New Century Financial Corporation Reports First Quarter Results

Apr 26, 2001, 01:00 ET from New Century Financial Corporation

    IRVINE, Calif., April 26 /PRNewswire/ -- New Century Financial Corporation
 (Nasdaq:   NCEN) announced today results for the three months ended March 31,
 2001.
 
      Operational Highlights
 
      -- Sold $5.3 billion in mortgage servicing rights to Ocwen Federal Bank
         FSB ("Ocwen") for approximately $21.8 million
      -- Modified residual financing agreements to extend maturity dates and to
         limit monthly "margin call" risk
      -- Extended the term of the subordinated debt with US Bank to December,
         2003
      -- Decreased loan acquisition cost to 2.87% versus 3.52% for the same
         quarter a year ago
      -- Increased production by 7%, to $1,026.5 million versus $956.5 million
         for the same quarter a year ago
      -- Reduced aged inventory (over 60 days since origination) by 66% during
         the quarter
      -- Reduced residual financing by $38 million during the quarter
      -- Repaid $22.5 million in working capital lines to US Bank
 
 
      Financial Summary (Unaudited)
      (in thousands except per share data)
                                                       Three Months Ending
                                                     03/31/01       03/31/00
      Total revenues                                  $47,955        $60,384
      Earnings (loss) before income taxes             ($3,195)       $12,717
      Net earnings (loss)                             ($1,853)        $7,273
      Income (loss) available
       to common shareholders                         ($2,577)        $6,548
      Diluted earnings (loss) per share               ($0.17)          $0.38
      Diluted wtd. Avg. shares outstanding         14,914,000     19,314,000
 
      The reduction in the average number of diluted shares outstanding
      compared to the previous period is due to the effect of common stock
      equivalents which are anti-dilutive in periods where losses are reported
      and are therefore excluded from diluted weighted average shares
      outstanding.
 
     For the three months ended March 31, 2001, total revenues decreased to
 $48.0 million, compared with total revenues of $60.4 million for the same
 quarter a year ago.  For the first quarter, 95.7% of total revenues were cash
 revenues, versus 71.4% for the same quarter a year ago.  Net loss was
 $1.9 million, or $0.17 per share on a diluted basis, compared with net
 earnings of $7.3 million, or $0.38 per share, for the same quarter a year ago.
     "The financial results for the quarter do not reflect the tremendous
 success that we've achieved in restructuring our balance sheet, reducing costs
 and increasing liquidity," stated Robert Cole, Chairman and CEO.  "As a result
 of these efforts, our investors can anticipate significant earnings growth in
 the next three quarters.  Our confidence to resume profitability this fiscal
 year is reflected in increasing the estimated EPS range to $1.15 to $1.30 for
 fiscal 2001," added Cole.
 
     Financial Report
     Pre-tax results for the first quarter, 2001 were negatively impacted by
 the following items ($'s in millions):
 
                                                            Year to Date
      Sales of aged inventory                                  $12.8
      Costs related to sale of mortgage servicing rights         1.8
      Charge-off of LoanTrader investment                        1.1
          Total                                                $15.6
 
     Sales of aged inventory:  During the first quarter, the Company sold
 $114.2 million, or 12% of total loans sold during the quarter, at a discount
 averaging 11.2%, as part of the Company's balance sheet restructuring plan to
 reduce the inventory of loans greater than 60 days old from $110 million at
 year-end to $40 million at the end of March.  The increase in aged inventory
 at year-end was primarily the result of the Company's transition to a 100%
 whole loan sales strategy in fiscal year 2000 and resulted in a pool of loans
 that were no longer considered acceptable for purchase by investors.  As a
 result, the Company adjusted its product matrix and underwriting guidelines to
 better match investor guidelines, with a target of reducing the percentage of
 loans that must be sold at a discount in future periods to less than 5% of
 total sales.  Based on the reduction in the aged inventory and recent loan
 sales results, management believes that this target can be achieved in future
 quarters.
     Mortgage servicing rights:  During the first quarter 2001, the Company
 sold approximately $5.3 billion in mortgage servicing rights to Ocwen.  As a
 part of the sale to Ocwen, the Company elected not to close a servicing
 agreement being negotiated with Fairbanks Capital that resulted in a $750,000
 termination fee paid to Fairbanks by the Company.  In addition, the Company
 accrued an additional $1 million in severance costs and legal fees related to
 this transaction.
     LoanTrader investment: In 1999 and 2000, the Company invested
 approximately $1.1 million in LoanTrader, a company based in Southern
 California whose primary business was providing an internet-based trading
 platform to facilitate business between loan brokers and mortgage lenders.
 The form of investment was primarily common stock.  In April 2001, the Company
 was notified by legal counsel representing LoanTrader, that the common stock
 shareholders would not likely receive any return on their investment.  As a
 result, the Company has written off the investment during the first quarter,
 2001.
 
     Sale of Servicing to Ocwen
     During the first quarter 2001, the Company completed the sale to Ocwen of
 approximately $5.3 billion of its servicing portfolio, for $21.8 million.
 Ocwen has assumed responsibility for all the Company's outstanding servicing
 advance receivables and future servicing advance obligations relating to the
 purchased portfolio.  As part of the sale agreement, approximately
 $4.2 million will be released to the Company subject to customary closing
 conditions upon the transfer of the servicing rights and is included in other
 assets at March 31, 2001.
 
     With the cash proceeds from this transaction, the Company accomplished the
 following:
 
      a) Repaid the portion of its warehouse line of credit secured by
         servicing advances
      b) Repaid the $22.5 million working capital line of credit with U.S.
         Bank, and
      c) Purchased an interest rate cap contract to hedge the projected
         residual cash flows.
 
     In addition, this transaction eliminated cashflow uncertainties relating
 to servicing advances, provides an opportunity to receive liquidity from
 future sales of servicing rights to Ocwen, and established an alliance with a
 well capitalized, highly rated servicer that should improve execution levels
 on future loan sales.
     As of March 31, 2001, the Company had retained ownership of approximately
 $367.9 million in mortgage servicing rights.  During the transition period,
 the Company will sub-service the mortgage servicing rights owned by Ocwen, and
 subsequent to the transition, Ocwen will sub-service the mortgage servicing
 rights owned by the Company.  The transfer of the Company's servicing
 portfolio to Ocwen is scheduled to be completed by August 1, 2001.
 
     Modification of Financing Obligations
     Concurrent with the closing of the Ocwen transaction, the Company modified
 its residual financing agreements by 1) limiting margin calls on the
 outstanding residual financing, and 2) terming out its financing arrangements,
 in return for the Company agreeing to specific amortization schedules to fully
 retire the outstanding financing debt by December 31, 2002.  In addition, U.S.
 Bank agreed to extend the term of its subordinated debt from June 2002 to
 December 2003.
     "The modification and extension of debt with our lenders significantly
 strengthens our financial position,"  said Edward F. Gotschall, Vice Chairman
 and CFO.  "The cash flows from our residual securities are now properly
 matched with the amortization of the debt, reducing the risk that cash flow
 from core operations will be required to reduce the debt."
 
