$2.2 billion 4th quarter production
By MortgageDaily.com staff
2/8/2005

NovaStar Financial reported it had the most productive year in its history. But that wasn't enough to impress Wall Street -- which sent shares of the company tumbling today.

The Missouri-based lender announced fourth quarter production of $2.2 billion in nonconforming loans slipped from the previous quarter's record of $2.4 billion.

However, loan volume during 2004 amounted to a milestone $8.4 billion -- far better than the $5.3 billion in the prior year, according to the earnings announcement.

Approximately 65% of the nonconforming loans last year reportedly came from independent mortgage brokers, 25% was through retail offices and 10% came from a growing network of correspondent lenders.

NovaStar reported portfolio loans under management totaled nearly $12.2 billion at the fourth quarter's end, jumping 69% from a year earlier. The significant growth generated record portfolio income and dividends, company chief executive Scott Hartman said in the announcement.

NovaStar said it securitized $2.5 billion in nonconforming loans in the fourth quarter, retaining non-rated securities with attractive risk-adjusted yields. In all of 2004, it reported $8.3 billion in securitizations.

"NovaStar continues to deliver mortgage deals that perform well for bondholders, allowing us to build successful relationships with leading investment banks and institutional investors," company vice president Michael Bamburg said. "These mortgage-backed securities provide attractive returns for the investors who fund the continued growth of our portfolio and provide nonrecourse, matched funding for our shareholders."

The lender additionally made the key investments in personnel and infrastructure necessary to help achieve its goal of a $50 billion mortgage portfolio, Hartman said.

Investors were hardly impressed with NovaStar's announcement -- with shares tumbling more than $3.00 following the announcement to $38.74.

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