New Century Financial Corp. does not intend to issue a securitization from its REIT portfolio during the quarter, Brad Morrice, the company's president and chief operating officer said last week during the lender's third quarter earnings conference call. The Irvine, Calif.-based subprime lender will instead sell the majority of its loans to the secondary market, although it may utilize off-balance sheet securitizations through its taxable REIT subsidiary.
The lender is holding back on growth of its $15.7 billion portfolio as it focuses on a share buyback program of up to five million - about 9% of the total outstanding - shares. According to CFO Patti Dodge, the purchase of undervalued stock is a more efficient investment than loan origination at the current low margins. Fueled by speculation of a downturn in the subprime lending market, New Century's stock price has plummeted by more than 50% to $32.40 as of Thursday's market close, from a high of $66.95 earlier this year. Asked whether the lender would consider joining the ranks of AmeriQuest Mortgage as a privately held company, Morrice said the company, at present, remains committed to its public charter.