California-based Impac Mortgage Holdings received a notice on Friday from the NYSE American LLC requiring a plan to adjust its stockholders’ equity level amid consecutive financial losses. Otherwise, the mortgage lender will be subject to delisting proceedings, according to a Securities and Exchange Commission (SEC) filing.
In the most challenging mortgage market in well over a decade, Impac stockholders’ equity reached approximately $3.5 million as of June 30, 2022. The mortgage lender had losses from continuing operations in its five most recent fiscal years ended Dec, 31, 2021, according to the NYSE’s deficiency letter.
However, to comply with the stock exchange standards, a listed company needs stockholders’ equity of $4 million or more when it has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. If the losses are in its five most recent fiscal years, the company must show $6 million or more equity.
NYSE gave the company a Sept. 29, 2022, deadline to submit a plan addressing the problem to regain compliance by Feb. 26, 2024.
Justin Moisio, chief administrative officer, said the company intends to prepare and timely deliver the plan, as requested. “Receipt of the notice of noncompliance does not affect the company’s business, operations or reporting requirements with the Securities and Exchange Commission,” the executive said.
Losses are piling up at Impac. The company reported a $13.5 million loss in the second quarter, up markedly from the $1.2 million loss in the first quarter of 2022 and the $8.9 million loss in the second quarter of 2021.
Executives have opted to pull back on non-QM products, which represent most of the company’s originations. That resulted in Impac bringing in less than $500,000 in revenue between April and June.
Impac’s common stock, which was trading at $0.50 at 1:00 PM EST Monday, will continue to trade under the symbol “IMH,” but with a designation “.BC” because it is not in compliance with listing standards.
