Troubled IndyMac Bank finds buyer

Silicon Valley / San Jose Business Journal


The Federal Deposit Insurance Corporation has signed a letter of intent to sell the banking operations of IndyMac Bank to a thrift holding company controlled by IMB Management Holdings LP, a limited partnership. Regulators seized the failed Pasadena, bank in July.
"The current economic climate is challenging for selling assets, but this agreement achieves the goals that were set out by the chairman and board when the FDIC was named conservator of IndyMac in July," said FDIC Deputy Director James Wigand, the lead negotiator for the transaction. "Unfortunately, as expected, IndyMac's liability structure, combined with aggressive real estate lending in California, had a significant impact on losses."
The partnership reportedly includes J. Christopher Flowers, a buyout specialist known for targeting distressed banks; hedge-fund operator John Paulson of Paulson & Co., and Steven Mnuchin, chairman and co-chief executive of Dune Capital, a privately owned hedge fund sponsor in New York.
Prior to IndyMac’s failure, the bank relied heavily on higher cost, less stable, brokered deposits, as well as secured borrowings, to fund its operations and focused on stated income and other aggressively underwritten loans in areas with rapidly escalating home prices, particularly in California and Florida, according to a press release by the FDIC.
Since the FDIC has operated the institution, it has restructured funding to focus on more stable core deposits and on improving the value of the loans.
The transaction is expected to close later this month or early next month, at which time full details of the agreement will be provided. It is estimated that the cost to the FDIC's DIF for resolving IndyMac Bank will be between $8.5 billion and $9.4 billion, in line with previous loss estimates.