Back to GetFilings.com

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2002, TFCE’s most recently completed second fiscal quarter, (based on the closing sale price of $1.75 of the registrant’s voting stock, as reported on the NASDAQ Stock Market on such date) was approximately $16,113,694.

The number of shares outstanding of the registrant’s Common Stock as of March 15, 2003 was 11,551,033

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

TFC ENTERPRISES, INC.
2002 FORM 10-K

Table of Contents

TABLE OF CONTENTS

PART I

This report contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by such acts.  Any statements contained in this Report that are not statements of historical fact are forward-looking statements.  Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks” and similar expressions are intended to identify forward-looking statements.  The important factors discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk Disclosure and Risk Factors,” among others, could cause actual results to differ materially from those indicated by forward-looking statements made in this report and those presented elsewhere by management from time to time.  Please refer to the cautionary statement that appears at the beginning of “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

ITEM 1.      BUSINESS

The Company

We began operations in 1977 in Alexandria, Virginia, with the founding of The Finance Company by Robert S. Raley, Jr., our current Chairman of the Board and Chief Executive Officer.  Mr. Raley has spent his entire 43-year career exclusively within the consumer finance industry.  We now conduct operations primarily through The Finance Company, a wholly-owned subsidiary.

2

Table of Contents

Through The Finance Company, we purchase and service retail installment sales contracts originated by automobile and motorcycle dealers in the sale of vehicles, consisting of new and used automobiles, vans, light trucks, and motorcycles on an individual basis.  Retail installment sales contracts are acquired after we have reviewed and approved the vehicle purchaser’s credit application. The primary focus of our business is retail installment sales contracts originated by dealers with consumers who are United States enlisted military personnel, in the E-1 through E-4 pay grades and non-military consumers who do not have access to traditional sources of credit. To achieve an acceptable rate of return and provide for credit risks, contracts are purchased from dealers at a discount to the remaining principal balance.  The discount is held in a nonrefundable reserve against which credit losses are first applied. We are based in Norfolk, Virginia, with Contract Production Offices throughout the United States.

Our purchases provide us with the ability to direct the credit underwriting process at the initiation of the retail installment sales contract.  Participating dealers benefit by having a source of financing for a group of customers who typically find financing difficult to obtain.  This financing allows a dealer to increase the number of vehicles sold and improves dealer profitability.  Consumers also benefit because the financing we provide enables them to purchase a vehicle they otherwise might not be able to buy.  As of December 31, 2002, $200.8 million, or 99%, of our gross contract receivables represented point-of-sale purchases, compared to $227.8 million, or 91%, at December 31, 2001 and $202.5 million, or 75%, at December 31, 2000.

Although we underwrite and purchase contracts through the various contract production offices, the responsibility for servicing the accounts is centralized at our service center located in Norfolk, Virginia.

In the bulk purchase business, which ceased operations in March 2001, we had emphasized acquisitions of portfolios of seasoned retail installment sales contracts.  These contracts normally had a payment history of at least three months.  While the typical bulk purchase was approximately $250,000, we had, at times, purchased portfolios totaling more than $12 million.  As of December 31, 2002, $2.4 million, or 1%, of our gross contract receivables was attributable to bulk purchases, compared to $20.3 million, or 9%, at December 31, 2001, and $64.5 million, or 25%, at December 31, 2000.

Unless otherwise noted herein, disclosures in this Annual Report on Form 10-K relate only to our continuing operations. Our discontinued operations consist of the consumer finance segment, which was divested in November 2002.

TFC Enterprises, Inc. was incorporated under the laws of Delaware.  Our principal executive and administrative offices are located at 5425 Robin Hood Road, Suite 101B, Norfolk, Virginia 23513, and our telephone number is (757) 858-1400.  In this report, when we refer to “TFC Enterprises,” “Company,” “we” or “us” or make similar references, we mean TFC Enterprises, Inc. and its wholly owned subsidiaries.

Discontinued Operations

Asset Sale of First Community Finance

On October 1, 2002, the Board of Directors authorized the Company, as the sole shareholder of First Community Finance, to sell substantially all the assets of First Community Finance.  On November 4, 2002, the Company sold the majority of its consumer finance receivables to an unrelated third party “buyer” for approximately $21 million.  Pursuant to the terms of the transaction, the buyer offered employment to the majority of First Community Finance’s employees and assumed all of the leases relating to the branch locations.  Total net proceeds were paid on the closing date in cash. 

