Problems with a 1981 issue of mortgage-backed securities as well as the costs of organizing a proposed savings and loan association contributed to a fiscal 1985 loss of $755,749 for the Hammond Co. of Newport Beach.
The loss, posted Monday, contrasted with net income of $1.4 million in fiscal 1984. Revenues dropped 27% to $8.6 million from $11.8 million reported in fiscal 1984.
For the fourth quarter ended March 31, Hammond--one of the few publicly traded mortgage banking firms in the nation--reported a loss of $819,128 on revenues of $1.8 million, compared to net income of $275,365 on revenues of $2.9 million for the fourth quarter of 1984. The mortgage banking firm has 11 branch offices in California, Hawaii and Arizona, all engaged in originating, selling and servicing residential and commercial real estate loans.
Most of Hammond’s loss was attributed to a dispute with the Federal National Mortgage Assn., which packages and insures pools of mortgages, over a 1981 mortgage-backed securities transaction. Hammond purchased $71 million worth of mortgage loans in 1981 and resold them by issuing FNMA mortgage-backed securities.
The company says it obtained information from FNMA that the loans met the criteria for being included in a mortgage-backed securities package and that Hammond purchased “special option” insurance from FNMA so the association would insure any losses from foreclosures.
However, during the fourth quarter of fiscal 1985, Hammond said, FNMA refused to pay claims on certain foreclosure losses. To cover the losses, which involved about 50 loans, the company took a write-off of $865,000--$775,000 of it in the fourth quarter, including a $350,000 reserve for potential future losses.
“I don’t think our experience (with FNMA) is unique around the country,” said President Tom Hammond in a telephone interview.
The company also spent about $100,000 in legal fees and other expenses relating to its proposed SunState Savings and Loan Assn. Chief Financial Officer Norman Brody said the company has state approval to open the S&L;, but has been waiting two years for the Federal Savings and Loan Insurance Corp. to insure the accounts. Brody said that in light of the recent failures of several Orange County banks, it may “not be as appealing today” to own a financial institution as it was a few years ago.
Hammond said the company’s profit margins decreased in fiscal 1985 because the company issued a large percentage of government loans, which have lower loan origination fees than commercial loans. Hammond said high interest rates in recent months also generated strong price competition among lending institutions issuing adjustable rate mortgages.
Comarco Posts Boosts in Quarter Net, Revenues
Comarco Inc., an Anaheim high-technology and engineering company, Monday posted a 22% boost in earnings and a 17% increase in revenues for the first quarter.
Net income was $448,000, compared with net income of $368,000 for the year-ago period. Revenues increased to $8.1 million from $6.9 million in the prior year.
Glenn D. Buell Jr., Comarco’s president and chief executive officer, said in a statement that the company’s recently completed a $10 million convertible debenture offering “strengthened the balance sheet and provides us with great flexibility for the future.”
During the first quarter, the company submitted a proposal with Lockheed Corp. to pursue a major contract with the National Aeronautics and Space Administration for various space shuttle operations. Comarco is seeking to provide mission-related documentation services. Buell said the contract is due to be awarded in the fall.
Comarco supplies computer-based products and engineering services to the defense and aerospace industry.
Losses Drop Sharply for Urgent Care Centers
Urgent Care Centers of America Inc., the fast-growing, Irvine-based operator of drop-in medical clinics, Friday reported that losses for its final 1985 quarter and the entire fiscal year dropped sharply from the year before as revenues climbed dramatically.
For the 1985 fiscal year year, Urgent Care’s losses were $493,799, compared to $1.8 million in the 1984 fiscal year. For the final quarter, ended Feb. 28, the company reported a loss of $342,961, compared to $518,419 in the year-ago period.
Annual revenues were $11.2 million, nearly 23 times the $486,061 recorded in fiscal 1984, while revenues for the fourth quarter were $2.8 million, more than 11 times the $246,676 recorded in the year-earlier period.
Although business at the company’s clinics has increased, Urgent Care executives attributed the vast majority of the revenue growth to the increasing number of clinics it operates. At the end of the 1984 fiscal year, the company had just four clinics, compared to 26 in operation throughout California and Nevada at the end of the 1985 year.
Separately, the company also reported that its previously announced merger with Medical Management Corp. of Los Angeles was completed on April 29. The stock swap between the two companies was valued at $2.5 million.
As a result of the merger, Medical Management, which operates centers primarily in Orange County, becomes as a wholly owned subsidiary of Urgent Care.
Earnings Rise 95% for Petrominerals Corp.
Petrominerals Corp. of Stanton said earnings for its first quarter rose 95% to $341,000 from $175,000 for the year-ago period. Revenues increased slightly to $5.3 million from the $5.1 million reported in the first quarter of 1984. “Increased oil production coupled with higher prices for heavy crude oil were the principal factors in accomplishing record quarterly operating results,” said Paul L. Howard, chairman and president, in a statement.
Petrominerals Corp. explores, produces and markets crude oil and natural gas in California, Louisiana and Oklahoma.
Cost-Cutting Pays Off for ClothesTime Inc.
Citing new cost-cutting moves and a more focused expansion plan, ClothesTime Inc. of Anaheim said its profits soared to a record $1.4 million in its fiscal first quarter, nearly three times the $471,000 profit reported in the same period last year.
For the period ended April 28, the discount women’s clothing chain reported sales of $27.6 million, 32% above the $20.9 million recorded in the year-ago period.
Gordon Nielson, ClothesTime’s president, attributed the company’s strong performance to improved inventory controls, an extensive cost-control program and a decision to redirect the company’s growth into markets where the company already has stores, rather than into new territory. The company currently has 160 stores in the western United States.