Mortgage Business Lifts Profit at IndyMac
IndyMac Bancorp Inc. reported 26% higher first-quarter profit Tuesday, sharply increasing its share of the mortgage market despite an industrywide downturn in home loans.
The Pasadena-based savings and loan earned $79.8 million, or $1.18 a share, up from $63.5 million, 98 cents, a year earlier. Revenue climbed from $253 million to $305 million.
Mortgage production rose 72% over the first quarter of 2005 to a record $20 billion, doubling IndyMac’s share of the national home-loan market to 3.89%.
Michael W. Perry, IndyMac’s chairman and chief executive, said he was pleased with the gains, achieved during a quarter when overall mortgage volume was 17% lower than a year earlier and profit margins on home lending fell significantly.
IndyMac benefited from Perry’s decision to expand into the business of buying large packages of loans originated and funded by others, said Paul Miller, an analyst at Friedman, Billings, Ramsey & Co.
That so-called conduit business can have low profit margins, but Perry said IndyMac benefited in handling the purchased loans because of its expertise in bundling mortgages for sale as securities.
The results topped Wall Street expectations of $1.08 a share, and IndyMac raised its profit projection for 2006 to as much as $5.40 a share, up from $5.20. Its shares rose $3.44, or 8%, to $47.61.