     Loan Acquisition Costs
     The loan acquisition cost -- defined as the fees paid to wholesale brokers
 and correspondents, direct loan origination costs, including commissions and
 corporate overhead costs, less points and fees received from retail borrowers,
 divided by total production volume -- for the periods indicated was as
 follows:
 
 
      Loan Acquisition
       Costs            Qtr Ended  Qtr Ended  Qtr Ended  Qtr Ended  Qtr Ended
                         03/31/01   12/31/00   09/30/00  06/30/00   03/31/00
 
      Wholesale          (1.93%)    (2.04%)    (2.29%)    (2.16%)    (2.46%)
      Worth Funding      (2.47%)    (2.40%)    (3.51%)    (2.30%)   (10.14%)
      Branch Operations  (2.45%)    (1.09%)    (1.16%)    (1.20%)    (3.12%)
      Central Retail
       Operations        (2.54%)    (2.67%)    (3.28%)    (3.38%)    (3.99%)
        Total Production (2.09%)    (1.94%)    (2.21%)    (2.10%)    (2.70%)
      Corporate Overhead (0.79%)    (0.75%)    (0.77%)    (0.77%)    (0.82%)
      Loan Acquisition
       Costs             (2.87%)    (2.69%)    (2.98%)    (2.87%)    (3.52%)
 
     Note:  loan acquisition costs do not include loan servicing, non-recurring
            charges and non-production costs.
 
     The first quarter reflects the impact of the Company's ongoing cost
 reduction strategies implemented during year 2000.  Premiums paid to acquire
 loans were decreased from 84 basis points in the first quarter of 2000 to
 44 basis points in the first quarter of 2001.  Total staffing was reduced from
 1,770 at year-end 1999 to 1,511 at year-end 2000 to 1,352 at the end of March
 2001.  Because restructuring costs continued to be incurred during the first
 quarter, the full benefit of decreasing loan acquisition costs will be
 realized in future quarters.
     "We're on track to achieve our goal of 2.50% during the second quarter
 this year," said Brad A. Morrice, Vice Chairman and President.  "By lowering
 our costs, we've positioned ourselves to remain competitive in the marketplace
 and realize attractive profit margins in future periods" added Morrice.
 
     Loan Originations and Purchases
 
     A summary of loan originations for the periods shown below is as follows
 (000's):
 
 
                                          Three Months Ending
                           03/31/01        Percent    03/31/00       Percent
      Wholesale            $807,953          78.8     $709,338          74.2
      Retail                218,579          21.2      247,123          25.8
      Total              $1,026,533         100.0     $956,461         100.0
 
     A summary of loan originations by product type for periods shown below is
 as follows (000's):
 
 
                           Quarter Ended 03/31/01     Quarter Ended 03/31/00
                            Amount          Percent    Amount        Percent
      Fixed Rate           $189,298          18.4     $221,853          23.2
      2 YR LIBOR ARM       $739,725          72.1     $658,171          68.8
      3 & 5 YR LIBOR ARM    $76,125           7.4      $28,710           3.0
      6 MO LIBOR ARM            $98           0.0       $8,375           0.9
      2nd Mortgages         $21,287           2.1      $39,352           4.1
      Total              $1,026,533         100.0     $956,461         100.0
 
     Note:  Production numbers exclude loans brokered to other lenders of
            $19.7 million during the quarter ending March 31, 2001 and
            $7.7 million during the quarter ending March 31, 2000.
 
     Borrower Credit Quality
 
     A summary of loan originations by the Company's credit grades for periods
 shown below is as follows (000's):
 
 
               Quarter Ended 03/31/01              Quarter Ended 03/31/00
      Risk                       Avg.  Credit                   Avg.  Credit
      Grade     Amount     %     LTV    Score   Amount     %     LTV   Score
      Alt-A    $19,719    1.9%  80.0    660      $8,554   0.9%   86.3   643
      A+      $402,514   39.2%  81.1    617    $304,151  31.8%   82.5   636
      A-      $276,230   26.9%  78.1    570    $295,438  30.9%   80.5   580
      B       $225,059   21.9%  75.8    548    $215,204  22.5%   76.6   552
      C        $66,737    6.5%  71.5    540     $89,906   9.4%   71.9   538
      C-       $36,274    3.5%  64.0    540     $43,208   4.5%   64.5   533
      Total $1,026,533  100.0%  77.9    583    $956,461 100.0%   78.8   586
 
     Loan Loss Allowance
     The Company establishes loan loss allowances for potential losses on loan
 repurchases quarterly in accordance with representations and warranties
 provided upon the sale of loans. During the quarter ended March 31, 2001, the
 Company reduced its loss allowance for repurchased loans by $1.9 million.  The
 reduction in loss allowance reflects the significant decrease in repurchased
 loans that were part of the aged inventory during the quarter.
 
     The following table summarizes activity in the allowance for repurchases
 for the quarter ended March 31, 2001 and 2000 (000's):
 
 
                                                2001           2000
      Beginning balance                        $6,443         $3,665
      Provision (reduction) in allowance       (3,375)         1,600
      Loss on sale of repurchased loans         6,066            667
      Charge-offs                              (4,624)        (1,759)
      Ending balance                           $4,510         $4,173
 
     Loan Sales Statistics
 
     The following table summarizes the loan sales activities for the periods
 shown below (000's):
 
 
                             Quarter Ended 03/31/01    Quarter Ended 03/31/00
                               Amount   Gross Gain %    Amount   Gross Gain %
      Premium Loan Sales
        Whole Loan Sales     $839,599       3.69%      $488,196     2.76%
         Securitizations            0          --       429,680     4.67%
        Total Premium
         Sales               $839,599       3.69%      $917,876     3.65%
       Discounted Loan
        Sales                 114,230                     8,580
          Total Sales        $953,829       2.40%      $926,456     3.50%
       % of Production Sold     92.9%                     96.9%
 
     Gain on Sale of Loans
 
     The following table reflects the components of the gain on sale of loans
 for the periods shown below (000's):
 
 
                                                       Three Months Ended
                                                     03/31/01       03/31/00
      Gross Gain on Loans Sold at a Premium:
      Whole loan transactions                         $30,944        $13,478
      Net gain on securitization                            0         20,046
      Mortgage servicing rights                         1,383          2,062
        Gross Gain on Sale                            $32,327        $35,586
      Loss on Loans Sold at a Discount                (12,837)        (1,598)
      Less: Reductions in (additions to)
       loss allowances                                  3,375         (1,600)
        Net Gain on Sale                              $22,865        $32,388
 
