In yet another late Friday SEC filing, Accredited disclosed that it expects to report a “significant loss” in the first quarter of 2007, and that it has laid off nearly 1,300 employees. (Late Friday filings are typically used for bad news disclosures that might otherwise hurt a stock price; the idea is that everyone has a weekend to cool down instead of reacting immediately). Reuters covered the news this morning, claiming shares had dipped, but — lo and behold the power of Friday SEC filings — the shares have rebounded nicely as I write this post:
Accredited Home said it made $1.9 billion of mortgage loans in the quarter, down 47 percent from $3.6 billion a year earlier. It said its cash level stemmed mainly from its $230 million term loan from Farallon Capital Management LLC. Subprime lenders lend to people with poor credit histories. “The company’s cash and liquidity appear adequate at the moment, especially in light of actual and, most likely, continued declines in origination volume as well as the elimination of approximately one-third of its work force,” wrote Roth Capital Partners LLC analyst Richard Eckert. Delinquent loans as a percentage of loans serviced more than tripled to 8.96 percent from 2.85 percent a year earlier. Accredited Home said results were also hurt by its Oct. 1 purchase of Los Angeles subprime lender Aames Investment Corp.
I especially liked that Reuters felt the need to add a sentence describing subprime lending to their coverage: “Subprime lenders lend to people with poor credit histories.” The amount of Accredited’s first quarter losses won’t be known for probably another few months, however, as the company informed the SEC on Friday that it is still trying to organize its financial statements after losing its former auditor Grant Thornton LLP last month.