3

Table of Contents

Pursuant to the terms of the transaction, the Company has retained approximately $3.8 million in consumer finance receivables.  The Company has stopped originating loans through First Community Finance and is currently attempting to collect the remaining receivables.

Industry Overview

Commercial banks and captive finance companies of major automobile manufacturers tend to dominate most segments of the automotive finance industry.  Although consumer credit risk classifications are not standardized, institutions generally concentrate on consumers that could be characterized as being “low-risk” or “medium-risk” from a credit perspective.  Our target market involves consumers that are characterized as being “high-risk” from a credit perspective.

In 2001 and continuing in 2002, our management has directed TFC Enterprises toward those sectors of the market in which management believes pricing more closely reflects inherent risk.  Our focus is the automobile retail installment sales contract business which involve consumers whom have limited access to traditional sources of credit.

AUTOMOBILE FINANCE OPERATIONS

Dealer Selection and Program

Through its marketing efforts, The Finance Company has established relationships with automobile dealers that originate retail installment sales contracts which are then purchased by The Finance Company, through individual purchases.  We have relationships with both franchised and independent dealerships that are not affiliated with us.

To achieve an acceptable rate of return and provide for credit risks, we purchase contracts from dealers at a discount to the principal balance.  In automobile retail installment sales contract purchases, the discount is the difference between the purchase price we pay the dealer and the amount financed, net of the cost of ancillary products such as warranty, other loss protection products and physical damage insurance The amount of the discount at which contracts are purchased reflects, among other things, term and credit risk.  We purchase contracts in accordance with applicable underwriting criteria and pursuant to a Master Dealer Agreement, in the case of automobile retail installment sales contract purchases, or an Asset Purchase Agreement, in the case of the bulk purchases.

We believe that our marketing programs substantially benefit dealers.  The programs provide a source of financing for a group of customers which typically finds financing difficult to obtain.  Accordingly, dealers are able to sell more vehicles and improve their profitability.  In addition, we provide the following services to dealers:  (1) documentation designed to conform to applicable federal and state laws; (2) timely response to credit applications; (3) timely payment for approved installment contracts; and (4) access to a range of ancillary products.

Sales and Marketing

We market to both franchised and independent dealerships.  Prospective dealers are contacted initially by phone and by personal visits to dealer facilities by appropriate personnel.  In addition, we establish relationships with dealers through referrals from existing dealers.  We also distribute marketing brochures and run advertisements in trade journals and other industry publications directed to dealers.  Further, we participate at automobile dealers association meetings and conventions.

Competition

There are numerous providers of financing for the purchase of used vehicles. These financing sources include banks, savings and loan associations, consumer finance companies, credit unions and financing divisions of automobile manufacturers or automobile retailers.  Many of these providers of vehicle financing have significantly greater resources than The Finance Company and have relationships with established dealer networks.  We have focused on a segment of the market comprised of consumers who typically do not meet the more stringent credit requirements of the traditional sources of consumer financing.  As a result, the borrowing needs of these less credit-worthy

4

Table of Contents

consumers have historically not been consistently addressed by traditional financing sources.  If, however, the other providers of consumer financing were to assert a significantly greater effort to penetrate our targeted market segment, given their financial strength, The Finance Company could be materially and adversely affected by the increased competition.

Automobile Retail Installment Sales Contract Purchase Program

The Finance Company establishes relationships with dealers who meet its financial, organizational and compliance criteria.  We currently make purchases from dealers in approximately 30 states.

The Finance Company purchases contracts pursuant to a Master Dealer Agreement.  Upon entering into a Master Dealer Agreement, we provide the dealer with necessary documentation for originating retail installment sales contracts and training its personnel in the use of our documentation.  The Master Dealer Agreement contains representations and warranties by the dealer to The Finance Company on certain matters, including the security interest in the vehicle.  It also sets forth the general terms upon which retail installment contracts will be purchased by us.  The agreements are nonexclusive and do not obligate a dealer to sell, or The Finance Company to purchase, any particular contract or volume of contracts.  The Master Dealer Agreement may be terminated at any time by us or by the dealer (without, however, affecting either party’s obligations in respect of contracts purchased prior to termination).

