The letter of intent is signed and IndyMac Federal Bank is finally headed back to the private sector. The Federal Deposit Insurance Corp. agreed to sell IndyMac’s banking operations to a thrift holding company backed by IMB Management Holdings in a deal announced on December 31. The price tag is $13.9 million.
Under the agreement, Pasadena, CA-based New IndyMac will include 33 branches with $6.5 billion in deposits; a $16-billion loan portfolio; a $6.9- billion securities portfolio; a servicing platform with mortgage servicing rights amounting to $157 billion in unpaid balance; and reverse mortgage- platform Financial Freedom, which holds $1.5 billion of reverse mortgages and an unpaid principal balance of $20.2 billion. The agency’s mortgage modification program will continue.
And the new owners will get a government backstop. The FDIC will “share losses on a portfolio of qualifying loans with New IndyMac assuming the first 20 percent of losses after which the FDIC will share losses 80/20 for the next 10 percent of losses and 95/5 thereafter,” according to an agency fact sheet. At the close of the transaction, IMB will capitalize New IndyMac with around $1.3 billion in cash. The deal should be finalized by late January or early February 2009. When it’s over, the cost to the FDIC’s for resolving the bank failure will be in the $8.5-$9.4-billion range.