Citigroup Inc. appears to be the only financial services company to have enjoyed unqualified success with a growth-through-acquisition strategy in the subprime business.

If, as Citi expects, the Associates First Capital Corp. deal immediately adds to per-share earnings, the company would again stand farther apart from other expansion-minded banks and financial services companies whose acquisitions soured.

First Union's acquisition of Money Store, once a subprime powerhouse, was followed by a major earnings shortfall and executive turnover, and culminated in a major restructuring last June in which the Sacramento, Calif., company's lending operations were shuttered.

Conseco Inc.'s 1998 purchase of Green Tree Financial Inc. prompted the market to knock 80% off the insurance giant's stock price and ultimately led to the ouster of Conseco founder and chairman Stephen C. Hilbert in May. Conseco is now looking to sell the unit.

But the business of making loans to riskier credits has paid well for Citigroup. Its Citifinancial unit earned $229 million in the first half of the year, up 53% from the same period last year.

"It comes down to execution and management," said Michael L. Mayo, an analyst at Credit Suisse First Boston.

Citigroup has subprime roots. Chairman Sanford I. Weill's empire-building started out with the 1986 acquisition of Commercial Credit. Renamed CitiFinancial last year, Commercial Credit is considered a success story in cross-selling, having used door-to-door agents of Citigroup unit Primerica Financial Services.

Associates was the No. 3 subprime lender last year, originating $9.8 billion, according to National Mortgage News. But it is highly diversified, its other businesses including truck leasing and overseas operations, noted David Olson, president of Wholesale Access, a Columbia, Md., research firm.

"This was not a company that was highly dependent on any one product or one area," Mr. Olson said. Associates also stands out because it had profit growth even while smaller independent subprime lenders have been losing money, and buying one big company spares Citigroup the systems-integration hassle that a purchase of several small ones would necessitate, he said.


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