Keith Hughes is in the midst of a rather delicate balancing act.

The new chairman of Associates Corporation of North America must continue the success of his predecessor and mentor, Reece Overcash, who died of a stroke on Jan. 17. In addition, Mr. Hughes must put his own stamp on the $32 billion-asset company.

Balance is also important for other reasons at Associates.

Says Mr. Hughes: "We've always placed a high priority on having balance in the company, meaning balance in our product line, balance in geographic concentrations. We are very sensitive to the thought that we could be concentrated too much in a business or a market. And that, I think, has served us well over the years. It's kept us out of some businesses, too."

Through acquisitions and internal growth, the company has created a portfolio of $34.7 billion in gross receivables, enough to rank as the second-largest finance company in the nation, behind General Electric Capital Corp.

These holdings are split almost evenly among Associates' three principal business lines: home equity loans; consumer installment loans, including credit cards; and commercial financing.

While home equity loans accounted for $12 billion, or 34.5%, of the total portfolio at Dec. 31, this line of business has actually declined as a percent of total, from 38.6% in 1992. Over the same period, consumer credit has grown from 31.3% to 34.1%.

In 22 years with the company - the last three as president under Mr. Overcash - Mr. Hughes has gained a clear understanding of Associates' culture. Because of this, analysts do not expect major changes right away.

"This team has been in place for a very long period of time and they have been very successful," said Kevin J. Morley, a finance company analyst with CS First Boston Inc. in New York. "I don't think there is any need for Mr. Hughes or anyone else to tamper with the organization."

The combination of continuity of management, diversity of businesses, and expectations that the company's strong earnings growth will continue prompted Moody's Investors Service to upgrade Associates' debt ratings in February. The upgrade, which came less than a month after Mr. Hughes took the reins, boosted the senior debt rating to Aa3 from A1, and the rating on subordinated debt to A2, from A1.

An earlier downgrade by Moody's in 1991 was partially due to a series of acquisitions, said Ann Maysek, a bond analyst with Donaldson, Lufkin & Jenrette in New York.

But the acquisitions brought the Associates several businesses that benefited from the fall in interest rates that began in 1992.

"I think they were able to take advantage of the interest rate environment to build their balance sheet strength," she said.

The aggressive growth strategy is an example of the company's adaptability, according to Mr. Hughes. And it is this quality that he intends to emphasize.

"We always realize that because we're in the financial services business, we've got to be able to change, and change quickly. We address things promptly and we know we need to make things better," he said.

In the commercial finance business, for instance, the company has adapted a strategy to look for what it calls "triangle" financing opportunities. This involves financing entire product cycles and begins by helping manufacturers fund equipment purchases or find working capital.

Next, Associates helps product dealers pay for their inventories and buildings through a combination of traditional financing and loans backed by the U.S. Small Business Administration.

Finally, through the issuance of credit cards and other consumer installment loans, the company ultimately finances the sale of products.

At times, though, these opportunities are not easy to find.

For instance, when Associates bought the home equity business of sister company Ford Consumer Finance in 1990, Associates did not want the manufactured housing finance business that came with it. That business had left a bad taste in the mouths of Associates executives who had had experience with it.

"When we got it, our first thoughts were, 'How do we sell it?'" Mr. Hughes remarked. "When we started thinking about it, though, we said perhaps there was a way to take our commercial philosophy, apply it to manufactured housing, and really have a business that could fit into the company."

Today, this business is part of the mushrooming consumer installment division that has grown at a compound annual rate of 21.9% since 1992.

The company is also looking for opportunities to expand internationally. Associates' foreign operations manage about $7 billion of financial assets for sister companies under the Ford Motor Co. umbrella.

In this arena, Mexico holds the most potential - and risk - for the company. Despite the currency crisis, Mr. Hughes said he expects to have a lending license within a month. After that, he expects to move slowly.

"We initially thought a joint venture would be best for us, but we concluded last year to go on our own," Mr. Hughes said. "We would expect a lot of partnerships to evolve in Mexico between Associates and other financial institutions, though."

The Mexican venture is part of a more comprehensive North American strategy. Besides the U.S. market, the company is looking to add to its operations in Canada. Right now, the company has three commercial finance offices there, and is considering pushing in to consumer finance to complete the setup.

The company's United Kingdom operations are getting an equally close look. Mr. Hughes said the company is cautiously moving into commercial finance in England, and is considering using this network as a basis for future expansion.

"We don't have any imminent plans for the European continent," he said. "But we think the stronger we get in the U.K., the more likely it would be that we might enter Europe selectively, either through an acquisition or perhaps de novo."

But adaptability also means being able to get out of businesses that do not fit the game plan. Just last year, the company sold its profitable mortgage servicing operation after searching for the right formula for eight years.

The sale of this business is a reminder that the ultimate rating for Mr. Hughes will come from the Detroit headquarters of the company's Ford parent. To be sure, past successes have made the job of balancing new investment opportunities with secure, income-producing businesses easier for the time being.

"We have a big shareholder we want to keep happy."

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