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., which owns the majority of Associates First Capital, announced this month that it was selling its entire stake.
CIT Group Inc., New York, reported a 15.7% increase in net income, to $75.3 million.
The company's total financing and lease assets increased 9.5%, to $20.3 billion. Total managed assets, which include loans the company has securitized but continues to service, increased 11.3%, to $22.3 billion for the quarter.
Since the beginning of the year, delinquencies decreased 12 basis points, to 1.60% of finance receivables.
CIT Group announced last month that it had filed with the Securities and Exchange Commission for an initial public offering of 20% of its common stock.
Southern Pacific Funding Corp., a Lake Oswego, Ore., subprime mortgage lender, reported a 68% earnings increase, to $13.8 million, on record loan originations. The company originated $578.6 million in home equity loans during the quarter, an increase of 151% from a year earlier.
Correspondent purchases decreased 35% for the quarter, while loans from strategic alliances increased 105%. Delinquencies decreased 30 basis points, to 4.5%, while loans in default increased 80 basis points, to 4.7%.
