IndyMac Sputters to Loss

Updated from 12:19 p.m. EDT

IndyMac Bancorp(IMB Quote) swung to a steep first-quarter loss and provided a darkened outlook for the full-year as the company continues to battle a tight credit market.

The independent mortgage lender posted a net loss of $184.2 million, or $2.27 a share, vs. a net profit of $52.4 million, or 70 cents a share, in the year ago period.

The results were much worse than the consensus expectation of a 98-cent-a-share loss prior to IndyMac's prewarning earlier this month, in which it said business was improving from the fourth quarter's loss of $509 million, or $6.43 a share. Analysts polled by Thomson Reuters were expecting a loss of $1.92 a share after the warning.

"While many others in the mortgage finance industry saw worsening losses during the first quarter given the current state of the housing and credit markets, we achieved a 64% reduction in our net loss from last quarter as we took the appropriate steps in the second half of last year to get the bulk of our credit costs behind us," Chairman and CEO Michael W. Perry said in a company statement.

Perry noted that 24% of the first-quarter loss is related to staff reduction severance and office closing costs and 22% is from business activities such as homebuilder construction lending, home equity lending and the conduit channel that the company has permanently closed.

IndyMac shares were down 7.6% to $3.17 in recent trading.

Perry said IndyMac does not expect to return to profitability in 2008, but does expect losses to decline each quarter. That is in contrast to his expectation in February, when he said the company expected "a small profit of roughly $13 million." Analysts expect a loss of 62 cents a share in the second quarter and $2.97 for the full year.