As mortgage-related companies continue to bleed capital, one merger closed, an alliance was forged and two public offerings have been planned for a single company.
Capital One Financial Corp. announced it expects to report diluted earnings per share of $3.97 for full-year 2007, which is $1.03 below what it anticipated primarily due to increased provision expense of $1.9 billion and additional legal reserves established in the fourth quarter. The fourth quarter provision for loan losses consists of $1.3 billion in charge-offs and an allowance build of about $650 million.
“The allowance build reflects fourth quarter delinquencies in the company’s national consumer lending businesses, continued deterioration in the approximately $700 million Held for Investment portfolio of Home Equity lines of-credit originated by GreenPoint Mortgage, and expectations for a weaker U.S. economy in 2008,” the McLean, Va.-based company said in the announcement.
Meanwhile, Huntington Bancshares said it anticipates a fourth quarter net loss of $239 million. The number in the red will primarily reflect charges and provisions totaling $1 per share, mainly due to $275 million, or 75 cents, related to the restructured lending relationship with Franklin Credit Management Corp. The quarter’s results will also include a pretax $106 million provision for non-Franklin credit losses, $64 million higher than in the third quarter partly because of continued weakness in the commercial real estate markets in eastern Michigan and northern Ohio. With the Franklin loans included, the total fourth quarter provision expense for credit losses will be a pretax $512 million.
Huntington also said it expects to report total non-performing assets of about $1.7 billion, with $1.2 billion representing the restructured Franklin loans.
“These results were well below our expectations,” Huntington said in the announcement. “Though a negative this quarter, [the] successful restructuring, we believe, addresses fully the current and anticipated financial performance issues associated with this relationship.”
Thornburg Mortgage Inc. said it plans to raise $200 million in long-term capital through two concurrent public offerings. One offering consists of 11 million shares of common stock, and the other will add 4.5 million shares to its existing 10 percent convertible preferred stock. Each offering will have a 15 percent over-allotment option for underwriters.
The Santa Fe, N.M.-based company said it will use the majority of the net proceeds to finance the acquisition or origination of additional adjustable-rate mortgage assets, and the rest will go toward liquidity needs and working capital.
FirstPlus Financial Group Inc. subsidiary Rutgers Investment Group Inc. announced it has inked a deal to provide mortgage processing and fulfillment services on an outsource basis for HomeLoanAdvisors.Com. HomeLoanAdvisors.Com manages the client contact while Rutgers handles back office work.
In the midst of the losses and capital-raising initiatives, Fort Worth, Texas-based Southwest Bank bought BMC Mortgage Services Inc. from Marshall Boyd and Cue Lipscomb on Dec. 31, according to an announcement. Southwest will retain Boyd and Lipscomb as co-presidents of the subsidiary, as well as its 20 employees and three branches in Fort Worth and Austin. BMC, which primarily engages in funding conventional and jumbo loans, along with FHA and VA loans, had volume of over $140 million in 2007.
