The Wall Street Journal-20080116-IndyMac to Cut Work Force by At Least 24-
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IndyMac to Cut Work Force by At Least 24%
IndyMac Bancorp Inc. announced plans to eliminate 2,403 jobs, or 24% of its work force, and said further reductions are likely, in the latest sign of fallout from the mortgage-default crisis.
But Michael Perry, IndyMac's chief executive, said in an interview that the company isn't seeking to raise capital or be taken over by a larger institution. Speculation about IndyMac's future has increased since last week's agreement by Bank of America Corp. to acquire Countrywide Financial Corp. for about $4 billion.
"We feel like we have the capital and liquidity to survive on our own," Mr. Perry said. In 4 p.m. composite trading on the New York Stock Exchange, IndyMac shares were down 27 cents, or 5.7% to $4.49. At that level, the company's market value is about $330 million, down about 90% since early 2007.
The cost cutting at IndyMac comes amid a wave of job losses in the mortgage industry. Employment in real-estate finance, including mortgage brokers, has dropped to about 400,000 from a peak of 505,000 in October 2006, says Doug Duncan, chief economist at the Mortgage Bankers Association, a trade group. He expects that total to keep falling and bottom out at 350,000 to 375,000, probably around the middle of this year. About 300 to 400 of the IndyMac job cuts involve workers in India, Mr. Perry said, and the rest are in the U.S.
IndyMac, which is based in Pasadena, Calif., and operates a thrift, was the ninth-largest home-mortgage lender by loan volume in the first nine months of last year, with a market share of about 3.3%, according to Inside Mortgage Finance, a trade publication.
IndyMac has long been a specialist in so-called Alt-A loans, a category between prime and subprime that often involves borrowers who don't fully document their income or assets. Amid a surge in defaults, however, investors no longer want to buy such loans. So IndyMac, like other lenders, since August has abruptly shifted its focus and now is concentrating on loans it can sell to government-sponsored mortgage investors Fannie Mae and Freddie Mac or ones it can hold as long-term investments.
IndyMac's forecast for 2008 loan volume is $43 billion, down from $78 billion in 2007 and $92 billion in 2006, Mr. Perry said yesterday in the company's blog.
The latest job cuts are in addition to 1,600 announced last year. Mr. Perry said further cuts of 500 to 1,000 jobs are likely this year.
IndyMac, which is due to report its fourth-quarter earnings on Feb. 12, had a loss of $202.7 million in the third quarter. Mr. Perry said the company hopes to return to profitability in the second half, repeating his guidance released in early December.