      Other Adjustments to Gain on Sale:
      Premiums paid to acquire loans                  ($4,227)       ($7,814)
      Hedge gain (loss)                                  (366)             0
      Other adjustments                                 2,278         (1,764)
        Net Gain (loss) on Sale                       $20,550        $22,810
 
     During the first quarter, the Company sold $839.6 million through premium
 whole loan sales transactions at an average premium of 3.69% versus
 $488.2 million for the same period a year ago at an average premium of 2.76%.
 Loans sold through discounted sales totaled $114.2 million at an average
 discount of 11.2%, resulting in a blended gross premium of 2.40%.  Loans sold
 through discounted sales included the sale of aged inventory, which was
 reduced from $110 million at year-end to $40 million at March 31, 2001.
     The Company retained the servicing rights on $367.9 million of loans sold
 during the first quarter, versus $430.0 million for the same period a year
 ago.  The Company records the relative fair value of the retained mortgage
 servicing rights using a .55% value for fixed rate loans and a .50% value for
 adjustable rate loans.
     Other adjustments include net origination fee income and direct
 origination costs, both of which are deferred and recognized upon sale of
 loan.
 
     Residual Securities
 
     The carrying value of the Company's residual securities for the first
 quarter is summarized below (000's):
 
 
                                                       2001           2000
      Book value of securities @ March 31            $328,082       $406,976
      General Valuation Allowance                           0         (5,000)
        Net carrying value                           $328,082       $401,976
 
     A roll-forward of the carrying value of residual securities for the first
 quarter is summarized below (000's):
 
 
                                                       2001           2000
      Carrying value @ January 1                     $361,646       $364,689
      Residual securities recorded                          0         39,127
      Sale of residuals through
       NIMS/call transactions                         (32,409)             0
      Amoritization of residual secs.                  (1,155)        (1,840)
        Net book value @ March 31                    $328,082       $401,976
 
     Financing secured by the Company's ownership of residual interests for the
 first quarter is summarized below (000's):
 
 
                                                       2001           2000
      Total financing @ January 1                    $176,806       $177,493
      Financing received on residual securities             0         24,687
      Financing paid down through
       call transaction                               (25,897)             0
      Principal advances/(paydown) on financing       (12,577)        (5,812)
        Total financing @ March 31                   $138,332       $207,992
     Percentage of net book value                       42.2%          51.7%
 
     Cash flow received from residuals
      for quarter                                     $12,309        $13,164
 
     In establishing the net book value of the residual securities, management
 reviews on a quarterly basis the underlying assumptions used to value each
 residual security and adjusts the carrying value of the securities based on
 actual experience and trends in the industry.  To determine the Residual Asset
 value, cash flow is projected for each security.  To project cash flow, "Base"
 assumptions for each product type based on historical performance are used for
 Constant Prepayment Rates (CPR), and Losses.  Each security is updated to
 reflect actual performance to date, and the "Base" assumption for CPR and Loss
 is then used to project performance of the security from that date forward.
 If the actual performance of the security differs materially from the Base
 assumptions with respect to CPR or Loss, adjustments are made.  The Forward
 Libor curve is then used to project future interest rates and cash flows for
 each security.  The projected cash flows are then discounted at 13% for CE
 securities and 15% for net interest margin securities to establish the net
 book value of the residual securities.
     At year-end 2000, prepayment speed assumptions were increased to
 historical levels to reflect the decreasing interest rate trend and loss
 projections were increased.  The securities are currently performing in
 accordance with the revised assumptions.
     In December 2000, Salomon Brothers exercised their call option with
 respect to the Company's security 1998-NC5.  In January 2001, in conjunction
 with the fulfillment of the call option, the Company purchased from Salomon
 $43.5 million in delinquent loans from the security collateral pool and sold
 those loans to CSFB.  Salomon Brothers reissued certificates supported by the
 remaining collateral pool and sold the resulting new residual interest, paying
 the Company the proceeds from the sale.  As a result, the Company reduced the
 carrying value of residual securities by $32.4 million and retired
 $25.9 million of its residual financing.
     Approximately $209.3 million of the $328.0 million or 63.8% of the net
 book value of the residual securities is cash held in over-collateralization
 accounts.  There are three components to residual securities:
 
      a) Net interest receivable (NIR)
      b) Projected cash flows from the collection of prepayment penalties, and
      c) Cash held by the trustees in the over-collateralization accounts.
 
     During the life of the security, cash held in over-collateralization
 accounts is generally released to the residual holder.  Cash held in over-
 collateralization accounts is not affected by prepayment speeds or interest
 rate movement.
 
     Servicing Operations
     As of March 31, 2001, the Company's servicing portfolio, including
 securitized loans, loans sold servicing-retained and loans held for sale
 totaled $5.5 billion.  Of that total, $4.6 billion was sub-serviced for Ocwen,
 $367.9 million represents servicing rights owned by the Company and
 $471.7 million represents loans held for sale.  As of March 31, 2001, the
 Company had recorded a total value of mortgage servicing rights of
 approximately $1.7 million or .50% (50 basis points) of the owned servicing
 portfolio.
     Total servicing revenue for the first quarter was $17.7 million versus
 $19.1 million for the same period a year ago.
 
     The following table details the components of the Company's total
 servicing revenue and the relative annualized percentage of the average
 servicing portfolio for the periods indicated (000's):
 
 
                                         Quarter Ended        Quarter Ended
                                           03/31/01              03/31/00
                                      Amount       %        Amount        %
      Servicing fees                  $5,661      0.49      $6,826      0.45
      Late fees and other income       2,226      0.19       2,386      0.16
      Interest on residual
       securities                     11,154      0.96      11,324      0.75
      Amort. Of mortgage
       svcg rights                    (1,381)    (0.12)     (1,403)     (0.10)
      Total Servicing Revenue        $17,660      1.52     $19,133      1.26
 
     Interest on residual securities represents cash received by the Company as
 a result of its ownership in residual securities, net of related amortization
 or accretion.
 
