IndyMac Warns on 2008 First Quarter Guidance, Cites "Panic"
IndyMac Bancorp, Inc. said Tuesday morning that "panic market conditions" surrounding mortgages have turned the capital markets onto their head, and that as a result the thrift would likely miss its first quarter earnings guidance. The bank had originally forecast a net loss of $38 million for the quarter in an investor presentation on February 12. In a filing with the Securities and Exchange Commission, IndyMac noted that "spreads on everything" had reached "near all-time historic levels," and that the Pasadena-based thrift could not estimate the effect of market turmoil on its MBS portfolio. "Spreads between Treasuries and other instruments, in particular, non-GSE mortgage assets, are difficult to ascertain, given the fact that there are virtually no new non-GSE mortgage securities issuances and the only resale activity is a handful of distressed sales," the company said in its filing. "As a result, the financial impact of this spread widening on Indymac is difficult to estimate at this time, but it is expected to have a negative effect on the value of IMB’s MBS portfolio." Seventeen percent of IndyMac's MBS portfolio is classifed as "trading" for accounting purposes, which means that write-downs to this portion of the portfolio will directly impact earnings for the quarter. The thrift said 86 percent of its total MBS portfolio was comprised of Alt-A-backed securities; this securities class, in particular, has been roiled in the past week amid rumors that UBS AG dumped more than $24 billion of investment-grade Alt-A RMBS earlier this month. For more information, visit http://www.indymac.com. Disclosure: The author held 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.