Stonegate Mortgage closes 2014 with tough quarter

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Stonegate Mortgage Corp. finished 2014 with a money-losing quarter that fell short of Wall Street expectations.

The Indianapolis-based non-bank mortgage firm said Thursday afternoon that it lost $21.4 million, or 83 cents per share, in the latest period, compared with a profit of $2.1 million, or 8 cents per share, in the fourth quarter of 2013.

On an adjusted basis, Stonegate lost $1.2 million, or 5 cents per share, in the latest quarter. That compared with an adjusted profit of $2.7 million in the fourth quarter of 2013.

Analysts had projected an adjusted quarterly gain of 30 cents a share in the latest quarter.

Stonegate finished the full year with a loss of $30.6 million, compared with a profit of $22.6 million in 2013. On an adjusted basis, the firm earned $15.6 million, or 61 cents per share, in 2014, missing analyst projections of 88 cents per share.

Revenue plummeted from $43.8 million in the fourth quarter of 2013 to $26.5 million in the latest period. Full-year revenue increased 18 percent, to $185.6 million, from $157.9 million in 2013.

"The decline in interest rates toward the end of the fourth quarter resulted in significant increases in principal payoffs and a negative fair market value adjustment to our mortgage servicing portfolio," CEO Jim Cutillo said in a written statement.

Stonegate, which originates, finances and services mortgages across the country, reported a strong showing in some of those areas in 2014. Loan origination volume, for instance, leapt 45 percent, to $12.6 billion.

Its servicing portfolio, as measured by unpaid principal balance, stood at $18.3 billion at the end of the fourth quarter, up 54 percent from the same point a year prior.

"While the housing market has not recovered at the pace that most economists expected, Stonegate has made investments that we believe will allow us to take advantage of the current conditions and future conditions in the housing finance market," Cutillo said.

Stonegate shares rose 2 percent Thursday before the earnings announcement, closing at $10.53 each.

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