Magazine article American Banker

3Q Earnings: Triad, Thornburg Join in Industry's Strong Quarter

Magazine article American Banker

3Q Earnings: Triad, Thornburg Join in Industry's Strong Quarter

Article excerpt

Though many financial services firms are suffering in this anemic economy, several mortgage companies have bucked trends again, reporting third quarters of strong net income and per-share growth.

This week Triad Guaranty Inc. and Thornburg Mortgage Inc. added to the strong showing. Winston-Salem, N.C.-based Triad, the second publicly held mortgage insurer to release its earnings, reported net income of $10.2 million, or 73 cents per share, an increase of 14.9% from a year earlier.

Thornburg of Santa Fe, N.M., reported net income of $14.5 million, or 52 cents per share. Its 108% profit increase was credited mainly to the fact that its business is so new; it was started in September 2000. Yet Thornburg executives said it also benefited from the huge volume of refinancing activity, which pushed loan production well beyond expectations.

Countrywide of Calabasas, Calif., had previously reported a profit surge of 64%, to $149.2 million, for its quarter ended Aug. 31. Fannie Mae and Freddie Mac reported net-income growth of more than 20% in the quarter ended Sept. 30. At Prospect Heights, Ill.-based Household International Inc., third-quarter profits rose 12%, and MGIC Investment Corp. of Milwaukee, a big mortgage insurer, reported a jump of more than 9%.

Such results may mean a record year for the mortgage industry. Originations for 2001 are forecast to range from $1.6 trillion to as much as $2 trillion, driven by a seemingly undaunted loan-refinancing market.

Nonetheless, many observers say, the combination of rising unemployment, sputtering corporate earnings, and the inevitable end of the refinancing boom when mortgage rates rise will slow things down. The only question is when.

Gary Gordon, an analyst at UBS Warburg, said that he expects the fourth quarter to be strong for the mortgage business, which he thinks will cool off next year. …

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