Back to GetFilings.com
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
COMMISSION FILE NO.: 0-22910
TFC ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1306895
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5425 Robin Hood Road
Suite 101B
Norfolk, Virginia 23513
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: - (757) 858-4054
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $ .01 par value per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 1, 1999: Common Stock - $20,401,873.
The number of shares outstanding of the registrant's common stock as of
March 1, 1999: 11,404,882.
==============================================================================
TFC ENTERPRISES, INC.
1998 FORM 10-K
TABLE OF CONTENTS
PART I........................................................................1
Item 1. Business...........................................................1
Item 2. Properties........................................................13
Item 3. Legal Proceedings.................................................13
Item 4. Submission of Matters to a Vote of Security Holders...............13
PART II......................................................................14
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters....................................................................14
Item 6. Selected Financial Data..........................................14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................14
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.......14
Item 8. Financial Statements and Supplementary Data......................14
Item 9. Changes in and Disagreements with Accountants....................14
PART III.....................................................................15
Item 10. Directors and Executive Officers of the Registrant; Section 16(a)
Beneficial Ownership Reporting
Compliance..................................................15
Item 11. Executive Compensation...........................................15
Item 12. Security Ownership of Certain Beneficial Owners and Management...15
Item 13. Certain Relationship and Related Transactions....................15
PART IV......................................................................16
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.16
Documents Incorporated by Reference
Portions of the registrant's Annual Report to Shareholders (the "Annual
Report") are incorporated by reference in Part II of this Form 10-K, and
portions of the definitive Proxy Statement (the "1999 Proxy Statement") to be
used in connection with the 1999 Annual Meeting of Shareholders are incorporated
by reference in Part III of this Form 10-K.
PART I
This Report contains "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Any statements contained in
this Report that are not statements of historical fact are forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks" and similar expressions are intended to identify
forward-looking statements. The important factors discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Market Risk Disclosure and Risk Factors," among others, could cause actual
results to differ materially from those indicated by forward-looking statements
made in this report and those presented elsewhere by management from time to
time. Please refer to the cautionary statement that appears at the beginning of
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the TFC Enterprises, Inc. 1998 Annual Report, which is
incorporated by reference, for more information.
Item 1. Business
The Company
The Company conducts its consumer finance operations through three
wholly owned subsidiaries, The Finance Company ("TFC"), First Community
Finance, Inc. ("FCF") and Recoveries, Inc. ("RI").
Through TFC, the Company is engaged in purchasing and servicing
installment sales contracts originated by automobile and motorcycle dealers in
the sale of used automobiles, vans, light trucks, and new and used motorcycles
(collectively "vehicles"). Installment sales contracts are acquired on either an
individual basis after the Company has reviewed and approved the vehicle
purchaser's credit application (a "point-of-sale purchase"), or on a group basis
through the purchase of a dealer's portfolio of existing installment sales
contracts (a "bulk purchase"). The Company focuses its point-of-sale business on
installment sales contracts originated by dealers with consumers who are United
States military enlisted personnel, primarily in the E-1 through E-5 grades.
Bulk purchases are primarily from dealers who finance their own contracts with
civilian customers and sell them after origination in bulk. To achieve an
acceptable rate of return and provide for credit risks, contracts are purchased
from dealers at a discount to the remaining principal balance. Most of the
discount is held in a nonrefundable reserve against which credit losses are
first applied.
The Company has been engaged in consumer finance activities since its
founding in 1977. The Company's point-of-sale purchases provide it with the
ability to direct the credit underwriting process at the initiation of the
installment sales contract. Participating dealers benefit by having a source of
financing for a group of customers who typically find financing difficult to
obtain, thereby increasing the number of vehicles sold and improving dealer
profitability. Consumers also benefit because the financing provided by the
Company enables them to purchase a vehicle they otherwise would not be able to
buy. As of December 31, 1998, $104.1 million, or 67% of the Company's net
contract receivables represented point-of-sale purchases, compared to $75.2
million, or 59% at December 31, 1997 and $80.7 million, or 64% at December 31,
1996.
During 1994 and 1995, to increase volume, the Company expanded its
point-of-sale operations into the civilian market. At that time, the Company
faced significant competition in this business line. To meet the competition,
the Company purchased a substantial number of contracts at prices that, in
hindsight, did not adequately reflect the credit risk of the obligor.
Compounding this problem was the significantly greater day-to-day servicing
requirements and risk of non-payment associated with civilian point-of-sale
contracts as compared to more traditional military point-of-sale contracts. When
the Company recognized the problems in late 1995, it took action to improve the
risk-adjusted returns of the Company's portfolio by redirecting the Company
toward military point-of-sale and civilian bulk purchase business lines.
The Company's bulk purchase business emphasizes acquisitions of portfolios
of seasoned installment sales contracts. These contracts normally have a payment
history of at least three months. While the typical bulk purchase involves fewer
than 100 individual contracts, the Company has, at times, purchased portfolios
totaling more than 1,000 contracts. Bulk purchases provide the Company with
demographic diversification, as the majority of customers are not military
enlisted personnel. They also provide a payment history on which to evaluate and
price the credit risk of the contracts and a relatively efficient mechanism for
establishing dealer relationships in new areas. Bulk purchases benefit dealers
by providing an immediate source of liquidity. As of December 31, 1998, $36.6
million, or 23% of the Company's net contract receivables, was attributable to
bulk purchases, compared to $41.6 million, or 32% at December 31, 997 and $36.7
million, or 29% at December 31, 1996.
Historically, regional service centers were responsible for purchasing and
servicing contract receivables originated by dealers in their regions. However,
during 1996, the Company transferred the underwriting functions to the
point-of-sale and bulk purchase Loan Production Offices ("LPO" or collectively,
"LPOs") to improve control over the underwriting process. Also in 1996, to
improve collection results, the Company closed the Dallas, Texas service center
and moved the responsibility for servicing point-of-sale accounts to the
Norfolk, Virginia service center and the responsibility for servicing bulk
purchase accounts to the Jacksonville, Florida service center. In addition,
there are point-of-sale LPOs in Jacksonville, Florida; Killeen, Texas; San
Diego, California; Norfolk, Virginia; Tacoma, Washington; Clarksville,
Tennessee; Columbus, Georgia; and a bulk purchase LPO in Norfolk, Virginia.
