Impac Mortgage Holdings Inc. slumped Wednesday after the company warned that it plans to re-evaluate its dividend policy amid lower-than-expected profit margins.
Profits at the Newport Beach-based company are being squeezed by rising short-term interest rates, which affect what it pays on bonds that are backed by mortgages it controls. The income Impac earns on loans is tied to long-term rates, which have been mostly flat.
Impac invests in, originates and packages together home loans.
Shares of the company were down 12.1% to $18.9 Wednesday, a day after the company warned that its income for the second quarter would fall short of its promised dividend. As a real estate investment trust, Impac must pay out nearly all its income as a dividend to shareholders.
Impac is one of several mortgage companies based here. Others, such as Irvine’s New Century Financial Corp., also have said profits are declining.
Mortgage loan prepayments have been more than expected, which leads to lower income, Impac said.
Still, the company said its loan originations and acquisitions are “strong” and its portfolio has grown to $27 billion in loans.
The company’s second-quarter dividend is 75 cents per share. Impac plans to adjust its third-quarter dividend in light of its expected income in the period.
