The Wall Street Journal recently ranked the companies with the best returns for investors, and a flood of mortgage-related entities made the list.
The financial news publication released its 10th annual Shareholder Scoreboard, which reviewed the performances of 1,000 companies in 76 industries to determine which entities had the best and worst total returns to investors over periods of one, three, five, and 10 years through the end of 2004. The investor return rankings reflect changes in share price as well as reinvested dividends or other distributions. For multiyear periods, compound annual returns were used.
Of the 50 companies on the one-year best performers list, the only mortgage-related company was Peoples Bank at No. 39 with an annual return of 86.1%. The subsidiary of Ohio-based Peoples Bancorp recently acquired two Kentucky full-service branches of Advantage Bank. The parent company reported mortgages accounted for $350 million of its $1 billion loan portfolio.
In the category of the three-year best performers, New Century Financial took home the bronze medal, the Journal said. Investors in the Irvine, Calif.-based subprime lender had three-year average annual return of 94.6%. In 2004 alone, the annual return was 63.8%, the real estate investment trust announced.
"We are extremely proud that New Century is among the top performing companies over the past three years, delivering superior results for our stockholders," said the company's chief executive Robert Cole in a written statement.
At No. 15 with three-year compound annual total returns of 67.0% was Hovnanian Enterprises, according to the Journal. The homebuilder company originates mortgages through K. Hovnanian American Mortgage LLC.
Two spots below Hovnanian was Friedman, Billings & Ramsey in seventeenth place with a return of 64.0%. The real estate investment trust recently acquired 100% of the equity interest of First NLC Financial Services LLC through which it will originate mortgages.
While homebuilder NVR placed No. 28 with 55.7% three-year compound annual total returns, it topped the list of the best five-year performers and took the silver in the best of the past decade. The Journal noted that the stock of the parent of McLean, Va.-based NVR Mortgage Finance would have been a no buy about a decade ago, but since emerging from bankruptcy protection in 1993 the homebuilder "is back on solid ground again, and then some."
Following closely behind was Doral Financial at No. 29 with a figure of 55.0%, the publication said. The Puerto Rico-based lender, which also has U.S. operations, claims it is the largest residential mortgage lender on the island and that its mortgage volume grew 20% annually to $7.8 million in 2004, according to its Web site.
Next, at No. 30, was Countrywide Financial also with a three-year compound annual total return of 55.0%, according to the Journal.
Five spots below with 51.6% was another Puerto Rico-based lender, First Bancorp. Through First Bank it offers mortgages to residents in the Carolina states and Virginia.
East West Bancorp, parent to East West Bank, placed No. 46 with 49.5%.
At No. 50, the last of the three-year best performers was UCBH Holdings. The parent of lender United Commercial Bank had compounded annual total returns of 48.3%.
In the category for the five-year best performers, in which NVR snagged the crown with 74.4% average annual returns for that period, there were five mortgage-related entities within the top 20: Hovnanian in No. 2 with average returns of 73.1%; Doral placed eleventh; UCBH was No. 13; the parent of Home American Mortgage, M.D.C. Holdings, filled slot 17; and the parent of DHI Mortgage, D.R. Horton followed at No. 18.
The remainder of the five-year best list was filled by homebuilder Lennar, which provides mortgages through its Lennar Financial Services companies, at No. 22 with 50.9% average returns; Beazer Homes, the parent of Beazer Mortgage; East West Bancorp; New Century with 44.6% average annual returns in No. 37; Countrywide with returns of 43.9% at No. 41; Hudson City Bancorp; Thornburg Mortgage; Fidelity National Financial; and Pulte Homes.
NVR's second place 68.6% average annual returns in 10 years was followed by Doral, which placed twelfth with 47.1%, M.D.C. Holdings at No. 23, and Star Financial at No. 25. The remaining half of the list held Lennar, D.R. Horton, First Bancorp, Hovnanian, New York Community Bancorp and Capital One Financial.
Mortgage-related entities named as some of the worst performers were found in the one-year period list: New York Community Bancorp placed 39th with an annual total return of -24.7%; and General Motors, the parent of GMAC Mortgage, was No. 48 with an annual return of -21.4%.
Most Admired Mortgage Companies
In FORTUNE magazine's latest list of America's Most Admired Companies, the parent of a mobile home loan lender ranked among the top 10, and within the mortgage services industry, Washington Mutual was dethroned by another thrift.