Through FCF, the Company is involved in the direct origination and
servicing of small consumer loans. FCF began operations in the first quarter of
1995 with the opening of two branches in Richmond, Virginia. Four additional
branches were opened in Virginia in 1995 and four branches were opened in North
Carolina during 1996. In 1997, one additional branch was opened in Virginia and
four branches were opened in North Carolina. In 1998, two additional branches
were opened in North Carolina and one was closed in Virginia. The Company is
evaluating additional branch openings in 1999. Net contract receivables relating
to FCF at December 31, 1998 were $15.1 million, or 10% of the Company's net
contract receivables, compared to $11.7 million, or 9% of the Company's net
contract receivables at December 31, 1997 and $8.8 million, or 7% at December
31, 1996.
RI was formed in 1997 as a third party debt collection company to
capitalize on the Company's collection expertise. Recoveries, Inc. is currently
licensed in 38 states, and expects to expand to all 50 states. The current
business plan focuses on servicing foreclosed or troubled loan portfolios, debt
collections for medical organizations and for other third party businesses.
The Company's operations began in 1977 in Alexandria, Virginia, with the
founding of TFC by Robert S. Raley, Jr., the Company's current Chairman of the
Board, President and Chief Executive Officer, whose 40 year career has been
exclusively within the consumer finance industry. The Company was founded
specifically for the purpose of providing direct financing for the credit needs
of individuals having limited access to traditional sources of credit,
particularly young United States military enlisted personnel. Mr. Raley
recognized that the traditional providers of consumer credit were ignoring the
financing needs of that market segment.
With the significant increase in interest rates in the late 1970s and
early 1980s, the Company incurred operating losses as a result of the increased
costs of its funding. To offset those losses, the Company opened a used car
dealership near Fort Belvoir in northern Virginia. Within several months of
opening the northern Virginia dealership, the Company opened a second used car
dealership in Norfolk, Virginia, the home of the world's largest naval base. The
operation of these dealerships generated sufficient operating income to enable
the Company to survive and provided the Company expertise in used automobile
financing, particularly to United States military enlisted personnel. With the
reduction in interest rates that occurred in the mid-1980's, the Company sold
its used car dealerships. The Company was able to identify the need that used
automobile dealers have for a reliable source of financing because of past
experience owning and managing used car dealerships.
The Company is incorporated under the laws of Delaware. The Company's
principal executive and administrative offices are located at 5425 Robin Hood
Road, Suite 101B, Norfolk, Virginia 23513, and the Company's telephone number is
(757) 858-4054. References to the Company include the Company's wholly owned
subsidiaries.
Industry Overview
The automobile industry is dominated in certain respects by commercial
banks and captive finance companies of major automobile manufacturers. Although
consumer credit risk classifications are not standardized, institutions
generally focus on consumers that could be characterized as being "low-risk" or
"medium-risk" from a credit perspective. TFC's target market involves consumers
that are characterized as being "high-risk" from a credit perspective.
The direct consumer loan industry established in the early 1900's has
traditionally been serviced by major national companies, smaller regional
companies and small local independent companies. Over the last 10-15 years many
of the major national companies have retreated from or reduced their involvement
in this market.
Management's focus in 1998 and continuing in 1999 has been on redirecting
the Company toward those sectors of the market in which management believes
pricing more closely reflects the risk inherent in the business. Areas of focus
include the military point-of-sale business, bulk purchases and small, direct
consumer loans.
Automobile Finance Operations (TFC)
Dealer Selection and Program
Through its marketing efforts, TFC has established relationships with
dealers that originate installment sales contracts purchased by TFC, either
through point-of-sale purchases or bulk purchases. TFC's relationships are with
both franchised automobile dealerships and independent used car dealers that are
not affiliated with the Company.
To achieve an acceptable rate of return and provide for credit risks,
contracts are purchased from dealers at a discount to the remaining principal
balance. With respect to point-of-sale purchases, the discount is the difference
between TFC's purchase price from the dealer and the amount financed, net of the
cost of ancillary products. With respect to bulk purchases, the discount is the
difference between TFC's purchase price and the amount of the remaining
principal balance on the contract. The amount of the discount at which contracts
are purchased reflects, among other things, term and credit risk. Contracts are
purchased in accordance with applicable underwriting criteria and pursuant to a
Master Dealer Agreement, in the case of point-of-sale purchases, or an Asset
Purchase Agreement, in the case of bulk purchases.
TFC believes that its dealer programs provide substantial benefits to
dealers by providing a source of financing for a group of customers who
typically find financing difficult to obtain, thereby increasing the number of
vehicles sold and improving dealer profitability. Additionally, TFC provides the
following services to dealers through its point-of-sale program: (1)
documentation designed to conform to applicable federal and state laws; (2)
timely response to credit applications; (3) timely payment for approved
installment contracts; and (4) access to a range of ancillary products.
Sales and Marketing
TFC markets to both franchised automobile dealerships and independent used
car dealers. Initial contacts are pursued both by telemarketing through its
national marketing division and by personal visits to dealer facilities by
appropriate marketing personnel. TFC also establishes relationships with dealers
through referrals from existing dealers and independent marketing contractors.
Other marketing efforts involve the distribution of marketing brochures and
advertisements in trade journals and other industry publications directed to
dealers. TFC also participates at several of the Independent Automobile Dealers
Association meetings and conventions.
Competition
There are numerous providers of financing for the purchase of used
vehicles. These financing sources include banks, savings and loan associations,
consumer finance companies, credit unions and financing divisions of automobile
manufacturers or automobile retailers. Many of these providers of vehicle
financing have significantly greater resources than TFC and have relationships
with established dealer networks. TFC has focused on
a segment of the market comprised of consumers who typically do not meet the
more stringent credit requirements of the traditional sources of consumer
financing and whose needs, as a result, have historically not been consistently
addressed by such financing sources. If, however, the other providers of
consumer financing were to assert a significantly greater effort to penetrate
TFC's targeted market segment, given their financial strength, TFC could be
materially and adversely affected by this type of competition.
