Asset manager Resource lists loss
Loans to risky companies hurt the ledgers in the 4th quarter.
The worldwide turmoil in the credit market struck Resource America Inc., a Philadelphia asset manager, last month.
The company said late Thursday that it recorded a pretax loss of $18.33 million on loans it made to highly leveraged companies as the market for such risky loans worsened. That meant Resource could not sell the loans for full value.
A Bank of America analyst said the same day that banks holding $160 billion of such loans will have to take more losses after the plunge in the value of that debt early in the year, according to Bloomberg News.
Resource America's loss on such loans swung the company to a net loss of $6.37 million, or 37 cents per share, in the quarter ending Dec. 31 from a net profit of $4.45 million, or 26 cents per share, in the same period of 2006. The company said it took the loss on the loans in the fourth quarter, even though the problem occurred this year.
"The economic environment, particularly the global financial markets, continues to be one of the most challenging ever, but we are encouraged by the substantial progress" in certain areas of the business, such as the management of leasing assets, Jonathan Cohen, president and chief executive of the company said in a news release.
Difficult market conditions also forced a $1 million impairment charge on investments in securities known as collateralized debt obligations and a $2.77 million provision to cover loans or other forms of credit that might not be paid back, up from $45,000 the year before.
Resource America said that it had $17.9 billion in assets under management on Dec. 31, up from $13.6 billion the year before.
The company's shares closed yesterday at $12.76, down 3 cents, on Nasdaq. Their 52-week high was $28.11.