Hanover's Net Falls in 3rd Qtr

Hanover Capital Mortgage Holdings' third-quarter net income fell to $100,000, or $0.02 per share, compared to $2.2 million, or $0.27 per share, in the third quarter of last year. Year-end results were not available at press time.

However, Hanover declared a $0.25 dividend per share to be paid on Dec. 5 to shareholders of record on Nov. 23, the company said.

Hanover said the reduction in operating income reflected a reduction in gain-on-sale income from the sale of mortgage assets and the impact of Hurricanes Katrina and Rita, since the majority of bonds sold in the third quarter contained loans from regions that were affected by the storms.

Another factor affecting income was higher borrowing costs related to $20 million that was raised last March. The proceeds of that trust-preferred offering were not fully invested during the third quarter and, as a result, the borrowing cost increases were not fully offset by interest income, Hanover said.

In the company's earnings statement, CEO John Burchett said that the company's core investment in subordinated mortgage-backed securities continues to perform well.

"Management continues to find good investment opportunities as evidenced by new purchases of subordinated mortgage-backed securities in October of 2005 of $41 million in principal value at a cost of $27.1 million."

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