During the mid 1990's, there was a significant increase in the number of
competitors in the automobile non-prime finance industry markets in which TFC
operates and an improvement in the access to funds. The combination of increased
competition and the industry's improved access to funds resulted in a general
increase in prices offered to dealers for installment sales contracts. In
certain sectors of the market, prices increased to the point at which
anticipated credit losses relating to the contracts were not adequately
reflected in prices offered to dealers. As a result, the Company found it
increasingly difficult to purchase contracts at what it considers to be
reasonable prices.
Management's focus since 1996 has been on redirecting the Company toward
those sectors of the market in which management believes pricing more closely
reflects the risk inherent in the business. Areas of focus will continue to
include the military point-of-sale and bulk business lines. During 1997 and
1998, a number of the Company's competitors have experienced financial problems
that have restricted their ability to compete with the Company in its core
markets. Management believes that because of the problems faced by its
competitors, the Company should have continuing opportunities in 1999 to
purchase installment contracts from dealers on terms consistent with its current
pricing and underwriting policies.
Point-of-Sale Purchase Program
In its point-of-sale program, TFC establishes relationships with dealers
that meet its financial, organizational and compliance criteria. TFC currently
makes point-of-sale purchases from dealers in approximately 30 states.
TFC purchases contracts relating to its point-of-sale program pursuant to
a Master Dealer Agreement. Upon entering into a Master Dealer Agreement, TFC
provides the dealer with necessary documentation for the origination of
installment sales contracts and trains its personnel regarding the use of TFC's
documentation. The Master Dealer Agreement contains representations and
warranties by the dealer to TFC with respect to certain matters, including the
security interest in the vehicle, and sets forth the general terms upon which
installment contracts will be purchased by TFC. The agreements are nonexclusive
and do not obligate a dealer to sell or TFC to purchase, any particular contract
or volume of contracts. The Master Dealer Agreement may be terminated at any
time by TFC or by the dealer.
Typically, a dealer will submit a customer's credit application to more
than one financing source for review. Under TFC's program, a dealer is required
to provide TFC with a completed credit application that lists the applicant's
assets, liabilities, income, credit and employment history, and other personal
information bearing on the decision to extend credit.
The information from the application is then entered on TFC's automated
application processing system. After data entry is complete the system
automatically contacts the Credit Bureau and includes this information in the
applicant's file and identifies any characteristics of the applicant that are
outside the parameters of the credit guidelines.
The application and related information are then analyzed by one of TFC's
credit analysts. A credit analyst evaluates the applicant's ability to make
regular payments and other factors, including the amount of money to be financed
in relation to the purchase price and value of the vehicle. TFC generally
determines the value of the vehicle based upon the NADA's Used Car GuideBooks on
Retail and Wholesale Values and/or the Kelley Blue Book. Upon completion of the
credit application review, a credit analyst will decide whether to approve the
financing as submitted, decline the financing or conditionally approve the
financing.
Typically, installment contracts are purchased by and assigned to TFC at a
price that reflects a discount from the amount financed. Most of the discount is
held in a non-refundable reserve against which credit losses are first applied.
The assigning dealer makes certain warranties as to the validity of the contract
and compliance with certain laws and generally
agrees to indemnify TFC for any claim, defense and set-off against the dealer
that may be asserted against TFC by reason of the assignment. TFC, at the time
of purchase, requires physical damage insurance on all automobiles covered by
the installment sales contracts that it purchases through its point-of-sale
program. To the extent that material terms of a contract prove to be inaccurate,
TFC generally has the right to require the dealer to repurchase such contract
under the terms of the Master Dealer Agreement.
Bulk Purchase Program
Many dealers finance automobile sales through the use of their own funds.
TFC currently purchases portfolios (bulk purchases) of seasoned installment
contracts from such dealers in approximately 20 states. TFC limits consideration
of dealers to those that generate sufficient business volume, employ
satisfactory credit approval procedures and adequately monitor and report loan
performance data. Bulk purchases are made pursuant to an Asset Purchase
Agreement that requires the dealer to make representations and warranties to TFC
with respect to each contract to be purchased by TFC and with respect to
security interests in the related vehicles. Unlike a point-of-sale purchase,
with respect to which TFC has the opportunity to verify the information relating
to the installment contract before its purchase, bulk purchases are made after
the origination of the installment contract. Thus, the typical Asset Purchase
Agreement provides TFC with more extensive remedies than the Master Dealer
Agreement. Generally, if a representation or warranty is breached, TFC, under
the Asset Purchase Agreement, can require the dealer to repurchase the contract.
In certain cases, a special reserve or holdback is established, against which
payment defaults on contracts can be charged.
Generally, TFC purchases that portion of the dealer's portfolio that meets
or exceeds TFC's underwriting standards. TFC's due diligence normally begins
with a review of information obtained from the dealer on TFC's standard
information-gathering forms. Additional information is then obtained to verify
the dealer's compliance with licensing, bonding and organizational requirements.
TFC then performs extensive due diligence procedures that it has developed
during its years of operation to determine whether to do business with that
particular dealer.
Within 90 days after completing a bulk purchase, TFC confirms by telephone
various terms of most contracts with the purchaser of the vehicle. To the extent
that material terms of any contract prove to be inaccurate, TFC generally has
the right to require the dealer to repurchase such contract under the terms of
the Asset Purchase Agreement
Contract Duration
Contracts in TFC's point-of-sale portfolio have an initial duration
normally ranging from 18 to 48 months, with an average original maturity of
approximately forty months. Bulk purchase contracts generally have an average
remaining maturity of 18 to 24 months at the time of purchase.
