Warning of a likely third-quarter loss, mortgage lender IndyMac Bancorp said Friday that it planned to lay off about 1,000 employees, or 10% of its workforce, and might cut its stock dividend in half.
The Pasadena-based savings and loan blamed the troubled housing and mortgage markets, particularly the lack of buyers for what had been its specialty -- so-called alt-A loans, the niche between the safest prime loans and high-risk sub-prime mortgages.
“Clearly, we have experienced challenges in the current market, and there will surely be more before this difficult period is over,” IndyMac Chief Executive Michael Perry said in a statement.
Perry said the firm would at best break even in the third quarter and at worst lose 50 cents a share, or about $37 million.
IndyMac, the nation’s No. 7 mortgage lender last year, earned $44.6 million in the second quarter.
Perry said he expected “solidly profitable” results in the final quarter of 2007 and in 2008 after the company completes a transition to originating mainly traditional prime loans that government-sponsored mortgage companies Freddie Mac and Fannie Mae will buy.
The company’s shares sank as low as $19.53 but rallied back to close at $21.41, off 25 cents.
On Thursday, IndyMac paid its regular quarterly dividend of 50 cents per share of common stock, but Perry said he would ask the company’s board to reduce the payout to 25 cents when it meets at the end of the month.
He said the elimination of the 1,000 jobs would occur “over the next several months.” The statement didn’t say what jobs and locations were affected.