Some leading finance companies reported stellar second-quarter earnings last week, despite rising delinquencies in some divisions.
Money Store Inc., Union, N.J., reported a 60% increase in net income for the quarter, to $30.2 million, versus $18.9 million a year earlier.
The company's home equity division, which makes up the bulk of its business, increased loan originations 26%, to $1.3 billion.
Money Store's loan originations increased 28% in the past 12 months, to $1.7 billion. Its serviced portfolio shrank 37%, to $14.1 billion.
Delinquencies fell in the home equity and commercial loan divisions, but rose in the auto sector by 82 basis points, to 4.25% of loans serviced.
Money Store also announced during a conference call that it would be increasing its participation in high loan-to-value home equity originations.
Firstplus Financial Group Inc., Dallas, currently the leading high loan- to-value lender, reported a 292% increase in net earnings over a year earlier, to $38.2 million.
Loan originations for the quarter were $993.5 million, up from $265.2 million. Credit quality remained stable, the company reported, at a Fair Issac & Co. score of 681. Thirty day-and-over delinquencies declined to 2.2%, from 3.7%.
Firstplus increased its provisions for losses on loans held for sale to $12.9 million, from $3.3 million.
Home equity specialist Southern Pacific Funding Corp., Lake Oswego, Ore., reported a 168.1% increase in earnings, to $13.4 million.
Loan production increased 157.3%, to $454.6 million. During the quarter, Southern Pacific opened five new wholesale regional offices , and completed the acquisition of two subsidiaries.
Delinquency rates on the company's $1.6 billion rose to 4.8%, from 4.0% a year earlier.
This is Southern Pacific's fifth consecutive year of reporting greater than 100% year-over-year growth in originations, revenues, and net earnings.
Amresco Inc., Dallas, reported a 70% increase in net income, to $12.5 million.
The increase was fueled in part by a boost in Quality Mortgage originations to $252.6 million, up from $173 million in the first quarter. Amresco purchased the subprime mortgage lender last year.
Amresco's report prompted Piper Jaffray, Minneapolis, to raise its earnings estimate for 1998 to $2.15, from $2. Amresco's stock price target was raised to $43 per share, from $30. Shares were trading Friday at $29.
Household International, Springfield, Ill., reported a 21% increase in earnings for the quarter, to $150.3 million.
The home equity and credit card lender increased its managed portfolio of consumer loans 15% during the quarter and its home equity portfolio by one-third.
Sixty day-and-over delinquencies declined to 4.32%, from the first quarter's 4.45%, but chargeoffs increased to 4.58%, from 4.15% three months ago.
