It is the largest nonbank financial services company in the country, but most Americans have never heard of it.

For Associates First Capital Corp., that is just fine.

What started in 1918 in a garage in South Bend, Ind., as a finance company for automobile buyers has quietly morphed into a financial services giant with a market capitalization of $32 billion. Its $90 billion of managed assets make it just a shade smaller than SunTrust Banks Inc., the nation's 10th-largest bank, which has $93 billion.

"We have a certain degree of humility," said Keith W. Hughes, chairman and chief executive officer of Associates. "We are conservative in the way we go about things, starting with the way we make loans and collect them."

Mr. Hughes described Associates as "old school" in its underwriting and accounting practices. Though it has been on an acquisition tear, restraint is the guiding principle, Mr. Hughes said: No matter how attractive the deal, Associates will back off if the price seems too high.

Modesty may be an unusual trait for a company that has had 24 consecutive years of growth and left smaller competitors by the wayside. Though it does not dominate two of its consumer lending categories-credit cards and mortgages-it is the market leader in lending for construction equipment and trucking, and a major provider of corporate relocation services.

"Subprime" is a dirty word among Associates executives, but many of its credit card and home equity borrowers are people with blemished credit records, to whom it assigns high interest rates. The company makes a point of saying that it offers low rates to highly qualified customers who could borrow anywhere.

Curiosity in Associates began mounting after its spinoff from Ford Motor Co. in April 1998. What leaped from the Ford balance sheet was a diversified lending company that now has $71.4 billion in receivables and $1.2 billion in net earnings.

Associates does not link last year's 20% earnings growth to the departure from Ford.

"We were fortunate to be an autonomous subsidiary, and they were a great parent company for us," Mr. Hughes said in a recent interview at Associates' headquarters, about 10 miles northwest of Dallas.

Ford "invested in our balance sheet, encouraged us to grow, and to control what we were growing," he said. "That is the cultural web of the company, and it has really been sustained."

Associates attributes its success to corporate values. Words such as conservative, modest, hardworking, Midwestern, focused, and risk-averse often creep into conversations with Mr. Hughes and his executive team.

In its sector, Associates is "the most consistent company in terms of financial performance," said Robert Hottensen, managing director at Goldman, Sachs & Co. "They've done this by creating a culture within the company that has stressed consistency."

Mr. Hottensen said Associates' distinguishing characteristics are "very strong credit controls, operating controls, and management controls."

Associates has been on the prowl for smaller lenders. Last year it announced 13 major acquisitions; two have closed in 1999.

Even so, Associates typically wins only one out of five deals it bids on, Mr. Hughes said. It will not buy a company unless it sees a strategic fit, a likelihood of profits in the first year, and potential for future growth.

These guidelines cost it a bid for Beneficial Financial Corp., which was sold last year to Associates' biggest rival, Household International Inc. Mr. Hughes is not wistful.

"Even though your adrenaline is running on an acquisition and you want to close it, you've got to be able to sit back and say, 'This is the maximum value, and we'll fight another battle another day,'" he said.

Instead, Associates bought another force in consumer loans, Avco Financial Services Co. It paid $3.9 billion to the parent company, Textron Inc., in January.

Avco brought $7.7 billion in receivables, 8,000 employees, 1,200 branches, and 2.5 million customers. Associates does business in 15 foreign countries, and Avco expanded its presence in some European markets, Hong Kong, India, and Canada.

This week Associates announced the sale of 128 former Avco branches to Commercial Credit Inc., a subsidiary of Citigroup, because of operational overlaps. Last week it said it would sell Avco's operations in Australia and New Zealand.

The moves were somewhat atypical: Associates usually retains workers and offices from acquisitions, and says it relishes the fresh perspective and experience the outsiders bring. Employee pride is yet another cornerstone of the Associates ethos.

"We've been lucky to keep most of the leadership of the companies we've acquired," Mr. Hughes said. "If you have executives that have skill sets from other companies and you can bring those to bear on the market, it's an unbeatable combination."

Associates, which traces its name to the 11 business associates of its founder, E.M. Morris, still considers internal growth its mainstay. In 1998, 13% of earnings growth was organic, the company said.

