IndyMac Bancorp Profit Rises 59% in 3rd Quarter
IndyMac Bancorp said Monday that its third-quarter earnings rose 59% over the like period a year earlier, as the Pasadena-based thrift and mortgage bank captured a growing share of the home loan market and benefited from accounting changes.
IndyMac earned $79.3 million, or $1.18 a share, on revenue of $283 million. That’s up from earnings of $49.7 million, or 78 cents a share, on revenue of $204 million during the same period in 2004.
In addition to writing and selling more loans, IndyMac’s profit was given a boost by accounting changes that recalibrate the value of mortgages in its pipeline. If those adjustments had been applied a year ago, IndyMac’s third-quarter 2004 profit would have been $56 million, or 88 cents a share. In that event, the company would have posted a 40% increase in earnings for its just-completed quarter.
The higher earnings came despite the effects of hurricanes Katrina and Rita, which reduced IndyMac’s earnings by 5 cents a share as customers in the devastated areas could not make their mortgage payments.
The results came at a time of intense competition in the mortgage origination business, a trend that has sliced into the profit margins of all companies in the industry. IndyMac’s net interest margin in mortgage banking, the key indicator of operating profit, was 2.3%, down from 3.6% a year earlier.
IndyMac Chief Executive Mike Perry predicted continued growth for his company, which increased its share of U.S. mortgage originations to 2.2%, up from 1.6% a year earlier.
Analysts had expected slightly better earnings of $1.20 a share, and IndyMac’s stock fell 5 cents to $37.33.
In an interview, Perry said he was “very pleased” with the results as his industry moved into a challenging period of declining mortgage volumes, talk of a housing bubble and worries over sub-prime lending and option ARMs, the adjustable-rate loans that give borrowers a choice of how much to pay each month. Though IndyMac is exposed to such factors, he said he was confident it would emerge a strong survivor as the industry shook out.
Other Los Angeles companies reporting earnings Monday:
* Insurance company Mercury General Corp. said third-quarter profit grew 12%, to $73 million, or $1.33 a share. The results included about $4 million in losses resulting from hurricanes, compared with hurricane losses of $24 million in the third quarter of 2004. Mercury said it expected to incur losses of about $12 million from Hurricane Wilma, which Oct. 24 made landfall as a Category 3 storm on the southern Gulf Coast of Florida.
* Aerospace parts maker Ducommon Inc. said third-quarter profit surged 53% to $4.3 million, or 42 cents a share. Sales rose 21.6% to $63 million.
* Arden Realty Inc., an office real estate investment trust, said third-quarter funds from operations were flat at $43.1 million, or 63 cents a share. Revenue from rental operations rose 15% to $114.6 million.
* Kilroy Realty Corp., a real estate investment trust that owns offices and industrial buildings, said third-quarter funds from operations dropped 31% to $14.2 million, or 43 cents a share. Revenue rose 10.8% to $60.4 million.