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(dollars in thousands)
Gross Contracts purchased
or originated:
Point-of-sale $142,221 $ 85,311 $58,623 $231,877 $145,193
Bulk 54,929 70,520 61,391 61,261 76,990
-------- -------- ------- -------- --------
Total $197,150 $155,831 $120,014 $293,138 $222,183
======== ======== ======== ======== ========
Number of contracts
purchased or
originated:
Point-of-sale 11,478 7,411 6,154 24,095 15,610
Bulk 11,711 14,157 11,853 14,084 21,324
-------- -------- ------- -------- --------
Total 23,189 21,568 18,007 38,179 36,934
======== ======== ======= ======== ========
Average size of
contract: (in
dollars):
Point-of-sale $12,391 $11,511 $9,526 $9,623 $9,301
Bulk $4,690 $4,981 $5,179 $4,349 $3,607
Weighted average $8,502 $7,228 $6,665 $7,678 $6,013
The Finance Company's contract purchase volume is discussed more fully in
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the TFC Enterprises, Inc. 1998 Annual Report, which is
incorporated herein by reference.
Ancillary Products
In connection with its point-of-sale business, TFC offers, through its
dealers in certain states, warranty products, as well as physical damage
insurance. These products are provided and underwritten by third-party vendors.
Accordingly, liabilities under the ancillary products are not obligations of
TFC. TFC offers these products to dealers so that they, in turn, may provide
vehicle purchasers a more complete line of products and services. By offering
these products, TFC is able to generate supplementary revenue without incurring
significant additional expenses. During 1998, 1997 and 1996, TFC generated gross
revenues of approximately $0.7 million, $0.8 million and $1.2 million,
respectively, from the sale of ancillary products through its dealers.
Collections
Payments on purchased installment sales contracts are received by TFC
through a number of different means. Payments are monitored by TFC to maintain
current information regarding each customer's current address and banking data.
Customers occasionally make payments in person at one of TFC's service centers
or Loan Production Offices. Collections Department personnel, at times, will
make a collection through a field visit to the customer.
Monitoring the payment history of accounts and implementing appropriate
remedial action is the responsibility of the Collections Department within each
service center. At year-end 1998, a total of 146 employees, or 48% of TFC's
total full-time equivalent employees, worked in the Collections Departments of
the two service centers.
One of the primary responsibilities of the Collections Department is to
monitor customer accounts that are delinquent in payment. Collections Department
personnel work with customers to resolve payment problems and bring accounts to
current status at the earliest possible stage of delinquency. Collections
Department employees are compensated, in part, through bonuses tied to their
monthly collection performance.
When calling a delinquent account, Collections Department personnel
utilize TFC's Collections Training Manual developed by TFC. The manual specifies
the procedure to follow in different circumstances to maximize the effectiveness
of the call. Specific action with respect to a delinquent account will depend on
the customer's particular circumstances as well as the past payment history of
the account. However, in all cases, the primary focus is resolving the problem
causing the delinquency, arranging a modified payment plan, or working out a
settlement agreement. At times, Collections Department personnel meet with
customers in the field or at a service center.
When TFC has difficulty locating a customer, Collections Department
personnel will attempt to find the individual through skip tracing, which
utilizes various sources of information about a customer to which TFC has
access. All communications with and efforts to locate the customer are reflected
in TFC's data files.
In certain situations, TFC will repossess a vehicle. To the extent that a
deficiency balance exists upon repossession and sale of a vehicle, TFC may take
action to obtain a judgment.
Decisions to charge off accounts are made at the end of each month.
Accounts are generally charged off when they are 180 days contractually past
due. Additionally, the carrying value of repossessed assets is reduced, through
charge-off, to the lower of the unpaid contract balance or anticipated
liquidation proceeds. Once an account is charged off, it is transferred to the
Recovery Unit. Customers are called regularly and attempts are made to set up
repayment plans or workout settlement agreements as appropriate to a customer's
circumstances. Each Recovery Unit employee is responsible for keeping records of
all collection activity and for following up on callback and broken promise
dates as appropriate.
The Company's charge-off and delinquency experience is discussed more
fully in Management's Discussion and Analysis of Financial Condition and Results
of Operations included in the TFC Enterprises, Inc. 1998 Annual Report, which is
incorporated herein by reference.
Consumer Finance Operations (FCF)
Consumer Loan Program
In its Consumer Loan Program, First Community Finance ("FCF") originates
direct loans through a branch network. Loans are obtained through print media,
customer referrals, renewals and other sources. Applications are primarily
received directly from the consumer either by telephone or in person at one of
the branches.
Once an application has been received, a background investigation is
performed on the applicant, including such things as employment and income
verification, residence verification, direct references from other creditors and
review of credit bureau files. This information is reviewed by a branch manager
or assistant manager to determine creditworthiness. If the applicant is
approved, the applicant would visit the appropriate branch to execute necessary
documents and receive funding.
Loan Origination
Most contracts have an initial duration of 36 months or less.
The following table sets forth for the periods indicated FCF's loan volume
as well as the number and average size of its loans. FCF commenced operations in
1995.
1998 1997 1996 1995
---- ---- ---- ----
Loans originated (in
thousands) $21,391 $16,023 $13,174 $6,257
======= ======= ======= ======
Number of loans originated 11,864 7,093 6,623 3,254
======= ======= ======= ======
Average size of loan $1,803 $2,259 $1,989 $1,923
======= ======= ======= ======
FCF's loan volume is discussed more fully in Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the TFC
Enterprises, Inc. 1998 Annual Report, which is incorporated herein by reference.
Ancillary Products
In connection with its consumer loan business, FCF offers its customers
credit life, credit accident and health insurance, and property insurance. These
products are provided and underwritten by third-party vendors. Accordingly,
liabilities under the ancillary products are not obligations of the Company.
These products protect the customer as well as providing supplementary revenue
to FCF. During 1998, 1997 and 1996, FCF generated gross revenues of
approximately $0.3 million, $0.3 million and $0.1 million, respectively, from
the sale of ancillary products.
Collections
Payments on consumer loans are received by FCF primarily through the
mail or the customer pays at the appropriate branch. Each branch monitors
payments to maintain current information regarding each customer's current
address and banking data. Branch personnel, at times, will make a collection
through a field visit to the customer. Monitoring the payment history of the
accounts and implementing appropriate remedial action is the responsibility of
the branch.
