Money Store closing in LV, nationwide

Monday, June 26, 2000 | 10:53 a.m.

SUN STAFF AND WIRE REPORTS

First Union Corp. said today it will close its struggling Money Store finance unit nationwide -- including its one office in Las Vegas -- to boost its earnings.

The eight-employee Las Vegas office, which handles home equity loan sales, will close by the end of the third quarter, said Sandra Sternberg, a First Union spokeswoman.

The Las Vegas unit was the only surviving office in Nevada after a nationwide cutback in December that included closure of a four-person office in Reno.

The moves by the Charlotte, N.C., company follow lower earnings growth after First Union's acquisitions of the Money Store and CoreStates Financial Corp. in the late 1990s.

The moves will lead to $2.8 billion in restructuring and other charges, the company said.

The Money Store, known for advertising that has featured retired baseball stars Jim Palmer and Phil Rizzuto, employs about 3,000 workers.

All home equity loan originations and future home equity lending activities will cease. The Money Store will continue loan servicing and portfolio management.

First Union said it also plans to sell the servicing portfolio and platform of First Union Mortgage Corp. by the third quarter and seek a buyer for its consumer and commercial credit card portfolios.

Eighty to 90 branches will be sold in areas where it lacks a leading market share, the company said. First Union also will sell up to $13 billion in investment securities as a move to reduce the company's sensitive to interest rates fluctuations.

First Union also will sell about $500 million in nonperforming assets and $400 million in poorly performing loans to improve its credit risk profile.

The changes at the Money Store unit now based in Sacramento, Calif., come two years after purchasing the company, which lends to people with poor credit histories. The $2.1 billion stock purchase made First Union the nation's top equity home lender.

But First Union, with assets of $254 billion and bank branches in 12 East Coast states and Washington, D.C., has stumbled since the Money Store purchase and acquisition of CoreStates that same year.

First Union lost 20 percent of CoreStates' 2 million customers, many of whom were frustrated with the bank's handling of basic services as well as the bank's lack of commitment to lending to small businesses.

In March 1999, the bank laid off 5,800 workers companywide in an effort to trim costs and in what turned out to be a failed attempt to modernize branches by replacing tellers with telephone services. The bank later announced it was hiring as many as 2,000 tellers to beef up customer service.