After cutting nearly 25 percent of its workforce yesterday, IndyMac released a memo in an effort to confirm its overall stability and pledge its commitment to the wholesale lending channel.
“This is obviously the most tumultuous time that the mortgage industry has ever faced,” said Frank Sillman, Chief Executive Officer, in a memo to IndyMac customers.
“We’re seeing the very largest global financial companies taking billions of dollars of losses in each of the last two quarters, and the largest independent mortgage company in our industry has just accepted a bailout by one of the largest banks in the country.”
Sillman went on to explain that IndyMac had made the right move to convert from a REIT to a federally chartered bank after the liquidity crisis in 1998, and said it was well capitalized to weather the current mortgage crisis.
“Today, virtually 100% of our assets and liabilities are contained within IndyMac Bank. As a bank, we have strong and stable funding sources … FHLB advances and federally insured deposits … which have allowed us to build up a “war chest” of more than $6 billion in liquidity,” he explained.
“In addition, we continue to maintain strong capital levels. As previously reported, as of September 30, 2007 (the date of our most recent financial statements), IndyMac Bank had $2.5 billion in regulatory capital, and our capital ratios exceeded the “well capitalized” criteria outlined in the capital regulations.”
He also worked to dispel any rumors that the Pasadena-based mortgage lender may be slowly shuttering its wholesale lending division.
“As we have stated consistently through this crisis, IndyMac is very committed to the Wholesale business, he said.
“Wholesale has been IndyMac’s biggest and most profitable business unit over the years, and it’s our goal to return that business to profitability in March. That’s why we’ve had to take the steps we’ve taken, so we can right size our wholesale model for the new realities of the market.”
Regarding the wholesale operations centers that were shut down yesterday, Sillman said the bank reviewed volume trends by region, and determined that consolidation wouldn’t compromise its ability to serve customers in the areas affected.
“While many national banks are heading out of the Wholesale business, IndyMac remains strongly committed to it.”
Shares of IndyMac were up 31 cents, or 6.90%, to $4.80 in early afternoon trading on Wall Street.