Bullish on Indymac: CEO Says Lender Has "Turned a Corner"
Indymac Bancorp Inc. (IMB) CEO Michael Perry said yesterday that the Pasadena, Calif.-based thrift is likely to post better financial results when it reports first quarter earnings on May 12. In an email to employees announcing CFO Scott Keys' leave of absence due to an unknown medical condition, Perry wrote that "we have turned a corner and that our business is improving." In particular, Perry said that Indymac would likely improve on the $509 million loss it recorded during the fourth quarter of 2007, suggesting that first quarter losses might be as little as $178 million and as much as $255 million. The bank had earlier said it expected a loss of $38 million for Q1, and then but warned in early March that losses would likely be higher than its original guidance. Perry also highlighted some positive trends at what will likely be the nation's largest independent lender, after the Bank of American/Countrywide merger is expected to be completed during the third quarter. In particular, he said that total credit costs would like be down roughly fourfold from the $863 million booked in the fourth quarter, and that the company is predicting further drops in credit costs throughout the remainder of 2008. He also signaled that originations have dropped significantly, saying that "last year we had roughly three times the mortgage production as we currently have" -- an outcome Perry painted as positive relative to the liquidity needs that would come with higher production volumes. While mortgage production was admittedly a "struggle" in Q1, according to Perry, Indymac produced nearly $10 billion in new mortgage loans during the quarter, 90 percent of which was saleable to Fannie/Freddie/FHA/VA. "Our stock remains under pressure because, as the last major independent home lender, we are at the center of the current storm in the housing and mortgage markets," Perry said. Shares of Indymac were among Wall Street's biggest gainers Thursday, closing up 22.15 percent at $3.97; the bank has seen its stock fall from $30.39 per share just one year ago. Disclosure: The author owned no positions in IMB when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.