Mortgage lender IndyMac Bancorp swung to a larger-than-expected lost Tuesday, marking the first time the company has reported a loss in eight years. The lender lost $202.7 million ($-2.77/share) compared to a gain of $86.2 million ($1.19/share) last year. Analysts had been expecting a loss of $0.46/share, while IndyMac had forecasted $0.50/share. IndyMac took a $575 million credit-related charge, and cut its quartely dividend in half to $0.25/share. The company noted it held only $112 million in subprime, second-mortgages and home equity lines of credit as of Sept. 30 -- 0.3% of its total assets. Mortgage loan production fell 30% to $16.82 billion, giving IndyMac a 3.1% market share. It managed to sell 77% of its loans, vs. 90% in Q2 and 81% a year ago. In September IndyMac said it would cut up to 1,000 jobs, about 10% of its work force. CEO Michael Perry said, "We could have performed better even with the very tough environment had we not followed our major competitors and expanded so significantly during the housing boom... these are difficult decisions because scale is important in the mortgage business, which encouraged our drive for market share," (full earnings call transcript later today). The wider loss was a result of increasing loan losses and severance costs. IndyMac increased its credit reserves 47% to $1.39 billion. The company was the largest lender of "Alt-A" loans, given to borrowers with a risk to default profile that falls between subprime and prime, in 2006. Looking ahead, Perry said the firm "could be modestly profitable, or we could struggle and have additional losses" in Q4 and 2008. Shares are up 6.8% to $13.64 as of 10:33 ET.
Commentary: IndyMac to Post 3rd Quarter Loss, But Sees Profitable Future • Housing Bubble and Real Estate Market Tracker
Stocks to watch: IMB. Competitors: CFC, BAC. ETFs: PSP
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