IndyMac Bancorp (IMB) has suffered huge losses on defaulted mortgage loans and its financial conditions are nothing new. That’s why this latest development shouldn’t come as a surprise.
The bank today issued a letter to its stakeholders - excerpts:
As we stated in our financial update on May 12, 2008, we have been working with our investment bankers to raise additional capital. To-date, we have not been successful with these efforts, and, while we will continue these efforts with our bankers and others, we don’t expect to be able to raise capital until there is more stability and less uncertainty in the housing and mortgage markets...
Based on information we have provided to our regulators, they have advised us that we are no longer “well capitalized”.
A consequence of falling below well-capitalized is that we are no longer permitted to accept new brokered deposits or renew or roll over existing ones, unless we get a waiver from the FDIC. While we have submitted a waiver application, it is uncertain as to whether such a waiver will be granted. As a result of the above, we have made the difficult decision, effective July 7, 2008, that we will no longer accept any new loan submissions or rate locks in our retail and wholesale forward mortgage lending channels, except for our servicing retention channel.
IndyMac also mentions an almost 50% reduction of its current workforce over the next couple of months.
That pretty much sums up the content of the letter but, it would be rather non-objective not to say the writing’s been on the wall for at least six months.