Great Western to Buy Capitol Finance
LOS ANGELES - Great Western Financial Corp. said it has entered a definitive agreement to acquire Capitol Finance Group Inc. from First Union Corp. of Charlotte, N.C.
Terms were not disclosed, but First Union said it expects the sale to close by yearend and yield an after-tax gain of about $9 million, or 8 cents a share.
First Sold in 1986
Capitol Finance, with $178 million in assets and 54 offices in five southeastern states, has been owned by First Union since 1986. First Union acquired the finance company along with its former parent, First Railroad & Banking Co. of Georgia.
The Capitol Finance network will become part of Great Western's consumer finance group, based in Memphis, which has assets of $2 billion and more than 500 offices in 23 states.
"The consumer finance industry is going through a consolidation period, with larger companies able to achieve greater efficiencies," said Doug Crisp, senior vice president of First Union's consumer credit division. "After receiving several unsolicited offers, we decided to sell Capitol because we didn't see First Union becoming a major player in the consumer finance industry."
Capitol Finance specializes in dealer financing, personal loans, home equity loans, and insurance-premium financing. The deal "reinforces our long-standing commitment to our customers in small to medium-sized communities," said M.M. Pappas, president of Great Western Consumer Finance Group.
The parent, $40 billion-asset Great Western Financial, also owns Great Western Bank of Beverly Hills, Calif., the nation's second-largest thrift.
Great Western has been augmenting its 1,000-office nationwide network through a series of acquisitions like that of the First Union unit, which fill gaps in its franchises. Great Western last month bought 11 branches of Republic Federal Savings and Loan, a California thrift owned by the Weyerhaeuser Co.