Another subprime auto lender is proving itself to be less than grade A.

Reliance Acceptance Group Inc. reported a first-quarter loss Wednesday of $9.9 million, or 76 cents per share, and said it was in violation of its loan covenants.

Its shares dropped $2.375 on Wednesday, to $6.625, and closed unchanged on Thursday.

The company announced the resignation of Thomas L. Barlow, its president and chief executive, and said that its chairman, Howard B. Silverman, has assumed Mr. Barlow's responsibilities. It is also searching for a chief operating officer and hired a new chief financial officer on March 13.

Reliance was spun off from Cole Taylor Financial Group on Feb. 12.

In a press release, Mr. Silverman said he had initiated discussions with Reliance's lenders and said the company would review its practices for selling cars seized from delinquent customers.

Delinquencies of 60 days or more in the subprime finance receivable portfolio were 2.2% on March 31, up from 1.7% at yearend. It had 1,053 repossessed vehicles awaiting disposition on that date, compared to 844 on Dec. 31.

Mr. Silverman also said the company would "reform branch systems and procedures" at its 53 offices located in 16 states.

"Credit underwriting practices have resulted in unacceptable default rates, and these practices are being changed immediately, even if it means a reduction in volume growth," he said.

- Aaron Elstein

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