Friedman, Billings, Ramsey & Co. analysts cut the first-quarter earnings estimates of 21 banking institutions yesterday because of continued downward pressure on credit markets as a result of the mortgage mess.
According to analyst info gathered by CNN, FBR took the negative action based on “expectations for greater credit losses and lower gain-on-sale margins in mortgage banking,” and noted that the industry remains undercapitalized.
Most notably, Pasadena, CA-based mortgage lender IndyMac Bancorp saw its 2008 loss estimate increased to $1.70, up from a previous loss estimate of just 80 cents.
FBR executed some major price cuts as well, reducing targets for both East West Bancorp Inc. and First Community Bancorp by $14 to $16 and $26, respectively.
Despite the bad news, many of the affected companies managed to avoid any share price weakness thanks to broader market conditions.
East West was down just two cents, or 0.10%, to $19.66, while First Community slipped eight cents, or 0.26%, to $28.68 Tuesday.
Meanwhile, shares of IndyMac rose (rather suspiciously) $1.15, or 22.20%, to $6.33 in trading on Wall Street today.
Last week, IndyMac CEO Michael Perry spoke out about the raw delinquency data many analysts use to assess a company’s financial position, claiming they make conditions appear worse than they are.
And earlier this month, the Alt-A mortgage lender said it would likely miss first-quarter estimates because of panic market conditions widening credit spreads.
(photo: visulogik)
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