One of the primary responsibilities of the branch is to monitor customer
accounts that are delinquent in payment. Branch personnel work with customers to
resolve payment problems and bring accounts to current status at the earliest
possible stage of delinquency. Specific action with respect to a delinquent
account will depend on the customer's particular circumstances as well as the
past payment history of the account. However, in all cases the primary focus is
resolving the problem causing the delinquency, arranging a modified payment plan
or working out a settlement. At times branch personnel meet with the customers
in the field or at the branch. When FCF has difficulty locating a customer,
collections personnel will attempt to locate the individual through skip
tracing, which utilizes various sources of information about a customer to which
FCF has access. All communications with and efforts to locate the customer are
reflected in FCF's data files.
Decisions to charge off accounts are made at the end of each month.
Accounts that reach a 180 day contractually past due status are generally
charged off. Once an account is charged off, collection activity will continue.
The Company's charge off and delinquency experience is discussed more fully in
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the TFC Enterprises, Inc. 1998 Annual Report, which is
incorporated herein by reference.
Recoveries, Inc.
To capitalize on its collection expertise, the Company, in 1997, formed a
new subsidiary, Recoveries, Inc. (RI) as a third party debt collector. RI is
currently licensed in 38 states, and expects to expand to all 50 states. The
current business plan focuses on servicing foreclosed or troubled loan
portfolios, debt collections for medical organizations and for other third party
businesses. During 1998 and 1997 RI generated insignificant revenue and operated
at a loss. Management cannot offer any assurance that Recoveries will generate
revenue or be profitable during 1999.
In March 1999, RI finalized an agreement with a major commercial lender to
service a foreclosed portfolio of sub prime automobile accounts receivable
totaling $10,000,000. RI received an up-front conversion fee to transfer the
accounts to it's system and will receive a monthly servicing fee equal to a
fixed percentage of the outstanding receivables as of the beginning of each
month.
Information Systems
The Company processes all data relating to its contract receivables and
financial reporting through a distributed network of computers. TFC's computer
systems are networked together to provide information to management for analysis
as well as automatic posting to the general ledger for financial reporting
purposes. The systems provide for complete contract processing from the purchase
of the contract, payment to the dealer, posting of payments and all other
collection activity from the inception date of the installment contract. TFC's
systems operate on software that has been adapted to the specific manner in
which TFC operates its business.
The TFC systems are interfaced with a predictive dialing system designed
to enhance collection activity by increasing the number of customer contacts per
collector hour. This system dials multiple telephone numbers simultaneously
based on parameters defined by the Collections Department. Calls are connected
automatically to a collector at the same time the customer's account is
displayed on the collector's computer screen. The process permits better control
of calling patterns for more effective calling and improved customer contact
rates. By eliminating busy signals, no answers and answering machines, the
system enables the collector to speak to more customers. The system also reports
collection performance by collector for improved supervision and results. The
Company has invested in technology that enables TFC to mechanically process and
score credit applications, thereby increasing capacity, reducing processing time
and improving standardization of credit underwriting without significant staff
increases.
First Community Finance uses a third-party computer system designed for
the consumer loan industry. Each branch processes all data relating to that
branch on a computer within the branch. The system provides for complete
contract processing from the closing of the loan, posting of payments and all
collection activity. These systems are networked together to provide
consolidated management information and automatic posting to the Company's
general ledger for financial reporting.
The Company believes that it has sufficient management information systems
in place, or in the process of being implemented, to meet the Company's current
and near-term future requirements.
For discussion about the Year 2000 see the section entitled
"Management Discussion and Analysis of Financial Position and Results of
Operations" in the TFC Enterprises, Inc. 1998 Annual Report.
Regulation
The Company's businesses are subject to regulation and licensing under
various federal, state and local statutes and regulations. Most of the states in
which the Company operates limit the interest rate, fees and other charges that
may be collected. In addition, many states prescribe certain terms in the
contract.
Numerous federal and state consumer protection laws and related
regulations impose substantive disclosure requirements upon lenders and
servicers involved in motor vehicle financing (TFC), direct consumer loans (FCF)
and third party debt collections (RI). Some of the federal laws and regulations
include the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal
Trade Commission Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Motor Vehicle Information and Cost Savings Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z and
the Soldiers' and Sailors' Civil Relief Act.
In addition, the Federal Trade Commission ("FTC") has adopted the
holder-in-due-course rule, which has the effect of subjecting persons that
finance retail installment credit transactions (and certain related lenders and
their assignees) to all claims and defenses which the purchaser could assert
against the seller of the goods and services. With respect to used automobiles
specifically, the FTC's rule on Sale of Used Vehicles requires that all sellers
of used vehicles prepare, complete and display a Buyer's guide which explains
the warranty coverage for such vehicles. The Credit Practices Rules of the FTC
impose additional restrictions on sales contract provisions and credit
practices.
Certain states where the Company operates have adopted motor vehicle
retail installment sales acts or variations thereof, consumer finance acts and
third party debt collections acts. Such laws regulate, among other things, the
interest rates and terms and conditions of motor vehicle retail installment
sales contracts and also impose restrictions on consumer transactions and
require sales contract disclosures in addition to the requirements under federal
law. Those requirements impose specific statutory liabilities upon creditors who
fail to comply.
The Company believes that it is in compliance with all applicable laws and
regulations.
Employees
At December 31, 1998, the Company had 360 full-time equivalent employees.
No employees are currently covered by collective bargaining agreements. The
Company believes that its employee relations are excellent.
