Subprime mortgage lenders continue to report strong increases in profits for the first quarter, with one exception-Emergent Group.

Emergent decided to go conservative, bucking the industry trend of reporting 7% to 9% gains on the sale of securitized loan pools and booked only 4.6% of the loan values as profit.

As a result, the Greenville, S.C.-based lender reported a net income for the quarter of $402,000, down 69% from a year ago despite a 137% increase in revenues.

"After careful review of industry practices and increasing concern about gain-on-sale accounting, we decided to take a lower initial gain on the securitization," said Jack Sterling, Emergent's chairman and chief executive, in a written statement.

In doing so, the company hopes to "establish a higher earnings credibility and enhance the opportunity for higher incremental earnings," he said. Emergent began securitizing loan pools in the first quarter. Previously, it had been selling whole loans with the servicing released.

Wall Street investors have been defecting from the subprime market in part because of fears that earnings in the sector are inflated. Emergent's shares were up slightly by mid-Monday.

Emergent also reported a 141% increase in originations for the quarter over those a year ago, to $205.2 million.

Others in the sector saw similar swells in revenue and originations. Delta Financial Corp., Cityscape Financial Corp., and First Alliance Corp. all reported net income increases of more than 50%.

At Delta Financial, Woodbury, N.Y., net income rose to $7.0 million for the quarter, versus a $200,000 loss a year ago. Loan originations increased 104% to $237 million, while delinquencies fell 40 basis points to 8.0%.

The company's diversification into retail loan origination is "proceeding well," said Hugh Miller, chief executive. The company completed its acquisition of retail originator Fidelity Mortgage Inc. during the quarter.

Cityscape Financial Corp., Elmsford, N.Y. reported an 81% increase in earnings for the quarter, to $16.8 million, on a 193.4% increase in revenues.

The company originated $388.1 million in domestic loans, a 132.8% increase. Cityscape's loan originations in the United Kingdom increased 262% from the year before to $99.2 million. Delinquencies decreased 95 basis points to 7.97% for domestic originations.

First Alliance Corp., Irvine, Calif., reported a 66% increase in earnings for the quarter, to $7.7 million. Originations increased 39% to $105.3 million over a year ago. Delinquencies decreased to 4.4% from 5.5% the quarter before.

The company announced that it plans to repurchase one million shares of its common stock.

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