September 10, 2009 / 11:33 AM / in 8 years

UPDATE 3-Xceed Mortgage swings to loss in Q3

* Q3 loss C$0.27 vs profit C$0.06 last year

* New mortgage originations more than double

* No short-term liquidity concerns

* Sells 26 pct less mortgages in Q3

* Shares fall more than 20 pct (Recasts, adds details, updates share movement)

Sept 10 (Reuters) - Insured mortgages provider Xceed Mortgage Corp XMC.TO swung to a third-quarter loss after four straight quarters of profit, hurt mainly by negative residual securitization income.

Toronto-based Xceed, which is seeking shareholder approval to become a Schedule 1 bank, said cash flow from operations and existing resources will enable it to meet its short-term liquidity requirements.

Xceed said the withdrawal of Wells Fargo WFC.N, a major lender for non-prime mortgages, from the Canadian market in the quarter had an impact on its legacy portfolio of uninsured mortgages.

“Sufficient financing to fund uninsured mortgages remains either unavailable or uneconomic and it is not yet clear when this situation will significantly improve,” Chief Executive Ivan Wahl said in a statement.

As a Schedule 1 bank, the company said it will get access to retail deposits that can be an additional source of funding for its mortgage originations activities.

Xceed said it will receive regulatory approval to operate as a bank not later than the first quarter of 2010.

SWINGS TO A LOSS

Xceed reported a net loss of C$7.5 million ($6.94 million), or 27 Canadian cents a share, compared with a net income of C$1.6 million, or 6 Canadian cents a share, in the year-ago period.

Cash flow from operations was C$0.4 million, or 2 Canadian cents a share, compared with C$7.1 million, or 26 Canadian cents a share in the prior-year period.

New mortgage originations in the quarter totalled C$171.8 million, compared with C$82.8 million in the same period last year.

Xceed sold mortgages valued at C$128.3 million in the third quarter, compared with C$174.1 million last year.

Mortgages and other assets under administration were C$1.972 billion at the end of the third quarter, down from C$2.273 billion a year earlier.

Xceed Mortgage shares, which have gained more than 56 percent in the past three months, were down more than 11 percent, or 23 Canadian cents, at C$1.75 in morning trade Thursday on the Toronto Stock Exchange. ($1=1.081 Canadian Dollar) (Reporting by Krishna Chaithanya in Bangalore; Editing by Anil D‘Silva)

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