IndyMac Sees Big Growth in Servicing, But Credit Concerns Rise
IndyMac's posted dramatic growth in its loan servicing portfolio over the past year, but the hybrid thrift-mortgage bank also saw a higher share of its on-balance sheet loans fall into nonperforming status.
Earnings fell to $52.4 million, or $0.70 per share, in the first quarter, down from $79.8 million, or $1.18 per share, in the first quarter of 2006 as credit costs crept higher
IndyMac said shrinking profit margins on loan production and higher credit costs were largely to blame for the earnings downturn.
But IndyMac said first-quarter revenue totaled $302.1 million, down just 1% from the year-earlier period. And the company grew its assets 23% from a year ago to a record level of $29.7 billion.
But the company did suffer credit deterioration, with nonperforming assets accounting for 1.09% of the portfolio, more than double the 0.43% level from a year earlier.
IndyMac said it serviced $156 billion of loans for others as of March 31, up 62% from last year.
Michael Perry, IndyMac's chairman and CEO, said he was disappointed with the company's results but that IndyMac's performance "must be considered solid in light of the challenging conditions we faced this quarter."
He said the spread widening for private mortgage-backed securities, which resulted in pricing erosion on loans sold into the secondary market, was particularly harmful to earnings. Higher credit costs also took a toll.
IndyMac predicts that margin pressure will persist in the second quarter. The company said it expects to see mortgage banking revenue improve in the second half of this year. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com