     The following table details the components of the Company's interest on
 residual securities for the periods indicated (000's):
 
 
                                             Quarter Ended    Quarter Ended
                                                03/31/01       03/31/00
      Cash received                              $12,309        $13,164
      (Amortization)/Accretion                    (1,155)        (1,840)
      Interest on residual securities            $11,154        $11,324
 
     The following table provides information on New Century's 1997, 1998, 1999
 and 2000 securitized loans delinquent over 60 days (000's):
 
 
      Risk                 Original          Current          Original
      Grade                Balance           Balance            LTV %
      Alt-A                    3,185            2,778           82.76
      A                   $2,669,647        1,356,741           77.95
      A-                   2,518,496        1,304,722           77.48
      B                    1,435,016          733,525           74.41
      C                      880,707          413,862           70.36
      C-                     392,184          148,300           63.85
                          $7,899,235       $3,959,927           75.61
 
      Risk        Vintage      Vintage       Vintage     Vintage
      Grade        1997          1998         1999         2000      Total
      Alt-A        0.00%         0.00%        0.00%        0.00%      0.00%
      A            6.10%         7.93%        6.02%        4.54%      6.30%
      A-          11.71%        11.27%        7.57%        7.74%      8.73%
      B           14.13%        13.93%       13.08%       11.36%     13.00%
      C           21.05%        20.52%       16.66%       17.80%     17.87%
      C-          22.03%        22.31%       30.23%       27.62%     27.20%
                  11.81%        11.84%        9.64%       10.21%     10.33%
 
     The foregoing tables indicate that, as anticipated, the Company is
 experiencing higher rates of delinquency on lower credit grade loans.  The
 risk of loss on lower credit grade loans is mitigated by the lower loan-to-
 value ("LTV") ratios on these loans.  In addition, delinquency percentages in
 older vintages are higher, as expected, but are impacted by prepayment speeds
 as well as loan performance.  Based upon an evaluation of current
 delinquencies and LTV's, the Company believes that its current assumptions
 regarding loss ratios on securitized loans are adequate.
     The Company has previously repurchased a total of $41.4 million in loans
 out of its 1997 and 1998 securitizations, excluding repurchases pursuant to
 the call of security 1998-NC5.  Such repurchases are permitted only when the
 loan defaults and are undertaken by the Company in order to avoid disruption
 of cash flow from certain securitization trusts and to provide the Company
 with maximum flexibility in resolving problem loans.
 
     Servicing Transition
     The Company has been able to maintain the performance of the servicing
 portfolio at expected levels of delinquency and loss subsequent to the
 announcement of the Ocwen transaction.  Significant retention plans are in
 place for key servicing employees.
     The transition plan to transfer loan servicing on the mortgage servicing
 rights sold to Ocwen is progressing according to the established timelines.
 Management believes that the Company and Ocwen will be able to complete all of
 the tasks needed in order to transfer all of the loans as of the projected
 transfer date of August 1, 2001.
 
     Cash and Liquidity
     The Company's available cash and liquidity as of March 31, 2001 was
 $12.1 million, and included cash of $9.1 million and $3.0 million in available
 borrowing capacity.  Cash and liquidity increased from $11.6 million at
 December 31, 2000 as a result of the cash received from the Ocwen sale,
 partially offset by losses on discounted sales.  A receivable of $4.2 million
 relating to the Ocwen sale will be released, subject to customary closing
 conditions, upon the successful transfer of mortgage servicing rights and will
 subsequently be included in the cash and liquidity calculation.
 
     Summary
     New Century Financial Corporation commenced lending operations in February
 1996, as a specialty finance company that, through its subsidiaries,
 originates, purchases, sells, and services non-conforming mortgage loans
 secured primarily by first mortgage loans on single-family residences.
     At March 31, 2001, New Century originated loans through 65 retail sales
 offices operating in 26 states and 26 wholesale sales offices, including
 5 regional operations centers, operating in 20 states and employed 1,352
 Associates.
 
                Safe Harbor Regarding Forward-Looking Statements
 
     Certain statements contained in this press release may be deemed to be
 forward-looking statements under federal securities laws, and the Company
 intends that such forward-looking statements be subject to the safe-harbor
 created thereby. Such forward-looking statements include (i) the expectation
 that the Company will achieve significant earnings growth in the last three
 quarters of 2001, (ii) the belief that the Company can reduce the percentage
 of loans that must be sold at a discount to 5%, (iii) the payment by Ocwen of
 an additional $4.2 million for the purchase of the Company's servicing rights,
 (iv) the expectation that the alliance with Ocwen should improve execution
 levels on future loan sales, (v) the expectation that the modification and
 extension of debt will reduce the risk that cash flow from core operations
 will be required to reduce debt, (vi) the full benefit of decreasing loan
 acquisition costs will be realized in future quarters, (vii) the expectation
 that the Company will realize attractive profit margins in future periods and
 (viii) the belief that the Company and Ocwen will be able to complete all
 tasks necessary for the transfer of loan servicing rights by August 1, 2001.
 The Company 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.  Such factors include, but are not limited to
 (i) the Company's limited operating history and its ability to sustain and
 manage its growth, (ii) the Company's continued ability to access funding
 sources, (iii) volatility in the market for whole loans, (iv) the condition of
 the market for mortgage-backed securities, (v) the Company's ability to
 maintain acquisition costs at current levels, (vi) the Company's ability to
 alter its production mix quickly in response to changing whole loan market
 conditions, (vii) the potential effect of new state or federal regulations on
 the Company's business, (viii) the maintenance of interest rates at current
 levels, (ix) the Company's ability to recognize expected cash flow from its
 residual assets, (x) Ocwen's ability to perform its obligations and maintain
 high quality servicing operations, (xi) the ability of the Company and Ocwen
 to complete the transfer of servicing by August 1, 2001, and (xii) the
 Company's ability to preserve its servicing platform during the period
 preceding the transfer.  Additional information on these and other factors is
 contained in the Company's Annual Report on Form 10-K for the year ended
 December 31, 2000 and its other periodic filings with the Securities and
 Exchange Commission.
 
 
                         New Century Financial Corporation
                              Selected Financial Data
                                    (unaudited)
 
                      (dollars in 000's except per share data)
 
                                            Three Months Ended March 31
                                               2001                 2000
     Revenues
       Gain on sale of loans                 $20,550              $22,810
       Interest income                         9,258               18,441
       Servicing fee income                   17,660               19,133
       Other income                              487                    0
     Total revenues                          $47,955              $60,384
 
     Operating expenses                       51,150               47,667
     Earnings (loss) before
      income taxes (benefit)                  (3,195)              12,717
     Income taxes (benefit)                   (1,342)               5,444
 
     Net earnings (loss)                     ($1,853)              $7,273
 
     Basic earnings (loss) per share          ($0.17)               $0.45
     Diluted earnings (loss) per share        ($0.17)               $0.38
 
 
                                   March 31,     December 31,   March 31,
                                      2001           2000          2000
     Balance Sheet Data:
     Cash and cash equivalents       $9,109        $10,283       $14,184
     Loans receivable
      held for sale, net            472,766        400,089       470,858
     Residual interests in
      securitization                328,082        361,646       401,781
     Other assets                    22,792         65,143        59,078
     Total assets                  $832,749       $837,161      $945,901
     Borrowings under
      warehouse lines               273,725        201,705       256,959
     Borrowings under
      aggregation lines             190,606        202,741       206,798
     Residual financing             138,332        176,806       207,797
     Subordinated debt               40,000         40,000        30,000
     Other liabilities               42,308         63,760        64,399
     Total stockholders' equity     147,778       $152,149       179,948
     Total liabilities
      and stockholders' equity     $832,749       $837,161      $945,901
 
                     MAKE YOUR OPINION COUNT -  Click Here
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SOURCE New Century Financial Corporation
    IRVINE, Calif., April 26 /PRNewswire/ -- New Century Financial Corporation
 (Nasdaq:   NCEN) announced today results for the three months ended March 31,
 2001.
 
