losses and delinquencies in the company's auto-lending business. Smith Barney Inc. analyst William H. Ryan cut Money Store to "neutral" from "outperform.' The company reported last week that in the second quarter, chargeoffs on auto loans rose 151% and delinquencies rose 24% from the first quarter. Analysts say Money Store built its subprime auto business last year, and the Union, N.J., consumer finance company reported making $168 million in auto loans in the second quarter, a 67% increase from the second quarter of 1996. But auto loan chargeoffs rose in this year's second quarter to 3.82%, from 1.52% for the same period in 1996. Delinquencies rose 82 basis points from March 31, to 4.25%. Money Store officials could not be reached Thursday, but Marc Turtletaub, Money Store chief executive, said when earnings were released that auto loans make up only 5% of its portfolio and that it is "building reserves to provide adequately for losses as the auto loan portfolio matures." Money Store shares closed Thursday at $35.875, down 37.5 cents. Many other companies are stepping up subprime auto-lending volume as the sector settles down from the accounting scandals and heavy losses that devastated several companies in spring of this year. ACC Consumer Finance Corp., Consumer Portfolio Services Inc., and TFC Enterprises Inc. all reported substantially higher first-half earnings in 1997 than in 1996, and most grew by picking up business from ailing competitors. "The survivors are showing record volumes in loan originations," said Mr. Ryan, the Smith Barney analyst. "They're capturing the market." ACC, based in San Diego, posted earnings of 30 cents per share through the first six months of the year, up from 16 cents a year earlier. Consumer Portfolio Services, a current darling of Wall Street, posted earnings of 56 cents per share, up from 43 cents a year ago, because of a 70% second-quarter increase in purchasing installment contracts from car dealers. TFC was one of the first subprime lenders to experience financial problems, but it may be recovering. The company posted earnings of 8 cents per share in the first half of the year, up from 3 cents a year ago. The Norfolk, Va., company said it cut loan loss provisions, reduced management costs, and boosted loan volumes by 40%.

The auto lenders that appear to be experiencing the greatest financial difficulties are companies that lend to customers with relatively pristine credit. Union Acceptance Corp., Arcadia Financial Ltd., and Onyx Acceptance Corp. all finance cars to customers who could qualify for bank loans. But because these companies have been unable to sell seized vehicles for as much as they expected, they have been warning investors to expect tough going. Union Acceptance posted a loss of 83 cents per share for the quarter ending June 30, compared with a gain of 41 cents per share a year ago. Arcadia, formerly known as Olympic Financial, reported losing $1.78 per share for the first half of the year, compared with a 76 cent per share gain the same time a year earlier. Onyx posted earnings of 20 cents per share for the first half, down from $1.06 a year before.

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