NovaStar Financial Inc., a former high flyer in the subprime mortgage originations business now pursuing the appraisal niche and others, reported net earnings of $457,000 for the second quarter, up from $256,000 one year prior.
But back out a loss of $244,000 attributed to noncontrolling interests of investments the company has, NovaStar earned $213,000 for quarter, up from $118,000 one year prior (when the noncontrolling interests contributed a $138,000 loss).
The company, which still manages a legacy portfolio of subprime mortgage-backed securities, reported $28.5 million in revenue for the second quarter, $26 million of it from servicing fees. One year prior, its total revenue was $20.2 million and its servicing revenue was $18 million.
At the end of the second quarter, NovaStar completed a recapitalization plan that swapped preferred stock for common stock. The move eliminated the need to pay $60 million in dividends.
Plus the recapitalization left the company with $16 million in working capital as of June 30; at the end of last year it had a $36 million deficiency.
Besides the MBS portfolio, NovaStar is the majority owner of three companies: appraisal management company StreetLinks LLC, mortgage technology company Corvisa LLC, and Advent Financial Services LLC, which provides access to banking products to low and moderate income individuals.
StreetLinks had second quarter revenues of $25.2 million, respectively, compared with $17.8 million one year prior.
