The nonprime market underwent another shakeout in the June quarter, allowing two smaller independent lenders to raise their loan originations and profits, while one larger independent reduced its new business sharply and another left the field altogether.

Focusing on prime-quality paper, Westcorp boosted its second-quarter loan purchases 6 percent to $1.6 billion and Credit Acceptance Corp. (CAC) upped its loan purchases 40.8 percent to $206.9 million.

However, AmeriCredit, Inc., went ahead with a massive retrenchment program that shaved its originations for the period to $687 million from more than double that amount in the 2002 quarter – and giant insurer Universal Underwriters quit the nonprime sector after a seven-year run.

Continuation of a steady growth cycle was reported by Westcorp president Tom Wolfe, who reported that net profit in the second quarter jumped 46 percent to a record $31.6 million. Westcorp and its WFS Financial subsidiary reported that the company’s portfolio of managed auto contracts reached the $10 billion level as of June 30, up from $8.9 billion a year earlier.

“Our second-quarter record earnings were the result of our focus on asset quality and cultivating our most valuable dealer relationships,” Wolfe declared.

The Credit Acceptance scenario was marked by an income and profits growth pattern, although CAC did introduce a contraction decision by suspending loan originations in Canada and the United Kingdom. U.S. income increased during the June quarter 29.6 percent to $16.1 million as the lender concentrated its business on providing “guaranteed credit approval” in the U.S., said Chairman Don Foss.

AmeriCredit, the long-time leader among independent nonprime loan providers, sustained a net loss of $17.1 million in the June quarter, the fourth of its 2003 fiscal year. It entered a massive downsizing program early this year after the soft used-vehicle market brought steep losses in the latter months of 2002.

AmeriCredit President Dan Berce said it is continuing to cap its quarterly loan originations at $750 million, about half of what it had generated prior to the financial crunch of late last year and early 2003. Berce expressed a “cautious view” towards the subprime market in the second half of 2003, explaining that even though used-car values are “up slightly,” unemployment and payrolls “remain soft.”

Berce said AmeriCredit’s dealer portfolio is holding at the 8,000 mark, after a reduction from a peak of 10,000. He predicted a return to profitability later this year as AmeriCredit originates more “high-quality” loans.

Universal Underwriters (UU) pulled out of nonprime financing to focus on “core products,” such as F&I products and services, according to Ed Zorobe, director of its subprime specialist, Universal Underwriters Acceptance Corp. He said UU has about 22,000 outstanding loans, which it will continue to service.

Ford Credit also cut back on its nonprime operations last year by closing subsidiary Fairlane Credit, based in Colorado Springs, Colo.

AmeriCredit, based in Fort Worth, Texas, sells its stock on the New York Stock Exchange. Shares in both Westcorp, based in Irvine, Calif., and CAC, headquartered in Southfield, Mich., are sold on NASDAQ. Universal Underwriters, an 81-year-old auto dealer insurer, is owned by Zurich Financial and is located in Overland Park, Kan.