Magazine article American Banker

New Century in Black Again, on Sunny Side with Street

Magazine article American Banker

New Century in Black Again, on Sunny Side with Street

Article excerpt

New Century Financial Corp. is flying high.

After huge losses in 2000 and early 2001, the Irvine, Calif., subprime lender has reported three straight quarters of profits, totaling $50 million.

And in just the last week alone -- from its close on Feb. 22 to March 1 -- New Century's stock has soared 30%, closing Friday at $17.14. It is also up 150% from its 12-month low of $7, reached on April 4 last year.

"All vital signs are extremely positive, and the stock has been reflecting that," said Charlotte A. Chamberlain, an analyst with Jefferies & Co. in Los Angeles.

Thomas C. Ferguson of Advest Inc. in New York said: "This is a company that has performed extremely well over the past nine months. They have exceeded earnings expectations consistently over the last three quarters and set very impressive targets for 2002 earnings."

New Century has also delivered on a promise to become a "cash-flow-positive" company, which has helped it build credibility with the Street, Mr. Ferguson said.

Ms. Chamberlain said Fannie Mae's declaration in an exclusive interview with American Banker last week that it had designs on buying as much as half of today's subprime loans, and Freddie Mac's continued interest in the sector should bode well for New Century.

"That certainly puts a seal of legitimacy on that market that has been missing in the past," Ms. Chamberlain said. "That's a very positive sign ... because that's an industry that really has been suffering under a dark cloud of very negative press. …

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