FDIC Board approves letter of intent to sell IndyMacMortgagePress.comFDIC, IndyMac Federal Bank FSB, conservatorship, IMB Management Holdings LP, James Wigand, loan modification
The Federal Deposit Insurance Corporation (FDIC) has signed a
letter of intent to sell the banking operations of IndyMac Federal
Bank FSB of Pasadena, Calif., to a thrift holding company
controlled by IMB Management Holdings LP, a limited partnership.
The FDIC's Board of Directors approved the agreement to sell
IndyMac Federal to the investor group.
"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."
Prior to the IndyMac failure on July 11, 2008, 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. 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.
IMB Management Holdings LP and the investor group will inject a
substantial amount of capital into a newly formed thrift holding
company, which will own and operate IndyMac Federal. IMB Management
Holdings LP, has agreed to bring in an experienced senior
management team to run the day-to-day operations of the thrift.
Despite the challenges of selling assets in today's current
economic climate, the FDIC received considerable initial interest
from potential bidders. It was determined that the bid from IMB
Management Holdings, LP, was the least costly to the Deposit
Insurance Fund (DIF) of all competing bids.
The agreement with IMB Management Holdings, LP is not the first
time private equity firms have participated in acquiring failed
institutions. In the early 1990s, the FDIC tapped private equity
when it sold New Bank of New England and CrossLand Federal Savings
Bank.
The streamlined loan modification program introduced at IndyMac
by the FDIC in late August has provided total estimated savings of
$423 million based on a comparison of the projected net present
value of the modified loans to the net present value of
foreclosure. The continuation of the loan modification program will
be a condition for the FDIC to provide any type of loss-sharing on
IndyMac's assets.
"The FDIC and IndyMac staff accomplished a tremendous amount of
work in a short period of time to help thousands of struggling
homeowners stay in their homes and maximize value for both the
Deposit Insurance Fund and mortgage investors," said John Bovenzi,
CEO of IndyMac Federal and FDIC Chief Operating Officer.
The transaction is expected to close in late January or early
February, 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. Costs include
prepayment fees of $341.4 million to the Federal Home Loan Bank of
San Francisco, on the payoff of $6.3 billion in FHLB advances.
"It is unfortunate that many of the banks that have failed last
year had a heavy reliance on Federal Home Loan Bank advances,"
Bovenzi said. "These secured borrowings and the associated
prepayment penalties have the effect of increasing the costs to the
FDIC and to uninsured depositors."
For more information, visit www.fdic.gov.
