Associates First Capital Corporation reported record second quarter earnings of $409 million, or $0.56 per share (diluted), a 14.8 percent increase per share over the same period a year earlier.
“This quarter’s results reflect strong margins, improved operating efficiency and strengthened credit quality. These key drivers of our business remain a priority and give us confidence in our outlook for earnings growth throughout the year,” said Keith W. Hughes, chairman and chief executive officer. In reaching its milestone of $100 billion of managed assets, the company relied on strong organic growth and strategic acquisitions. The company’s global consumer businesses achieved record internal growth driven by home equity, credit card and auto volumes.
Benefiting from consolidation in the consumer finance industry in Japan, the company bolstered its presence as one of that nation’s top five consumer lenders by closing its second acquisition this year. Strengthening its position as one of the largest issuers of private label credit cards in the United States, in July the company announced a major partnership with Zale Corporation, the nation’s largest specialty retailer of fine jewelry. The acquisition will add 840,000 active accounts to The Associates credit card business.
As the nation’s leading independent financing source for the trucking industry for the past 25 years, the company is well positioned to manage through the industry-wide challenges of higher fuel prices and softening collateral values. The company’s priority in its transportation division is on tightening underwriting and increasing pricing.
During the quarter, The Associates launched a new version of its industry-leading Freedom Loan home equity product, which will reward borrowers with a 3.25 percent reduction of their interest rate for on-time payments. The initial program, launched last July, has generated record sales volume, lowered delinquencies and improved customer retention.
In continuing to maintain its highly rated balance sheet, in June the company entered into a $12.1 billion bank credit facility, the largest in the U.S. market this year. The facility provides the company with additional capacity for its commercial paper program, its lowest-cost source of funds. “This reflects the strong level of confidence in the company by major banks around the world,” said Roy A. Guthrie, chief financial officer.
Associates First Capital Corporation, established in 1918, is a leading diversified finance company providing consumer and commercial finance, leasing, insurance and related services worldwide. The Associates, headquartered in Dallas, has operations in the United States and 13 international markets. The Associates is a Fortune 150 corporation and is listed among that magazine’s Most Admired Companies.
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