DATE: Wednesday, April 9, 1997              TAG: 9704090430

SECTION: BUSINESS                PAGE: D2   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:   47 lines

TFC REPORTS 4TH QUARTER LOSS, DUE TO HIGH-RISK LOAN PROBLEMS

Battered by problems with some of its loans to high-risk auto buyers, TFC Enterprises Inc. said Tuesday it lost money in the December quarter of 1996 and for the full year.

The Norfolk-based parent of The Finance Company and First Community Finance attributed its difficulties to delinquencies and charge-offs on loan contracts it bought in 1995.

For the three months ended Dec. 31, TFC reported a net loss of $7.06 million, compared with a loss of $12.31 million in the fourth quarter of 1995. Its loss per share was 63 cents, compared with a $1.09 loss in 1995.

TFC, which expanded rapidly in the early 1990s, said its results for 1996 also were hurt by severance payments to former executives and charges for closing certain operations in Dallas and Northern Virginia. The company let go of certain senior executives and closed a regional processing facility in Dallas last year as part of a cost-cutting drive.

For all of 1996, TFC's net loss climbed to $7.6 million from $6.46 million the previous year. The loss per share widened to 67 cents from 57 cents.

In the process of restructuring itself, TFC has been shrinking. At year end, the volume of its loan contracts stood at $126.25 million, which was down 26 percent from $171.05 million one year earlier.

However, TFC chairman, president and chief executive Robert S. Raley said in a statement Tuesday that he expected the company's financial condition to improve this year because of renewed growth in loan demand from members of the military and TFC's purchases of loans made to civilian car-buyers.

TFC also said it has amended a loan agreement with its primary source of financing, General Electric Capital Corp. The change, TFC said, allowed it to consolidate its borrowing from NationsBank into the line of credit provided by GE Capital.

This arrangement also provided GE Capital with additional warrants that can be converted into TFC common stock, TFC said.

TFC's losses have occurred amid mounting difficulties at a handful of other companies specializing at ``sub-prime'' auto lending to riskier borrowers.

One of the best in the business, Mercury Finance Co., disclosed in February that it had overstated its earnings by $90 million over four years. Mercury later defaulted on more than $300 million of short-term borrowing and has struggled to stay in business.

Another well-known lender to high risk car-buyers, Dallas-based Jayhawk Acceptance Corp., sought bankcrupcty-court protection from creditors in February after suffering a $15.5 million loss for the fourth quarter of 1996.

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