U.S. Bancorp to Sink Millions Into New Century Financial

Acquisitive U.S. Bancorp continues to find buying opportunities in Orange County.

The Minneapolis-based bank, which is about to close its purchase of Newport Beach-based Western Bancorp., said it is also boosting its investment in New Century Financial Corp., the Irvine mortgage lender.

U.S. Bancorp, which owns a 23% stake in New Century, said it will invest another $20 million in the Orange County company, which specializes in loans to borrowers with credit problems.

New Century officials said the investment will enable the company to continue to grow its core business and help New Century develop an Internet-based loan channel.

New Century Chief Executive Robert Cole said the new capital will come in handy amid the recent softness in the cash markets. U.S. Bancorp’s support of New Century continues to fuel speculation that the large bank will one day acquire the entire mortgage company.

Sub-prime lenders such as New Century are increasingly attractive to large mainstream banks because they typically offer higher profits, analysts say. One of New Century’s rivals, Long Beach Financial Corp., was recently acquired by Washington Mutual Inc., the nation’s biggest thrift.

Officials at New Century would not comment on the company’s future ties with U.S. Bancorp. A spokeswoman said the recent investment, which is structured as $20 million in subordinated debt, will not dilute the value of existing shares and is not convertible into common stock.