IndyMac Downsizing with Voluntary Severance Packages

September 26, 2007 No Comments »

According to several sources I spoke with, IndyMac Bancorp has begun downsizing its mortgage operations side by offering voluntary severance packages to an undisclosed number of employees.

I’ve been told that the size of the severance package varied based on current salary and how long the employee has been with the company, but all in all they’re said to be quite generous.

I’ve heard that some of the severance packages include compensation for up to a year, possibly longer, as well as extended health benefits.

Apparently the severance packages were extended to operations staff, though it appears they were not offered to members of the sales team (surprise, surprise).

Two weeks ago, the Alt-A mortgage lender said it would offer the voluntary severance packages in an effort to shed 1,100 employees, and would follow those attempts with layoffs.

According to IndyMac employees, the lender said it was looking to “right-size”, not downsize its workforce in an attempt to fall in line with current market demand.

In a recent letter to company shareholders, IndyMac Chief Executive Michael W. Perry said he expects the lender to either break even, or lose up to 50 cents a share in the third quarter as loan origination has waned.

He also said loan production volume would likely drop roughly 50 percent in the fourth quarter, but that the lender still expects to turn a profit in that quarter and in 2008.

“Clearly, we have experienced challenges in the current market, and there will surely be more before this difficult period is over,” Perry said.

“But the challenges we are facing today are, frankly, not as daunting as those we have faced in the past.”

Shares of IndyMac rose 69 cents, or 3.08%, to close at $23.10, well below their 52-week low of $48.14.

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