RAC Financial Group, Dallas, is on the move. Company executives are traveling the country, doing a road show for a recently filed offering of five million shares.

The issue, which should raise about $125 million, has observers wondering where the nonconforming mortgage lender will direct the capital.

Most likely to another acquisition. "They have been talking about buying something," said an analyst who follows the company.

RAC executives could not be reached for comment.

FirstPlus Financial Group, RAC's principal business unit, is expected to purchase another regional consumer finance company with retail offices. The company purchased National Loans Inc., which makes consumer loans through 27 retail branches in Mississippi and Tennessee in October. Earlier last year, the company bought Mortgage Plus, a home improvement lender with retail offices in Denver, Seattle, and Atlanta.

"They've always had big bold plans, and they're not shy about doing deals," said Luke Smith, an analyst with Chesapeake Securities, Chesapeake, Md.

Large lenders that like FirstPlus cater to customers who don't qualify for bank loans, have been rapidly purchasing smaller companies in recent months.

RAC is expected to release third-quarter earnings Tuesday, and analysts say that they should be significantly above original estimates.

"Their originations are up significantly, and they have historically been able to beat estimates," explained Peter Tallas, an analyst with Freedman, Billings, Ramsey and Co. Inc., Arlington, Va.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.