Industry News

IndyMac’s loan volume up, profit margins down

Lender faces higher credit costs, makes less-profitable loans

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IndyMac Bancorp Inc. posted record loan production of $26 billion in the fourth quarter 2006 -- a 44 percent increase from the same quarter a year ago -- but said profit margins were down because of increased credit costs, increasing loan loss reserves, and a shift to less-profitable fixed-rate loans. IndyMac Chief Executive Officer Michael Perry predicted 2007 will be "a very challenging year," with the company continuing a hiring moratorium on "non-revenue-generating" employees, a freeze on base salaries, and a plan to increase outsourcing from 9 percent of the workforce to 13.5 percent by the end of the year. "The MBA is forecasting a 5 percent decline in industry mortgage originations to $2.4 trillion, following 2006's 17 percent decline," Perry said in a statement. "While we expect to continue to capture market share, we also believe that competition will be fierce and the housing market will be challenging. As a result, we believe that in 2007 our revenue margins will remai...