Mortgage lender IndyMAC Bancorp. Inc. was once part of the Countrywide Financial Inc. family until 1997. Now the Pasadena, Calif.-based company is in trouble, caught in the aftermath of the subprime tsunami and could follow the fate of its former parent.
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All the telltale signs of Indy being a target are out there. The company has a sizable $6 billion in liquidity but could be acquired on the cheap, weakened right now with a stock [IMB] that is trading in the penny stock range of $4 to $5 from $25 in August, when the subprime problem was just rearing its ugly head. Registering a net loss of $202.7 million in the third quarter primarily because of mortgage losses, Indy expects more losses in the fourth quarter, when it announces results on Feb. 12.
Meanwhile, the credit rating agencies could no longer ignore Indy's financial problems as Standard & Poor's and Fitch Ratings recently downgraded the credit ratings of Indy to junk status. As for Moody's Investors Service, Indy said on its company blog that it requested that rating agency to withdraw its credit ratings: "We have long maintained ratings with other ratings firms, but the presence of the ratings and the actual level of ratings has no impact on our ability to access deposits or Federal Home Loan Bank advances, which comprise our primary sources of liquidity. ... Since our relationship with Moody's was approximately a year old, we chose to terminate this relationship." The move was also aroused by the fact that Indy would be saving "$350,000 annually including the elimination of one employee" from withdrawing its Moody's rating and because its business operates within a federal thrift, it does not rely on corporate debt markets for funding. - Gerald Magpily
See TheStreet.com article
See CNNMoney article
See IndyMac Company Blog
See TheDeal.com: Bank of America rescues Countrywide
