R. Harold Owens joined World Acceptance Corp., a small-loan company based in Greenville, S.C., in June 1995 as executive vice president. This month he was promoted to president.

Previously, he was consecutively president and chief executive of Security Pacific Financial Services Inc., Fleet Finance Inc., and KeyCorp Finance Inc., all specialists in home equity and subprime loans, now a hot business.

He spoke to American Banker recently about his experiences and the state of the business.

A lot of new companies are jumping into the home equity and consumer finance businesses. Will they make the grade?

OWENS: They are absolutely on thin ice; they are just asking for trouble. Earlier, everybody wanted to get into subprime auto finance. Everybody wanted a piece of the action, and look at the debacle and turmoil there.

Anybody in the industry can tell you that fierce competition will shrink margins. New competitors bring pricing pressures. Second mortgages are no different. Lenders have been digging more deeply into the barrel. They lowered credit standards. They've been overloading customers. So there are more delinquencies and chargeoffs.

And now they are not digging as deep as in the past. But a lot of people will have to consolidate debt, and that should be good for the second- mortgage industry.

Your new job puts you into a more specialized niche in consumer finance. How did you get there?

OWENS: At Fleet, I was just signing a lot of checks and dealing with lawsuits. I saw no future for the company, so I just threw up my hands.

After Fleet, I was working on a deal to start a de novo consumer finance company with H & R Block. But that fell through because of some management changes.

At KeyCorp, I did a business plan, which was to centralize the gathering of rejected business from the banking franchise and do it centrally out of Cleveland. But I also planned a storefront system. We would have a good mix of unsecured loans and first and second mortgages.

The business plan was ready to go, but I couldn't get the decisions made about the rollout. They had a changing of the guard, and they purchased an auto financing unit. They had a lot to do, but they were moving too slow for Harold Owens.

KeyCorp has restarted its finance company and is now looking toward just a centralized operation. Why do you think that is?

OWENS: I think they are looking at it from an expense viewpoint. Storefronts are costly. Their perspective is to keep the costs down.

Why did you want both storefronts and a centralized operation?

OWENS: The customers you get in Kansas City walk and talk different than those in Dodge City. In Dodge, they still believe in motherhood and apple pie, they want to see the bricks and mortar, they want the relationship. But in Kansas City, they want transactions, they want to pay by mail or at an ATM. They don't want to do it at a branch.

World Acceptance is primarily a small-loan company. Are you planning any other activities?

OWENS: We bought a portfolio in Georgia that brings us into higher balances and some real estate loans. We're looking at a couple of sizable packages in the second-mortgage business.

But we won't deviate a lot from our bread-and-butter business. Everything else will be separate - either a subsidiary or a division.

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