Bonds/Economy

IndyMac Seeks to Preserve Capital

Stock quotes in this article: IMB , IMBPR  

Loan Quality Continues to Slide

Nonperforming loans totaled $1.85 billion as of March 31, increasing a whopping 40.56% just from last quarter. Loan-loss reserves totaled $483 million, or 26% of nonperforming loans. However, previous markdowns of problem loans transferred from held-for-sale to IndyMac's investment portfolio, created "embedded credit reserves" of $481 million.

When these are factored in, IndyMac's loan-loss reserves covered 52% of nonperforming loans as of March 31, according to the holding company's 10-Q filing.

On the holding-company level, nonperforming assets, including nonaccrual loans and repossessed real estate, comprised 6.51% of total assets as of March 31, compared to 4.61% last quarter and 1.09% in March 2007.

In the 10-Q filing, the company stated it expects "to have an even higher level of non-performing loans in the future due to the continued market disruption."

Net loan charge-offs totaled $46 million for the quarter, while loan-loss provisions totaled $132 million. So loan-loss provisions continued to outpace charge-offs. During IndyMac's earnings conference call, CEO Michael Perry stated that the company did not expect to make extraordinarily large quarterly provisions for loan-loss reserves over the next four quarters, as the company had built credit reserves in advance of actual losses.

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Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.




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