IndyMac on Tuesday lowered its projected earnings for the fourth quarter to 97 cents per share, down from an earlier estimate of $1.30 to $1.40.


In a letter to shareholders, the nation's second-largest independent mortgage loan originator blamed deteriorating credit quality and higher finance costs. The Pasadena firm's stock fell $3, or nearly 7 percent, to $40.55, the largest drop in more than two years.


Chief Executive Michael Perry also cited blamed the poor quarter on higher credit costs, tighter profit margins and a drop in income from securities and securities sales.


"This shortfall reflects the challenging times being faced by the mortgage and housing industries and the difficult nature of forecasting earnings in our business," Perry said in the letter.


Perry will recommend to the company's board that it maintain IndyMac's dividend at 50 cents per share, the same level as last quarter, he said.


The company is scheduled to report earnings on Jan. 25.

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