Subprime lender Accredited Home Lenders Holding Co. hasn’t filed an annual report for 2006 and will be late filing its first-quarter results for 2007 because its auditor has quit.
But investors can expect “a significant loss” for the first quarter due to “fierce pricing competition, ongoing product contraction (and) higher delinquencies and losses,” the company said in a Securities and Exchange Commission filing.
Accredited reports that its accounting firm, Grant Thornton LLP, resigned March 27 without completing an audit of the company’s 2006 financial statement. Accredited said it hired Squar, Milner, Peterson, Miranda & Williamson to audit its books on April 9.
In the meantime, the numbers Accredited is releasing about its first-quarter results suggest it’s in the same boat as other subprime lenders who have seen delinquencies and defaults rise sharply in areas where home-price appreciation has slowed or reversed.
Accredited sold $3.5 billion in loans in the first quarter, constituting “substantially all performing and nonperforming loans” in its inventory on March 6. Of those loans, $2.7 billion were sold at a “substantial discount,” resulting in a pre-tax loss of $160 million.
Of the $800 million in loans that were not sold at a loss, the average net price was .63 percent above par value. In the first quarter of 2006, by comparison, Accredited sold $3 billion in loans at a 2.1 percent premium to par value.
Originations for the quarter were also down 47 percent from the same quarter last year, to $1.9 billion.
Company officials said Accredited had more than $350 million of cash on hand at the end of March, thanks in part to a $230 million term loan from Farallon Capital Management LLC that carries a 13 percent interest rate.
Accredited may be able to recover $100 million in taxes it paid in past years depending on its future taxable income, officials said, and “is continuing to work with its financial and legal advisors to explore various strategic options that could include, but are not limited to, raising additional capital, a merger, or other strategic transaction.”