IndyMac Bancorp emphasizes capital, liquidity levels in response to shareholder, may issue convertibles

By Jennifer Chiou

New York, Dec. 5 - IndyMac Bancorp, Inc. chief executive officer Mike Perry stressed the importance of preserving shareholder value with strong capital and liquidity levels in a response to a blog suggestion posed by a shareholder, according to a filing with the Securities and Exchange Commission.

The Pasadena, Calif., holding company for IndyMac Bank noted that, as already reported, it is "considering a variety of capital raising alternatives, including potentially raising capital through some sort of convertible debt or preferred offering that is privately placed with one or more investors."

Perry added that the company is exploring every option possible to raise capital levels, including shrinking its balance sheet and cutting its common stock dividend.

The shareholder suggestion stated: "The repurchasing of shares [by Indymac] at these deflated prices would send an even stronger message, not just about the viability of IMB, but about how it feels about itself as a sound investment. Later, as footing is regained and profit realized, the raising of more capital from additional offerings can resume."

In response, Perry also said that in normal times, the shareholder's "suggestion (repurchasing shares with our capital cushion)...would be exactly the right thing to do, given how far below book value our shares presently trade."

Perry, however, added, "These are not normal times. I attended the annual National Housing Forum (hosted by the Office of Thrift Supervision) on Monday of this week in Washington, DC. Clearly, the housing and mortgage markets are very tough right now, and no one is able to forecast when things will get better. One of the speakers said, 'This current housing and mortgage market is a once in 100 year event.'"

Perry said that despite a strong capital cushion, the company is not in a position to repurchase shares. He cited the $68.8 million raised from common equity in October at an average price of $19.40 per share.

IndyMac's chief went on to say that the bank's business model is in the eye of this storm, noting that he does expect to continue to narrow losses each quarter. Perry also said that "it is difficult to predict when we will return to profitability. Hopefully, if all goes well, we can return to modest profitability sometime in the second half of 2008."

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