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 $2.2 billion a year earlier.
Last week, Plaza reported October loan originations of $189 million, compared with originations of $1.1 billion in October 1993.
But the company's servicing portfolio has increased, largely because Plaza chose not to sell servicing in anticipation of its planned merger with Fleet.
Although Dallas-based Lomas narrowed from the third quarter of last year, analysts expressed concern over the latest results. Last year's tremendous runoff in the company's servicing portfolio has slowed, but now the company is being hurt by losses originating and warehousing mortgage loans.
The figures do not include an additional $5.5 million loss in the company's information services unit, which is set to be sold to The Prudential Insurance Co. of America by the end of the year.
* * *
File under "sign of the times":
Last week Hamilton Financial Services Corp. announced that it had hired investment banker Keefe, Bruyette and Woods to help it find a buyer.
Shares of Hamilton, a San Francisco-based mortgage bank and servicing broker, fell 25 cents for the week, closing at $3.625.
While Hamilton is generally well regarded, most observers agreed that the difficult operating environment and glut of mortgage banks for sale have chilled the enthusiasm investors once had for mortgage banks on the block.
"If they had made the same announcement in May, the stock would have hit the roof," said one observer.