Exhibit 99.1
[BEAR STEARNS LOGO]
[ECC CAPITAL CORPORATION LOGO]
Media Contacts:
Roque A. Santi Elizabeth Ventura Renu Aldrich
ECC Capital Bear Stearns Bear Stearns
(949) 856-7611 (212) 272-9251 (212) 272-2097
rsanti@encorecredit.com eventura@bear.com raldrich@bear.com
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For immediate release
BEAR STEARNS TO ACQUIRE ECC CAPITAL'S MORTGAGE ORIGINATION UNIT
Acquisition Is Next Step in Bear Stearns' Strategy of Vertical Integration in
Mortgage Business
NEW YORK, NY - October 10, 2006 - The Bear Stearns Companies Inc. (NYSE: BSC)
has agreed to acquire ECC Capital Corporation's (NYSE: ECR) mortgage banking
platform, the two companies announced today.
Under the agreement, Bear Stearns' mortgage bank subsidiary, Bear Stearns
Residential Mortgage Corporation, will purchase the subprime mortgage
origination platform of ECC Capital's subsidiary, Encore Credit Corp. Encore
Credit, specializing in subprime mortgage origination, will operate as a
separate division of Bear Stearns Residential Mortgage Corporation.
"The acquisition of ECC Capital's origination unit will give Bear Stearns
a substantial stake in the subprime lending business," said Jeff Verschleiser, a
senior managing director in the mortgage department at Bear Stearns. "We
continue to diversify our product mix to give independent mortgage brokers
additional options through Bear Stearns Residential Mortgage Corporation. With
our advanced technology, sophisticated risk management systems and capital
markets expertise, we are well positioned to continue to broaden our already
formidable mortgage franchise."
Shabi Asghar, ECC Capital's President and Co-CEO, said, "As part of the
Bear Stearns team, the Encore Credit sales force can now expect to have access
to more competitive loan pricing, to have a broader product menu and to be
integrated into Bear Stearns' state-of-the-art production platform technology,
which will provide our brokers with greater efficiency and service. Our
origination business seems to be a natural fit with Bear Stearns' expansion in
the subprime market." Mr. Asghar will be President and CEO of the business unit
after the transaction closes.
As part of the acquisition, Bear Stearns will take over Encore Credit's
operating centers in Irvine, Cal., Downers Grove, Ill. and Glen Allen, Va. Bear
Stearns will also acquire selected portfolios of whole loans. Encore Credit will
leverage the benefits of Bear Stearns Residential Mortgage Corporation's
existing technology, legal and compliance infrastructure. Bear Stearns
Residential Mortgage Corporation expects to employ most of the personnel of
Encore.
This acquisition is the latest addition to Bear Stearns' market-leading
mortgage franchise. Bear Stearns Residential Mortgage Corporation began
operations in April 2005 to provide mortgage brokers with an easy, streamlined
solution for financing home loans. With an innovative technology platform called
BearDirect.net, it now lends some $600 million per month in primarily Alt-A
loans. Coupled with Encore Credit's mostly subprime mortgage origination, the
combined platform will generate over $1 billion in loans per month.
"Bear Stearns has been buying loans from ECC Capital for over three years
and the performance of its loans has been favorable compared with other
originators in the marketplace," Mr. Verschleiser said. "Encore has a very
strong sales organization, and as part of Bear Stearns Residential Mortage
Corporation we will be able to expand Encore Credit's product mix and improve
its pricing and funding costs."
Friedman, Billings, Ramsey & Co., Inc. and Milestone Advisors, LLC served
as ECC Capital's co-financial advisors, and Latham & Watkins LLP served as ECC
Capital's legal advisor. Stifel, Nicolaus & Co., Inc. issued a fairness opinion
and Venable LLP acted as legal advisor to the special committee of the board of
directors.
About The Bear Stearns Companies Inc.
Founded in 1923, The Bear Stearns Companies Inc. (NYSE: BSC) is the parent
company of Bear, Stearns & Co. Inc., a leading investment banking and securities
trading and brokerage firm. With approximately $61.9 billion in total capital,
Bear Stearns serves governments, corporations, institutions and individuals
worldwide. The company's business includes corporate finance and mergers and
acquisitions, institutional equities and fixed income sales and trading,
securities research, private client services, derivatives, foreign exchange and
metals, and futures sales and trading, asset management and custody services.
Headquartered in New York City, the company has approximately 13,000 employees
worldwide. For additional information about Bear Stearns, please visit the
firm's website at www.bearstearns.com.
About ECC Capital Corporation
ECC Capital Corporation, headquartered in Irvine, Calif., is a mortgage
finance real estate investment trust (REIT) that originates and invests in
residential mortgage loans. Through its subsidiaries, ECC Capital offers a
series of mortgage products to borrowers, with a particular emphasis on
"nonconforming" borrowers who generally do not satisfy the credit, collateral,
documentation or other standards required by conventional mortgage lenders and
loan buyers. ECC Capital is currently structured to qualify as a REIT by
managing a portfolio of nonconforming loans it originates or acquires. As a
REIT, ECC Capital's principal business objective is to generate net income for
distribution to its stockholders from the spread between the interest income on
its assets in its portfolio and the costs of capital to finance its acquisition
of these assets. For additional information about ECC Capital Corporation,
please visit their website at www.ecccapital.com.
Forward-Looking Statements
Certain statements contained in this press release are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements are subject to risks and uncertainties,
which could cause actual results to differ materially from those discussed in
the forward-looking statements. For a discussion of the risks and uncertainties
that may affect Bear Stearns' future results, please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Risk Management" in the company's 2005 Annual Report to Stockholders and
similar sections of the company's quarterly reports on Form 10-Q which have been
filed with the Securities and
Exchange Commission. For a discussion of the risks and uncertainties that may
affect ECC Capital's future results, please see ECC Capital's Annual Report on
Form 10-K for the year ended December 31, 2005.