IRVINE, Calif., April 11 -- ECC Capital
Corporation (NYSE: ECR), a mortgage finance real estate investment trust
that originates and invests in residential mortgage loans, today announced
that as part of its initiatives to reduce its cost structure, improve
operating efficiencies and achieve profitability, it will be reducing its
workforce by approximately 170 people nationwide. This comprises
approximately 17% of ECC Capital's total workforce.
Following the completion of this personnel reduction, management
believes that ECC Capital's staffing levels will be at the appropriate
level to achieve its operating plan, and at the same time, provide adequate
flexibility to enable ECC Capital to respond quickly and efficiently to
changing market conditions in the mortgage industry. Going forward, ECC
Capital plans to focus on its core origination business and to regain
market share through new product initiatives, improved technology and
enhanced services. Management does not expect that additional personnel
reductions will be required in the future to achieve its current
operational objectives.
The estimated annual costs savings of these initiatives is expected to
range between $32 million and $35 million, including cost reductions
resulting from the restructuring announced on January 6, 2006 and the
reductions in the compensation of senior management announced on April 10,
2006. These savings encompass base salary, estimated benefits and payroll
taxes, reduced occupancy cost and depreciation. They do not include the
effect of reduced bonuses or other reductions in administrative costs
expected as a result of the decline in the number of employees, which ECC
Capital anticipates will result in additional savings.
"We believe that this staffing reduction will enable us to grow our
origination platform profitably and will result in a company that is
stronger and more efficient," said Shabi Asghar, ECC Capital's President
and Co-CEO. "By taking a measured yet timely response to the operating
challenges we are facing, we feel that we are addressing our immediate
requirements while retaining the capacity and talent we will need when more
stable market conditions return. Although the decision to further downsize
our staff was a difficult one, we believe we are now the right size to
refocus our efforts on providing first rate service with a common sense
approach to lending."
About ECC Capital Corporation
ECC Capital Corporation, headquartered in Irvine, Calif., is a mortgage
finance real estate investment trust (REIT) that originates and invests in
residential mortgage loans. Through its subsidiaries, ECC Capital offers a
series of mortgage products to borrowers, with a particular emphasis on
"nonconforming" borrowers who generally do not satisfy the credit,
collateral, documentation or other standards required by conventional
mortgage lenders and loan buyers. ECC Capital is currently structured to
qualify as a REIT by managing a portfolio of nonconforming loans it
originates or acquires. As a REIT, ECC Capital's principal business
objective is to generate net income for distribution to its stockholders
from the spread between the interest income on its assets in its portfolio
and the costs of capital to finance its acquisition of these assets.
Safe Harbor Regarding Forward-Looking Statements
Certain statements contained in this press release, including
statements relating to the anticipated cost savings and operational results
of ECC Capital's staffing realignment efforts, may be deemed to be
forward-looking statements under federal securities laws and ECC Capital
intends that those forward-looking statements be subject to the safe-harbor
created thereby. Statements that are not historical fact are
forward-looking statements. These forward-looking statements are based on
current expectations and assumptions and are subject to risks and
uncertainties, which could affect ECC Capital's future plans. ECC Capital
cautions that these statements are qualified by important factors that
could cause actual results to differ materially from those reflected by the
forward-looking statements. These factors include, but are not limited to:
(i) the condition of the whole loan sale market, (ii) the condition of the
U.S. economy and financial system, (iii) interest rates and the subsequent
effect on the business, (iv) the stability of residential property values,
(v) the potential effect of new state or federal laws or regulations, (vi)
the effect of increasing competition, (vii) ECC Capital's ability to
implement successfully its business strategy due to, among other things,
its reduced workforce, (viii) the risks associated with the use of
leverage, (ix) continued availability of credit facilities and access to
the securitization markets or other sources of capital including the whole
loan sale market, (x) ECC Capital's ability and the ability of its
subsidiaries to operate effectively within the limitations imposed on REITs
by federal tax rules, and (xi) other factors and risks discussed in ECC
Capital's Form 10-K for the year ended December 31, 2004, which was filed
with the Securities and Exchange Commission on April 8, 2005. You should
also be aware that, except as otherwise specified, all information in this
news release is as of April 11, 2006. ECC Capital undertakes no duty to
update any forward-looking statement to conform the statement to actual
results or changes in ECC Capital's expectations.
For Further Information:
AT THE COMPANY:
Roque A. Santi
Chief Financial Officer
(949) 856-7611
rsanti@encorecredit.com
SOURCE ECC Capital Corporation
Web Site: http://www.encorecredit.com
