IndyMac Sold – Three Banks Fail

By Tim Holland

The FDIC announced the sale of IndyMac Federal Bank FSB, Pasadena, CA to OneWest Bank. FSB, a newly formed Pasadena, California based federal savings bank. IndyMac bank is the largest bank to fail in the current recession and the most visible as the FDIC was obliged to actually take over the bank and operate it as opposed to immediately selling it to a third party.

All thirty three branches of IndyMac officially became branches of OneWest on Friday.

When acquired by the FDIC, Indymac had total assets of $23.5 billion and deposits of $6.4 billion. The agreement with OneWest calls for the new bank to acquire all of the deposits and approximately $20.7 billion of the assets at a discount of $4.7 billion. As is the case with most banks, assets on its balance sheet are primarily outstanding loans. The FDIC will retain the balance of the assets for later distribution.

IndyMac Bank has served as the FDIC’s laboratory since it took over the bank and has made efforts to modify the poorly performing loans among its assets. The new owners of the bank have also entered into a loss sharing agreement on the single family residential portfolio. Additionally, OneWest has agreed to continue the FDIC’s loan modification program it experimented with at IndyMac.

The eighteenth bank to fail this year was announced on Friday, as has become the FDIC’s pattern. The FirstCity Bank of Stockbridge, Georgia was closed by the Georgia Department of Banking and Finance and the FDIC was appointed receiver.

The FDIC has made the decision to close the bank and will be mailing checks to the depositors, representing the value of their insured deposits. The Checks will be mailed on Monday and any customers that have their Social Security and Veterans’ benefits direct deposited to their accounts at the failed bank will be sent to SunTrust Bank. Customers that are affected are urged to call the following toll free number for information: 1-877-367-2719

FDIC also recommends that customers of the FirstCity Bank with deposits above the $250,000 insurance threshold also call the phone number listed above.

The nineteenth and twentieth banks to fail are actually affiliated institutions and have national bank charters. As such, they are supervised by the Office of the Controller of the Currency which made the decision to close Colorado National Bank of Colorado Springs, CO and Teambank National Association of Paola, Kansas appointing the FDIC as receiver.

Unlike the Georgia bank mentioned above, buyers for the Colorado and Kansas banks were found. In the case of the Colorado National Bank, its four branches will open on Monday as branches of Herring Bank of Amarillo, Texas in the usual seamless transition of assets and liabilities. The bank in Kansas was purchased by Great Southern Bank of Springfield, Missouri and the 17 branches of Teambank will open on Monday under the supervision of the Missouri bank.