The Solihull personal loan company S&U, has closed its second mortgage venture Communitas to new business, while investing another £2 million in its used car finance operation Advantage.

Anthony Coombs, S&U's managing director, said Communitas stopped lending new money in June, before the recent "credit crunch", because financial markets were already lowering the value they ascribed to second mortgages.

"It was not because the quality of the business we were writing was poor," he said. "It was not."

The gross value of the Communitas loan book, around £5 million, was too small to securitise, though that would have been the longer-term intention, he added, describing the level of new business as unsatisfactory.

"Moreover, little prescience was required to see that second mortgage asset values were falling and were likely to fall further."

Mr Coombs was commenting on half-year results in which S&U's overall profit slipped to £4.61 million from £4.876 million in the first half of last year, while revenues rose to £22.86 million from £19.76 million.

Higher provisions against bad and doubtful debts - mostly at a Scottish office of the fast-growing subsidiary Wilson Tupholme - trimmed the contribution from home collected lending by £18,000 to £3.38 million - although the number of customers rose by 11,000.

There has now been a shake-up at Tupholme. Mr Coombs said "The qualify of our home credit debt as a whole has improved slightly as the trend towards shorter-term credit and more cautious underwriting bears fruit."

Profits from Advantage rose to £1.23 million from £1.20 million despite as slower used car market and competitive pressure on margins, particularly for insurance.

The interim dividend stays unchanged at 9p. "We want to stay about 1.8 times covered," Mr Coombs said. "And the shares yield nearly seven per cent."

Yesterday they finisihd 5p lower at 467.5p, back at their 12-month low.