All States Financial Corporation

INTRODUCTION

In early 2007, All States Financial Corporation was celebrating a historic achievement in the year just past when its net income exceeded $1 billion for the first time in history. The firm's 2006 earnings totaled $1.154 billion on year-end assets of $80 billion (see Tables 1 and 2). The corporation was the twelfth largest banking company in the United States. The firm had over 53,000 employees, and the market capitalization of its stock was in excess of $16 billion. The firm was proud of its 3,449 business offices—All States Financial employees called them "stores"—which were distributed across all 50 states. The corporation had three major components: All States Financial Banks, with offices in 16 states; All States Financial Mortgage, which claimed to finance one out of every 15 mortgages in the United States; and All States Financial Financial, a consumer finance subsidiary with 3.6 million customers.

All States Financial's three business components provided the firm with an enormously diverse base of earning assets, including net loans and leases of $38 billion (Table 1). Much of the asset base consisted of consumer products, including installment loans, sales finance contracts, and credit card loans. All States Financial held a large portfolio of mortgage servicing rights. In addition, the firm had a diverse presence in business lending. Its typical small office, often located outside of large cities, was active in small business lending, Small Business Administration (government-guaranteed) loans, and, in larger offices, financing for middle market companies. In addition, specialized subsidiaries in "asset-based" business credit and equipment leasing helped to round out its loan portfolio. Finally, the firm held a total of nearly $19 billion in investment securities, some of which the firm used flexibly to adjust its asset and liability position.

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