IndyMac Says It May Miss Forecast on Asset Declines

Chief Executive Michael Perry had said that day the Pasadena-based company, which posted its first annual loss in its 23-year history in 2007, had a "good shot" at reporting a profit in the second half.

None of the company's AAA non-agency mortgage-backed securities -- assets backed by home loans ineligible for purchase by Fannie Mae or Freddie Mac -- have been downgraded and the bank has the funding to maintain these, IndyMac said today in a regulatory filing. Lenders use such assets as collateral for raising money, and values of these have plunged amid the U.S. housing slump.

"They're making an obvious prediction that the first quarter won't look good, but they've got the cash" to fund the bank's business, Gary Gordon, an analyst with Portales Partners LLC in New York, said today in an interview. "They're not relying on Wall Street and therefore they're not getting the margin calls."

The bank's deposits, Federal Home Loan Bank advances, long- term debt and equity provide sufficient funding, IndyMac said. "Most of any potential negative financial impact in the first quarter of 2008 is not warranted" by the underlying performance of IndyMac's assets, the bank said. The bank intends to hold its AAA non-agency securities to recovery, it said.

Rising Borrowing Costs

IndyMac jumped 61 cents, or 13 percent, to $5.31 at 12:22 p.m. in New York Stock Exchange composite trading. Bank stocks soared after the Federal Reserve, led by Chairman Ben S. Bernanke, announced it would lend as much as $200 billion to the monetary system.

"It's a positive that Bernanke is on board and is fighting," said Matthew Howlett, an analyst at Fox-Pitt, Kelton Ltd. "There's been a tremendous amount of illiquidity in that market."

Michael DiVirgilio, a spokesman for IndyMac, didn't immediately return a call for comment.

Home lenders often pledge mortgage-backed securities as collateral to obtain financing. Debt markets that trade those securities have seized up because investors are wary about record U.S. defaults and foreclosures.

Borrowing costs have grown "due to panic market conditions," IndyMac said in the filing.

Thornburg Mortgage Inc., the "jumbo" home lender based in Santa Fe, New Mexico, today restated its results to show a fourth-quarter loss as it struggles to sell assets to meet margin calls.

IndyMac's loan originations declined more than 50 percent in the first two months of the year compared with a year earlier after the bank cut back on mortgages except those eligible for sale to government-chartered companies including Fannie Mae and Freddie Mac.