Home equity lender FirstPlus Financial Group Inc. said Tuesday that third-quarter earnings plunged 70%. The company also told investors and analysts in a conference call that it faces hurdles before it can close an agreement to sell off key portions of its business to Coast-to-Coast Financial Corp.--a sale that's essential to its survival.
"If the Coast-to-Coast deal, which is dependent on financing, isn't completed, they're going to be out of business," said Michael Abrahams at Sutro & Co.
Dallas-based FirstPlus said earnings from continuing operations fell to $13.7 million, or 35 cents a share, largely because its sales of securitized loans fell as investors turned away from riskier asset-backed securities.
Revenue edged up to $208.4 million from $208.1 million. The latest results exclude one-time charges of $85.2 million and $10.5 million in losses from curtailed operations.
FirstPlus, which specializes in lending up to 125% of a home's value minus the balance of a first mortgage, put itself up for sale Aug. 31. After failing to find a buyer, it sold off pieces of its business and fired 3,000 employees, or 50% of its staff, earlier this month, although it said it will continue to make high loan-to-value loans directly to borrowers.
At a Glance
* Equitable Cos. said third-quarter earnings fell 23%, led by declines at its Donaldson, Lufkin & Jenrette Inc. investment bank unit. Equitable, the seventh-largest U.S. life insurer, reported earnings of $141 million, or 63 cents a share, in line with forecasts. Revenue declined 6% to $2.37 billion. DLJ's profit plunged 79% to $25.8 million on lower securities trading revenue and a decline in underwriting activity that offset higher income from commissions and fees. Profit at Equitable's insurance and annuities operations rose 15% and total premiums grew 21%.
* St. Paul Cos. said third-quarter earnings fell 74% to $47.7 million, or 19 cents a share, 3 cents lower than analysts expected, as a spate of storms, including Hurricane Georges, raised policyholder claims. The property and casualty insurer's revenue declined 4.9% to $2.21 billion, as prices of business insurance fell.
* AmeriSource Health Corp.'s fiscal fourth-quarter profit rose 21% to $19.6 million, or 81 cents a share, matching expectations, as the drug wholesaler held down costs. The results exclude charges of $26.7 million taken for costs of its aborted acquisition by McKesson Corp. and some restructuring actions. Revenue fell 8.3% to $2.03 billion.
