Finance Companies Churn out Profits; Home Equity Boom Helps
Timmons, Heather, American Banker
Finance companies turned in overwhelmingly positive earnings reports for the quarter as they continued to originate loans at a record clip.
Well-established companies saw double-digit growth, while relative newcomers to the stock market continued to rake in triple-digit increases.
The growth was often spurred by demand in the home equity sector.
Earnings were strong all around, and worries about much higher rates of prepayments at home equity companies seem to be relatively unfounded, said Kate Bletcher, an analyst with Gruntal Securities, New York.
"I'm seeing accelerated expense growth," Ms. Bletcher said "Companies are plowing money back into the business," she said.
Finance companies are improving technology, too, Ms. Bletcher said.
Associates First Capital Corp., Dallas, reported third- quarter earnings of $270.9 million, or 78 cents per share, an 18% increase from a year earlier.
Consumer finance receivables originated were $36.2 billion, up 15% from a year earlier. Commercial receivables increased 14%, to $16.5 billion.
Delinquencies increased slightly companywide, edging up 13 basis points, to 2.36%.
The company said that it was preparing for the opening of the Texas home equity market if residents vote Nov. 4 to repeal the statewide ban. Ford Motor Co. …