Associates First Capital's stock rose 1.93% Tuesday to $23.125 after the Irving, Tex., financial services company met analysts' consensus forecast that first-quarter earnings per share would be up 11%, to 51 cents.

Associates' net income fell 11%, to $299.7 million, in the quarter. The per-share increase excluded a 10-cent charge announced earlier for the closing of the company's manufactured housing loan origination business.

But the report helped give Associates a boost after a difficult period in which analysts had downgraded it, expressing concern about its capitalization and credit losses in the home equity market. "They hit the number, and I think underlying trends this quarter will go a long way to restoring credibility," said Katrina Blecher, an analyst for Brown Brothers Harriman & Co.

Ms. Blecher said Associates' improvement in credit quality made its first-quarter results "a blowout" report. Net credit losses on home equity loans fell to 1.35% of average managed receivables, from 1.49% in the fourth quarter, she noted, and total credit losses fell to 2.86%, from 2.93%, as delinquencies declined. She added that loan growth and margin expansion were both very strong.

Associates chief financial officer Roy A. Guthrie said, "We have a bright future in store and are confident in our ability to hit expectations. Our markets are large and growing, the competitive landscape is more rational, and we are well-positioned for success."

Ms. Blecher, noting growth in home equity lending and credit cards, said Associates got a boost from its acquisition of KeyCorp's credit card division, which brought in better customers. During the first quarter, Associates' credit card business added 1.8 million customers from its KeyCorp and Citgo partnerships.

Bruce Harting, an analyst at Lehman Brothers, agreed with Ms. Blecher's evaluation. He said the company had a very good recovery quarter and that it is "vindicated in terms of its outlook for its home equity loan portfolio credit quality improving."

Mr. Guthrie said developments in the organizational structure of the company's home equity business were an important contributor to the rise in home equity credit quality.

Under a system in place since the fourth quarter, servicing for the home equity business revolves around a central utility that handles underwriting and application flows - and documentation and servicing after loans are closed. The central service is being made accessible to all of Associates' home equity divisions, including the sales channel; the direct channel (mailing, media, and phone operations); brokers; an evolving Internet channel; and a correspondent channel.

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