Typically, a dealer will submit a customer’s credit application to more than one financing source for review.  Under our program, a dealer is required to provide us with a completed credit application that lists the applicant’s liabilities, income, credit and employment history, and other personal information bearing on the decision to extend credit.  The information from the application is then entered into our automated application processing system and an initial screening is performed to determine whether the applicant satisfied our threshold credit criteria.  If a credit investigation is warranted, the system will then automatically contact the credit bureau, include the information obtained in the applicant’s electronic file and identify any characteristics of the applicant that are outside the parameters of our credit guidelines.

The application and collected information are then analyzed by one of our credit analysts.  The credit analyst’s primary concern is the ability and likelihood of the applicant to make regular monthly payments. In addition, the analyst considers the value of the collateral securing the loan.  A credit analyst evaluates the applicant’s personal cash flow requirements and ability to make regular payments.  The credit analyst also considers other factors, including the size of the monthly payment in relation to the applicant’s monthly income and other monthly payment obligations, as well as the amount of money to be financed in relation to the purchase price and value of the vehicle.  We determine collateral value based upon the Kelley Blue Book.

In addition to our standard underwriting investigation procedures, for a military customer we require an employment letter which is a document from the applicant’s military command that details pay grade, enlistment date, time left in the service, recent advancements or demotions, and any disciplinary action.  Contracts generally will not be purchased if the applicant has had a reduction in rank or has had any serious disciplinary action while in the service.  The applicant’s time left in service is used to determine the maximum term of the loan.  The maximum loan and payment amounts are established by an applicant’s pay grade.   A budget margin is also calculated for each applicant and the margin generally cannot exceed preset limits.

Upon completion of the credit application review, a credit analyst will decide whether to approve the financing as submitted, decline the financing or conditionally approve the financing.  Applicants with characteristics outside the parameters of the credit guidelines require the approval of a senior credit analyst or above.  Conditional approval of the financing may involve amending the proposed terms of the contract to enable an applicant to qualify under our guidelines.  Typical matters which might require amendment include requiring a co-signer, changing the length of the

5

Table of Contents

term of payment, requiring a greater down payment, substantiating certain additional credit information and requiring proof of resolution of certain credit deficiencies as noted on the customer’s credit bureau reports.  Approved, declined or conditional purchase decisions are promptly communicated to the dealer.  Prior to our funding an approved purchase, another credit staff member completes a checklist which verifies that all required documentation has been obtained and is accurate.

Typically, retail installment contracts are purchased by and assigned to The Finance Company at a price that reflects a discount from the amount financed.  All of the discount is held in a non-refundable reserve against which credit losses are first applied.  Dealers are generally advanced 75 to 80% of the amount financed (less ancillary products) for their military customers with good credit and 90 to 95% for non-military customers. The assigning dealer makes certain warranties as to the validity of the contract and compliance with certain laws.  Also, the dealer generally agrees to indemnify us for any claim, defense or set-off against the dealer that may be asserted against us by reason of the assignment.  At the time of purchase, we require either physical damage insurance or a combination of GAP protection and total loss coverage on all automobiles covered by the retail installment sales contracts that we purchase.  To the extent that material terms of a contract prove to be inaccurate, we generally have the right under the Master Dealer Agreement to require the dealer to repurchase the contract.

Contract Duration

Contracts in The Finance Company’s point-of-sale portfolio have an initial duration normally ranging from 36 to 60 months, with an average original maturity of approximately 46 months.  Bulk purchase contracts generally had an average remaining maturity of 18 to 24 months at the time of purchase.

Contract Purchase Volume

The Finance Company’s contract purchase volume is discussed more fully in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 below.

Ancillary Products

The Finance Company offers through its dealers warranty and other loss protection products as allowed by the state.  These products are provided and underwritten by third-party vendors.  Accordingly, liabilities under the ancillary

6

Table of Contents

products are not our obligation.  We offer these products to dealers so that they, in turn, may provide vehicle purchasers a more complete line of products and services.  By offering these products, we are able to generate supplementary revenue without incurring significant additional expenses.  During 2002, 2001 and 2000, The Finance Company generated gross revenues of approximately $0.6 million, $0.5 million, and $0.2 million, respectively, from the sale of ancillary products through its dealers.