      Operational Highlights
 
      -- Sold $5.3 billion in mortgage servicing rights to Ocwen Federal Bank
         FSB ("Ocwen") for approximately $21.8 million
      -- Modified residual financing agreements to extend maturity dates and to
         limit monthly "margin call" risk
      -- Extended the term of the subordinated debt with US Bank to December,
         2003
      -- Decreased loan acquisition cost to 2.87% versus 3.52% for the same
         quarter a year ago
      -- Increased production by 7%, to $1,026.5 million versus $956.5 million
         for the same quarter a year ago
      -- Reduced aged inventory (over 60 days since origination) by 66% during
         the quarter
      -- Reduced residual financing by $38 million during the quarter
      -- Repaid $22.5 million in working capital lines to US Bank
 
 
      Financial Summary (Unaudited)
      (in thousands except per share data)
                                                       Three Months Ending
                                                     03/31/01       03/31/00
      Total revenues                                  $47,955        $60,384
      Earnings (loss) before income taxes             ($3,195)       $12,717
      Net earnings (loss)                             ($1,853)        $7,273
      Income (loss) available
       to common shareholders                         ($2,577)        $6,548
      Diluted earnings (loss) per share               ($0.17)          $0.38
      Diluted wtd. Avg. shares outstanding         14,914,000     19,314,000
 
      The reduction in the average number of diluted shares outstanding
      compared to the previous period is due to the effect of common stock
      equivalents which are anti-dilutive in periods where losses are reported
      and are therefore excluded from diluted weighted average shares
      outstanding.
 
     For the three months ended March 31, 2001, total revenues decreased to
 $48.0 million, compared with total revenues of $60.4 million for the same
 quarter a year ago.  For the first quarter, 95.7% of total revenues were cash
 revenues, versus 71.4% for the same quarter a year ago.  Net loss was
 $1.9 million, or $0.17 per share on a diluted basis, compared with net
 earnings of $7.3 million, or $0.38 per share, for the same quarter a year ago.
     "The financial results for the quarter do not reflect the tremendous
 success that we've achieved in restructuring our balance sheet, reducing costs
 and increasing liquidity," stated Robert Cole, Chairman and CEO.  "As a result
 of these efforts, our investors can anticipate significant earnings growth in
 the next three quarters.  Our confidence to resume profitability this fiscal
 year is reflected in increasing the estimated EPS range to $1.15 to $1.30 for
 fiscal 2001," added Cole.
 
     Financial Report
     Pre-tax results for the first quarter, 2001 were negatively impacted by
 the following items ($'s in millions):
 
                                                            Year to Date
      Sales of aged inventory                                  $12.8
      Costs related to sale of mortgage servicing rights         1.8
      Charge-off of LoanTrader investment                        1.1
          Total                                                $15.6
 
     Sales of aged inventory:  During the first quarter, the Company sold
 $114.2 million, or 12% of total loans sold during the quarter, at a discount
 averaging 11.2%, as part of the Company's balance sheet restructuring plan to
 reduce the inventory of loans greater than 60 days old from $110 million at
 year-end to $40 million at the end of March.  The increase in aged inventory
 at year-end was primarily the result of the Company's transition to a 100%
 whole loan sales strategy in fiscal year 2000 and resulted in a pool of loans
 that were no longer considered acceptable for purchase by investors.  As a
 result, the Company adjusted its product matrix and underwriting guidelines to
 better match investor guidelines, with a target of reducing the percentage of
 loans that must be sold at a discount in future periods to less than 5% of
 total sales.  Based on the reduction in the aged inventory and recent loan
 sales results, management believes that this target can be achieved in future
 quarters.
     Mortgage servicing rights:  During the first quarter 2001, the Company
 sold approximately $5.3 billion in mortgage servicing rights to Ocwen.  As a
 part of the sale to Ocwen, the Company elected not to close a servicing
 agreement being negotiated with Fairbanks Capital that resulted in a $750,000
 termination fee paid to Fairbanks by the Company.  In addition, the Company
 accrued an additional $1 million in severance costs and legal fees related to
 this transaction.
     LoanTrader investment: In 1999 and 2000, the Company invested
 approximately $1.1 million in LoanTrader, a company based in Southern
 California whose primary business was providing an internet-based trading
 platform to facilitate business between loan brokers and mortgage lenders.
 The form of investment was primarily common stock.  In April 2001, the Company
 was notified by legal counsel representing LoanTrader, that the common stock
 shareholders would not likely receive any return on their investment.  As a
 result, the Company has written off the investment during the first quarter,
 2001.
 
     Sale of Servicing to Ocwen
     During the first quarter 2001, the Company completed the sale to Ocwen of
 approximately $5.3 billion of its servicing portfolio, for $21.8 million.
 Ocwen has assumed responsibility for all the Company's outstanding servicing
 advance receivables and future servicing advance obligations relating to the
 purchased portfolio.  As part of the sale agreement, approximately
 $4.2 million will be released to the Company subject to customary closing
 conditions upon the transfer of the servicing rights and is included in other
 assets at March 31, 2001.
 
     With the cash proceeds from this transaction, the Company accomplished the
 following:
 
      a) Repaid the portion of its warehouse line of credit secured by
         servicing advances
      b) Repaid the $22.5 million working capital line of credit with U.S.
         Bank, and
      c) Purchased an interest rate cap contract to hedge the projected
         residual cash flows.
 
     In addition, this transaction eliminated cashflow uncertainties relating
 to servicing advances, provides an opportunity to receive liquidity from
 future sales of servicing rights to Ocwen, and established an alliance with a
 well capitalized, highly rated servicer that should improve execution levels
 on future loan sales.
     As of March 31, 2001, the Company had retained ownership of approximately
 $367.9 million in mortgage servicing rights.  During the transition period,
 the Company will sub-service the mortgage servicing rights owned by Ocwen, and
 subsequent to the transition, Ocwen will sub-service the mortgage servicing
 rights owned by the Company.  The transfer of the Company's servicing
 portfolio to Ocwen is scheduled to be completed by August 1, 2001.
 
     Modification of Financing Obligations
     Concurrent with the closing of the Ocwen transaction, the Company modified
 its residual financing agreements by 1) limiting margin calls on the
 outstanding residual financing, and 2) terming out its financing arrangements,
 in return for the Company agreeing to specific amortization schedules to fully
 retire the outstanding financing debt by December 31, 2002.  In addition, U.S.
 Bank agreed to extend the term of its subordinated debt from June 2002 to
 December 2003.
     "The modification and extension of debt with our lenders significantly
 strengthens our financial position,"  said Edward F. Gotschall, Vice Chairman
 and CFO.  "The cash flows from our residual securities are now properly
 matched with the amortization of the debt, reducing the risk that cash flow
 from core operations will be required to reduce the debt."
 
