BANKING : Time Is Ripe for New Mortgage Subsidiary Offering by Imperial
With refinancing creating demand for new real estate loans, Imperial Bank is picking an opportune time to take its Newport Beach mortgage banking unit public.
The bank created a new subsidiary, Imperial Credit Industries Inc., and signed on two investment banking companies, PaineWebber Inc. and Montgomery Securities, to peddle 3.5 million shares to the public. The Irwindale-based bank will retain 4.5 million shares, or 56% of the company.
The bank also is contributing its two-branch Southern Pacific Thrift & Loan in Culver City to Imperial Credit. The thrift and loan will become a subsidiary of the mortgage bank and will fund the loans, said H. Wayne Snavely, Imperial Credit’s chairman and chief executive.
Snavely, formerly an executive vice president of the bank, said he expects the new company to earn $10 million this year.
Before being incorporated as Imperial Credit and taking on the thrift and loan, the Newport Beach operation earned $5.6 million last year as it funded $1.4 billion in mortgages from offices in Newport Beach, San Diego, Walnut Creek, Santa Monica, Portland, Ore., and Bellevue, Wash. Imperial Credit also services $1.1 billion in mortgages it has sold.
Imperial Bank officials, who consider the company’s stock undervalued in the market, figure that the mortgage banking operation won’t be fully appreciated by Wall Street as long as it remains part of the bank, Snavely said.
“The new public offering is valuing the two subsidiaries at almost the same price as the bank,” Snavely said. “We think that, in time, the marketplace would attribute the value of this entity to the bank as well.”
Pending approval from the Securities and Exchange Commission, the initial public offering will begin in late March or early April at $11.50 to $13.50 a share. The bank is selling 1.5 million shares, which at the mid-range price would give it a gain of $18.75 million. The company is selling an additional 2 million shares at the same price, giving it about $25 million in working capital.
