1st Alliance Cites Prepays in Earnings Drop

First Alliance Corp., Irvine, Calif., has reported earnings of $0.8 million ($0.04 per share) for the second quarter, compared with $7.9 million ($0.36 per share) a year ago.The company attributed the sharp falloff in earnings to a prepayment-related writedown, a reduction in net origination fees, and the postponement of the planned securitization of loans originated in the United Kingdom. The writedown of approximately $4.5 million in the value of First Alliance's residual interests -- as well as an $0.8 million increase in accelerated amortization on mortgage servicing rights -- stemmed mainly from "significant increases" in prepayments on adjustable-rate loans, the company said. The approximately 20% reduction in net origination fees resulted from lower-than-expected retail loan production, although it totaled $100 million, up 8% from $92 million a year earlier, First Alliance said.