IndyMac Bancorp Inc.’s tenure on the New York Stock Exchange could be running out.
The troubled Pasadena-based thrift has been trading at well below $1 since late last month and the exchange could send the company a notice of impending delisting as soon as next week.
NYSE regulators warn companies that they could be delisted once their stock price trades below $1 for 30 days and generally gives them six months to come back into compliance but delisting can come sooner.
“We monitor companies closely once their share price falls below $2 and we work with these companies very closely,” said Scott Peterson, a spokesman for the NYSE’s regulation division. “We do reserve the right to delist a company at any time.”
Peterson declined specific comment on IndyMac, which has been overwhelmed by rising mortgage loan foreclosures, but did acknowledge that exchange regulators are in frequent contact with the company.
Trading of the company’s stock already has been restricted as of June 26, when the share price fell below $1.05. That limited trading to the NYSE’s Arca electronic exchange and other electronic exchanges.
Since that time, the company’s stock has not climbed over $1 and closed July 10 at an all-time low of 31 cents. Some Wall Street analysts believe it’s increasingly unlikely it will surpass the $1 threshold anytime soon.
IndyMac Chief Executive Michael Perry last week sent a dire letter to shareholders saying the company had fallen below the level considered “well-capitalized” and could not raise fresh capital. As a result, the company said it would stop accepting new loan applications and would eliminate 3,800 positions.
After the announcement, two analysts who follow the company lowered their target prices for IndyMac’s stock to zero, saying there is virtually no shareholder value left.
“We are not predicting (Indymac’s) failure, but we expect that the value of the common equity left after today’s announced actions will be immaterial,” said Paul Miller, an analyst with Friedman Billings Ramsey & Co. Inc., in a report last week.
Later in the week, the company announced a deal to sell the bulk of its mortgage business to Northbrook, Ill.-based Prospect Mortgage. The moved saved 750 jobs from cuts.
But the company has not said it plans any particular moves to improve its stock price, such as a reverse stock split.
It also has said in a regulatory filing that despite $3.5 billion in available cash as of June 30 it is prohibited from conducting a stock buyback by the terms of its outstanding trust preferred securities.