Executive Officers of the Company
The executive officers of the Company are as follows:
Name Age* Position
Robert S. Raley, Jr. 61 Chairman of the Board of Directors of
TFCE, TFC and FCF, President and Chief
Executive Officer of TFCE and TFC, and
Executive Vice President of FCF
Ronald G. Tray 57 Vice President of TFCEI and, Senior
Executive Vice President and Chief
Operating Officer and Director of TFC
Rick S. Lieberman 42 Executive Vice President and Chief
Lending Officer of TFC
Delma H. Ambrose 39 Senior Vice President of TFC and General
Manager of the Norfolk Service Center
G. Kent Brooks 62 President, and Chief Executive Officer
and Director of FCF
Craig D. Poppen 40 Vice President, Treasurer and Chief
Financial Officer of TFCEI and FCF,
Executive Vice President, Treasurer and
Chief Financial Officer of TFC
Fletcher A. Cooke 55 General Counsel and Secretary of TFCEI
and TFC
*As of December 31, 1998
Robert S. Raley, Jr. founded TFC in 1977 and has served as Chairman of
the Board from that time until April 1990 and again from May 1990 to the
present. Additionally, he served as President and Chief Executive Officer
from 1977 to April 1990, from May 1990 to December 1992 and from August 1996
to the present. Mr. Raley has also served as Chairman of the Board of TFCE
since inception in 1984 and as its President and Chief Executive Officer from
1984 through 1992 and from August 1996 to the present. Mr. Raley initially
entered the consumer finance industry in 1959
Ronald G. Tray joined TFC as a Vice President and director for Management
Information Systems in 1989. Mr. Tray was appointed Chief Operating Officer of
TFC in 1996. Prior to joining TFC, Mr. Tray was President of the Mid-Atlantic
Division of Mtech Corporation, a data processing service bureau for banks,
located in Fairfax, Virginia.
Rick S. Lieberman, Executive Vice President and Chief Lending Officer of
TFC. Mr. Lieberman joined TFC in 1989 and has served the Company in several
capacities, including General Manager, Vice President of the Norfolk Regional
Service Center. Prior to joining TFC, he was with ITT Consumer Financial
Corporation for 8 years.
Delma H. Ambrose, Senior Vice President of TFC and General Manager of the
Norfolk Service Center. Mrs. Ambrose joined TFC in 1989 and has served the
Company in several capacities prior to becoming the General Manager of the
Norfolk Service Center. Prior to joining TFC, she was with Beneficial Finance
Corporation for 11 years.
G. Kent Brooks joined FCF in 1994 as President. Prior to that, he was with
Peoples Finance Corporation, Richmond, Virginia, from 1956 to 1980, the last
eight years of which he served as President. From 1980 to 1992, Mr. Brooks
served as a Senior Vice President and Regional Manager for Provident Financial
Corporation, subsequent to its acquisition of Peoples Finance Corporation. From
1992 to 1993, Mr. Brooks was with American General Finance, subsequent to its
acquisition of Provident Financial Corporation.
Mr. Brooks has been a Director of FCF since 1994.
Craig D. Poppen, CPA, joined TFC as Chief Financial Officer in 1998. From
1988 until 1995, Mr. Poppen was employed by Ernst & Young LLP. From 1995 until
1997, Mr. Poppen was employed by KPMG Peat Marwick LLP, and from 1997 until
January 1998, Mr. Poppen was employed by New Dominion Pictures, Inc., a
television production company where he served as Chief Financial Officer.
Fletcher A. Cooke joined TFC in 1997 as General Counsel. Prior to
that, he was with A.T. Massey Coal Company, Inc. as Assistant General Counsel
and Corporate Secretary from January 1991 to April 1996. Mr. Cooke was
Associate General Counsel with The Pittston Company from 1980 to 1991.
Item 2. Properties
The Company's principal executive offices and Point-of-Sale Service
Center, a Point-of-Sale Loan Production Office and Bulk Loan Production Office
are located in Norfolk, Virginia. The combined facilities consist of
approximately 36,000 square feet of space pursuant to a lease expiring in 2006.
The Company's Bulk Service Center and a Point-of-Sale Loan Production
Office is located in Jacksonville, Florida. The facility consists of
approximately 15,000 square feet of space pursuant to a lease expiring in 2001.
The Company's has five additional Point-of-Sale Loan Production Offices that on
a combined basis total approximately 9,300 square feet of space pursuant to
leases expiring from August 1999 to January 2002. First Community Finance,
Inc.'s offices, on a combined basis, total approximately 18,600 square feet of
space pursuant to leases expiring from March 1999 to January 2002.
The Company believes that its facilities are adequate for its current and
near-term future requirements.
Item 3. Legal Proceedings
The Company is a party to several legal actions that are ordinary, routine
litigation incidental to its business. The Company believes that none of those
actions, either individually or in the aggregate, will have a material adverse
effect on the results of operations or financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the year ended December 31, 1998.
PART II
The information required by Part II, Items 5, 6, 7 and 8 has been
incorporated herein by reference to the TFC Enterprises, Inc. 1998 Annual Report
as set forth below, in accordance with General Instruction G(2) of Form 10-K.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Since December 22, 1993, TFC Enterprises, Inc. Common Stock has traded on
the Nasdaq National Market System under the symbol "TFCE." Share price
information with respect to the Common Stock is set forth in the "Selected
Quarterly Data" table included in the TFC Enterprises, Inc. 1998 Annual Report,
which is incorporated herein by reference.
As of March 1, 1999, there were approximately 2,194 holders of the Common
Stock, including approximately 167 holders of record. No cash dividends have
been paid with respect to the Common Stock since issuance. The Company has no
current plans to pay any cash dividends relating to the Common Stock in the
foreseeable future. Any dividends on the Common Stock will be at the sole
discretion of the Company's Board of Directors and will depend upon the
Company's profitability and financial condition, capital requirements, statutory
restrictions, requirements of the Company's lenders, future prospects and other
factors deemed relevant by the Company's Board of Directors. If any dividends
are paid to the holders of Common Stock, all holders will share equally on a per
share basis.
The Company has not issued any of its authorized preferred stock.
Item 6. Selected Financial Data
Information included in the section entitled "Five-Year Summary of
Selected Financial Data" in the TFC Enterprises, Inc. 1998 Annual Report is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Information included in the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the TFC
Enterprises, Inc. 1998 Annual Report is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Information included in the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the TFC
Enterprises, Inc. 1998 Annual Report is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Consolidated Financial Statements of TFC Enterprises, Inc., including
notes thereto, are presented in the TFC Enterprises, Inc. 1998 Annual Report and
are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants
None.
