#2UPDATE EX-employee responds
Thu, November 14, 2002
There are many class action law suits in the works right now. Try to get in on them. The Money store is now owned and being dismantled completely by First Union. Summary: Just two years after acquiring The Money Store, First Union plans to discontinue the business and refocus on other areas. The move ends any hope of a recovery at the Charlotte-based bank this year. Charlotte-based regional bank warning, er, holding company First Union (NYSE: FTU) was back in the spotlight today after tossing out part of the business model it has spent the past few years cobbling together through acquisitions. Getting the heave-h*o is The Money Store, a home equity lender purchased in 1998 for about $2.1 billion in stock. Unfortunately for shareholders, The Money Store misadventure will end up costing much more than that, since First Union is taking a $3 billion charge in Q2 to get out of the business, including $1.7 billion to write off goodwill alone. Oh, and First Union also warned that its Q2 earnings will be lower than expected. While it's not very sporting to kick a company while it's down, many First Union commentators will do just that today anyway. In all fairness, the company deserves it. After a disastrous 1999 marked by earnings warning after earnings warning as the bank tried to digest its acquisition of CoreStates Financial, investors were looking for somewhat smoother sailing this year. Earnings were going to be in the tank, of course, but management had been promising an end to the ugly surprises. "We've turned the corner," President Ken Thompson proclaimed in January, when the firm seemed to be on the verge of a recovery. But with today's announcement, it's no longer clear whether First Union is on a new course or simply going in circles. Besides eliminating the drag from The Money Store, which wasn't expected to add to earnings this year, First Union is also pulling out of other areas. In order to reduce its interest rate risk, a whopping $13 billion of investment securities yielding below-market rates will be sold. That's about a quarter of the securities available for sale listed on the firm's first-quarter balance sheet. The company will also follow the lead of other regional banks such as KeyCorp (NYSE: KEY) and Mellon Financial (NYSE: MEL) recently and sell its consumer and commercial credit card portfolios. Shifting the focus away from cost centers and onto profit centers is a smart move for any business. This strategy is now getting more play in banking, where economies of scale figure to play a substantial role in the value creation story in today's consolidated environment. In First Union's case, the plan is to build off last year's purchase of EVEREN Securities -- one deal that hasn't blown up in the firm's face -- and concentrate on asset management, brokerage, and other fee-based growth areas in the Capital Markets unit. Management is setting the long-term annual EPS growth bar at 10% to 12%, although the company won't try to jump over that until after 2001. But with so many mis-steps in the past two years, investor confidence in First Union likely will not be restored until a much later date. Your Turn: Tell us what you think about First Union's restructuring on the company's discussion board.
Sat, December 15, 2001
----- Original Message ----- From: WWWENDY To: [email protected] Sent: Friday, December 14, 2001 6:02 PM Subject: Re: the money store If you go to their web site, the only address is Australia, there is no U.S. address listed. I tried calling the 800 number I used when I got the loan, and the phone company reported that this phone number was no longer in service, I also called 1800 directory assistance (1-800-555-1212) to see if their was any new 800 number and they said there was no number for them. Therefore, the only way I can contact them is by an e-mail link listed on their web site, or I can write to a post office box I use to send my payments to. If you know where they are located in the United States, please let me know. With all the info I could gather, they seemed to disappear from the United States. Thank you for your prompt reply to my e-mail. sincerely, Wendy Miller