Impac Woes Will Affect Shareholders’ Dividend Payments
In another sign of trouble in the sub-prime lending industry, Impac Mortgage Holdings said Thursday it will delay payment of its third-quarter dividend and will not make a payout to shareholders for the fourth quarter.
The Santa Ana Heights-based lender also said it expected to lose up to $22.9 million in the third quarter, which ended Sept. 30, because of the fall in market value of many of its holdings that it needs to liquidate. Analysts had expected the company to earn about $12 million.
The company said fourth-quarter earnings also would be “adversely affected.” Analysts had expected about $11.7 million in the fourth quarter.
The announcement, made after the close of the stock market, came less than two weeks after Impac announced that it would pay a 49-cents-a-share dividend to shareholders Oct. 26. Impac now plans to make the payout, which will total $11.9 million, on Jan. 6. At the end of June, the company reported that it had $7.4 million in cash on hand.
“We have no intention to go out of business or declare bankruptcy,” Chief Executive Joseph Tomkinson said in a news release. “We believe the residential market remains strong and that the recent turmoil in the credit markets is a short-term issue.”
Thursday’s announcement comes amid turmoil in the sub-prime lending market, including the non-conforming, high-yield residential industry in which Impac competes, that has resulted from higher default rates.
The company’s board authorized the repurchase of up to $5 million of its stock. The board also approved a “poison pill” anti-takeover plan to discourage a hostile bidder, although the company said it is not aware of any such plan.
Earlier this week, Impac’s stock hit a 52-week low of $4. On Thursday, it was the sixth largest gainer in all U.S. markets, climbing 53%, or $2.13 a share, to $6.13.
Impac is hardly alone in its troubles.
Earlier this week, Torrance-based Imperial Credit Industries Inc. hit a 52-week low of $3.875 after announcing that its third-quarter loss would be as much as $95 million. Last month, Wilshire Real Estate Investment Trust Inc. made an unsolicited takeover bid for the company, which Imperial rejected.
Standard & Poor’s placed Imperial’s rating on its CreditWatch list with negative implications.
