IndyMac Bancorp Inc., which has managed to post solid growth while many other mortgage lenders have struggled to maintain volume, is showing no sign of slowing down.
On Wednesday the Pasadena, Calif., nonprime specialist announced that its first-quarter production rose 68% from a year earlier, to $11.6 billion. According to the Mortgage Bankers Association's industrywide volume estimate of $575 billion for the quarter, IndyMac's share of the overall mortgage market nearly doubled, to 2%.
Michael W. Perry, IndyMac's chairman and chief executive officer, said in a press release Wednesday that its "business model as a hybrid thrift/mortgage banker and our diverse home mortgage product mix - combined with strong execution - are providing good traction."
IndyMac is gaining share and increasing revenue and profits as the industry moves from a refinancing boom to a more normal environment, he said.
Citing a rise in its net interest and gain-on-sale margins, IndyMac said it expects to post first-quarter earnings per share of at least 90 cents. Its previous guidance called for it to post earnings of 81 to 99 cents a share.
The increase in market share puts IndyMac well on track to achieve its goal, announced last year, of becoming the industry's eighth-largest lender by 2008. Much of that leap may occur this year, Mr. Perry said.
"According to National Mortgage News," a sister publication of American Banker, "we were the 12th-largest originator in the fourth quarter of 2004, up from 19th a year ago, and we have a solid shot at cracking the top 10 at any point this year," he said.
Keith Gumbinger of the financial information publisher HSH Associates in Pompton Plains, N.J., called the 2% market share "a sizable number … [that] would absolutely put them on the map among the more sizable and perhaps more well-known entities."
Given the current industry slump following the refi boom, "competition is quite intense, and to double your market share is very admirable," Mr. Gumbinger said.
However, he wondered if the upsurge was permanent or caused by the temporary popularity of some products.
William D. Dallas, who heads the Woodland Hills, Calif., subprime lender Ownit Mortgage Solutions, said that near-prime, alternative-A, and nonprime products - IndyMac's specialties - "fit customers' needs" at the moment. "We are nearing a very long cycle in real estate. Interest rates are still very low. For consumers, their incomes have lagged property appreciation by quite a bit and, as a result, need greater debt-to-income relief from lenders. Lenders like IndyMac and, to a degree, Ownit focus on this."
Last month Ownit's originations more than doubled from April of last year, to $705 million, he said.
Jim Konrath, the chairman and chief executive officer of the San Diego subprime specialist Accredited Home Lenders Inc., said its originations are up, too.
Paul J. Miller, an analyst with Friedman, Billings, Ramsey & Co. Inc., who expects IndyMac to post first-quarter earnings of 95 cents a share, said that its growth is "sustainable." IndyMac has "built out their platforms to sustain it; they've spent the last 12 months building out this market share" by adding account executives, he said.