Collections

The Finance Company receives payments on purchased contracts through a number of different means, including electronic transfer, personal check, payroll check endorsed to it, government check (such as Social Security, disability or income tax refund check that is endorsed to it), cashier’s check, traveler’s check, money order, Western Union Quick Collect Check, bank wire transfer and cash.  We monitor payments to maintain each customer’s current address and banking data.  In certain instances, a customer will make a payment at one of our contract production offices or our service center.

Our underwriting guidelines dictate that United States military enlisted personnel must, prior to their origination of a contract with a dealer, execute an authorized allotment form.  The form provides for the automatic electronic transfer of monthly payments to The Finance Company.  The process is managed by a third-party data processor, Military Assistance Corporation.  Salary allotments are effected monthly by the respective military branch’s disbursement center.  On the first day of each month immediately following a month in which allotments are effected, the amount of such allotment is deposited into a transaction account at Fort Knox National Bank established by Military Assistance Corporation in the name of the obligor.  The salary allotment is immediately transferred by Military Assistance Corporation first, from the obligor’s account to a Military Assistance Corporation custodial account at Fort Knox - National Bank, and, second, to the collection account.  The allotment system enables United States military personnel to effect timely payment of their obligations without regard to reassignment or temporary relocation characteristic of United States military enlisted personnel.  Although it is a purchase requirement to the dealer to require United States military enlisted personnel to initially authorize the allotment of their respective monthly payments to The Finance Company, the allotments are voluntary and may be withdrawn. The mere withdrawal of an allotment authorization does not constitute an event of default under a contract, but it could make it more difficult to effect collections on our delinquent receivables.

Monitoring the payment history of accounts and implementing appropriate remedial action is the responsibility of our Collections Department within the service center and the auto center branches.  At year-end 2002, a total of 89 employees, or 53% of The Finance Company’s total full-time equivalent employees, worked in Collections.

One of the primary responsibilities of Collections is to monitor customer accounts that are delinquent in payment.  Collections Department personnel work with customers to resolve payment problems and bring accounts to current status at the earliest possible stage of delinquency.  Collections Department employees are compensated, in part, through bonuses tied to their monthly collection performance.

When calling a customer with a delinquent account, Collections Department personnel utilize The Finance Company’s Collections Training Manual.  Developed by us, the manual specifies the procedures to follow in different circumstances in order to maximize the effectiveness of the call.  The specific action our employees take on a delinquent account will depend on the customer’s particular circumstances as well as the past payment history of the account.  However, in all cases, our primary focus is resolving the problem causing the delinquency, arranging a modified payment plan, or working out a settlement agreement.  Each Department employee is responsible for keeping records of all collections activity carried out on each account and for following up on “callback” and “broken promise” dates as appropriate.  In addition, Collections personnel are responsible for following up as necessary on bankruptcies and requesting repossession and legal action.

7

Table of Contents

When we have difficulty locating a customer, Collections personnel attempt to find the individual through skip tracing, which utilizes various sources of available information about a customer.  Military personnel have almost no ability to become a “skip” as long as they remain in the military.  In the event of transfer, they can be located through the military locator service, which provides current duty station addresses and phone numbers.  All communications with and efforts to locate the customer are reflected in our data files.

In certain situations, we will repossess a vehicle.  If a deficiency exists after we repossess and sell a vehicle, we may take action to obtain a judgment and garnishee a customer’s wages and assets.  From an accounting perspective, repossessed assets are carried at the lower of the unpaid loan balance or anticipated liquidation proceeds.

We generally charge off accounts at the end of the month in which they become 180 days past due based on the contract.  Additionally, in the month that a repossession occurs, the carrying value of the repossessed asset is reduced through charge-off to the lower of the unpaid contract balance or anticipated liquidation proceeds.  Once an account is charged off, it is transferred to the Recovery Unit, a separate group of collectors who continue collection activities.  The collection activities undertaken by the Recovery Unit are similar in many respects to those of the Collections personnel.  Customers are called as required and attempts are made to set up repayment plans or work out settlement agreements as appropriate to a customer’s circumstances.  Each Recovery Unit employee is responsible for keeping records of all collections activity carried out on Recovery Unit accounts and for following up on callback and broken promise dates as appropriate.  The Recovery Unit is also responsible for following up as necessary on bankruptcies and requesting repossession and legal action.

