United Companies Financial Corp., a once-high-flying home equity lender, fell to earth last year amid shrinking net interest margins and fraud at its title insurance subsidiary.

The lackluster performance of United Companies stock last year has also sparked the ire of disgruntled shareholders, one of whom has complained publicly about antitakeover provisions adopted by the United Companies board.

Dr. Harry M. Barnes 3d, a cancer specialist based in Montgomery, Ala., said he owns "several thousand" shares of United Companies, which is based in Baton Rouge, La.

Earlier this month, Dr. Barnes wrote a letter to United Companies president and CEO J. Terrell Brown complaining that the company's board had adopted its antitakeover provisions at a time of poor stock performance.

United Companies' board adopted a series of antitakeover provisions in the fourth quarter, including staggered directors' terms, limits on filling vacancies, and a 60-day advance notice requirement for shareholder proposals at annual meetings.

In his letter, Dr. Barnes threatened to take his complaints to United Companies shareholders in the form of a proxy vote.

"I'm not a really big shareholder," Dr. Barnes said. "I'm just disappointed the stock has done so poorly. Our perception is that top management has not done quite all they could have to support the company."

"We've received the letter, and we're reviewing it right now to determine the appropriate response," a United Companies spokesman said last Friday.

United Companies was the second-best-performing stock on Nasdaq in 1993 on the strength of its ability to securitize non-conforming mortgage loans.

United Companies, which has a $2 billion loan servicing portfolio, specializes in selling home equity/debt consolidation loans to borrowers with impaired credit.

United Companies is currently trading in the $32-a-share range, after beginning 1994 at $34.50. The problem last year was twofold: rising interest rates depressed spreads in the lending business, while fraud wreaked havoc in the title insurance subsidiary.

Due to embezzlement by some independent agents, United General Title Insurance Co. lost $8 million in last year's fourth quarter, fully half its $16 million in assets. United Companies has since indicated that it plans to sell the subsidiary.

The title insurance division has 852 independent agents in 28 states. United Companies currently has nearly $3 million in potential claims against two of the independent agents involved in the embezzlement scandal.

One of the agencies selling title insurance filed for bankruptcy last month.

There is some concern on the part of the United board that the company may make an appealing takeover target.

Equicredit Corp., which also makes subprime home equity loans and has a $1.5 billion servicing portfolio, was purchased last year by Barnett Banks Inc., Jacksonville, Fla., for $332 million in cash.

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