Home equity lenders are continuing to post strong profits reflecting rising origination volumes and restrained delinquencies.
For the companies leading the pack, volume more than doubled from a year earlier, while the percentage of loans 30 days or more past due grew only slightly.
Money Store Inc., Sacramento, Calif., reported a 72% increase in third- quarter net income, to $22.7 million.
Its servicing portfolio grew 43% from a year earlier, and loan originations rose 57% to a record $1.5 billion. Home equity and auto loan divisions posted the largest volume gains from the year-ago quarter, at 53% and 226%, respectively.
Home equity loan delinquencies increased 39 basis points, to 5.74%.
RAC Financial Group Inc., Dallas, reported $13.4 million of net earnings for the quarter, up from $1.3 million a year before. New loans for securitization more than doubled, to $556.9 million.
Expansion of RAC's correspondent network and its direct lending program were cited as primary reasons for the company's success.
In addition, RAC's delinquency rate fell, to 2.7%, compared with 3.6% the quarter before and 4.7% in the same quarter last year.
With the purchase of National Loans in October, RAC will expand its product line to include consumer loans.
Imperial Credit Industries Inc., Torrance, Calif, more than doubled its quarterly net, to $9.4 million.
The company's return on equity decreased to 17% from 21%, however, due in part to the sale of stock in Southern Pacific Funding Corp.
United Companies Financial Corp., Baton Rouge, La., reported a 14% increase in net income, to $21.2 million. But Steven Eisman, an analyst at Oppenheimer & Co., reduced his rating on the company, noting that its delinquencies were up sharply and loan volume off.
"Home equity companies have been among the strongest-performing stocks in the financial services sector," he said. "The exception has been United Companies," which he downgraded to "market perform" from "buy."
It attributed the decline in origination volume to a management reorganization.