Briefs: Moody's Downgrades Thrift on Subprime Link

The troubles bedeviling subprime auto lending have stung a thrift. On Monday, Western Financial Bank, Irvine, Calif., had its long-term debt downgraded to B1 from Ba3 and its rating for deposits cut to Ba2 from Ba1 by Moody's Investors Service.

Western Financial is a unit of Westcorp Inc., which owns 83% of subprime auto lender WFS Financial Inc. The thrift, which has 26 offices in California, does its auto lending through WFS.

Moody's analyst Thomas E. Foley said the downgrade "reflects the company's rapid expansion in nonprime automobile lending, and related deterioration in the quality of the serviced automobile loan portfolio."

WFS Financial grew aggressively in 1996 and had 141 auto lending offices in 32 states as of March 31. Mr. Foley said the credit quality of loans in the new locations is below that of WFS' traditional western U.S. base.

Mr. Foley noted that Westcorp has acknowledged the problems, slowed expansion, boosted collections, and installed a chief credit officer at the thrift. Westcorp chief executive Ernest S. Rady did not return a phone call.