Hot Home Equity Lender Seen Stoking Up Volume Growth With Proceeds from

IMC Mortgage Corp. has been growing at a torrid pace this year, and analysts say it is likely to keep doing so now that it has gone public.

By the end of June, IMC had originated $667 million of loans for 1996. Its production for all of last year was $625 million.

Tampa-based IMC, formerly known as Industry Mortgage Corp., went public in June at $18 a share.

The company's second-quarter earnings came in at 43 cents a share, compared to 8 cents last year. The one analyst who was covering the company at the time had been expecting 40 cents a share.

As a result of this solid quarter, the stock is now trading at $31, a 72% increase from its initial offering price.

George Nicholas, IMC's chairman and chief executive officer, started the company in 1993 as a partnership of lenders, including industry leaders such as Cityscape and the Money Store.

The company primarily makes home equity loans to customers with subpar credit histories. Most of the loans are originated through correspondents and brokers.

Mr. Nicholas said IMC is using some of the $51 million in proceeds from the offering to increase its retail presence. The company is planning to bolster the retail effort by spending more on direct mailings and by newspaper advertising.

IMC should have five new retail branches opened by yearend, he added, for a total of 17.

New retail business, combined with IMC's strong correspondent network, has enabled it to post strong growth in loan volume.

This rapid growth should continue, observers said. Bear, Stearns & Co. analyst Michael Diana said it is not unusual to see significant increases in business volume after a public offering because of the influx of cash available for spending on infrastructure.

Still, there are some concerns. As even more home equity companies are announcing that they too will go public, increased competition could put a damper on IMC's profits. But Mr. Nicholas said this has not happened yet.

"The margins have not been impacted as much as one would assume," Mr. Nicholas said. "The new entrees into nonconforming (loans) have not had that much of an effect on us."

Mr. Diana said the main issue for IMC, and the rest of the home equity industry, is credit quality.

But he added that investors are confident in IMC's management and that this confidence, combined with the better-than-expected second-quarter earnings, had led to the stock's meteoric appreciation since the company went public.

Mr. Nicholas and most of IMC's management team have been together since 1986 when he started American Financial Corp. in Tampa.

"Everybody knows" Mr. Nicholas, Mr. Diana said. "Everybody respects him, and it came through."

Bear Stearns and Oppenheimer & Co. were the two lead underwriters for the offering and are the only two firms covering the company.

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