Accredited Home Lenders' stock falls on layoff news; merger talk sends E*Trade, Ameritrade up

By Sheri Kasprzak

New York, Aug. 22 - It was more bad news for mortgage lenders on Wednesday.

Accredited Home Lenders Holding Co. said it is closing almost all of its 60 retail branch locations and five centralized retail support locations. Along with those closures, 480 employees will be laid off. The company expects that as many as 1,600 employees may be laid off once the restructuring dust has settled.

The lender says it will no longer accept U.S. loan applications though the company will honor its existing commitments.

"They really don't have much choice," said one sell-side trader on Wednesday morning. "It's probably the only thing they could do. They're not the only one making these moves. CFC [Countrywide] is cutting jobs too.

"They're likely not to be the only ones going forward either. There's just so much uncertainty in this market right now that it seems like no matter what move you make, the investors are going to pull out."

The move comes just days after Countrywide Financial Corp. said it will lay off 500 employees in its Full Spectrum Lending unit.

Accredited's stock falls

In pre-market action, Accredited Home Lenders shares gave up almost 4%. By the end of the day, the stock had fallen by 45 cents, or 6.87%, to close at $6.10, but gained 4 cents after hours (Nasdaq: LEND).

The move from San Diego's Accredited comes after weeks of turmoil in the subprime mortgage sector.

The closing of the retail branches and support locations will be closed Sept. 5.

"Effective immediately, no new U.S. loan applications will be accepted, although the company will honor existing commitments," said a statement released from Accredited on Wednesday morning.

Once market conditions improve, the statement said, Accredited may reenter the wholesale lending business.

"These difficult decisions were made out of necessity in light of the continued and widely publicized turbulence in the mortgage and financial markets, but with a heavy heart," said chief executive officer James Konrath, in the statement.

"Many of the people who are affected by these decisions have been productive, dedicated and loyal colleagues for many years. We will miss them and the enthusiasm and creativity that they brought to their jobs every day at Accredited."

The move, according to the statement, would not impact its Canadian operations or its servicing platform for its $8.4 billion loan portfolio as of June 30.

Countrywide stock comes back

Even though its stock made a pretty significant comeback on Tuesday after rumors surfaced that Countrywide is in talks for a sale of certain assets to billionaire investor Warren Buffett, shares of Countrywide resumed sliding Wednesday before turning around late in trading.

"The news [of the buyout] will only help so much," said one sell-side trader Wednesday. "So far it's rumor. This market is so volatile right now that anything that remotely looks like a solution or a bailout is going to help, at least for a while. The only way there will be a permanent change is when something solid is in place. There needs to be a solid plan or a solid agreement, something investors can look at and say, 'this is going to help them.'"

Shares of Countrywide gained 3 cents to close at $21.82 on Wednesday (NYSE: CFC). In after-hours trading, the stock gained 5 cents. On Tuesday, amid the buyout buzz, the stock rebounded by 9.99%, or $1.98, to end at $21.79 and gained another 15 cents after hours.

Last week, Countrywide tapped an $11.5 billion credit facility, the news of which shoved its shares down 10.99%.

E*Trade, Ameritrade to merge?

Whispers that TD Ameritrade Holding Corp. and E*Trade Financial Corp. might merge sent shares of both companies up early in the day. However, those gains tapered off as analysts said they didn't feel the merger would actually go forward.

The Wall Street Journal reported on Wednesday that the two online brokerage companies have been in merger talks for weeks but have not yet made a deal.

"If it does happen, it would be a very positive thing for both names," said one analyst on Wednesday afternoon. "There's no indication that this is actually going to happen. The stock is responding to the reports."

The analyst reached Wednesday, as well as reports from other analysts, indicated that Toronto-Dominion Bank, Ameritrade's majority shareholder, would likely have a problem with the merger since E*Trade has its own bank.

TD Ameritrade's stock climbed before the opening bell, gaining $1.35, or 8.26%. The stock went on to gain 80 cents, or 4.89%, to close at $17.15 (Nasdaq: AMTD). E*Trade's stock also got a leg up this morning, gaining $1.36, or 8.73%, in pre-market action. By the end of the day, the stock turned around to fall by 32 cents on the day, or 2.03%, to close at $15.25 (Nasdaq: ETFC).

Nymex up on merger talks

In other merger news, Nymex Holdings, Inc. said Wednesday it is considering a business combination or similar transaction.

"The company has talked to certain parties regarding a potential business combination," said a statement from Nymex.

Nymex's stock got a boost from the news. In pre-market activity, the stock put on $7.72, or 6.5%. The stock gained $7.28, or 6.13%, at the end of the session to close at $126.06 (NYSE: NMX).

The company's chairman Richard Schaeffer said he feels the transaction would have to be at a "meaningful premium to the company's current share price," and could result in a cost savings of up to $250 million, according to the news release.

Nymex is also developing a cost savings program that may reduce 100 to 150 jobs and excess trading floor capacity, including the sale of its headquarters building. The sale of the headquarters would likely save the company $500 million, the statement said.

New York-based Nymex is the parent company of the New York Mercantile Exchange.

Dubai World acquires stake in MGM

Elsewhere, shares of MGM Mirage climbed on news that Dubai World agreed to buy 9.5% stake in the casino operator, as well as part ownership in a real estate project. The move is valued at $5 billion.

Dubai plans to buy 14 million shares at $84 each from MGM Mirage and the same number of shares from existing shareholders at the same price. The share price is a 13% premium to the company's $74.32 closing stock price on Tuesday.

The agreement shoved shares of MGM up 8.91%, or $6.62, to close at $80.94. In after-hours trading, the stock fell by 7 cents (NYSE: MGM).

Volume of MGM shares was up with 8,021,300 shares traded, compared to an average 2,731,840 shares.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.