While the $200 million sale of Arcadia Financial to Associates First Capital was hailed as positive by most asset-backed players, it also marks the end of a brief but mighty securitization era for Arcadia, a regular auto loan-backed issuer since 1997.

Though retaining a handful of key Arcadia players, as well as some general market strategies, Associates plans to run things a little differently in terms of Arcadia's auto-lending and securitizing businesses.

"We're probably not going continue to run this thing at $200 million a month, like Arcadia has done," said company spokesman Rick Bridwell. "We're going to probably pare this thing back, change the metrics in terms of who we're lending money to, and how it's priced. Because we think their credit in the A-class category is underpriced, and we think we can price those a little bit better, and make it a little bit more profitable for us."

Though earnings and statistics concerning Associates auto lending business, called TranSouth, and Arcadia's businesses will be represented as a combined figure from this point forward, Associates is planning to run Arcadia as an entity somewhat independent of TranSouth.

"Arcadia's really a great fit, smack in the middle, serving more the large franchise dealers, so we don't plan to come in and make our system fit with theirs, or make their system fit with ours," Bridwell said. "We're going to take what pieces we can from theirs, and if it's adaptable to our two auto businesses that we have serving on the TranSouth side, we'll use some of that, but it's not going to be amalgamated by any means."

With the merger, Associates will assume control of Arcadia's securitized loans and the servicing portfolio.

"Arcadia carried on the books $629 million," Bridwell said. "We had three independent companies come in and value that for us and at the end of the day we agreed on a number - $512 million. We took a pretty conservative approach on it. We're pretty comfortable with it."

Arcadia's securitized portfolio amounts to roughly $5.3 billion, and the loans are triple-A wrapped by Financial Security Assurance. There is no risk to the company associated with the loans, said Bridwell, and it's only with the interest-only strip that Associates takes on risk, however minimal.

"The general feedback we've gotten when we mention Arcadia - everybody kind of lifted an eyebrow and said, you did what, why, who?'" Bridwell said. "Once they've listened to how we're laying this thing out, how it's structured, how it's priced, how we looked at the deal and put it together, people have come back and said, this really makes sense.'

"What we're buying is a platform. We're going to work it like another TranSouth. It's going to be a good deal for us and help us grow."

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