ECC Capital Corp. announced more bad news.
The Irvine, Calif.-based real estate investment trust announced Monday the decision to cancel first quarter dividend payments to holders of the company's common stock.
"Given current conditions in the whole loan market and the operating losses in our mortgage banking segment, we plan to retain capital and liquidity in order to provide greater flexibility in the disposition of our held-for-sale loan portfolio and for the prudent operation of our business," said Shabi Asghar, ECC president and co-chief executive officer. "As a management team we are focused on improving the Company's operating results and restoring our mortgage banking operations to profitability."
ECC, which paid $0.65 per share in dividends for fiscal 2005, is required to distribute at least 90 percent of its REIT taxable income for each taxable year, excluding capital gains. While the company expects to continue producing REIT taxable income during 2006, any future distribution of dividends will be made at the discretion of its board of directors and will depend upon such factors as the performance of its mortgage banking segment, its desire to maximize corporate liquidity, its maintenance of REIT status and any other relevant factors.
Late last month, ECC reported quarterly production slipped. Earlier in January, the subprime lender announced more than 400 of its employees would be laid off as a result of a reorganization.