     Loan Acquisition Costs
     The loan acquisition cost -- defined as the fees paid to wholesale brokers
 and correspondents, direct loan origination costs, including commissions and
 corporate overhead costs, less points and fees received from retail borrowers,
 divided by total production volume -- for the periods indicated was as
 follows:
 
 
      Loan Acquisition
       Costs            Qtr Ended  Qtr Ended  Qtr Ended  Qtr Ended  Qtr Ended
                         03/31/01   12/31/00   09/30/00  06/30/00   03/31/00
 
      Wholesale          (1.93%)    (2.04%)    (2.29%)    (2.16%)    (2.46%)
      Worth Funding      (2.47%)    (2.40%)    (3.51%)    (2.30%)   (10.14%)
      Branch Operations  (2.45%)    (1.09%)    (1.16%)    (1.20%)    (3.12%)
      Central Retail
       Operations        (2.54%)    (2.67%)    (3.28%)    (3.38%)    (3.99%)
        Total Production (2.09%)    (1.94%)    (2.21%)    (2.10%)    (2.70%)
      Corporate Overhead (0.79%)    (0.75%)    (0.77%)    (0.77%)    (0.82%)
      Loan Acquisition
       Costs             (2.87%)    (2.69%)    (2.98%)    (2.87%)    (3.52%)
 
     Note:  loan acquisition costs do not include loan servicing, non-recurring
            charges and non-production costs.
 
     The first quarter reflects the impact of the Company's ongoing cost
 reduction strategies implemented during year 2000.  Premiums paid to acquire
 loans were decreased from 84 basis points in the first quarter of 2000 to
 44 basis points in the first quarter of 2001.  Total staffing was reduced from
 1,770 at year-end 1999 to 1,511 at year-end 2000 to 1,352 at the end of March
 2001.  Because restructuring costs continued to be incurred during the first
 quarter, the full benefit of decreasing loan acquisition costs will be
 realized in future quarters.
     "We're on track to achieve our goal of 2.50% during the second quarter
 this year," said Brad A. Morrice, Vice Chairman and President.  "By lowering
 our costs, we've positioned ourselves to remain competitive in the marketplace
 and realize attractive profit margins in future periods" added Morrice.
 
     Loan Originations and Purchases
 
     A summary of loan originations for the periods shown below is as follows
 (000's):
 
 
                                          Three Months Ending
                           03/31/01        Percent    03/31/00       Percent
      Wholesale            $807,953          78.8     $709,338          74.2
      Retail                218,579          21.2      247,123          25.8
      Total              $1,026,533         100.0     $956,461         100.0
 
     A summary of loan originations by product type for periods shown below is
 as follows (000's):
 
 
                           Quarter Ended 03/31/01     Quarter Ended 03/31/00
                            Amount          Percent    Amount        Percent
      Fixed Rate           $189,298          18.4     $221,853          23.2
      2 YR LIBOR ARM       $739,725          72.1     $658,171          68.8
      3 & 5 YR LIBOR ARM    $76,125           7.4      $28,710           3.0
      6 MO LIBOR ARM            $98           0.0       $8,375           0.9
      2nd Mortgages         $21,287           2.1      $39,352           4.1
      Total              $1,026,533         100.0     $956,461         100.0
 
     Note:  Production numbers exclude loans brokered to other lenders of
            $19.7 million during the quarter ending March 31, 2001 and
            $7.7 million during the quarter ending March 31, 2000.
 
     Borrower Credit Quality
 
     A summary of loan originations by the Company's credit grades for periods
 shown below is as follows (000's):
 
 
               Quarter Ended 03/31/01              Quarter Ended 03/31/00
      Risk                       Avg.  Credit                   Avg.  Credit
      Grade     Amount     %     LTV    Score   Amount     %     LTV   Score
      Alt-A    $19,719    1.9%  80.0    660      $8,554   0.9%   86.3   643
      A+      $402,514   39.2%  81.1    617    $304,151  31.8%   82.5   636
      A-      $276,230   26.9%  78.1    570    $295,438  30.9%   80.5   580
      B       $225,059   21.9%  75.8    548    $215,204  22.5%   76.6   552
      C        $66,737    6.5%  71.5    540     $89,906   9.4%   71.9   538
      C-       $36,274    3.5%  64.0    540     $43,208   4.5%   64.5   533
      Total $1,026,533  100.0%  77.9    583    $956,461 100.0%   78.8   586
 
     Loan Loss Allowance
     The Company establishes loan loss allowances for potential losses on loan
 repurchases quarterly in accordance with representations and warranties
 provided upon the sale of loans. During the quarter ended March 31, 2001, the
 Company reduced its loss allowance for repurchased loans by $1.9 million.  The
 reduction in loss allowance reflects the significant decrease in repurchased
 loans that were part of the aged inventory during the quarter.
 
     The following table summarizes activity in the allowance for repurchases
 for the quarter ended March 31, 2001 and 2000 (000's):
 
 
                                                2001           2000
      Beginning balance                        $6,443         $3,665
      Provision (reduction) in allowance       (3,375)         1,600
      Loss on sale of repurchased loans         6,066            667
      Charge-offs                              (4,624)        (1,759)
      Ending balance                           $4,510         $4,173
 
     Loan Sales Statistics
 
     The following table summarizes the loan sales activities for the periods
 shown below (000's):
 
 
                             Quarter Ended 03/31/01    Quarter Ended 03/31/00
                               Amount   Gross Gain %    Amount   Gross Gain %
      Premium Loan Sales
        Whole Loan Sales     $839,599       3.69%      $488,196     2.76%
         Securitizations            0          --       429,680     4.67%
        Total Premium
         Sales               $839,599       3.69%      $917,876     3.65%
       Discounted Loan
        Sales                 114,230                     8,580
          Total Sales        $953,829       2.40%      $926,456     3.50%
       % of Production Sold     92.9%                     96.9%
 
     Gain on Sale of Loans
 
     The following table reflects the components of the gain on sale of loans
 for the periods shown below (000's):
 
 
                                                       Three Months Ended
                                                     03/31/01       03/31/00
      Gross Gain on Loans Sold at a Premium:
      Whole loan transactions                         $30,944        $13,478
      Net gain on securitization                            0         20,046
      Mortgage servicing rights                         1,383          2,062
        Gross Gain on Sale                            $32,327        $35,586
      Loss on Loans Sold at a Discount                (12,837)        (1,598)
      Less: Reductions in (additions to)
       loss allowances                                  3,375         (1,600)
        Net Gain on Sale                              $22,865        $32,388
 
