Westar Financial Services Inc., an automobile e-finance portal, reported on Feb. 16 that rapidly accelerating revenues contributed to record profits during its third fiscal quarter, ended Dec. 31, 2000.

Revenues were $110 million, an increase of 327 percent during the year and 85 percent over the immediately prior quarter. Revenue growth, coupled with widening margins, generated record operating profit of $726,000, or $.31 per share and net income of $420,000, or $.18 per share for the quarter.

Revenues continued to accelerate substantially faster than growth in overhead, according to the report. Gross margins widened appreciably during the quarter to 2.4 percent as the firm benefited from a series of price increases announced during the second quarter. Net margins were a positive 0.38 percent compared to a negative 2.2 percent in the year ago period.

"We are delighted to report our first quarter of profitability for both operating and net income just five quarters after we initiated our innovative and unique e-commerce business model," said Cindy Kay, vice president and controller.

"Westar's proprietary technology for automating the origination, decisioning, commitment, fulfillment and servicing of consumer finance transactions is one of the most scalable operations in the financial services industry," said R.W. Christensen, Jr. president and CEO of Westar.

"In addition, our unique reusable securitization capabilities allow us direct and immediate access to the capital markets. The combination of these two innovations is the core of our financial portal, which we define as a conduit through which a physical transaction is nearly instantaneously transformed into a financial instrument. Westar's emergence into profitability proves the elegance of the design of the business model, the effectiveness of Team Westar's execution of it, and firmly establishes our financial portal as a leader in electronic enterprise," Christensen said.

The company continued to expand financial portal activity during the quarter. Westar's newest and fastest growing channel is its Private Label operations, which can provide full-service portal capabilities to banks, thrifts and other financial services firms. "Volumes from our first Private Label clients are exceeding all expectations and continue to point to a $1 billion annual production potential," Christensen noted. "The ease of establishing our services within large institutions, the high levels of productivity achieved, and the efficiencies of the operation add up to a solid success and demonstrate some of the capabilities of our unique business model. We are negotiating with several other financial institutions which have shown strong interest in our Private Label offerings and we are excited about further selectively expanding our alliances in the banking industry."

The face value of the accounts serviced by the company was $371 million at Dec. 31, 2000, with delinquencies of 1.60 percent and annualized credit losses of .57 percent. Credit quality continued to improve, with average FICO scores of 740 on contracts produced during the quarter compared to 709 in the third quarter a year ago.

As planned, overhead costs increased during the third quarter, but at a much slower rate than revenues or gross margins. General and administrative expenses, at $1.9 million, were up 66 percent from the like period a year ago and 15 percent from the prior quarter. "With our move to larger offices completed and new capacity in place, overhead growth has begun to slow appreciably. We are beginning to reap the benefits of Westar's investment in its strong operating leverage. We expect that Westar's operating efficiencies will become more apparent with each further increase in volume," said Kay.

For the first nine months of fiscal 2001, revenues more than doubled to $207 million and net losses were $3.3 million, or $1.43 per share compared to revenues of $84 million in the first nine months of fiscal 2000 and net losses of $2.1 million, or $.98 per share.

Westar originates, decisions, commits to and fulfills consumer financings for itself or others, using decision tools and high-speed communications to assure transparency to all parties to the transaction.