Shares of Imperial Bancorp, the Inglewood-based parent of Imperial Bank, fell to a 52-week low Wednesday after the company said that because of losses at a related company, third-quarter profit will be as much as 74% below estimates.
Imperial Bancorp shares fell $2.19 to $15.69 on the New York Stock Exchange. The stock has plunged 54% from its 52-week high.
Imperial Bancorp blamed problems at Imperial Credit Industries Inc., the Torrance-based specialty finance company in which it owns a 23% stake. Earlier this week, Imperial Credit said it expects to report a loss of between $65 million and $75 million for the quarter ending Sept. 30, or $1.60 to $1.85 per diluted share. It might report a loss for the year, the company said.
"Obviously, losses are bad," said Thomas Theurkauff, a banking analyst with Keefe Bruyette & Woods in New York. "But the bank is doing quite well--the trends are looking good. What's dragging the bank's stock down is Imperial Credit."
Because of Imperial Credit, Imperial Bancorp said quarterly earnings will 29 cents to 32 cents below the 43 cents analysts had expected.
Imperial Credit blamed its losses on recent turmoil in the U.S. stock market, which has reduced the value of securities it owns. The company has also been involved in high-risk lending.
"We owned stock from taking two subsidiaries public and from two real estate invest trusts," said H. Wayne Snavely, chief executive of Imperial Credit. Shares in REITs, which hold such real estate assets as shopping centers and apartment buildings, have fared poorly this year.
But Snavely argued that Imperial Credit has been more of a help to Imperial Bancorp than a hindrance.
"The bank has benefited tremendously in the past from owning our [Imperial Credit] stock," he said.
Since 1995, the stock had more than tripled, but Imperial Credit's shares have sunk about 63% this year. On Nasdaq, they gained 88 cents Wednesday to $7.50, after trading at a 52-week low of $5.75.
Most of Imperial Bancorp's related companies are at least partially owned by George Graziadio or his family. Graziadio, 79, who could not be reached for comment, is chairman of the board, president and CEO of Imperial Bancorp, which he co-founded. His son sits on the board of Imperial Credit.
Formed in 1963 by two shopping center developers, Imperial Bank has $5.7 billion in assets and bank branches in California and loan offices in several states, including Texas, Washington and Arizona.
Imperial Bancorp recently postponed plans to spin off its entertainment-lending and specialty-lending businesses, citing volatility in the stock market and the drop in shares of Imperial Credit.
The spinoff, to be called Imperial Financial Group, would include the Lewis Horowitz Organization, which lends to independent filmmakers; the bank's small-business finance unit; Imperial Trust, which manages $8 billion in assets; and Imperial's stake in Imperial Credit.