IndyMac Bancorp swings to 1st-qtr loss, sees 2008 loss
May 12, 2008
LOS ANGELES ” IndyMac Bancorp Inc. said Monday it swung to a loss in the first quarter as deteriorating credit markets forced the mortgage lender to lower the value of mortgage-backed securities, and warned it would not post a profitable quarter in 2008.
“With respect to profitability, we do not expect that Indymac will be able to return to overall profitability until the current decline in home prices decelerates,” Chief Executive Michael Perry said in a statement.
The Pasadena, Calif.-based holding company for IndyMac Bank reported a loss of $184.2 million, or $2.27 per share, for the quarter ended March 31.
That compares with a profit of $52.4 million, or 70 cents per share, in the same period a year earlier.
Analysts polled by Thomson Financial expected a loss of $1.92 per share.
The latest results included credit costs and losses of $249 million related to declining values of mortgage-backed securities. The company more than tripled its credit reserves to $2.7 billion from a year earlier.
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The company said 24 percent of its losses during the quarter stemmed from severance payments and costs related to office closings. Discontinued businesses, including its homebuilder and home equity lending divisions, accounted for another 22 percent of the period’s losses, IndyMac said.
The lender stopped making new loans via its construction lending division in the fourth quarter, as the housing downturn left home builders in California and Florida stuck with new units they couldn’t sell.
The company originated $9.6 billion in new mortgage loans during the quarter, with 88 percent of the volume representing loans that can be sold to government-sponsored mortgage companies.
Perry forecast that the company would post smaller quarterly losses through the end of the year as its restructuring and credit provision costs and losses from discontinued operations decline.
“In this respect, I believe that we have turned a corner and that our business is improving,” Perry said in a statement.
Perry projected a $20 million loss for the fourth quarter, but noted some of the company’s business segments would be profitable as early as the second quarter.
To help generate capital, IndyMac said it will stop paying a dividend on preferred shares. The move is expected to save $7.4 million each quarter.
IndyMac noted its capital levels exceed regulators’ requirements.