The Wall Street Journal-20080213-IndyMac Posts Loss- Suspends Dividend

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IndyMac Posts Loss, Suspends Dividend

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IndyMac Bancorp reported a fourth-quarter loss and suspended its dividend on common shares as the Pasadena, Calif., thrift operator tries to ride out the mortgage-default crisis.

The company, which operates IndyMac Bank, said it expects to report another loss for the current quarter but a small profit for 2008 as a whole.

IndyMac said it took $863 million in pretax credit provisions and costs during the quarter, including loan losses. The company built up its total credit reserves for future losses by 71% during the quarter to $2.4 billion at year end.

Nonperforming assets stood at about 4.6% at the end of 2007 and are expected to peak between 7.5% and 8% in the second half of 2008, the company said.

IndyMac was one of the largest originators of so-called Alt-A loans, a category between prime and subprime, typically requiring less documentation of the borrowers' income and assets.

IndyMac's chief executive, Michael Perry, in a letter to shareholders released yesterday estimated that more than 225 independent mortgage companies have gone under while more than 100,000 industry jobs have been lost. "I take full responsibility for the mistakes that we made," Mr. Perry wrote. Mr. Perry added that if he isn't re-elected to the board at an IndyMac shareholder meeting scheduled for May 1, he will resign as CEO.

Suspending the $1-a-share annual dividend will save the company about $81 million a year, IndyMac said.