Headquarters: 18400 Von Karman Ave., Irvine
Employees: 7,118; 1,978 in OC
Business: subprime mortgage lender
Market value, as of April 4: $2.5 billion
12-month revenue: $2.4 billion, up 41%
12-month net income: $417 million, up 11%
Year in review: 2005 was a big year of growth tinged with an element of uncertainty for subprime mortgage lender New Century Financial Corp.
New Century, which is neck-and-neck with Orange-based Ameriquest Mortgage Co. as the nation’s largest subprime lender, posted a 30% jump in loan volume to $56 billion last year. The lender focuses on loans to people with less-than-perfect credit.
New Century’s revenue jumped 41% to $2.4 billion, though income grew at a slower 11% pace to $417 million.
The industry’s profits are getting squeezed amid the Federal Reserve’s policy of interest-rate tightening during the past few years. New Century and rivals borrow at short-term rates and lend at long-term rates.
What’s ahead: “This is a transition year,” said Robert Cole, chairman and chief executive, earlier this year.
That outlook starts at the top. Brad Morrice, vice chairman, president and chief operating officer, is set to become chief executive on July 1. Cole will stay on as executive chairman.
The company raised the rates it charges borrowers in a bid to boost profits. It also has cut costs. The company also will be leaning on its RBC Mortgage Co. unit for growth. New Century bought RBC, which lends to people with good credit, last year.
One irritation that won’t be in the mix this year: a board battle with David Einhorn, president of New York-based hedge fund operator Greenlight Capital Inc. Earlier this year New Century agreed to expand its board to make room for him, in return for Einhorn dropping a proxy battle.
Wall Street’s take: At a recent check of $45, shares are down from $53 last summer. New Century cited the “uncertain” operating environment for its policy of not providing earnings or loan production guidance this year.
WHO’S IN CHARGE
ROBERT COLE
Chairman, chief executive
Joined company: 1995
Education: master’s in business administration from Wayne State University
Career: Cofounder of New Century in 1995. Was chief operating officer-finance at Plaza Home Mortgage Corp. from 1994 until New Century debuted. From 1990 to 1994, Cole was president of real estate developer Triple Five Inc.
