Recent delinquency trends might argue against a buildup in consumer lending for some financial companies, but for the CIT Group a consumer strategy is winning raves.

The New York-based company - which was in the news on Friday, when Chemical Banking Corp. sold half its 40% stake to majority owner Dai-Ichi Kangyo Bank - embarked on the strategy in 1992. It now has $2.4 billion of consumer receivables in its $17 billion portfolio.

After another three to four years, says chief financial officer Joseph M. Leone, the company expects consumer business to account for 35% to 40% of its portfolio.

A recent rise in consumer delinquencies set off alarms in some quarters, but the market remains unruffled about CIT's exposure to consumer debt. Analysts say that underscores the differences that exist among participants in the consumer sector.

"It's an environment that could be difficult, but the individual players are not cast in the same stone," said E. Richard Schmidt, a managing director at Standard & Poors Corp.

Mr. Schmidt and other analysts agreed that CIT benefits from diversifying its portfolio and has the experience to avoid bad loans. As a diversified lender, CIT is able to back off when problems arise, he said. It faces less risk than unsecured consumer lenders, such as the credit card specialists.

S&P maintains an A-plus rating on CIT's senior debt and an A1 rating on its commercial paper, and rates the outlook stable.

"We're more concerned about mono-line lenders in the credit card business," Mr. Schmidt said.

One specific goal of the foray into consumer lending was to offset the risk of downturns in the environment for equipment financing and leasing, a CIT mainstay, noted Albert R. Gamper, the company's president and chief executive.

"We wanted to diversify the ticket size, the geography, and the credit dispersion," Mr. Leone added.

CIT had been a consumer lender from its inception in 1908 through 1986, when it sold that part of the business to its parent at the time, Manufacturers Hanover Corp.

In 1989, however, the ownership picture changed again, when 60% of the company was sold to Dai-Ichi Kangyo.

"We still had a lot of vestiges of technological capability, credit skills, and legal knowledge" in the consumer area, Mr. Leone said.

The consumer credit division, which is one of eight business units, has about $1 billion of home equity receivables. A sales financing business has $1.4 billion of receivables secured by manufactured housing, recreational vehicles, and pleasure boats.

CIT makes home equity loans that average 75% to 80% of the value of the home, meaning there is excess collateral guaranteeing the loans. Although the collateral in the other loans tends to depreciate more than the real estate, he said, those loans remain at least 50% to 70% secured.

Although the company has noted an uptick in delinquencies, the rise is consistent with what one would expect as the portfolio matures, Mr. Leone said.

CIT's various units compete with a small universe of companies including Finova, AT&T Capital, GE Capital, Heller International, the Money Store, Green Tree Financial, and Associates Financial, at a time when finance companies are attracting favorable attention from banks and Wall Street.

Norwest Corp. has purchased a finance unit, and BankAmerica and NationsBank Corp. are both making a play for the middle market commercial business that the specialized national lenders dominate.

Mr. Gamper said interest tends to ebb and flow in the consumer businesses. "In the 1970s, banks acquired financing businesses and in the 1980s, banks sold them off."

Indeed, he said, Manufacturers Hanover's acquisition of CIT, then primarily a factoring company, was one of four such acquisitions by money- center banks in the 1970s - and the only one that met with success.

Mr. Gamper rose to his post at CIT from within the bank, where he had worked since 1962.

In the five years Dai-Ichi Kangyo has controlled the company, revenues have climbed to $17 billion from $9 billion annually, while the staff had been pared to 2,800 from 3,000. That progress, Mr. Gamper said, is due in large part to the use of technology to "make people stretch." He noted that regional offices used by traveling industrial credit salesmen were down to five from 13 in the same period.

The company's earnings have grown steadily. Its income for the first nine months of 1995 was up 10.7% over the same period in 1994, to $167.8 million.

Mr. Gamper said investment bankers have told him if the company went public, CIT stock could sell for about 12 times earnings - a somewhat higher multiple than the stock of most banking companies. But the prospect that CIT stock could be spun off to the public appeared dimmed by last week's transaction between Chemical and Dai-Ichi Kangyo. The New York money-center had said it would consider selling all or part of its stake. On Friday, the Japanese bank obtained a five-year option on Chemical's remaining holding.

Samuel G. Liss, an equity analyst at CS First Boston Corp., is familiar with CIT as a competitor of the companies he covers. He said the company's return on equity (12.14%, according to Mr. Leone) was lower than other finance companies, but its return on assets (1.47%) was "quite admirable."

Chemical reportedly is selling its stake because it wants a higher return. But observers also said CIT has been a good investment for Dai Ichi, especially in contrast to other U.S. holdings by Japanese banks.

Mr. Liss said one area the CIT may have to "work through" in the current environment is its factoring business, a unit that supplies short-term inventory financing for retailers.

But Mr. Gamper said bankruptcies in the retail sector have also created opportunities for CIT's business credit unit to make debtor-in-possession loans - loans that have priority over other claims in the bankruptcy proceedings - and other secured loans to help troubled companies through hard times.

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