If NVR Inc.'s (NYSE:NVR) merchant builder model needed any further validation during this housing downturn, it came Wednesday morning in the company's fourth-quarter and full-year earnings report. The company was profitable for both the quarter and the year, owing not to tax refunds or other one-time gains but to earnings from home building and mortgage banking.

NVR posted net income for its fourth quarter ended December 31, 2009 of$60.6 million ($9.61 per diluted share), compared to a net loss of $30.5 million (-$5.54 per share) for the same quarter last year. Net income for the year was $192.2 million ($31.26 per share), up sharply from $100.9 million ($17.04 per share) for 2008. New orders were up sharply.

The profits beat the consensus analyst estimate of $9.51 per share for the quarter and $3106 per share for the year. NVR shares, however, were down 2.8% at $688.99 during morning trading Wednesday as the overall markets and the builder group sank on reports of a 7.6% drop in new home sales in December.

The positing results came despite an 18% drop in consolidated revenues for the quarter of $745.8 million and a 26% decline to $2.74 billion for the full year. Home building revenues were down 19% to $730.1 million as closings declined 8.1% to 2,550 and average prices dropped 11.6% to $286,200.

For the full year, NVR closed 9,042 homes at an average price of $296,400, down from 10,741 and $338,400 in 2008.

New orders for the quarter jumped 47% to 2,000 units, and the average new order price crept up to $279,800 from $296,000 in the comparable quarter last year. The cancellation rate was halved from 30% in last year's quarter to 15% this quarter.

Backlog was up 11.6% to 3,531 homes, but the average backlog price was down to $304,900 from $316,900 at yearend 2008. NVR's community count at quarter's end was down from 397 in the 2008 quarter to 352 at yearend 2009.

Gross profit margins increased to 18.9% for the quarter, up from 2.6% for the same period in 2008, which included a $109.8 million land deposit impairment and goodwill impairment charges of $11.7 million. SG&A was down to $62.1 million from $67.9 million for the quarter and to $233.1 million from $308.7 million for the year.

Mortgage closed loan production was $542.1 million for the quarter, down 13% from the same period last year, and income before tax increased to $8.7 million from $4.2 million for the same period of 2008, due in part to a decrease in incentives given to borrowers. For the year, mortgage closed loan production was down 12% to $2.06 billion and 0,376,000. Pretax income increased 32% to $35.3 million.

The company ended the quarter and the year with $1.25 billion in cash and$219.5 million in marketable securities. It listed approximately $135.5 million in term debt and senior notes and $65.9 million in liabilites related to consolidated assets not owned on its balance sheet at yearend. Total liabilities were $638.5 million.