Stonegate’s Revenue Falls Due to Lower Interest Rates










Total revenue fell for Stonegate Mortgage Corp. in the fourth quarter as lower interest rates and a flattened yield curve hit interest income, the company said in its earnings release Friday.

Stonegate’s total revenue in the fourth quarter was $26.5 million, down 58% from $63.1 million in the third quarter and 39% from $43.8 million the year prior. The Indianapolis-based company also posted a net loss in the fourth quarter of $21.4 million, or 83 cents per diluted share, having earned $2.1 million during the same period 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,” Jim Cutillo, Stonegate’s chief executive officer, said in the Feb. 27 news release.

For the full 2014 fiscal year, the company reported a net loss of $30.7 million as compared with net income of $22.6 million the year before. Mortgage loan origination volume increased year-over-year through the fiscal year by 45% to approximately $12.6 billion.

During the fourth quarter, mortgage loan origination volume was down 5% from the third quarter but up 41% from 2013 to roughly $3.4 billion. Stonegate’s retail origination channel grew by more than threefold between 2014 and 2013 to $565.3 million, while its wholesale origination channel nearly doubled in the same time to $818.4 million. The correspondent origination channel also grew by a more modest 8% to nearly $2 billion.

Additionally, the company’s servicing portfolio, measured in unpaid principal balance, grew to $18.3 billion during the three months ended Dec. 31 from $11.9 billion the previous year.

Stonegate also said during its earnings release that the company had signed a letter of intent to sell around $3 billion in Fannie Mae and Freddie Mac mortgage servicing rights to a third party, with the closing date to come on March 31.

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