FirstPlus President Confident of Strength

Although two subsidiaries of Dallas-based FirstPlus Financial Group filed for Chapter 11 bankruptcy recently, the move will not affect the Tustin-based banking affiliate, the lender’s president said Monday.

The two divisions, FirstPlus Financial Inc. and FirstPlus Special Funding Corp., have filed for protection from creditors.

But FirstPlus Bank is “well capitalized and very profitable,” said president Mike McGuire, adding that the bank has $246 million in deposits.

In August 1997, FirstPlus acquired Citizens Thrift & Loan, and its parent company, Western Interstate Bancorp in a stock swap for $29.6 million.

But being a key player in making sub-prime loans for up to 125% of the value of a homeowner’s property has taken a toll on the parent company. FirstPlus Financial closed an affiliate in Mission Viejo last year after failing to find a buyer.

McGuire said the bank made numerous high-equity loans over the past year, but stopped in January when Wall Street’s appetite soured for the loans, which were packaged and sold as securities to institutional investors. As a result, the Tustin bank has increased its number of traditional loans over the past two months, McGuire said.