Irvine-based New Century Financial Corp. again defied the slowing mortgage business with strong first-quarter results and an upbeat outlook.
The company, which makes home loans to borrowers with imperfect credit, reported a 22% rise in quarterly income to $103.7 million.
New Century’s net operating profit margin was 50 basis points in the quarter, in line with the company’s guidance.
With lower fees to brokers who steer loans to New Century, the company said it expects its net operating margin to be 60 to 75 basis points in the current quarter.
New Century made $13.4 billion in loans during the first quarter, a 31% increase from a year earlier.
The company sold $1.7 billion worth of loans packaged as bonds to Wall Street in the quarter.
New Century said it continues to build reserves for bad loans, though actual losses have been lower than it expected.
The first-quarter’s gain follows New Century’s February report of big increases in loans, profits and interest income for the fourth quarter.
New Century appears to had adapted itself as long-term interest rates rise and threaten profits.
Interest rate hikes by the Federal Reserve have pushed up payments New Century and others have to make to buyers of their mortgages packaged as bonds. That’s eaten into profits as interest income from mortgages hasn’t kept pace.
New Century has cut costs and nudged up rates on its mortgages to try and offset the impact of higher interest on its bonds.
Earlier this week, Orange-based ACC Capital Holdings, the parent of No. 1 subprime mortgage lender Ameriquest Mortgage, said it plans to cut about 3,800 jobs nationwide in a bid to check costs.
