Moviegoers watching “The Whole Nine Yards” probably won’t notice, but the new Bruce Willis comedy marks a milestone for Imperial Bancorp’s Imperial Entertainment Group, a leading player in the art of loaning cash to Hollywood.

After years of financing mostly low-budget independent films, Imperial is breaking new ground by funding the kind of films previously only bankrolled by giant studios.

Imperial Entertainment funded “The Whole Nine Yards” as part of a five-picture, $200 million deal with Franchise Pictures. Other films included in the pact include two potential blockbusters this summer “Battlefield Earth,” with John Travolta, and Sylvester Stallone’s “Get Carter.”

In the last three years, the film financing division’s outstanding loan portfolio has grown from $300 million to $600 million. The group’s reputation for knowing both the ins and outs of film financing and the most lucrative overseas markets have earned it a sterling reputation in the independent film world.

Known for art films

“They’re the smartest guys in the business right now,” said veteran producer Peter Hoffman, whose Seven Arts Pictures is making several movies with funding secured through Imperial. “They’re on the ground, they know the rules of engagement. In terms of single-picture lending, Imperial is far and away the leader in the independent film business.”

The bank long has been known for financing smaller-budget action-adventure movies, as well as critically acclaimed art-house films like “Gods and Monsters.” The move to more expensive films is less the result of a change in strategy than the changing nature of film finance, says Imperial Entertainment President Morgan Rector.

“We would have been doing the same deals in 1995, they just weren’t there,” he said. “All that’s happening is that the market is evolving.”

Five years ago, the independent film finance business was relatively straightforward. There was a lot of money available, and worldwide prices for rights to show a movie overseas were stable. A film with a “B-list” star and a budget of between $3 million and $12 million would be able to recoup its costs and turn a profit for its investors through overseas screenings and video sales, even if it didn’t make much at the U.S. box office.

“My clients are selling rights to German distributors and if (the distributors) are paying a consistent amount, it must be a good business,” Rector said.

But in 1996 and 1997, as the U.S. economy improved, more money flooded into the market, resulting in more movies. This glut hit the market just about the time most of the Asian economies went into a tailspin, limiting the ability of a film to make money for its investors. Between the time a film gets a loan and is distributed, a year can pass, enough time for an economic sea change.

The other thing that cut into smaller-budget films was the trend among video retailers to have as many copies of hit films on their shelves as possible, leaving less room for the straight-to-video movies that made up much of what independent film companies were producing.

Bifurcated financing

“It is the diminution of the video market,” Rector said. “You’re always hoping for a big release, but if it didn’t happen, then you could still market it direct to video. But now there is more breadth of product and less depth.”

Banks, insurance companies and others who funded independent movies became less enamored of low-budget movies as a result, causing a bifurcation in financing: either fund bigger pictures with more recognizable stars, or extremely inexpensive pictures with unknowns. Imperial took the former road. It is financing around 40 movies this year, well down from about 75 three years ago.

The same is true for the production companies themselves. Imperial’s clients are moving toward funding more expensive movies, carrying their bank along with them.

For the production company, Imperial’s knowledge and service are essential.

“In the entertainment business, you look for the same thing in a loan that everyone else does: availability of funding, quick response time and consistency from your loan officer,” said Franchise Chief Financial Officer Hans Turner. “And you don’t just want a loan, you’re also looking for other business options. Banks have a large, diverse clientele, maybe they’re looking to sell something that you’re looking to buy. And for films, they have to know intimately all the (foreign) buyers and the territories. The Imperial guys are really on top of this stuff.”

If the intricacies of financing a big-budget movie can seem obscure, the bottom line is the same as for any other kind of bank loan.

“Our business is finding intelligent ways to finance independent films on our own or with others,” Rector said. “As the business changes, we still want to have a reputation as the best of the financing options.”