Merger Speculation Sends Two Mortgage Stocks Skyward : Trading: Plaza Home Mortgage shares rise 19%, while Imperial Credit Industries’ shoot up 23.5%. Both are based in Santa Ana.
Shares of two Orange County mortgage brokerages soared Tuesday on speculation that mortgage companies increasingly are becoming the focus of mergers and acquisitions.
Plaza Home Mortgage Corp.'s stock rose 19% to close at $7.125 in heavy Nasdaq trading, while shares of Imperial Credit Industries Inc., also traded on the Nasdaq market, jumped 23.5% to $10.50. Both companies are based in Santa Ana.
It was the second time this year that shares of Plaza and other publicly traded mortgage companies have been boosted by merger speculation as interest rates rise and home sales level off. The activity began on May 12 when Chemical Banking Corp. agreed to acquire Margaretten Financial Corp. in a $330-million transaction. Chemical paid $25 a share for the New Jersey operator of 89 mortgage offices.
Two weeks later, on May 26, Plaza’s stock jumped 23% to $8.129 a share, a one-day gain of $1.56. Two months after that, on July 29, Plaza released a dismal second-quarter financial report showing a first-half loss of $9.8 million, or 85 cents a share, contrasted with a profit of $3.3 million, or 30 cents a share, for the same period a year earlier.
The company attributed the loss to the substantial industrywide decrease in mortgage refinance activity, “intense” pricing pressure in the origination markets and hedging losses.
A Plaza Home spokeswoman said the company doesn’t comment on its stock activity.
Shares of Plaza, which went public in October, 1992, have traded as high as $8.50 this year and hit their historic high of $10.50 in March, 1993.
On Tuesday, investors traded 186,500 shares of Plaza common stock, almost three times the recent daily average volume. About 68,000 shares of Imperial changed hands, a 51% increase over average daily volume.
Imperial, which also went public in 1992, traded at a high of $19.525 in March, 1993. The shares were as high as $13.50 this year before the price began sagging as mortgage interest rates rose.
Imperial reported a profit of $1.2 million, or 11 cents a share, for the first half of 1994, down from earnings of $6.9 million, or 67 cents a share, for the same period a year earlier.