      Other Adjustments to Gain on Sale:
      Premiums paid to acquire loans                  ($4,227)       ($7,814)
      Hedge gain (loss)                                  (366)             0
      Other adjustments                                 2,278         (1,764)
        Net Gain (loss) on Sale                       $20,550        $22,810
 
     During the first quarter, the Company sold $839.6 million through premium
 whole loan sales transactions at an average premium of 3.69% versus
 $488.2 million for the same period a year ago at an average premium of 2.76%.
 Loans sold through discounted sales totaled $114.2 million at an average
 discount of 11.2%, resulting in a blended gross premium of 2.40%.  Loans sold
 through discounted sales included the sale of aged inventory, which was
 reduced from $110 million at year-end to $40 million at March 31, 2001.
     The Company retained the servicing rights on $367.9 million of loans sold
 during the first quarter, versus $430.0 million for the same period a year
 ago.  The Company records the relative fair value of the retained mortgage
 servicing rights using a .55% value for fixed rate loans and a .50% value for
 adjustable rate loans.
     Other adjustments include net origination fee income and direct
 origination costs, both of which are deferred and recognized upon sale of
 loan.
 
     Residual Securities
 
     The carrying value of the Company's residual securities for the first
 quarter is summarized below (000's):
 
 
                                                       2001           2000
      Book value of securities @ March 31            $328,082       $406,976
      General Valuation Allowance                           0         (5,000)
        Net carrying value                           $328,082       $401,976
 
     A roll-forward of the carrying value of residual securities for the first
 quarter is summarized below (000's):
 
 
                                                       2001           2000
      Carrying value @ January 1                     $361,646       $364,689
      Residual securities recorded                          0         39,127
      Sale of residuals through
       NIMS/call transactions                         (32,409)             0
      Amoritization of residual secs.                  (1,155)        (1,840)
        Net book value @ March 31                    $328,082       $401,976
 
     Financing secured by the Company's ownership of residual interests for the
 first quarter is summarized below (000's):
 
 
                                                       2001           2000
      Total financing @ January 1                    $176,806       $177,493
      Financing received on residual securities             0         24,687
      Financing paid down through
       call transaction                               (25,897)             0
      Principal advances/(paydown) on financing       (12,577)        (5,812)
        Total financing @ March 31                   $138,332       $207,992
     Percentage of net book value                       42.2%          51.7%
 
     Cash flow received from residuals
      for quarter                                     $12,309        $13,164
 
     In establishing the net book value of the residual securities, management
 reviews on a quarterly basis the underlying assumptions used to value each
 residual security and adjusts the carrying value of the securities based on
 actual experience and trends in the industry.  To determine the Residual Asset
 value, cash flow is projected for each security.  To project cash flow, "Base"
 assumptions for each product type based on historical performance are used for
 Constant Prepayment Rates (CPR), and Losses.  Each security is updated to
 reflect actual performance to date, and the "Base" assumption for CPR and Loss
 is then used to project performance of the security from that date forward.
 If the actual performance of the security differs materially from the Base
 assumptions with respect to CPR or Loss, adjustments are made.  The Forward
 Libor curve is then used to project future interest rates and cash flows for
 each security.  The projected cash flows are then discounted at 13% for CE
 securities and 15% for net interest margin securities to establish the net
 book value of the residual securities.
     At year-end 2000, prepayment speed assumptions were increased to
 historical levels to reflect the decreasing interest rate trend and loss
 projections were increased.  The securities are currently performing in
 accordance with the revised assumptions.
     In December 2000, Salomon Brothers exercised their call option with
 respect to the Company's security 1998-NC5.  In January 2001, in conjunction
 with the fulfillment of the call option, the Company purchased from Salomon
 $43.5 million in delinquent loans from the security collateral pool and sold
 those loans to CSFB.  Salomon Brothers reissued certificates supported by the
 remaining collateral pool and sold the resulting new residual interest, paying
 the Company the proceeds from the sale.  As a result, the Company reduced the
 carrying value of residual securities by $32.4 million and retired
 $25.9 million of its residual financing.
     Approximately $209.3 million of the $328.0 million or 63.8% of the net
 book value of the residual securities is cash held in over-collateralization
 accounts.  There are three components to residual securities:
 
      a) Net interest receivable (NIR)
      b) Projected cash flows from the collection of prepayment penalties, and
      c) Cash held by the trustees in the over-collateralization accounts.
 
     During the life of the security, cash held in over-collateralization
 accounts is generally released to the residual holder.  Cash held in over-
 collateralization accounts is not affected by prepayment speeds or interest
 rate movement.
 
     Servicing Operations
     As of March 31, 2001, the Company's servicing portfolio, including
 securitized loans, loans sold servicing-retained and loans held for sale
 totaled $5.5 billion.  Of that total, $4.6 billion was sub-serviced for Ocwen,
 $367.9 million represents servicing rights owned by the Company and
 $471.7 million represents loans held for sale.  As of March 31, 2001, the
 Company had recorded a total value of mortgage servicing rights of
 approximately $1.7 million or .50% (50 basis points) of the owned servicing
 portfolio.
     Total servicing revenue for the first quarter was $17.7 million versus
 $19.1 million for the same period a year ago.
 
     The following table details the components of the Company's total
 servicing revenue and the relative annualized percentage of the average
 servicing portfolio for the periods indicated (000's):
 
 
                                         Quarter Ended        Quarter Ended
                                           03/31/01              03/31/00
                                      Amount       %        Amount        %
      Servicing fees                  $5,661      0.49      $6,826      0.45
      Late fees and other income       2,226      0.19       2,386      0.16
      Interest on residual
       securities                     11,154      0.96      11,324      0.75
      Amort. Of mortgage
       svcg rights                    (1,381)    (0.12)     (1,403)     (0.10)
      Total Servicing Revenue        $17,660      1.52     $19,133      1.26
 
     Interest on residual securities represents cash received by the Company as
 a result of its ownership in residual securities, net of related amortization
 or accretion.
 
