THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, November 3, 1994 TAG: 9411030384
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: By TOM SHEAN, STAFF WRITER
LENGTH: Medium: 52 lines
The price of TFC Enterprises Inc.'s stock stabilized Wednesday after being battered by investors disappointed with the company's third-quarter earnings.
Shares of the Norfolk-based auto-finance company were unchanged at 8 1/4 after plunging 26 percent Tuesday. The stock, however, dropped to a 52-week low of 7 3/4 in active trading Wednesday before recovering slightly.
TFC reported late Monday that it earned $1.87 million, or 17 cents a share, for the three months ended Sept. 30. That compared with a net loss of $1.46 million, or 14 cents a share, for the third quarter of 1993.
TFC's management thought the company's earnings for the latest quarter were good, so ``we were a little surprised at the reaction in share price,'' said Charles M. Johnston, its chief financial officer.
TFC's per-share income of 17 cents for the recent quarter was slightly below expectations of 18 cents in the investment community, Johnston said.
In reaction to the earnings announcement, the securities firm Wheat First Butcher Singer downgraded its recommendation of TFC shares from a ``strong buy'' to a ``buy on weakness,'' Johnston said. ``Once that happened, the stock got hit pretty hard.''
TFC, which specializes in financing the sale of used cars to high-risk borrowers, attributed the rise in its third-quarter net income to an increase in earning assets and a reduction in operating expenses.
Net interest income, the biggest source of TFC's earnings, jumped 36 percent to $7.26 million, while its operating expenses declined 24 percent to $4.74 million.
One major expense for the year-earlier quarter - $2.55 million of contingent interest - had been eliminated after an initial public offering of TFC common stock earlier this year.
The company, which netted $44.5 million from an offering of 4.15 million shares, used most of the proceeds to reduce its debt.
For the nine months through Sept. 30, TFC reported net income of $5.33 million, or 48 cents a share. In the comparable nine months of 1993, the company lost $2.81 million, or 24 cents a share.
Separately, TFC said a change in the compensation arrangements for five senior officers will reduce cash bonus compensation by about $900,000 annually. Beginning next January, annual cash bonuses paid to those officers will drop to 3 percent of earnings before taxes and bonuses from 9 percent.
Meanwhile, base salaries for the five officers will be increased by a combined amount of $400,000, TFC said. The company's board of directors also approved a package of stock options for certain officers. by CNB