IndyMac Bancorp, Inc.
June 26, 2011 – 1:47 pm
Business Profile
IndyMac Bancorp, Inc. is a financial holding company and operates through it principal subsidiary IndyMac Bank, F.S.B. IndyMac Bank is a hybrid mortgage / thrift bank which has a total assets base of $29 billion. The bank is headquartered in Pasadena, California. The bank produces mortgages across all 50 states of US. According to the American Banker, the firm is the seventh largest bank based on assets and as per the National Mortgage News, the bank is the ninth largest residential mortgage producer based on 3Q2006 mortgage origination. The bank provides cost-effective financing for the development, acquisition, and improvement of single-family residential homes.
The bank also offers single family residential home secured financing and other financial products. The bank uses Electronic Mortgage Information and Transaction System (e-MITS) to automate underwriting, price products based on risk and locak rat across the nation via Internet. The bank offers competitive mortgage services and products which are personalized to suit the individual client’s requirement.
The bank was originally formed as a passive mortgage REIT (real estate investment trust) in 1985 under the name, Countrywide Mortgage Investments. The Company transformed itself as an active mortgage lending institution in 1993. The Company decided to add depository institutions activities as response to the liquidity crisis across the globe during the fourth quarter of 1998. In January 2000, the Company converted itself to a fully taxable organization from a REIT status. In July 2000, the Company acquired SGV Bancorp, Inc., parent of the First Federal Savings and Loan Association of San Gabriel Valley.
In July 2004, the Company entered into the reverse mortgage segment by acquiring 93.75% stakes in Financial Freedom Holdings, Inc., a leading provider of reverse mortgages in US from Lehman Brothers. The remaining stake, owned by James Mahoney, chief executive officer of Financial Freedom, was acquired in July 2006, making Financial Freedom a fully-owned subsidiary of Indymac Bank. The acquisition increased the market share of the bank and broadened its product portfolio.
The Company believes that its hybrid model offer it avenues for long term growth and facilitate efficient operations in different macro economic environment with changing interest rates. The model offers merits of the higher returns on equity from mortgage banking, and stability in earnings from traditional loans and savings institution.
Indymac focuses on increasing its market share in the mortgage origination segment while maintaining its profitability targets. In 2006, the bank generated mortgage origination of $90.0 billion and grew its share by 78% to 3.58%.
The Company’s net interest income before provision of loan losses increased 24% to $527 million in 2006 from $425 million in 2005. The Company’s fee and other non interest income also increased 35.1% to $50 million in 2006 from $37 million in 2005. The Company’s net income increased 17.1% to $343 million in 2006 from $293 million in 2005. During the same period, the Company’s total assets grew 37.2% to $29.5 billion as of December 31, 2006 from $21.5 billion as of December 31, 2005 IndyMac’s total loans increased 38.0% to $19.6 billion as of December 31, 2006 compared with $14.2 billion as of December 31, 2005. The Company’s total deposit grew 41.6% to $10.9 billion as of December 31, 2006 compared with $7.7 billion as of December 31, 2005. The Company’s total equity increased 33.3% to $2.0 billion as of December 31, 2006 from $1.5 billion as of December 31, 2005.
The Company operates through two major business segments – the thrift and the mortgage banking segments.
Mortgage Banking: The segment carries out loan origination, loan sales, and loan servicing functions. The bank delivers a comprehensive portfolio of loan products primarily to prime customer with high credit quality. The product offering includes ARM (adjustable rate mortgage), intermediate term fixed rate mortgages, pay option ARMs, fixed rate mortgages, construction loans, home equity lines of credits, sub-prime mortgages and reverse mortgages.
The Company operates though 16 distributed regional mortgage offices. The bank’s origination channel include mortgage professionals group, direct mail, online advertising, Internet leads, real estate professionals, affinity relationship. Mortgage Professional group generated 86% of the bank’s total loan origination volume during 2006. The group leverages its relationship with mortgage bankers, mortgage brokers, capital market players and financial institutions across the nation as well as directly through the builders. Consumer Direct channel targets new and existing clients through direct mail, Online aggregators, telemarketing, Internet advertising as well as through branches. The company’s recently acquired Financial Freedom business also generates mortgage business, particularly reverse mortgages. The Company’s reverse mortgage origination grew 71% to $5.0 billion in 2006 compared with $2.9 billion in 2005.
Thrift: The segment invests in residential mortgage assets, particularly of single family including MBSs (mortgage-backed securities). The Company derives revenues from this segment primarily as spread income, that represents the difference between the cost of funds and the interest earned.