     The following table details the components of the Company's interest on
 residual securities for the periods indicated (000's):
 
 
                                             Quarter Ended    Quarter Ended
                                                03/31/01       03/31/00
      Cash received                              $12,309        $13,164
      (Amortization)/Accretion                    (1,155)        (1,840)
      Interest on residual securities            $11,154        $11,324
 
     The following table provides information on New Century's 1997, 1998, 1999
 and 2000 securitized loans delinquent over 60 days (000's):
 
 
      Risk                 Original          Current          Original
      Grade                Balance           Balance            LTV %
      Alt-A                    3,185            2,778           82.76
      A                   $2,669,647        1,356,741           77.95
      A-                   2,518,496        1,304,722           77.48
      B                    1,435,016          733,525           74.41
      C                      880,707          413,862           70.36
      C-                     392,184          148,300           63.85
                          $7,899,235       $3,959,927           75.61
 
      Risk        Vintage      Vintage       Vintage     Vintage
      Grade        1997          1998         1999         2000      Total
      Alt-A        0.00%         0.00%        0.00%        0.00%      0.00%
      A            6.10%         7.93%        6.02%        4.54%      6.30%
      A-          11.71%        11.27%        7.57%        7.74%      8.73%
      B           14.13%        13.93%       13.08%       11.36%     13.00%
      C           21.05%        20.52%       16.66%       17.80%     17.87%
      C-          22.03%        22.31%       30.23%       27.62%     27.20%
                  11.81%        11.84%        9.64%       10.21%     10.33%
 
     The foregoing tables indicate that, as anticipated, the Company is
 experiencing higher rates of delinquency on lower credit grade loans.  The
 risk of loss on lower credit grade loans is mitigated by the lower loan-to-
 value ("LTV") ratios on these loans.  In addition, delinquency percentages in
 older vintages are higher, as expected, but are impacted by prepayment speeds
 as well as loan performance.  Based upon an evaluation of current
 delinquencies and LTV's, the Company believes that its current assumptions
 regarding loss ratios on securitized loans are adequate.
     The Company has previously repurchased a total of $41.4 million in loans
 out of its 1997 and 1998 securitizations, excluding repurchases pursuant to
 the call of security 1998-NC5.  Such repurchases are permitted only when the
 loan defaults and are undertaken by the Company in order to avoid disruption
 of cash flow from certain securitization trusts and to provide the Company
 with maximum flexibility in resolving problem loans.
 
     Servicing Transition
     The Company has been able to maintain the performance of the servicing
 portfolio at expected levels of delinquency and loss subsequent to the
 announcement of the Ocwen transaction.  Significant retention plans are in
 place for key servicing employees.
     The transition plan to transfer loan servicing on the mortgage servicing
 rights sold to Ocwen is progressing according to the established timelines.
 Management believes that the Company and Ocwen will be able to complete all of
 the tasks needed in order to transfer all of the loans as of the projected
 transfer date of August 1, 2001.
 
     Cash and Liquidity
     The Company's available cash and liquidity as of March 31, 2001 was
 $12.1 million, and included cash of $9.1 million and $3.0 million in available
 borrowing capacity.  Cash and liquidity increased from $11.6 million at
 December 31, 2000 as a result of the cash received from the Ocwen sale,
 partially offset by losses on discounted sales.  A receivable of $4.2 million
 relating to the Ocwen sale will be released, subject to customary closing
 conditions, upon the successful transfer of mortgage servicing rights and will
 subsequently be included in the cash and liquidity calculation.
 
     Summary
     New Century Financial Corporation commenced lending operations in February
 1996, as a specialty finance company that, through its subsidiaries,
 originates, purchases, sells, and services non-conforming mortgage loans
 secured primarily by first mortgage loans on single-family residences.
     At March 31, 2001, New Century originated loans through 65 retail sales
 offices operating in 26 states and 26 wholesale sales offices, including
 5 regional operations centers, operating in 20 states and employed 1,352
 Associates.
 
                Safe Harbor Regarding Forward-Looking Statements
 
     Certain statements contained in this press release may be deemed to be
 forward-looking statements under federal securities laws, and the Company
 intends that such forward-looking statements be subject to the safe-harbor
 created thereby. Such forward-looking statements include (i) the expectation
 that the Company will achieve significant earnings growth in the last three
 quarters of 2001, (ii) the belief that the Company can reduce the percentage
 of loans that must be sold at a discount to 5%, (iii) the payment by Ocwen of
 an additional $4.2 million for the purchase of the Company's servicing rights,
 (iv) the expectation that the alliance with Ocwen should improve execution
 levels on future loan sales, (v) the expectation that the modification and
 extension of debt will reduce the risk that cash flow from core operations
 will be required to reduce debt, (vi) the full benefit of decreasing loan
 acquisition costs will be realized in future quarters, (vii) the expectation
 that the Company will realize attractive profit margins in future periods and
 (viii) the belief that the Company and Ocwen will be able to complete all
 tasks necessary for the transfer of loan servicing rights by August 1, 2001.
 The Company 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.  Such factors include, but are not limited to
 (i) the Company's limited operating history and its ability to sustain and
 manage its growth, (ii) the Company's continued ability to access funding
 sources, (iii) volatility in the market for whole loans, (iv) the condition of
 the market for mortgage-backed securities, (v) the Company's ability to
 maintain acquisition costs at current levels, (vi) the Company's ability to
 alter its production mix quickly in response to changing whole loan market
 conditions, (vii) the potential effect of new state or federal regulations on
 the Company's business, (viii) the maintenance of interest rates at current
 levels, (ix) the Company's ability to recognize expected cash flow from its
 residual assets, (x) Ocwen's ability to perform its obligations and maintain
 high quality servicing operations, (xi) the ability of the Company and Ocwen
 to complete the transfer of servicing by August 1, 2001, and (xii) the
 Company's ability to preserve its servicing platform during the period
 preceding the transfer.  Additional information on these and other factors is
 contained in the Company's Annual Report on Form 10-K for the year ended
 December 31, 2000 and its other periodic filings with the Securities and
 Exchange Commission.
 
 
                         New Century Financial Corporation
                              Selected Financial Data
                                    (unaudited)
 
                      (dollars in 000's except per share data)
 
                                            Three Months Ended March 31
                                               2001                 2000
     Revenues
       Gain on sale of loans                 $20,550              $22,810
       Interest income                         9,258               18,441
       Servicing fee income                   17,660               19,133
       Other income                              487                    0
     Total revenues                          $47,955              $60,384
 
     Operating expenses                       51,150               47,667
     Earnings (loss) before
      income taxes (benefit)                  (3,195)              12,717
     Income taxes (benefit)                   (1,342)               5,444
 
     Net earnings (loss)                     ($1,853)              $7,273
 
     Basic earnings (loss) per share          ($0.17)               $0.45
     Diluted earnings (loss) per share        ($0.17)               $0.38
 
 
                                   March 31,     December 31,   March 31,
                                      2001           2000          2000
     Balance Sheet Data:
     Cash and cash equivalents       $9,109        $10,283       $14,184
     Loans receivable
      held for sale, net            472,766        400,089       470,858
     Residual interests in
      securitization                328,082        361,646       401,781
     Other assets                    22,792         65,143        59,078
     Total assets                  $832,749       $837,161      $945,901
     Borrowings under
      warehouse lines               273,725        201,705       256,959
     Borrowings under
      aggregation lines             190,606        202,741       206,798
     Residual financing             138,332        176,806       207,797
     Subordinated debt               40,000         40,000        30,000
     Other liabilities               42,308         63,760        64,399
     Total stockholders' equity     147,778       $152,149       179,948
     Total liabilities
      and stockholders' equity     $832,749       $837,161      $945,901
 
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 SOURCE  New Century Financial Corporation