IndyMac shares surged today after congressional leaders agreed on a plan to raise the conforming limit and words by Chief Executive Michael Perry hinted at profitability for 2008.
Profitable in 08’?
Perry told Bloomberg that his company had a “good shot” at returning to profitability in 2008, although he said “not a lot of profitability, but profitability.”
“We’re going to be doing our best to get these credit losses behind us in the fourth quarter, like everyone else has done,” Perry said in a telephone interview. “And we’ll be a well-capitalized institution after doing that.”
He mentioned that the Pasadena-based mortgage lender had a huge rate-lock day on Wednesday, apparently locking more than $1 billion worth of loans.
“It’s been a long, long time since we had a rate-lock day like yesterday,” he said. “We rate-locked over a billion of loans.”
Conforming Loan Limit Increase
Much of IndyMac’s loan production comes from California, a state dominated by jumbo loans.
The proposed increase in the conforming loan limit to as much as $730,000 could significantly boost IndyMac’s lending volume, and reconnect the lender with its bread and butter.
That coupled with ultra-low mortgage rates could put the company in a good spot, and even lead to a takeover bid if another bank sees value in that.
Of course the loan limit increase is only good for one year initially, though I bet Countrywide wishes it was announced earlier…
Shares of IndyMac climbed $1.03, or 18.97%, to $6.46, rising as high as $7.00 during Friday’s session.