Hammond Co. Income Plunges; It Blames High Costs, ‘Big Chill’

Saying that it has fallen victim to a “big chill” in the housing market, the Hammond Co. said Tuesday that its second-quarter net income dropped 89% and it is unlikely that it will end the year with a profit.

The mortgage banking company said it had net earnings of $103,000 on revenues of $4.6 million during the three months ending Sept. 30, contrasted with net income of $935,000 on revenues of $6.6 million in the same period last year.

The Newport Beach-based company reported a loss of $432,000 for the first six months of its fiscal year on revenues of $8.4 million, contrasted with profits of $965,000 on revenues of $11.2 million last year.

In an unusually candid and self-critical statement accompanying the quarterly figures, Hammond blamed the losses on its own costs of doing business, which it said were too high contrasted with the smaller amount of home loans the company is originating and selling.

Fewer people are buying homes because of what the company said was a “big chill” in the housing market that started in August.

“The Hammond Co. believes the confidence level of the home buyers in the western states has fallen precipitously, which has reduced the rate of home sales,” the statement said. The company operates in California, Arizona, Hawaii and Washington.

But, the company said, it didn’t want to divert blame from itself to the economy. “The Hammond Co. believes it is not necessary to recite excuses, discuss external economic factors or the pending recession” in explaining its losses, the firm said. “The company . . . must adjust on the cost side and continue to meet any adverse economic situation. The company believes it has the capital and cash to get through this process.”

Hammond said it undertook a major reorganization in September in order to cut costs, which resulted in lower profits.