Non-traditional mortgage lender Xceed Mortgage Corp. today reported weaker profit for the third quarter ended July 31.

Net income was $6.9 million, down from $8.6 million a year earlier. Basic earnings per share totaled 24¢ versus 30¢ a year earlier.

Cash flow from operations was 22¢ per share versus 4¢ a share in the corresponding quarter of 2005.

Return on average shareholders’ equity was 28.4% in the 2006 third quarter, down from 41.7% for the fiscal 2005 third quarter.

Mortgages and other assets under administration rose to $2.1 billion, an increase of 5.1% from the end of the prior quarter and 26.1% higher than a year earlier.

Mortgage fundings were $260.4 million, compared with $336.2 million a year earlier.

“While our mortgage fundings in the fiscal third quarter continued to be affected by new entrants in the non-traditional mortgage market, we are encouraged by recent trends. Xceed’s pipeline of commitments in the latter part of the third quarter and first part of the fourth quarter of fiscal 2006 rose to levels encountered during the same period of the prior year,” said Ivan Wahl, chairman and CEO.

Xceed noted that the third quarter of 2005 was exceptional and unprecedented in terms of mortgage funding volume and the profitability that resulted. As a point of reference, under the current management, mortgage fundings have grown since 2002 at a compounded annual growth rate of 57.7%. Similarly, net income has grown at a compounded annual growth rate of 78.9% during the same period.