|
|
 |
|
Overall, 2001 was a strong year for IndyMac.
In our first full year as a federally regulated depository institution, we exceeded substantially all of the goals discussed in our letter to you last year. We achieved
a 52% increase in recurring earnings per share (to $2.00); a 74% increase in loan production (to a record $17.5 billion); a four-fold increase in deposits (to
$3.2 billion); and a 39% improvement in return on equity (to 16.55%).
Our strong results were generally mirrored across the mortgage industry as declining interest rates created record industry loan volumes. As a mortgage banker in this environment, we really had the wind at our backs. The current outlook suggests that the wind is coming back around now and the market may not be quite
as favorable in 2002. In fact, at the end of last year, the Mortgage Bankers Association of America (MBA) forecast that the industry’s mortgage production would decline by approximately 30% in 2002.
For both IndyMac and our competitors, concerns with regard to the industry’s point in the cycle, as opposed to concerns over our performance, translated to a contraction in the price/earnings multiple at which our shares trade. Our price/earnings multiple declined 48%, from 22.4 at December 31, 2000 to 11.7 at December 31, 2001. As a result, our total return to shareholders for 2001, of –21%, fell short of the total return generated by the overall market, which reflected one-year returns of –5% and –12%, by the Dow Jones Industrial Average and the S&P 500, respectively. However, we continued to outperform the market when evaluated on a longer-term basis with annualized total returns of 35% for the three years ended December 31, 2001 and 26% for the period since 1993 (when our current management team took the helm). These returns compare to 5% and 16% for the Dow Jones Industrial Average
and –1% and 14% for the S&P 500, respectively, for the same periods.
While 2001 was a good year for IndyMac, we prefer to focus on the future since challenges lie ahead.
We want to explain why our long-term outlook remains positive and how we plan to achieve increased production and profitability in the coming year. We believe that the equity markets will recognize our continued focus on execution to grow our business and, as we perform, we expect to see our price/earnings multiple expand and enhance our total return to shareholders.
Along this line, we are proud to note that the equity research analysts at Standard & Poor’s Corporation selected IndyMac as one of 35 companies for their S&P PowerPicks 2002 Portfolio. The objective of the PowerPicks Portfolio is to exceed the total return generated by the S&P 500 during the same year. The PowerPicks Portfolio consists of companies that the analysts believe are positioned for superior growth throughout the year. |
|
|
