You might recall little-known Delta Financial, a company I covered during last quarter's earning season for having been the lone bright spot in a sea of reported earnings losses for the fourth quarter of 2006. As a result, I was eagerly looking to see what the company did in the first quarter -- and well, it appears the lender has somehwat fallen back to the pack, reporting a yearly decrease in quarterly earnings for the first quarter of 2007. The company said it earned $4.9 million, down 26 percent from the same quarter one year ago. But in spite of the drop, the company is still turning a profit. And their stock, in early trading this morning, is actually up. I suppose that means the market sees it sort of like I do: at least the company turned a profit, which is more than we can say for many lenders right now. CEO Hugh Miller was certainly happy, too. A few choice bits of his remarks to the press:
“While we experienced a decrease in quarterly earnings over last year, we still believe our results were solid given the challenging operating environment in the first quarter of 2007, in which many in the sector have announced significant losses or, in several cases, ceased to operate. "...During the first three months of the year, when we typically experience a seasonal slowdown in originations, we achieved a 31 percent year-over-year increase in loan volume, reaching a record $1.2 billion in loans." “...While we are not immune to the effects of the current challenging market conditions and potential future market disruptions, we believe we are well positioned to continue to grow as we believe that the demand for subprime loans remains strong, the market's confidence in the quality of Delta's loans remains, and we can continue to capitalize on market opportunities as they arise in the sector. As a result, we anticipate that our second quarter 2007 earnings will increase over the first quarter 2007.�
A subprime lender making money, AND expecting to see an earnings increase in the second quarter? (Somebody pinch me, please.)