Impac Reduces Dividend, Citing Margin Pressure

Impac Mortgage Holdings has cut its dividend, citing significant pressure on profit margins as a result of interest rate conditions. The company will pay a fourth-quarter dividend of $0.20 per share on Jan. 24, down from a previous quarterly dividend of $0.45. The ex-dividend date is Jan. 12 for the fourth-quarter dividend.

Impac's chairman and CEO, Joseph Tomkinson, said that the combination of rising short-term interest rates and elevated prepayment rates has put pressure on Impac's net margins. "Furthermore, although loan production remained solid during the fourth quarter of 2005, profitability at our mortgage operations declined significantly as price competition and the widening of bond spreads affected our profitability on the sale of mortgage loans throughout the fourth quarter," Mr. Tomkinson said in the company's announcement.

He went on to say that the company has taken steps to improve overall profitability by "increasing pricing on current mortgage loan production to meet market expectations and making the necessary adjustments to our cost structure to reduce overall expenses."

Impac has over $1 billion of equity and over $28 billion in total assets. The mortgage REIT operates long-term investments, mortgage operations and warehouse lending units.

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