PART III
The information required by Part III, Items 10, 11, 12, and 13 has been
incorporated herein by reference to the Company's 1999 Proxy Statement as set
forth below, in accordance with General Instruction G(3) of Form 10-K.
Item 10. Directors and Executive Officers of the Registrant; Section
16(a) Beneficial Ownership Reporting Compliance
Information relating to directors of the Company and compliance with
Section 16(a) of the Exchange Act is set forth in the sections entitled
"Election of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's 1999 Proxy Statement and is incorporated herein by
reference. Pursuant to General Instruction G(3) of Form 10-K, certain
information concerning the executive officers of the Company is set forth under
the caption entitled "Executive Officers of the Company" in Part I, Item 1, of
this Form 10-K.
Item 11. Executive Compensation
Information regarding compensation of officers and directors of the
Company is set forth in the section entitled "Executive Compensation" in the
Company's 1999 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding ownership of certain of the Company's securities is
set forth in the section entitled "Security Ownership of Management and Certain
Beneficial Owners" in the Company's 1999 Proxy Statement and is incorporated
herein by reference.
Item 13. Certain Relationship and Related Transactions
Information regarding certain relationships and related transactions with
the Company is set forth in the section entitled "Certain Relationships and
Related Transactions" in TFC's 1999 Proxy Statement and is incorporated herein
by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents filed as part of this report:
(1) Financial Statements
The Consolidated Financial Statements of TFC Enterprises,
Inc. and the Auditor's Report thereon, are incorporated herein by reference.
Applicable pages in the TFC Enterprises, Inc. 1998 Annual Report are as
follows:
Page
Consolidated Financial Statements:
Report of Ernst & Young LLP, Independent Auditors --
Consolidated Balance Sheets at December 31, 1998 and 1997 ___
Consolidated Statements of Operations for the Years ended ___
December 31, 1998, 1997 and 1996
Consolidated Statements of Changes in Shareholders' Equity
for the Years ended December 31, 1998, 1997 and ___
1996
Consolidated Statements of Cash Flows for the Years ended
December 31, 1998, 1997 and 1996 ___
Notes to Consolidated Financial Statements ___
(2) Financial Statement Schedule
Schedule I - Financial Information of Registrant - TFC
Enterprises, Inc.
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and therefore
have been omitted.
(3) Exhibits
The exhibits listed on the accompanying Exhibit Index are
filed or incorporated by reference as part of this Form 10-K and such
Exhibit Index is incorporated herein by reference.
(b) Reports on Form 8-K (filed during the fourth quarter of 1998):
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TFC ENTERPRISES, INC.
By: /s/Robert S. Raley, Jr.
------------------------
Robert S. Raley, Jr.
Chairman of the Board, President and
Chief Executive Officer
Dated: March 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date:
/s/Robert S. Raley, Jr.
- ----------------------- Chairman of the Board March 30, 1999
and Director, President
and Chief Executive Officer
/s/Walter S. Boone, Jr.
- ----------------------- Director March 30, 1999
Walter S. Boone, Jr.
/s/Douglas B. Bywater
- --------------------- Director March 30, 1999
Douglas B. Bywater
/s/Andrew M. Ockershausen
- ------------------------- Director March 30, 1999
Andrew M. Ockershausen
/s/Phillip R. Smiley
- -------------------- Director March 30, 1999
Phillip R. Smiley
/s/Linwood R. Watson
- -------------------- Director March 30, 1999
Linwood R. Watson
/s/Craig D. Poppen
- ------------------ Chief Financial Officer March 30, 1999
Craig D. Poppen (Principal Accounting and
Financial Officer)
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
3.1 Amended and Restated Certificate of Incorporation of TFC *
Enterprises, Inc. (Incorporated by reference to the
Registrant's Registration Statement on Form S-1,
Commission File No. 33-70638, previously filed with
the Commission on October 21, 1993.)
3.2 Amended and Restated Bylaws of TFC Enterprises, Inc. *
(Incorporated by reference to the Registrant's
Registration Statement on Form S-1, Commission File
No. 33-70638, previously filed with the Commission on
October 21, 1993.)
3.3 Second Amendment to Amended and Restated Bylaws of TFC *
Enterprises, Inc. regarding the number of directors
comprising the Board of TFC Enterprises, Inc. (Incorporated
by reference to the Registrant's Form 10-K for the fiscal
year ended December 31, 1995, Commission File No.0-22910,
previously filed with the Commission.)
4 Form of Common Stock Certificate of the TFC Enterprises, *
Inc. (Incorporated by reference to the Registrant's
Registration Statement on Form S-1, Commission File No.
33-70638, previously filed with the Commission on October
21, 1993.)
10.1 Form of Master Dealer Agreement. (Incorporated by *
reference to the Registrant's Form 10-K for the fiscal
year ended December 31, 1997, Commission File No. 0-22910,
previously filed with the Commission.)
10.2 Form of Asset Purchase Agreement. (Incorporated by *
reference to the Registrant's Form 10-K for the fiscal
year ended December 31, 1997, Commission File No. 0-22910,
previously filed with the Commission.)`
10.3 Form of Motor Vehicle Installment Sale Contract, *
Truth-in-Lending Disclosure, Promissory Note and Security
Agreement. (Incorporated by reference to the Registrant's
Registration Statement on Form S-1, Commission File No.
33-70638, previously filed with the Commission on October
21, 1993.)
10.4 Employment Agreement between The Finance Company and *
Robert S. Raley, Jr. dated October 22, 1992.
(Incorporated by reference to the Registrant's
Registration Statement on Form S-1, Commission File No.
33-70638, previously filed with the Commission on
October 21, 1993.)
10.5 The Finance Company 401(k) Savings Plan dated May 1, 1991, *
and Amendment No. 1 dated August 1, 1993. (Incorporated by
reference to the Registrant's Registration Statement on
Form S-1, Commission File No. 33-70638, previously filed with
the Commission on October 21, 1993.)
