New Century Profit Jumps 45%; Duties for 3 Executives Shuffled
Irvine-based mortgage company New Century Financial Corp. said Thursday that fourth-quarter earnings jumped 45%, results that beat expectations and sent its stock soaring.
New Century, a specialist in “sub-prime” mortgages for people who can’t get traditional bank loans, grew its share of a shrinking home-loan market, funding $15.7 billion in loans during the quarter, up 36% from a year earlier.
Net earnings were $114 million, or $2 a share, up from $78.7 million, or $1.44, a year earlier. Revenue rose to $389.4 million from $340.9 million.
No. 1 U.S. mortgage lender Countrywide Financial Corp. had reported results Tuesday that disappointed Wall Street, with its Chairman Angelo Mozilo blasting New Century and other sub-prime lenders for depressing profit margins and being “irresponsible” in pricing loans so low.
Mozilo was traveling and unavailable for comment Thursday, a spokesman said.
Sub-prime lenders, which charge higher fees and rates because their borrowers have poor credit or present other risks, have felt the pinch of rising interest rates.
New Century said nearly 21% of its loans for the quarter were a product it recently introduced: 40-year, adjustable-rate mortgages, which allow more buyers to qualify by lowering the initial interest rate and stretching out the repayment period. It also is expanding into prime loans.
New Century also reshuffled duties for three of its founders. Brad A. Morrice, vice chairman, president and chief operating officer, will become chief executive in July, replacing Robert K. Cole, who will continue as executive chairman of the board.
New Century’s vice chairman of finance, Edward F. Gotschall, will leave that job to devote more time to his family but will remain on the board, the company said.
The $2 a share in profit easily topped the $1.79 consensus of analysts surveyed by Thompson Financial, and New Century shares added $3.97 to $42.02.
For the full year, New Century earned $411.1 million, or $7.17 a share, on $1.45 billion in revenue, up from $375.6 million, or $8.29, on $1.36 billion in revenue a year earlier.
