Magazine article American Banker

Lomas and Plaza Lost Heavily in Quarter as Originations Fell

Magazine article American Banker

Lomas and Plaza Lost Heavily in Quarter as Originations Fell

Article excerpt

Plaza Home Mortgage Corp. and Lomas Financial both announced larger-than-expected losses for the third quarter of 1994, reflecting plunging loan volume throughout the industry.

Plaza announced a third-quarter loss of $10.2 million, or 87 cents a share, compared with a loss of $4.9 million, or 42 cents a share, in the same period last year. Plaza stock slid by 18.75 cents for the week, closing at $7.8125.

Lomas said it lost $7.4 million in the quarter, or 37 cents a share, a lesser loss than the $39.7 million suffered in the same quarter last year.

Lomas' stock lost 50 cents last week, ending at $3.625 after establishing a new low for the year of $3.50.

Plaza, based in Santa Ana, Calif., said losses for the quarter and the year to date "exceeded management expectations." The company lost $20.1 million in the first three quarters of 1995, or $1.71 a share.

Part of the problem was that the company was forced to make further adjustments of the value and tax status of assets of Sandia Mortgage Corp., which Plaza bought in 1993.

There has been some fear that Plaza's continued poor performance may place it out of compliance with covenants of its merger agreement, thereby scotching the deal or making it subject to further negotiations.

As Plaza announced in early November, the merger with Fleet Financial is subject to "mortgage banking market conditions ... and company performance."

Plaza reported third-quarter loan origination volume of $749 million, versus $2. …

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