Money Store Inc. said Thursday that it would shutter its nonprime auto lending division. The move will result in a $42 million charge to 1997 earnings and the elimination of 400 jobs.
"We did not see a way in this environment for us to turn this around quickly," said Marc Turtletaub, chief executive of the finance company. "Our plan is to focus on our core business."
Money Store, which has 35 offices, started making nonprime auto loans in January 1995. At Sept. 30, its auto portfolio was $776 million, or 5.1% of its total loan portfolio. The company will continue to service these loans.
"Though we're not pleased with the one-time writeoff, the move puts us in a stronger position in 1998," Mr. Turtletaub said.
Wall Street applauded the news. Money Store's stock closed Thursday up $1, or 5.88%, at $18 a share. Investors took the announcement to mean that there would be no other surprises in the company's fourth-quarter earnings, one analyst said.