HUNTINGTON BEACH, Calif. — Subprime auto lender Triad Financial is relocating 124 California-based positions to Texas, but said the move has more to do with the expense of doing business in the state than fallout from the subprime mortgage market.
The company, which is owned by a consortium made up of three investment firms including Goldman Sachs, announced the move earlier this year as a cost-saving effort. Charlene Lewis, company spokesperson, said the lease on the company’s Huntington Beach location was up for renewal, and that most of the company’s operational functions are already located in Texas.
“A review of facilities and operations led to the decision that the efficiencies we will gain by completing the consolidation of operational functions in one location was best for the future of the business,” she said. “Substantially, lower facilities costs are a factor as well.”
Lewis said some news reports linking the company’s move to problems in the subprime mortgage market and the company’s reported increases in delinquency rates were false. She said the move was instead part of an overall plan to further consolidate operations to its North Richland Hills, Texas, facility. The company is also relocating its headquarters there.
News reports, however, came out shortly after the company filed a layoff notice with the state’s Labor and Workforce Development Agency, which was mandatory since the company was moving jobs to Texas. Lewis said reporters left voicemails as early as 4 a.m. on Wednesday, and that her return calls didn’t make it in time for stories posted on news wires that morning.
“Triad is experiencing higher delinquency, but this is unrelated to problems in the mortgage industry,” she said. “We are closely tracking the performance of our homeowners, who are in fact a relatively small part of our portfolio. And we are seeing very little difference in delinquency across those who own homes and those who do not.”
In an Aug. 14 filing with the Securities and Exchange Commission (SEC), the company reported that net income fell 19 percent to $8.1 million in the quarter ending June 30, mostly due to increases in it reserves for loan losses and $7.5 million set aside for the relocation.
According the SEC filing, delinquencies increased to 11.2 percent during the first six months of 2007, up from 9.5 percent at the end of 2006. Lewis said that even though delinquencies tend to drop in the first half the year, she does not believe the increase is a sign of something bigger.
“A primary reason that we don’t expect to see the same problems as the subprime mortgage industry is because we offer very different products,” she continued. “For example, we do not offer teaser or variable rates or no documentation loans.”
Lewis said that 80 percent of employees from the Huntington Beach office were offered relocation packages. Out of those offered the package, 50 percent accepted the offers.
“We expect the transition to be completed by the end of the year,” she said. “Triad will maintain a presence in Huntington Beach with approximately 126 employees in departments such as IT and Finance who will continue operating from 7711 Center Avenue.”