IndyMac Bancorp to temporarily suspend dividends; profitability not expected this year

By Lisa Kerner

Charlotte, N.C., May 12 - IndyMac Bancorp, Inc., the holding company for IndyMac Bank, FSB, exercised its right to suspend the dividends on its non-cumulative preferred stock at IndyMac Bank based on expected continued losses in 2008.

In addition, IndyMac will defer the interest on its trust preferred securities at its holding company.

The move is expected to generate capital by the "most efficient and least dilutive means," a company news release said.

"We view the deferral/suspension of the interest/dividends on the preferred stock issues as temporary, and, once the market stabilizes and IndyMac returns to solid profitability, we anticipate resuming the interest/dividend payments and paying the accumulated deferred interest on the holding company trust preferred," IndyMac chairman and chief executive officer Michael W. Perry stated in the release.

Pasadena, Calif.-based IndyMac is not currently forecasting a return to profitability this year. The company said it is not expected to return to overall profitability until the current decline in home prices decelerates.

"Taking these actions will improve our cash flow by $7.4 million per quarter at the holding company, enabling us to contribute more capital to the bank, and preserve capital of $10.6 million per quarter (which also flows directly to earnings) directly at the bank," Perry added.

IndyMac reported a first-quarter loss of $184.2 million, or $2.27 per share.

Perry said total operating liquidity is "solid" and totaled more than $4 billion at the end of the first quarter.

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