The chairman and chief executive officer of Pasadena, California-based IndyMac Bancorp Inc. says despite a “volatile” lending market, the company and its independent mortgage lender IndyMac Bank F.S.B. made considerable gains in 2006 and continue to set internal controls to safeguard the effectiveness of its line of hybrid/thrift mortgage products.
In a letter to shareholders, Chief Executive Officer and Chairman Michael Perry said while the company’s 2006 year-end results show the company outperforming its prior year in mortgage loan production, mortgage market share, net revenue, earnings-per-share, and growth in total assets – the fourth quarter was less forgiving.
“Our fourth quarter EPS declined both sequentially and versus the fourth quarter of 2005, and we fell short of EPS expectations for the quarter,” said Perry. “While I am disappointed in how we finished 2006 and with our outlook for 2007, where EPS will likely be down from 2006 given tough conditions in the mortgage market, I believe we will emerge from this difficult mortgage environment a stronger and more competitive company.”

Perry’s letter to shareholders also attempted to dispel perceptions that IndyMac deals primarily in the volatile subprime market by clearly stating nonprime loans represent only 4 percent of the company’s total loan production.
Despite nonprime loans accounting for only a slice of the company’s business, Perry said IndyMac continues to implement initiatives that will safeguard its credit risk by adjusting mortgage underwriting guidelines, setting risk-based prices, and making quality decisions on assets selected for the company’s investment portfolio.
“Our industry has come into some criticism recently, some warranted and some not, over the proliferation of “non-traditional” mortgage products, such as Option ARMs and interest-only mortgages, as well as limited documentation underwriting,” Perry stated. “While these loans do contain more risk for lender and borrower alike, when they are offered by lenders and used by consumers responsibly, they bring great value to both.”
Perry also said foreclosure levels and credit losses are beginning to return to more normal levels, and he remains optimistic about the company’s line of hybrid loans.
“We remain fundamentally committed to our hybrid/thrift mortgage banking business model and our strategies inasmuch as we are outperforming most of our mortgage banking and thrift peers, and earning a solid return on our shareholders’ capital and believe strongly in the long-term opportunities presented in the housing and mortgage markets,” said Perry.
Click here= to read Perry’s full statement to shareholders.