IndyMac Profit Plunges

IndyMac's (IMB Quote) profit plummeted 57% in the second quarter.

In the three months ending June 30, IndyMac said profit was $44.6 million, compared to $104.7 million in the second quarter of 2006. Revenue fell 21% to $297.8 million.

The Pasadena, Calif.-based company's earnings of 60 cents a share beat the mean estimate by 6 cents, according to Thomson Financial.

IndyMac's nonperforming assets rose 342% to $516 million, while mortgage loan production fell 12% from first-quarter levels to $22.5 billion.

IndyMac said the pipeline for mortgage loans in process rose 7% to $13.4 billion.

IndyMac, which specializes in Alt-A loans, posted its results just a week after lending giant Countywide Financial(CFC Quote) pointed to spreading defaults across the mortgage industry.

Countrywide, the largest independent lender, surprised Wall Street by saying delinquencies and defaults were hitting some so-called prime mortgage categories, such as home-equity loans.

The Calabasas, Calif.-based lender's CEO, Angelo Mozilo, also said he doesn't see a housing recovery until 2009.

The collapse of the subprime mortgage market continues to ripple through the lending industry. Late Monday, merger partners Radian (RDN Quote) and MGIC (MTG Quote) said they were considering writing off their investments in subprime issuer C-Bass.

Late Friday another Alt-A lender, American Home Mortgage(AHM Quote), delayed paying quarterly dividends because of margin calls and writedowns. The stock hasn't traded this week as investors await an update on the company's status.

"We anticipate that the second half of 2007 and 2008 will continue to be challenging for the mortgage and housing markets and for IndyMac," IndyMac CEO Michael Perry said. "We expect competitive pricing pressures on our [mortgage banking] margins to continue.

"In addition, we expect that the current, temporary volatility and reduced liquidity in the secondary markets will adversely impact secondary market execution, putting further pressure on MBR margins, although we expect this negative impact to abate once the secondary market stabilizes. While our recent guideline tightening has improved the quality of our loan production, additional deterioration in the housing market could further increase our credit costs."

The company cited the difficult industry landscape in declining to provide guidance for the rest of the year.

Shares of IndyMac rose 37 cents to $22.06 early Tuesday.