There is little evidence to suggest George C. Evans has ever ducked a fight. While a boxer and football player as a young man, his nose was broken 12 times.

Maybe that's why, over his 37-year career in subprime auto lending, he's been attracted to rescuing companies that have taken it on the chin.

But in his latest reclamation project, the 62-year-old chairman and chief executive of Search Financial Services Inc. faces his biggest challenge yet.

He must restore the reputation of a company that recently emerged from bankruptcy. And he must do it at a time when subprime lenders' credibility with investors seems near rock bottom because of accounting scandals and unexpectedly heavy losses.

"This is going to be as tough a turnaround as you'll find," said Thomas C. Blum, managing director at Bear, Stearns & Co. "Still, Evans has the resume. I wish him good luck."

Search Financial, the Dallas-based company formerly known as Search Capital Group, competed with companies like Mercury Finance Co. and Jayhawk Acceptance Corp. for buying loans from car dealers who made loans to "D" credits - consumers who couldn't get loans from anywhere else. The trick is to make loans quickly and prod enough customers to pay 26% interest rates to offset the defaults that are sure to come. It is not a business for the faint-hearted.

Mr. Evans has been in subprime lending "long before people knew what it was," including a stint as vice chairman at Associates Corp. from 1976 to 1981. He focused on Search in late 1994 after a couple of years out of the business and was so disgusted by what he saw that he took over the company.

"They had 17,000 loans, and their default rate was 17% because they never verified anything," he said. "In this business, you've got to get to know customers, not just buy their loans. You've got to call them, see what the mileage is on their car, ask them when they get their paycheck.

"And," he said, waving a finger permanently bent by an old baseball injury, "you make sure the dealers don't lie to you."

He promptly fired and replaced Search's management. He also fired virtually its entire board of directors. Then, in August 1995, he had all of Search's subsidiaries file for Chapter 11 bankruptcy. Irate noteholders filed a class action seeking $29 million in damages.

Search's problems were the first sign that not all was well in the hot sector of subprime auto lending. Wall Street at the time was aggressively touting the stocks and securities to investors.

Moody's Investors Service issued a scathing report titled, "Search Capital Group Inc.: A 'C and D' Auto Lender That Didn't Make the Grade." But as is now apparent, the problems at Search weren't unique.

"Wall Street is extremely guilty of throwing money at companies led by people who had no cash, no equity, and no experience," Mr. Evans said.

He pulled Search out of bankruptcy by persuading the company's noteholders to convert debt into preferred stock. He also settled the class action for 10 cents on the dollar - $290,000 in cash and $2.6 million in stock. And he also switched from lending to "D" customers to borrowers higher up on the spectrum.

Then he began rebuilding by seeking out troubled competitors, many of whom suffered the same problems Search had a year earlier. On Feb. 7, Search said it would buy the assets of MS Financial Inc. of Jackson, Miss., in a stock swap worth $21 million. It has arranged to buy the company outright in a deal that is expected to close in July. With that purchase, Search will inherit MS' $75 million line of credit from Fleet Financial Group. Coincidentally, Fleet forced Jayhawk Acceptance into bankruptcy by withdrawing its revolving loan the same day Search purchased MS.

Mr. Evans envisions other deals, mainly with companies with $30 million to $200 million of assets. But he'll also give the bigger fish a look, like Mercury Finance, and BankBoston Corp.'s subprime auto lending unit, Fidelity Acceptance Corp. Within five years, he says, he envisions Search with $1 billion of assets and annual earnings of $50 million.

That would be good for Search's shareholders, and it wouldn't hurt Mr. Evans. He has spent the money he made as a top Associates executive acting as his own lawyer in a civil lawsuit seeking damages for the wrongful death of his 25-year-old son.

In 1990 his son was shot by an undercover Texas state police officer posing as a drug dealer, according to news reports. "Wrong place, wrong time," is all Mr. Evans will say.

A grand jury declined to indict the accused officer on criminal charges. So Mr. Evans, who attended law school while he was getting started in consumer finance, pursued a civil suit. A judge ruled the officer was liable, but Mr. Evans lost a retrial in which the jury was not allowed to hear about the policeman's previous trial.

Going to Search, Mr. Evans said, was as much to help him get on with his life as it was to salvage a company. He figures if he can make Search profitable, he'll have something for his retirement.

Whether he can do that remains to be seen. But Mr. Evans has before pulled subprime auto lenders out of the abyss.

In 1992, while his son's case was at a standstill, he was hired by the creditors of Century Acceptance Corp. in Kansas City to serve as president and chief executive. The company had lost $16 million in the two years before Mr. Evans arrived, but within a year it was profitable, he said. In 1995, after he left, the company sold to BankBoston for $129 million, a 21% premium.

He also turned around a small subprime auto lender in Georgia in the early 1960s before selling it to Avco Financial Services, where he worked as vice president for 16 years before Associates.

He likes to say his team at Search has 214 years of collective experience in subprime lending. But for now, Mr. Evans has little to sell investors besides experience. Last week the company reported a first- quarter loss of $4.8 million after preferred stock dividends related to the class action were paid.

Investors will need to see "clean" financial performance, according to Mr. Blum of Bear Stearns, before they buy Search's turnaround story.

In the meantime, Search is trying to raise the money needed to carry out its strategy of buying sick subprime auto lenders.

The company received a $100 million warehouse loan in April from Lehman Brothers, which adds to the $25 million warehouse line of credit it has from Hibernia Corp. and the $75 million line it stands to receive from Fleet. And Mr. Evans and his top executives were in New York recently to pitch a $35 million private placement with institutional investors.

It will be an uphill battle, Mr. Evans acknowledges, to rebuild what one investment banker calls "the poster child for all that's gone wrong in subprime auto finance."

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