Magazine article American Banker

Finance Giant Works the Old-Fashioned Way

Magazine article American Banker

Finance Giant Works the Old-Fashioned Way

Article excerpt

When Harold Marshall joined Associates First Capital Corp. in 1961, he started at the very lowest rung of consumer finance. "Back then they called it a trainee," he says, "but that was just a fancy name for car repossessor."

Since then, Mr. Marshall, 61, has gone on to become president and chief operating officer. Associates, meanwhile, has emerged as the second-largest consumer finance company in the United States-after GE Capital-and by far the largest home equity lender. The company's holdings of home equity loans have grown by nearly 100% since 1991, to $16.7 billion.

Mr. Marshall expects no slowdown. In fact, he says, Associates will double both originations and earnings once again over the next five years, even as the hot home-equity market draws droves of new competitors.

How? By providing relentlessly hands-on customer service. With more than 2,000 branches worldwide, Associates provides a level of old-fashioned hand- holding that its customers seem to need and appreciate, observers say.

Most offices open at 7 a.m. and they don't close on weekends. In addition, Associates' loan officers often trek to customers' homes.

It's "a 1950s-style throwback finance company," says Michael Durante, an analyst with Prudential Securities. Wholeheartedly in favor of the strategy, Mr. Durante says Associates' planned doubling of volume is "very do-able."

Mr. Marshall, for his part, says the plan now is more of the same.

"We are going to have to get up earlier and work harder" than the competition, he said.

The effort has certainly paid off so far. Associates has been producing 20% more than the volume of home equity loans of its next nearest rival, Money Store, according to National Mortgage News.

Unlike most other consumer finance companies, Associates holds the majority of its loans in portfolio. Total loans, held and securitized, swelled 22% in the last twelve months alone, to $50. …

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