Hammond Posts $1.1-Million Loss, Plans to Buy Back 13.5% of Stock

The Hammond Co., a Newport Beach mortgage banking firm, posted a $1.1-million loss for its 1989 fiscal year ended March 31, contrasted with a $907,416 profit for the previous fiscal year.

Annual revenue fell 20% to $20.4 million from $25.5 million the previous year.

For its fourth quarter, Hammond lost $885,684, contrasted with earnings of $297,491 in the year-earlier quarter. Quarterly revenue fell 33% to $4.1 million from $6.1 million.

The company attributed the loss to fewer new loans, lower interest income and a $450,000 write-off related to its failed bid last fall to buy Mission Savings & Loan in Riverside.

Meanwhile, the company said it plans to make a tender offer in the next few weeks for 13.5% of its stock, paying shareholders between $4 and $5 a share.

Reducing the total number of shares outstanding is a well-established method for a company to bolster its stock price when it believes the shares are undervalued.

The exact figure Hammond will pay for the shares is unknown because the company is conducting a so-called Dutch auction, in which shareholders offer their stock at prices within the range set by the company. The company then accumulates the stock, begining with shares tendered at the lowest bids and working up the ladder until it reaches its target number of shares. But it pays all shareholders the price per share it took to acquire the last share needed.

Thomas T. Hammond, the company’s chairman, owns 32% of the stock and is required to sell to the company the same percentage of his shares as the public shareholders sell.