IndyMac Slashes Earnings Forecast
IndyMac Bancorp Inc. revealed itself Thursday as the latest victim of the shrinking mortgage market, slashing its third- quarter profit forecast and sending its stock price reeling.
IndyMac, a Pasadena mortgage banker specializing in online lending, cited fierce competition and consumers’ growing preference for adjustable-rate mortgages, which are less profitable for lenders. The company also said it had underestimated costs stemming from its acquisition this year of reverse-mortgage lender Financial Freedom Holdings Inc.
California lenders in less vulnerable niches beat or met expectations, including adjustable-loan specialist Golden West Financial Corp., whose profit rose nearly 15% on record lending, and wealth manager First Republic Bank, up 39%.
Asian American banks also posted higher earnings -- East West Bancorp climbed 26%, Cathay General Bancorp rose 78% and Hanmi Financial Corp. soared 124%.
Those results contrasted with the 47% profit decline that Countrywide Financial Corp. reported Tuesday as it adjusted from a refinance boom to a market of higher interest rates and mainly home purchase loans.
Calabasas-based Countrywide, the nation’s largest home loan originator, is luring top mortgage salespeople with hefty compensation to further boost its 12% market share.
That is turning up the heat on rivals such as IndyMac, which split off from Countrywide in 1997 and is set to release its earnings Thursday. In a warning statement, IndyMac said it would earn 78 cents a share, down from 87 cents a year earlier. Wall Street had been expecting roughly 91 cents, and IndyMac shares fell $4.49, or 13%, to $31.14 on the New York Stock Exchange.
Golden West, the Oakland-based parent of World Savings Bank, said third-quarter profit was $324.8 million, or $2.09 a share, up from $282.9 million, or $1.83, a year earlier. The results beat Wall Street expectations by 3 cents, and Golden West’s shares rose 31 cents to $109.06 on the NYSE. The company also announced a 2-for-1 stock split and raised its dividend 20%.
First Republic earned nearly $11 million, or 65 cents a share, up from $7.9 million, or 51 cents, in the third quarter of 2003. The results met analysts’ expectations. The San Francisco bank also raised its dividend by 20%. Its shares rose 96 cents to $47.01 on the NYSE.
San Marino-based East West earned $20.4 million, or 39 cents a share, on strong loan growth, up from $16.1 million, or 32 cents, a year earlier. That beat estimates by 2 cents. East West closed up $2.21, to $36.92, on the NYSE.
Los Angeles-based Cathay General earned $23.2 million, or 46 cents a share, up from $13 million, or 36 cents, a year ago. Analysts were expecting 45 cents a share. Shares of Cathay rose 11 cents to $38.30 on Nasdaq.
Los Angeles-based Hanmi earned $11.1 million, or 44 cents a share, up from $4.9 million, or 34 cents, in the third quarter of 2003. That beat Wall Street estimates by 4 cents. Hanmi shares rose 35 cents to $29.95 on Nasdaq.
