A day after IndyMac Bancorp's decision to sharply curb its lending and lay off 3,800 employees, the mortgage company's shares tumbled toward oblivion Tuesday, with at least two analysts warning that no value remained for shareholders.
IndyMac, which specialized during the housing boom in loans for borrowers who didn't document their incomes, has been inundated by defaults.
It announced after the stock market closed Monday that regulators no longer considered it well capitalized. It said it would shut all home lending except for reverse mortgages, which help older people access their home equity, and refinancings for current customers.
The lender's stock sank 27 cents, or 38%, on Tuesday to 44 cents. The shares peaked at $50.11 in 2006.
Hope, however, emerged Tuesday for some of the IndyMac employees heading for joblessness.
Prospect Mortgage Co., a 2-year-old company backed by Chicago private equity firm Sterling Partners, said it would take over 60 to 75 of the Pasadena savings and loan's retail offices, putting about 750 IndyMac employees on its payroll.
The deal's terms weren't disclosed, but it wasn't expected to generate significant cash for IndyMac.
Earlier Tuesday, Paul Miller, an analyst at Friedman, Billings, Ramsey & Co., cut his price forecast for IndyMac stock from $1 to zero, citing the thrift's statement that it had failed in an effort to raise new capital.
"Next Stop, Receivership," was the headline on a note from Jason Arnold, an analyst at RBC Capital Markets who also reduced his price target to zero, from $1.50.
IndyMac "will not survive without a material capital injection," Arnold wrote, calling the prospect of one unlikely because regulatory restrictions and mounting losses had left IndyMac's business model "arguably in shambles."
"We think IndyMac is painted into a corner and can't get out," he said in an interview.
IndyMac, which operates under a federal savings and loan charter, declined to comment on analysts' bleak projections for the company.
The lender's stock has been suspended from trading on the New York Stock Exchange floor since June 26, when it first closed below $1, and is trading instead on the NYSE's all-electronic ARCA market.
The exchange can permanently delist a company if the average trading price of its shares over 30 days falls below $1. Such low-priced stocks normally end up in the over-the-counter market, where they're generally of interest only to hard-core speculators and day traders.