The Finance Company’s charge-off and delinquency experience is discussed more fully in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 below.

INFORMATION SYSTEMS

We process all data relating to our contract receivables and financial reporting through a distributed network of computers.  Our computer systems are networked together to provide information to management for analysis as well as automatic posting to the general ledger for financial reporting purposes.  The systems provide for complete contract processing from the purchase of the contract, payment to the dealer, posting of payments and all other collection activity from the inception date of the installment contract.  Our systems operate on software that has been adapted to the specific manner in which we operate our business.

We have invested in technology that enables us to electronically process credit applications.  This technology reduces processing time and improves standardization of credit underwriting without significant staff increases.  TFC’s loan servicing software systems interface with a predictive dialing system designed to enhance collection activity by increasing the number of customer contacts per collector hour.  The system dials multiple telephone numbers simultaneously based on parameters defined by the Collections Department.  Calls are connected automatically to a collector at the same time the customer’s account is displayed on the collector’s computer screen.  The process permits better control of calling patterns for more effective calling and improved customer contact rates.  By eliminating busy signals, no answers and answering machines, the system enables the collector to speak to more customers.  The system also reports collection performance by collector for improved supervision and results.  The company also utilizes an imaging system which eliminates all but essential paper files.

We have sufficient management information systems in place to meet our current and near-term future requirements.

Regulation

Our businesses are subject to regulation and licensing under various federal, state and local statutes and regulations. Certain states where we operate have adopted motor vehicle retail installment sales acts or variations, consumer finance acts and third party debt collections acts.  These laws regulate, among other things, the interest rates and terms and conditions of motor vehicle retail installment sales contracts.  These state laws also impose restrictions on direct consumer loan transactions, require disclosures in addition to the requirements under federal law and impose specific statutory liabilities upon creditors who fail to comply. 

8

Table of Contents

Numerous federal and state consumer protection laws and related regulations impose substantive disclosure requirements upon lenders and servicers involved in motor vehicle financing.  Some of the federal laws and regulations include the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Motor Vehicle Information and Cost Savings Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations B and Z, the Graham-Leach-Bliley Act of 1999 and the Soldiers’ and Sailors’ Civil Relief Act.

In addition, the Federal Trade Commission has adopted the holder-in-due-course rule.  This rule has the effect of subjecting persons that finance retail installment credit transactions (and certain related lenders and their assignees) to all claims and defenses which the purchaser could assert against the seller of the goods and services.  A regulation which applies specifically to the sale of used automobiles is the Federal Trade Commission’s rule on Sale of Used Vehicles.  It requires all sellers of used vehicles to prepare, complete and display a buyer’s guide which explains the warranty coverage for these vehicles.  The Federal Trade Commission’s Credit Practices Rules impose additional restrictions on sales contract provisions and credit practices.

We believe that we are in compliance in all material respects with all applicable laws and regulations.

Employees

At December 31, 2002, we had 168 full-time equivalent employees.  No employees are currently covered by collective bargaining agreements.  We believe that our employee relations are excellent.

Executive Officers of the Company

The executive officers of the Company are as follows:

9

Table of Contents

Robert S. Raley, Jr. founded The Finance Company in 1977 and has served as Chairman of the Board from that time until April 1990 and again from May 1990 to the present.  Additionally, he served as President and Chief Executive Officer of The Finance Company from 1977 to April 1990, from May 1990 to December 1992 and from August 1996 to the present.  Mr. Raley has also served as Chairman of the Board of TFC Enterprises since its inception in 1984 until April 1990 and again from May 1990 to the present and as its President and Chief Executive Officer from 1984 until April 1990 and again from May 1990 through 1992 and from August 1996 to the present.  Mr. Raley initially entered the consumer finance industry in 1959.

Ronald G. Tray joined The Finance Company as a Vice President and director for Management Information Systems in 1989.  Mr. Tray was appointed Chief Operating Officer and Director of The Finance Company in 1996 and then appointed President in 2000.  Mr. Tray was appointed Vice President of TFC Enterprises in 1996 and then appointed President and Director in 2001.  Prior to joining The Finance Company, Mr. Tray was employed by MTech Corporation, a data processing service bureau for banks, located in Fairfax, Virginia, for approximately 20 years.  He served as President of Mtech’s Mid-Atlantic Division for the last 2 1/2 years.

