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Stonegate shares slip after firm reports major revenue slide

May 10, 2016

Stonegate Mortgage Corp. kicked off 2016 in a slump, disappointing Wall Street with an steeper-than-expected revenue decline and surprising analysts with a first-quarter loss.

The Indianapolis-based non-bank mortgage firm said Tuesday morning that it lost $37.5 million, or $1.45 per share, in the latest period, compared with a loss of $11.1 million, or 43 cents per share, in the first quarter of 2015.

On an adjusted basis, Stonegate lost $3.07 million, or 12 cents per share, in the latest quarter. That's a 154 percent negative swing from the same period last year, when it reported an adjusted profit of $5.7 million, or 22 cents a share.

Analysts surveyed by Thomson Financial had projected an adjusted quarterly gain of 3 cents a share in the latest quarter. Stonegate shares fell 2.7 percent in morning trading, to about $4.68 each.

Stonegate's revenue dropped to $5 million, down from $35 million in the year ago quarter, an 86 percent drop. Analysts expected $42.9 million in revenue in the most recent quarter.

"Our first quarter results were significantly impacted by a $35.7 million decline in the fair market value of our MSR asset and a 15 [percent] decrease from the prior quarter in mortgage originations from continuing operations that, while disappointing, was consistent with the overall decline in the industry as a whole during the first quarter ...," CEO Jim Smith said in written remarks.

"Even in these difficult conditions, we made additional progress in optimizing the expense structure of our business," he said.

Mortgage loan origination volume decreased to $1.94 billion during the first quarter of 2016, down from $2.27 billion in the fourth quarter of 2015 and $2.61 billion in the first quarter of 2015.
 

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