10.6 TFCEI Employee Stock Purchase Plan dated December 20, *
1993. (Incorporated by reference to the Registrant's
Registration Statement on Form S-1, Commission File No.
33-70638, previously filed with the Commission on October
21, 1993.)
10.7 Employment Agreement between Ronald G. Tray and The *
Finance Company dated January 1, 1995. (Incorporated by
reference to the Registrant's Form 10-K for the fiscal year
ended December 31, 1994, Commission File No. 0-22910,
previously filed with the Commission.)
10.8 TFC Enterprises, Inc. 1995 Long-Term Incentive Plan. *
(Incorporated by reference to the Registrant's Form 10-K
for the fiscal year ended December 31, 1994, Commission
File No. 0-22910, previously filed with the Commission.)`
10.9 Stock Option Award Agreement between Ronald G. Tray and *
TFC Enterprises, Inc. dated October 27, 1994. (Incorporated
by reference to the Registrant's Form 10-K for the fiscal
year ended December 31, 1994, Commission File No. 0-22910,
previously filed with the Commission.)
10.10 Forms of Junior Subordinated Promissory Notes. *
(Incorporated by reference to the Registrant's
Registration Statement on Form S-1, Commission File No.
33-70638, previously filed with the Commission on
October 21, 1993.)
10.11 Office Lease dated June 1, 1995, by and between AFW No. 39 *
Corporation and The Finance Company. (Incorporated by
reference to the Registrant's Form 10-K for the fiscal
year ended December 31, 1994, Commission File No. 0-22910,
previously filed with the Commission.)
10.12 Lease Agreement, dated April 28, 1995, between Three Oaks *
Plaza, Ltd. and The Finance Company, Inc. (Incorporated by
reference to the Registrant's Form 10-Q for the quarter ended
March 31, 1995, Commission File No. 0-22910, previously filed
with the Commission.)
10.13 Note purchase agreement among The Finance Company and *
Connecticut General Life Insurance Company ("CIGNA") and
certain affiliates of CIGNA dated June 30, 1995, relating
to $10,000,000 in original principal amount of 9.38%
Senior Subordinated Notes due June 30, 2003.
(Incorporated by reference to the Registrant's Form 10-Q
for the quarter ended June 30, 1995, Commission File No.
0-22910, previously filed with the Commission.)
10.14 Amendment to Employment Agreement between The Finance *
Company and Ronald G. Tray dated July 27, 1995 (effective
as of January 1, 1995). (Incorporated by reference to the
Registrant's Form 10-Q for the quarter ended June 30, 1995,
Commission File No. 0-22910, previously filed with the
Commission.)
10.15 Amendment No. 1 to note purchase agreement, dated as of *
June 30, 1995, by and between The Finance Company and
Connecticut General Life Insurance Company ("CIGNA")
regarding CIGNA's consent to the Company's $25 million
credit facility with NationsBank. (Incorporated by
reference to the Registrant's Form 10-Q for the quarter
ended September 30, 1995, Commission File No. 0-22910,
previously filed with the Commission.)
10.16 Second Amendment to Employment Agreement between Ronald G. *
Tray and The Finance Company dated January 1, 1996.
(Incorporated by reference to the Registrant's Form 10-K for
the fiscal year ended December 31, 1995, Commission File No.
0-22910, previously filed with the Commission.)
10.17 Amendment No. 2 and Waiver and Forbearance Agreement by *
and among The Finance Company, CIGNA, and certain
affiliates of CIGNA, dated as of January 31, 1996,
relating to 9.38% Senior Subordinated Notes, dated as of
January 31, 1996. (Incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended December
31, 1995, Commission File No. 0-22910, previously filed
with the Commission.)
10.18 Amended and Restated Motor Vehicle Installment Contract *
Loan and Security Agreement dated January 1, 1999 between
The Finance Company and General Electric Capital
Corporation. (Incorporated by reference to the
Registrant's Form 8-K previously filed with the
Commission, Commission File No. 0-22910, on January
29,1999.)
10.19 TFC Enterprises, Inc. Warrant to Purchase Common Stock *
dated December 20, 1996. (Incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended December 31,
1996, Commission
File No. 0-22910, previously filed with the Commission.)
10.20 Allonge to Warrant to Purchase Common Stock dated April 4, *
1997. (Incorporated by reference to the Registrant's Form
10-K for the fiscal year ended December 31, 1996, Commission
File No.-0-22910, previously filed with the Commission.)
10.21 TFC Enterprises, Inc. Warrant to Purchase Common Stock *
dated April 4, 1997. (Incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended December 31,
1996, Commission File No. 0-22910, previously filed with the
Commission.)
10.22 Amended and Restated Registration Rights dated April 4, *
1997 between TFC Enterprises, Inc. and General Electric
Capital Corporation. (Incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended December 31,
1996, Commission File No. 0-22910, previously filed with the
Commission.)
10.23 Amendment No. 3 and Waiver of Note Agreement by and among *
The Finance Company, CIGNA, and certain affiliates of CIGNA,
dated as of April 4, 1997, relating to 9.38% Senior
Subordinated Notes. (Incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1996, Commission File No. 0-22910, previously
filed with the Commission.)
11 Statement re: computation of per share earnings.
(Incorporated by reference to Exhibit 99.1 of this report.)
**13 Annual report to security holders.
**21 List of subsidiaries of TFC Enterprises, Inc.
**23 Consent of Ernst & Young LLP.
**99.1 The Financial Statements and notes thereto which appear on pages ___
through ___ of TFC Enterprises, Inc. 1998 Annual Report to
Shareholders (filed as Exhibit 13 to this Form 10-K) are incorporated
herein by reference.
**99.2 Financial Statement Schedule I.
- -----------------------------------------------------
* (Not filed herewith. In accordance with Rule 12b-32 of the General Rules
and Regulations under the Securities Exchange Act of 1934, the exhibit is
incorporated by reference).
** Filed herewith.