ECC Sees Lower Second-Quarter Loss

ECC Capital Corp., Irvine, Calif., reported a loss of $18.6 million ($0.19 per share) for the second quarter of 2006, an improvement from the loss of $33.96 million ($0.35 per share) a year earlier.The company said the loss was because of accounting adjustments to increase its reserves by $16.4 million for expected losses on repurchased loans and to mark certain loans to the lower of cost or market. In addition, during the second quarter it disposed of certain aged and repurchased inventory at a significant discount to par, which resulted in an overall loss on sale of loans (excluding accounting adjustments) of $5.5 million. The loss on sale of loans was partially offset by gains on eurodollar futures hedging ECC Capital's held for sale inventory of $5.7 million. Shabi Asghar, president and co-chief executive, said its cost containment efforts had reduced ECC Capital's operating costs, but "overall results were impacted by an increase in repurchase claims related to whole loan sales in prior periods. We've resold a large portion of these repurchased loans, but at a discount to par." During the second quarter, the company formed a special committee to review strategic alternatives. The company also said it will not pay a dividend for the third quarter. It did not pay dividends in the first or second quarters either. It is re-evaluating its status as a real estate investment trust.