Despite reporting that its profit had been cut in half, shares in IndyMac Bancorp Inc. surged more than 15 percent Tuesday after the lender reported better-than-expected second quarter earnings.
IndyMac reported second-quarter net income of $45 million (60 cents per share), a 57 percent drop from $105 million ($1.49) from the same period a year earlier. But the results beat Wall Street's expectations of 54 cents per share, according to Thomson Financial.
IndyMac also reported that total mortgage production fell 12 percent to $23 billion for the second quarter, reflecting the slumping demand for home loans.
Declining performance also led to a large jump in repurchase demand from Wall Street. Investors who buy mortgages originated by IndyMac can demand they be repurchased if the loans default shortly after they are made. IndyMac, which sells the bulk of its loans to investors, faced repurchase requests of $221 million during the second quarter, up from $71 million from the same period last year but down from $527 million in the first quarter of 2007.
IndyMac said earlier this year that it plans to scale back its subprime lending, but expects to capture some business lost by subprime lenders that have closed their doors. The lender also announced earlier this month that it had cut 400 jobs in an effort to cut costs.
While shares in IndyMac had a rollercoaster day yesterday, they bounced back Tuesday, gaining $3.31, or 15 percent, to $25 and continued to rise in afternoon trading on the New York Stock Exchange.
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