Delma H. Ambrose joined The Finance Company in 1989 and has served in several capacities prior to becoming the General Manager of the Norfolk Service Center in 1996.  Prior to joining The Finance Company, she was employed by Beneficial Finance Corporation for 11 years.

Rick S. Lieberman joined The Finance Company in 1989 and has served in several capacities, including Vice President and General Manager of the Norfolk Regional Service Center until 1996 when he assumed his current position.  Prior to joining The Finance Company, he was employed by ITT Consumer Financial Corporation for 8 years.

Patricia Piccola joined The Finance Company in 1980 through an acquisition of another specialty finance company.  During her tenure, Ms. Piccola has been involved in nearly every function of The Finance Company’s corporate finance and administrative areas, most recently as Assistant to the Chief Operating Officer.  She assumed her current position in 2000.

Denise L. Newlon joined The Finance Company in 1996 and has served in several capacities, including Controller.  Prior to joining The Finance Company, she was employed by several banking institutions.  She assumed her current position in 2003. 

Financial Information About Segments

The business segments of TFC Enterprises, Inc. are discussed in Note 14 to the Consolidated Financial Statements of TFC Enterprises, Inc., presented in Item 8 below.

Item 2.   Properties

Our principal executive offices, service center and a contract production office, are located in Norfolk, Virginia.  The combined facilities consist of approximately 36,000 square feet of space pursuant to a lease expiring in 2006.

The Company has point-of-sale contract production offices which, on a combined basis, total approximately 7,567 square feet of space pursuant to leases expiring from March 2003 to April 2005. 

We believe that our facilities are adequate for our current and near-term future requirements.

10

Table of Contents

Item 3.   Legal Proceedings

We are a party to several legal actions that are ordinary, routine litigation incidental to our business. We believe that none of those actions, either individually or in the aggregate, will have a material adverse effect on our results of operations or financial position.

Item 4.   Submission of Matters to a Vote of Security Holders

The Annual Meeting of Shareholders of TFC Enterprises, Inc. was held on November 19, 2002, to consider two matters of business.  The matters brought before the shareholders and the voting results were as follows:

Election of Directors

The following directors’ terms of office as a director continued after the meeting: Andrew M. Ockershausen,  Douglas E. Bywater and Linwood R. Watson.

Ratification of the Appointment of Auditors

* “ Broker non-votes” occur where a broker holding stock in street name does not vote those shares.

PART II

Item 5.   Market for Registrant’s Common Equity and Related Stockholder Matters

Since December 22, 1993, TFC Enterprises, Inc. Common Stock has traded on the Nasdaq National Market System under the symbol “TFCE.”  Share price information with respect to the Common Stock is set forth in the “Selected Quarterly Data” table included below. As of March 14 2003 there were approximately 1,737 holders of the Common Stock, including approximately 165 holders of record. The TFC Enterprises, Inc. Bylaws now allow the Board complete discretion in setting the annual meeting.  No cash dividends have been paid with respect to the Common Stock since issuance.  We have no current plans to pay any cash dividends relating to the Common Stock in the foreseeable future. Any dividends on the Common Stock will be at the sole discretion of our Board of Directors and will depend upon our profitability and financial condition, capital requirements, statutory restrictions, requirements of our lenders, future prospects and other factors deemed relevant by our Board of Directors.  If any dividends are paid to the holders of Common Stock, all holders will share equally on a per share basis.

We have not issued any of our authorized preferred stock.

The following table sets forth the quarterly range of high and low sales price per share of the Company’s Common Stock for 2001 and 2002 as reported by the NASDAQ Stock Market.

11

Table of Contents

12

Table of Contents

Item 6.   Selected Financial Data

The following table contains certain consolidated financial and operating data and is qualified by the more detailed Consolidated Financial Statements and Notes thereto included elsewhere in this Report.  The Consolidated Statements of Income Data as of December 31, 1998, 1999, 2000, 2001 and 2002 for the years then ended were derived from the Company’s Consolidated Financial Statements and Notes thereto and have been restated to present the Company’s subsidiary, First Community Finance, as discontinued operations.  The Operating Data has been derived from the unaudited internal records of the Company.  The consolidated financial data shown below should be read in conjunction with the Consolidated Financial Statements and Notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Report.

Five-Year Summary of Selected Financial Data