by Calculated Risk on 9/07/2007 11:23:00 AM

Press Release: Indymac Provides Update on Current Performance

Dear shareholders and other Indymac stakeholders:

...the mortgage and housing markets are very difficult, and the private secondary markets have significantly worsened. The illiquidity in the secondary markets, and consequent significant and abrupt spread widening for all mortgage products except those saleable to the GSEs, have negatively impacted the profitability of our mortgage production division. ... we have largely converted our mortgage production to a GSE-eligible model ...

... Given the current operating environment and our anticipated earnings performance, I believe it is prudent to assess our current common stock dividend payout, and I plan to recommend to the Board of Directors that we reduce our quarterly dividend payout to $0.25 per share for the time being. ... I also believe that we will be able to sustain this level of dividend payout through the current down cycle for the mortgage and housing markets, which is presently forecasted to worsen before it gets better.

... the secondary mortgage markets have changed dramatically, and in response we have transformed our mortgage production from largely an Alt-A platform at the beginning of the quarter to roughly 90 percent GSE-eligible production currently. ... We expect that our production volumes will be down substantially, by roughly one-half in the fourth quarter, although we are experiencing some pricing power on new loans such that our margins are improving. With production volumes coming down, we need to again take steps to right-size our organization and have announced internally our intentions to do so, starting with a voluntary severance program, which will be followed by additional involuntary layoffs. Combined, we see a reduction of roughly 10 percent of our workforce, or approximately 1,000 employees, over the next several months.
emphasis added