Troubled ECC Capital Seeks Strategic Advice

In an indication of stress in the mortgage business, Irvine-based home lender ECC Capital Corp. reported a $50-million fourth-quarter loss Monday and said it would hire an investment bank to help it consider its strategic options.

ECC, a specialist in higher-cost loans to borrowers with poor credit or other financial problems, became a public company in February 2005. It said its losses for the year totaled $64 million, or 72 cents a share, on revenue of $96 million.

Facing tough competition and decreased demand from buyers of its loans, ECC has cut 800 jobs to save $40 million a year, reduced its executives’ compensation by $1.2 million annually and closed four of its seven offices to reduce annual costs by more than $3.5 million.

ECC went public at $6.75 a share, but its stock has been pummeled since then. It lost 7 cents Monday to close at $1.38.

In a conference call with analysts, President and co-Chief Executive Shabi Asghar said that in addition to the cost cutting, ECC would pursue a “parallel path” by having an investment bank present it with strategic alternatives. He declined to say what was under consideration, but the phrase typically refers to options that include a sale or a merger.

Asghar said the process was in the “very preliminary” stage. He also said the company was considering changing its corporate structure so that it would no longer be a real estate investment trust passing most of any profit it makes to shareholders in the form of dividends.

-- E. Scott Reckard