Contrary to popular rumors of a possible sale, IndyMac Bancorp Inc. will stay true to the company name and remain independent despite the downturn and uncertainty in the mortgage market that have driven rivals into mergers or even bankruptcy. During the Pasadena, Calif., firm's fourth-quarter earnings call Tuesday, CEO Michael Perry said that upon the closing of Bank of America Corp.'s purchase of rival and former parent Countrywide Financial Co., IndyMac will be "the largest independent home lender in the nation."
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Those are some confident words coming from a CEO, whose company posted a net loss of $509.1 million, or $6.43 per share in the fourth quarter compared to profit of $72.2 million, or 97 cents a share, in the same year-ago period. Overall, the company registered a loss of $615 million for 2007, the first annual loss in the company's history. But like a politician during an election year, Perry did hedge his bets of another company possibly making an investment in IndyMac. saying that "it's not out of the realm of possibility to do that" should the company need dilutive capital.
Perry sees the loss as a hiccup and expects to make "a small profit of roughly $13 million" in 2008. To bolster its financial strength, IndyMac suspended its quarterly dividend, exited its homebuilder construction and conduit lending division, and bolstered its capital reserve, raising $676 million in capital in 2007 for a total of $6 billion in liquidity. The company has been so obsessed with lowering costs that it also eliminated its 401K matching plan, saving about $6 million a year. Additionally, IndyMac will look to refocus its business model, stressing its retail platform through the acquisition of the retail units of New York Mortgage Co., American Home Mortgage Investment Corp. and a few others. The additions added 1,035 sales people and 125 branches.
Meanwhile, IndyMac has a few chips on the table it could cash in, such as divesting Financial Freedom Holdings Inc., a company IndyMac acquired for $80 million in 2004. But Perry does not want to sell the unit because of the weak market conditions. He says there are "pirates" out there to acquire the unit on the cheap. And if things don't improve for IndyMac, it could suffer the same fate. - Gerald Magpily
See earnings results press release from IndyMac [pdf]
See Dealscape: Will IndyMac put up the 'For Sale' sign Tuesday?
See Dealscape: Could IndyMac go the way of Countrywide?
See Dealwatch: Subprime meltdown
