Word: tree
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Dates: during 1990-1999
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...also hardly uncommon in an industry that had been white hot until recently. As a so-called sub-prime lender, Green Tree makes high-interest loans to people with damaged credit. With dozens of rivals streaming into the field, however, profits and stock prices have been heading south faster than a recreational vehicle. Just last week the Money Store, for which Hall of Fame pitcher Jim Palmer delivers commercials, reportedly put itself up for sale after recording a dizzying slump in profits. Two other big lenders--Aames Financial and Cityscape Financial--are seeking buyers as well...
...shareholders have suffered more than those of Green Tree, which was founded in 1975 in St. Paul, Minn., and has long been an industry leader. Hapless Green Tree investors have seen their stock sink from $50 a share last October to just $19 before it rebounded a bit to close at $24 last week. Coss, 59, a former used-car salesman who sports jeans and cowboy boots off the job, has seen the value of his own shares fall from $330 million to $145 million. Such misery has plenty of company: more than 20 Green Tree competitors have lost anywhere...
Just ask Green Tree, where many shareholders remain bitter about the profit revision, which included a $190 million write-down for the fourth quarter of 1997. Angry investors have filed at least a dozen lawsuits, some charging that Green Tree used improperly "aggressive" accounting methods to tot up profits and thereby boost Coss's personal pay--a charge the company denies. Coss did enjoy a formula that accorded him a salary of $400,000 plus 2.5% of the company's pretax profits. Half the compensation was in cash, the other half in the form of Green Tree stock that Coss...
...Green Tree seems likely to ride out its troubles. The company employs 5,700 people at 200 locations across the country and holds a whopping 30% of the lucrative market for financing mobile homes, making it the sector's largest lender. In addition, more than 90% of its $28 billion loan portfolio is secured by mobile homes, houses and other customer assets. Such backing is rare in the sub-prime industry and enables Green Tree to recover a relatively high proportion of losses when customers default on their payments. And despite problems such as the downgrading of much of Green...
Like other sub-prime lenders, Green Tree makes a business of bundling up loans and selling them as packages of asset-backed securities to pension funds and other big investors. That replenishes Green Tree's capital and lets the lender make fresh loans and thus pump up volume, which grew...