IndyMac Chief Executive Michael Perry said Thursday that he doesn’t expect the company to be profitable until at least the second half of 2008.
“If all goes well, we can return to modest profitability sometime in the second half of 2008,” Perry wrote. “Until we can ‘see some light at the end of the tunnel,’ maintaining strong capital and liquidity levels is paramount.”
Perry also noted that the Pasadena-based mortgage lender is not buying back stock, despite shareholder requests.
IndyMac is also mulling over new ways to raise capital, including a possible dividend cut or the sale of convertible or preferred securities.
Perry brought up the recent troubles facing the government-sponsored entities, Fannie Mae and Freddie Mac, who IndyMac rely on heavily for the sale of their conforming loans.
“IndyMac Bank’s business model is in the eye of this storm,” Perry said. “Now the GSEs have their own issues and are raising rates and cutting product guidelines.”
As an analyst pointed out a couple weeks ago, restrictions facing the GSEs could leave lenders like IndyMac with no place to sell their mortgage loans.
In early November, IndyMac posted a third-quarter loss of $202.7 million, or $2.77 a share, as credit losses quadrupled.
At that time, Perry said IndyMac could be “modestly profitable” in the fourth quarter, but he now expects a loss, although not as significant as in the third-quarter.
According to the Inside Mortgage Finance, IndyMac made $64.89 billion of mortgage loans from January to September, ranking ninth nationally.
Shares of IndyMac, which began the year at $45.16, fell 71 cents, or 8.11%, to $8.04 in midday trading on Wall Street.