Robert Tenney.

In 1990, a small Louisiana town with an unemployment rate of 16.5 percent stood to loose 500 jobs if a citizens group did not obtain financing to rescue the county's largest employer from bankruptcy court.

Half a week before proof of financing was due, Jobs for St. Landry Parish, the group trying to rescue Opelousas, La.-based manufacturer Standard Fittings Inc., still did not have a loan commitment. Local and outside banks wanted nothing to do with what they saw as a risky venture.

The group then contacted Robert Tenney, chief executive of Fremont Financial Corp. of Santa Monica, asking for a $2.5 million loan, plus $1 million in working capital, to reopen Standard Fittings.

Seventy-two hours later, Fremont committed itself to the loan.

For Tenney, it was an example of asset-based lending -- a loan based on the company's collateral and not on cash flow, as mainstream commercial banks do -- at its best, providing loans that mainstream bankers won't touch.

"It was a transaction that had to be done in a very short time or it wasn't going to be done at all," said Tenney. "It showed the ability of an asset-based lender to accomplish a loan that might have taken a number of weeks at a commercial bank."

"The banks had turned a deaf ear," agreed Randolph McCormick, owner of Opelousas Dixie Glass Co. and a leader of the effort to save Standard Fittings. "He (Tenney) gave us a real good helping hand."

Asset-based lenders' fortunes tend to be counter-cyclical, and the present recession offers no exception. As traditional lenders have tightened their lending criteria to accept only the best risks, asset-based lenders like Tenney have had a field day making loans to good credit risks being ignored by banks.

Driven by that demand, Fremont is expecting net income of $7 million to $7.5 million in 1992, versus $5.5 million in 1991 and $3.8 million in 1990.

The company is now one of the largest asset-based lenders in the country, with offices in Los Angeles, New York, Chicago, Atlanta and Minneapolis. Its loan portfolio totals $200 million and it plans to build that to $500 million by 1995, says Tenney.

Fremont continues to expand, by increasing lending and also by acquiring smaller asset-based lenders that lack the low-cost source of funds that larger firms such as Fremont enjoy. In August 1991, the company acquired Churchill Business Credit Inc. of Minneapolis, Minn., which had a $35 million loan portfolio.

Fremont's current successes mark a change for a company whose existence was in doubt when Tenney took the helm in 1989.

The company had been broadsided by its 1986 acquisition of Chicago-based Interfinancial Corp., a company which was equal in size to Fremont but which was also a Trojan horse of credit problems. Credit losses and restructuring of the company led to a loss of $17 million in 1989, Tenney says.

Behind Fremont's problems was a clash of cultures, he says. "There was a centralized administration and a lack of ownership feeling at the middle-management and regional level," says Tenney. "It was like (they were ducking responsibility because) 'that's not my problem.'"

It became their problem. Of Tenney's 100 current employees, only five date from when he took over. Most, he said, left of their own volition after he canned a few top officials.

Joining Fremont was a big risk for Tenney. Prior to joining the troubled company, he was content as senior vice president and western regional executive for Congress Financial Corp.

Tenney, now 49, accepted the Fremont offer only after repeated wooing by James McIntyre, chief executive of Fremont Financial's parent company, Fremont General Corp.

"At the initial contact (by a San Francisco recruiting firm) I said I wasn't interested," Tenney recalls. "It took a number of calls before we set up a meeting. I was intrigued with the challenge of this -- and the opportunity. This was a real challenge, there were questions whether it could be done."

Tenney, an animated speaker and chainsmoker, says skills of an asset-based lender and a commercial bank lender are very different. While a commercial bank lender asks how a company is going to pay back a loan from its earnings, asset-based lenders prepare for the worst and ask whether the collateral it will receive in that case will cover the loan.

That demands the skills of an auditor, which is why many asset-based lenders come from major accounting firms. Tenney, in fact, was an auditor for Ernst & Ernst, predecessor to Ernst & Young, for three years after graduating from Ferris University in Big Rapids, Mich.

Tenney said boredom with his auditing job was the major reason he decided to move into asset-based lending, joining Congress Financial in 1968. After nine years there, he joined A.J. Armstrong Co., which was acquired by Security Pacific National Bank in 1981. He then joined Chase Manhattan and established a Los Angeles asset-based lending office for the bank's Chase Commercial subsidiary.

Tenney says he enjoys the challenge of understanding how different businesses work. "I like dealing with entrepreneurs and understanding how companies operate. The key mistake people make is when they don't understand the nature of the business or the collateral. So we do tremendous research on it. We have to know as much about how the company works as management does. On occasion we know more than the company's officials do."

Tenney cites an example of a new business he is interested in lending to: Companies which buy the life insurance policies of AIDS patients and give the policyholders instant cash in exchange.

"There are amazing profits there," he says. "They pay 60 percent of the benefit for a person with less than two years of life expectancy. I thought it was gruesome at first, but the more I looked into it, the more benefits I saw. It offers policyholders, who wouldn't otherwise get their money while they are living, money to do what they want to do with their lives."

Tenney doesn't worry about competition from the large banking and thrift giants which entered the asset-based lending field in the 1980s. Most, he notes, have gotten out of the business after taking big hits on the operations.

Pride contributes to the problems of commercial banks and savings and loan institutions trying to enter the business, he said. At Chase, the parent company's executives "didn't understand what we were doing," Tenney says. "It was a bit beneath them. They kind of thought we were a pawn shop."

When Chase pulled out of asset-based lending in 1984, Tenney moved back to Congress Financial.

The key to asset lending, says Tenney, is a "tremendous effort at due diligence." His loan officers evaluate a borrower's assets every 90 days and conduct internal collateral verification on a weekly basis, as well as daily monitoring of collateral by sales, collections and accounts receivables reports.

That leads to a bigger loan cost, usually 2 percent to 3 percent higher than most commercial lenders.

Tenney's co-workers praise his knack for making quick decisions.

"He has a tremendous ability to grasp a situation very quickly and whether it's good or bad and resolve it quickly," says Bay Fetner, senior vice president of Congress Financial and Tenney's subordinate when he was at Congress Financial and Chase Manhattan. "He doesn't care if it's good or bad news. Just tell him. That's all he ever asks from people -- just be straight with him."

In Fetner's six years working with Tenney, he recalls only one situation that caught Tenney off-guard.

A longtime West Coast client called Tenney at Chase one day and said his partner was shipping cocaine to some of their clients. Tenney notified his superiors of the situation and helped the borrower arrange to buy out his partner's stake in the company. Tenney, noted Fetner, had handled the situation by the book.

At the next quarterly credit meeting of Chase Commercial's credit officers, the subsidiary's senior credit officer was reviewing the different accounts in alphabetical order. Then he turned to Tenney and announced the loan to the partners. "Bob," he asked slyly, "isn't that your guy who's shipping cocaine to his clients?"

"That's the only time I've seen Bob without an answer," says Fetner, who says everyone else in the room assumed the remark was a joke as the senior credit officer moved on to the next account.