UCFC Explores Options, Expects Earnings Hit

United Companies Financial Corp., Baton Rouge, La., has reported that it expects a significant prepayment-related falloff in second quarter earnings and has announced the retention of Salomon Smith Barney to assist in seeking a "strategic partnership."UCFC's board of directors has appointed a special committee to explore the strategic option as a way of gaining access to additional capital for growth, the company said. Regarding second quarter earnings, UCFC chairman and CEO J. Terrell Brown said results are expected to be "below analyst expectations primarily due to approximately $10 million in charges relating to the valuation of our interest-only strips. While this adjustment is relatively small compared to the size of our portfolio, like many others in our industry, we are seeing prepayment rates that are higher than we have historically experienced." The home equity lender said it expects to report net income of $3 million to $5 million ($0.10-0.15 per share) in the second quarter, compared with $23.8 million ($0.73 per share) a year ago. UCFC's website address is http://www.unitedcompanies.com.