Mortgage work boosts PHH to record profit for quarter Hunt Valley firm says it prospers by being 'different from pack'


Led by its mortgage operation, PHH Corp. yesterday posted record second-quarter earnings.

The Hunt Valley-based company reported revenues of $589.8 million, up 16 percent from the corresponding quarter last year when it posted $510.1 million in sales. Net earnings rose 11 percent in the quarter, to $19.6 million from $17.6 million. Earnings per share rose from $1.01 to $1.12.

PHH is a diversified service company with three main businesses. It manages fleets of vehicles for corporations, relocates corporate executives and processes mortgages for large membership groups.

In its mortgage operation, PHH serves as a "back office," not only making the home loans for the groups it services, but also collecting fees for handling payments on the mortgages.

"We're different from the pack in the way we originate and service mortgages," said Terry Edwards, PHH vice president for investor relations. While revenue for many companies in the home mortgage business plummeted after the refinance boom peaked in early 1994, PHH has continued to increase its mortgage portfolio, Mr. Edwards said.

PHH is a leader in marketing mortgage services. During the last year, it has expanded its business with two large membership organizations -- Credit Union National Association, in Madison, Wis., and USAA, of San Antonio, a group of current and former military officers and their families.

Because of the volume of work it handles for membership groups, PHH is able to cut the cost of processing each mortgage application, Mr. Edwards explained.

Operating income for the company's mortgage-services segment increased 40 percent, from $7.5 million to $10.5 million, during the second quarter.

"This business segment continues to outperform the prior year quarter in every significant category," Robert D. Kunisch, PHH chairman and chief executive, said in a statement.

Operating income from real estate services increased 3 percent, from $11.1 million to $11.4 million, the company reported.

In its vehicle-management business, the company reported operating income of $11.3 million, the same as in last year's second quarter. Mr. Edwards said the lack of growth in that area was due to a decline in the sale of used vehicles, which was offset by fee-based services, such as fuel purchases.

PHH, which which trades on the New York Stock Exchange, closed unchanged yesterday at $45.88 per share. Its quarterly results were released after the market closed.

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