American Home Mortgage Holdings Inc., a small mortgage banker with an Internet slant, plans to raise $22.5 million in an initial public offering soon.

The 11-year-old New York-based company's IPO is scheduled for late September, according to a spokesman for Friedman, Billings, Ramsey & Co., the investment bank that will handle the sale. American Home Mortgage declined to comment, citing Securities and Exchange Commission restrictions.

According to a prospectus filed with the SEC, American Home plans to sell 2.5 million shares at a target price of $9. After the offering is completed, it would have 7.5 million shares outstanding.

The prospectus says that if the company had paid corporate income tax last year, American Home would have earned $2.888 million. Thus, the IPO target price would value the company at $67.5 million, or 23.4 times earnings.

That appears rich compared with established mortgage companies, whose stock prices have been hammered this year as interest rates have risen. Countrywide Credit Industries, the largest independent home lender, was trading at 9.07 times earnings Wednesday afternoon; Resource Mortgage Bancshares Group was at 3.09 times earnings.

Indeed, it seems like an odd time to take public a company that only originates mortgages. Rising rates have depressed lending volumes, price competition has squeezed margins, and many companies -- including Countrywide and Bank of America -- have been slashing staff and closing branches to reduce overhead. Unlike those industry giants, American Home has no servicing portfolio to offset falling volume.

Then again, the company's proposed valuation is lower than the value of younger mortgagers that emphasize their Internet presence. E-Loan Inc. was trading at 98.11 times earnings Wednesday and Rock Financial Corp. at 31.03 times earnings.

American Home may view itself as belonging more to the latter category. The prospectus says the company began marketing its products on the Internet in January. It has its own Web site, MortgageSelect.com, and originates loans through several prominent aggregator Web sites, including Microsoft's HomeAdvisor, GetSmart, and LendingTree.

In July, the prospectus says, American Home "accepted" applications over the Internet for $39.5 million of loans, representing almost a quarter of its total applications. It does not say how many of those applications actually resulted in closed loans -- though it says the company expects that its web site "will account for a significant portion of our total originations in 1999."

Simply being an Internet play does not guarantee a smash IPO anymore. Though E-Loan's offering in late June was well-received, rising to $63 a share after opening at $14 on its first day of trading, a few weeks later Mortgage.com raised only about half -- $56.5 million -- of the $112 million it had expected. TheStreet.com's Internet stock index is off 22% from its April high.

American Home Mortgage is primarily a retail shop; more than 80% of its $1.158 billion of originations last year came from its 16 branches, all on the East Coast. Part of the proceeds from the stock offering will finance the expansion of its Internet business, the prospectus says.

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