Since the failure of IndyMac Bank on July 11, 2008 the FDIC has been operating the financial institution.  The FDIC has now entered into a letter of intent to sell what is referred to as New IndyMac to IMB HoldCo LLC.  IMB HoldCo LLC is a recently formed thrift holding company controlled by IMB Management Holdings LP, a limited partnership.  IMB HoldCo is owned by a consortium of private equity investors led by Steven T. Mnuchin of Dune Capital Management LP.  The purchase price for the bank is listed at approximately $13.9 billion.

According to the press release provided by the FDIC this is not the first time that the government used a private equity firm for the sale of bank assets.  It was determined that the bid from IMB Management Holdings, LP, was the least costly to the Deposit Insurance Fund of all competing bids

The New IndyMac that is being sold consists of the retail bank headquartered in Pasadena, CA.  33 bank branches that are located in the Los Angeles area.  The bank deposits that total approximately $6.5 billion.  A loan portfolio of $16 billion.   A securities portfolio of $6.9 billion.  A servicing platform with mortgage servicing rights representing an unpaid principal balance of $157.7 billion.  A reverse mortgage platform, Financial Freedom, with $1.5 billion of reverse mortgages and mortgage servicing rights representing an unpaid principal balance of $20.2 billion.

As part of the sales agreement, the FDIC has agreed to share losses on a portfolio of qualifying loans with New IndyMac assuming the first 20% of losses after which the FDIC will share losses 80/20 for the next 10% of losses and 95/5 thereafter.  The FDIC estimated the cost for resolving IndyMac Bank will be between $8.5 billion and $9.4 billion, in line with previous loss estimates.  The 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.

When the transaction is closed, IMB HoldCo will capitalize New IndyMac with approximately $1.3 billion in cash. Terry Laughlin will be the President and CEO of the new thrift acquiring New IndyMac.

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