NovaStar Financial posts 2Q income
NovaStar Financial Inc. reported earnings of $457,000 for the second quarter, as the former subprime mortgage lender continues to rebrand itself as an appraisal company. The company reported income of $256,000 for the year-ago quarter. The loss attributable to noncontrolling interests widened to $244,000 for the three months ended June 30 from $138,000 a year ago. Second-quarter revenue rose to $28.5 million from $20.2 million a year ago and nearly all of the company's revenue comes from servicing fees. NovaStar listed total assets of $40.2 million at June 30 up 6% from $37.9 million at the end of 2010. Cash and cash equivalents rose slightly to $12.7 million at June 30 from $12.6 million at Dec. 31. The company said it has enough cash to and cash flow from mortgage securities to meet its senior debt payments. NovaStar completed the exchange of two series of preferred stock during the second quarter for about $3 million cash and nearly 81 million new common shares. So far this year, the company incurred expenses of about $2.4 million to close stock swaps. Prior to the financial meltdown of 2008, Novastar was one of the largest players in the subprime mortgage space. In January 2010, the Kansas City-based firm said "events occurred that required the company to reconsider the accounting for three consolidated loan trusts." As a result, Novastar recorded a gain of $993.1 million during fiscal 2010. Now, NovaStar is trying to build its property appraisal business through its StreetLinks unit. "StreetLinks had significant growth during 2010 and for the six months ended June 30, with the addition of new customers," the company said. "Infrastructure changes and added efficiencies gained through automation have decreased expenses relative to the increased production." Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.