The consumer finance units of the two largest financial institutions on the West Coast turned in strong second-quarter results, but mostly for different reasons.

Norwest Financial, the consumer finance unit of Wells Fargo & Co., and Washington Mutual Inc.'s Aristar subsidiary each reported a more than 20% increase in earnings.

"Auto lending, home equity lending, consumer loans-we saw extremely strong consumer finance growth across the board," said James R. Bradshaw, an analyst at Pacific Crest Securities in Portland, Ore.

The woes faced last year by subprime and home equity lenders helped Norwest Financial keep customers who might otherwise have taken their business to these nonbank competitors, said Ronald L. Lottes, an executive vice president at the unit. San Francisco-based Wells Fargo has been reaping the benefits of this since mid-1998, when intense competition and liquidity problems forced several nonbank lenders into bankruptcy or sale.

Norwest Financial earned $66 million, up 22%, during the second quarter.

"There's been a real change in the industry," Mr. Lottes said. "We have seen the elimination of much of our competition in terms of real estate lending."

Customers who, for example, had an 80% loan-to-value credit with Norwest Financial and wanted to consolidate more debt were attracted to high-loan- to-value lenders willing to offer 125% LTV loans.

"We don't think the 125% product is intelligent lending, so we'd be losing these customers," Mr. Lottes said. "But we're no longer losing those accounts."

The merger of Norwest Corp. and Well Fargo also played a major role in improving the results of the consumer finance unit, which has $4.7 billion in loans outstanding. The new Wells Fargo, which was formed in November when Norwest bought Wells Fargo and took its name, has begun to emphasize cross-selling, for which the former Norwest was well known.

Norwest Financial, which has 80 offices in the former Wells Fargo's core California market, is already taking more customer referrals from bank branch salespeople.

"We're beginning to capitalize on the synergies to be harvested from the Wells family in California," Mr. Lottes said. "There's a lot of business to be gained in cross-marketing our products."

Norwest Financial also set some aggressive first-quarter goals for branch managers, Mr. Lottes said. The manager of any branch that had 25% growth-compared with the expected 6% growth-and kept debt losses below 20% would receive a bonus and get to attend a special awards conference. Nearly half of Norwest Financial's 812 branch managers qualified, Mr. Lottes said.

For Aristar, which Seattle-based Washington Mutual acquired as part of its 1997 purchase of Great Western Financial Corp., the gains came about largely because of a renewed focus on profitability.

Aristar earned $17 million in the second quarter, 26% more than the year-earlier figure.

Aristar president and chief executive Craig J. Chapman said staff members in the unit's 512 branches stopped trying to sell memberships to auto clubs and other marginally profitable products. Instead, they concentrated on making lucrative home equity loans instead.

Aristar, which has roughly $3 billion in loans outstanding, has also been centralizing administrative and collection functions to allow branches to focus on selling its products, he said.

"We've removed ancillary products and non-value-added transactions from the branches," Mr. Chapman said.

The second-quarter numbers also benefited from a reduction in its portfolio of installment sales contracts, which Mr. Chapman described as Aristar's loss leader.

"We managed our business mix better," Mr. Chapman said.

Both consumer finance units had one factor in common to thank for their recent strong performance - the economy.

"Confidence has been very high, and consumer spending continues to outstrip personal disposable income, as it has for several years," Mr. Bradshaw said.

Mr. Chapman agreed, citing high customer demand for ready cash.

"Although we like to say we are geniuses, we do have to attribute some of our results to the fact that we are blessed with a good economy," Mr. Chapman said. "Consumers are very confident right now and need ready access to cash on a regular basis."

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