FDIC Approves Letter of Intent To Sell IndyMac, Deal Includes Financial Freedom

image Today the FDIC announced it has entered a letter of intent to sell IndyMac to IMB HoldCo, LLC, a thrift holding company controlled by IMB Management Holdings LP for approximately $13.9 billion. 

The complete sale of the bank includes the following:

  • The retail bank headquartered in Pasadena, CA, with 33 branches located
    primarily in the Los Angeles MSA with approximately $6.5 billion in deposits.
  • A loan portfolio of $16 billion and a securities portfolio of $6.9 billion.
  • A servicing platform with mortgage servicing rights (“MSRs”) representing an
    unpaid principal balance of $157.7 billion.
  • A reverse mortgage platform, Financial Freedom, with $1.5 billion of reverse
    mortgages and MSRs representing an unpaid principal balance of $20.2 billion.

According to the press release, the FDIC has agreed to share losses on a portfolio of qualifying loans with the new IndyMac assuming the first 20 percent of losses. From there, the FDIC will split losses 80/20 for the next 10 percent of losses and 95/5 thereafter. 

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"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."

IMB HoldCo is owned by a consortium of private equity investors which includes the following:

  • Dune Capital Management
  • J.C. Flowers & Co.
  • Paulson & Co.
  • MSD Capital, L.P.
  • Stone Point Capital
  • SSP Offshore LLC
  • SILAR MCF-I LLC. 

To learn more about each of the companies click here for the FDIC’s fact sheet.

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."

Congrats to everyone at Financial Freedom.  I’ve put in requests for interviews with FF executives but have yet to hear back.  If any employees can help with this please let me know.

FDIC Board Approves Letter of Intent to Sell IndyMac Federal

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