California-based Impac Mortgage Holdings, a former mortgage lender repositioning itself as a brokerage firm, announced on Thursday that NYSE American, LLC. has started the proceedings to delist its common stock from the exchange, suspending its trading immediately.
Impac does not intend to appeal the determination, the company said in a filing with the U.S. Securities and Exchange Commission (SEC). Impac’s common stock will start trading on April 27 on the OTC Pink, where penny stocks dominate and companies that don’t adhere to the SEC’s reporting requirements.
Impac’s common stock was trading at $0.22 on Thursday at about 11:00 AM EST, up 2.23% compared to the previous closing.
The delisting follows Impac’s failure to adjust its stockholders’ equity levels amid consecutive financial losses. Section 1003 of the NYSE Amex LLC Company Guide requires a company to maintain at least $2 million in equity if it has reported losses from continuing operations and/or net losses in two out of its three most recent fiscal years.
However, in the most challenging mortgage market in over a decade, Impac’s equity reached a negative $11.6 million as of December 31, 2022, down compared to the previous year’s positive $9.9 million in stockholder equity.
The company did not reach profitability in the most recent fiscal years. Impac delivered a $39.4 million loss in 2022 and a $3.8 million loss in 2021.
In August 2022, NYSE American gave the company a deadline of February 26, 2024 to comply with the stock exchange standards. However, the company stated in its required quarterly plan update that it could not continue to demonstrate an ability to return to compliance by then.
In March, Impac announced changes to the business. The company will now operate as a mortgage brokerage, giving up its retail consumer direct lending division and winding down its third-party origination (TPO).
The company has also voluntarily relinquished its government-sponsored enterprise (GSE) seller/servicer designation due to the lack of conventional GSE origination volume and servicing rights over the past several years.
When announcing the changes, George Mangiaracina, chairman and CEO, mentioned that non-transitory inflation and Federal Reserve tightening had reduced the addressable market for the company’s product offerings.
The executive also said excess industry origination capacity remained, evidenced by participants’ pricing to decrease net margins in pursuit of market share.
“The company has no intention of engaging in systematic, non-economic activities,” Mangiaracina added.