The bankruptcy of Southern Pacific Funding Corp., losses at Franchise Mortgage Acceptance Corp., and a poor yearend market for home equity loans crippled earnings at Imperial Credit Industries and Imperial Bancorp.
Processing Content
Imperial Bancorp, parent of Imperial Bank of Inglewood, Calif., on Tuesday reported an 11% decline in 1998 annual income, to $43.7 million, and a 21% decline for the fourth quarter, to $16.9 million.
It attributed the decline to lower earnings at Imperial Credit of Torrance, Calif. At yearend, Imperial Bancorp owned 8.9 million shares of Imperial Credit, or 24.3% of its outstanding shares. The banking company has been trying to sell its stake in recent months.
A one-time, $2.1 million charge related to cancellation of a spinoff of a small unit of the banking company contributed to the decline.
Imperial Credit reported a $73.6 million net loss for 1998 and a 90% decrease in income for the fourth quarter, to $6.6 million. The loss was due primarily to a writeoff of its investment in Southern Pacific Funding, the Lake Oswego, Ore., home equity lender that filed for bankruptcy, Imperial Credit said.
The third quarter's unstable asset-backed securities market also led to a $97.5 million charge by Imperial Credit.
Its fourth-quarter earnings decline was due to its 35% ownership of Franchise Mortgage Acceptance, Los Angeles. Franchise Mortgage said last week that it was taking a $39 million hedge loss.
Imperial Credit's losses also included a charge for the discontinued operations of Auto Marketing Network Inc.