Mr. Hughes, 52, first joined Associates in 1973 as a manager of a broker-dealer subsidiary. He left a year later to become vice president and director of marketing at what was then Northwestern National Bank in Minneapolis (it turned into Norwest Corp. and is now Wells Fargo & Co.). Two years later he joined Crocker National Bank in San Francisco as senior vice president of branch banking.

In 1981, Mr. Hughes rejoined Associates as president of diversified services and a member of the board of directors. He was named senior executive vice president in 1984, vice chairman for consumer operations in 1988, and president and chief operating officer in 1991. In 1995 he was named chairman and chief executive officer. He is also a director of Visa U.S.A. and Visa International.

Associates says the acquisitions are meant to enhance its strengths and gain footholds in new businesses. One example is last year's purchase of SPS Transaction Services Inc., a processor of private label credit cards, from Morgan Stanley Dean Witter & Co. for $896 million.

SPS handles private-label accounts for such companies as Radio Shack, Goodyear, Conoco, and Phillips Petroleum, and Associates had already issued cobranded cards for Amoco, Citgo, Phillips, and Unocal.

With the SPS acquisition, Associates now issues credit cards for 40 stores including Staples, Home Depot, and Radio Shack. The ability to process some of its card accounts was considered a bonus.

Private label fits nicely with Associates' goal of issuing cards to the "underserved market," said Joseph N. Scarpinato, executive vice president of credit card operations. Retail and gas cards are easier to obtain for people with damaged credit or no history at all, he said.

Associates is known for giving high interest rate cards to consumers who might not qualify elsewhere. It has come under fire for heavy solicitation of college students, and for hiking rates on card portfolios it has acquired.

Mr. Scarpinato said Associates prices according to risk, and customers who pay bills regularly see rates lowered. He calls this practice "life- cycling a customer."

"Over time, a person who has no credit history develops one," he said. "So we could be in the business of grooming our customers to give them to our competition, if we're not careful."

Though Associates considers itself "very much of a niche player" in private-label cards, it also has a sizable consumer card portfolio. It is a top-20 bank card issuer, with more than $6.4 billion in Visa and MasterCard receivables out of its $10 billion portfolio.

Associates recently announced an agreement to issue cards on behalf of Washington Mutual Inc. of Seattle.

"Our core competencies are evaluating risk and managing relationships," Mr. Scarpinato said.

Associates' thriving mortgage business is also populated with customers some people would refer to as "subprime." Other companies have been courting this market, and Associates is trying to keep its edge by reducing costs.

Roy A. Guthrie, Associates' chief financial officer, said the company has changed underwriting methods "so we can be more predictive in the loss profile" and "lower the price to where the competition is."

Mr. Hottensen of Goldman Sachs said Associates and other nonbank finance companies are benefiting as banks close branches and encourage use of remote channels. Consumers who live in rural areas or have low incomes have fallen "below the radar screens of banks," he said.

Associates' bread-and-butter business is lending to the heavy-duty truck and construction industries; it has $25 billion in receivables in these markets. Another large division is relocation services, in which it is the sole provider for U.S. government employees.

"We're an amalgamation of what we think are some pretty strong products and franchises," Mr. Hughes said. "When we set our sites for improving, it would tend to be with the best-of-class competitor in that market."

Kenneth A. Posner, analyst at Morgan Stanley Dean Witter, predicts Associates will maintain a 17% earnings per share growth rate for the next few years, versus its 18% last year.

The company must "leverage its distribution, brand, and customer base, and not let itself get painted into a corner as being a subprime mortgage specialist," Mr. Posner said.

"Household has a bigger consumer finance business than Associates," said Denis Laplante, an analyst at Fox-Pitt Kelton. "But Associates over a long period of time provides a good balance between secured and unsecured lending." Household, of Prospect Heights, Ill., ended 1998 with $72.6 billion in managed assets, a shade less than Associates.

Mr. Guthrie, the CFO, said the success of his company and its competitors has spurred Wells Fargo & Co., BankAmerica Corp., Citigroup, and others to seek larger pieces of the same turf.

"Banks were flush with capital and looking for markets to play in," Mr. Guthrie said. "Lots of companies are chasing the same households and businesses."

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