Breaking News

Tweet TWEET

Former IndyMac Said to Hold Sale Talks With at Least Two Suitors

OneWest Bank FSB, the lender formed out of the remains of failed IndyMac Bancorp Inc., has held informal sales talks in recent weeks with at least two potential buyers, said people familiar with the matter.

UnionBanCal Corp. has expressed interest in Pasadena, California-based OneWest, said one of the people, who asked not to be named because the talks are private. Minneapolis-based U.S. Bancorp also held discussions with OneWest and has since pulled back, that person said.

Billionaires George Soros and John Paulson formed part of the private-equity group that rescued IndyMac and revived it as OneWest in 2009. While OneWest’s owners have made exploratory calls to determine what price the bank might fetch, a sale isn’t imminent, and the group also is considering an initial public offering, another person said.

OneWest, which has absorbed two other failed banks, had $25.8 billion of assets at Sept. 30 and almost 80 branches, according to the Federal Deposit Insurance Corp. Representatives at OneWest, UnionBanCal and U.S. Bancorp declined to comment on the talks. Spokesmen for Soros Fund Management LLC and Paulson & Co. also declined to comment.

The FDIC seized IndyMac after a run on the lender in 2008 led to the third-largest bank failure in U.S. history. OneWest Chairman Steve Mnuchin, a former partner at Goldman Sachs Group Inc., led the group that invested $1.55 billion to kickstart OneWest four years ago. In addition to Paulson and Soros, the consortium also included Michael Dell, founder of computer maker Dell Inc., and J. Christopher Flowers, who created private- equity firm J.C. Flowers & Co.

Photographer: Jin Lee/Bloomberg

The value of Paulson’s stake in OneWest Bank FSB has more than doubled, and the investors recouped some of the investment through a $500 million dividend in the fourth quarter. Close

The value of Paulson’s stake in OneWest Bank FSB has more than doubled, and the... Read More

Close
Open
Photographer: Jin Lee/Bloomberg

The value of Paulson’s stake in OneWest Bank FSB has more than doubled, and the investors recouped some of the investment through a $500 million dividend in the fourth quarter.

Paulson Stake

The value of Paulson’s stake has more than doubled, and the investors recouped some of the investment through a $500 million dividend in the fourth quarter, according to a Paulson letter sent to investors in January and obtained by Bloomberg News. OneWest earned $121 million in the third quarter, compared with a loss of $57 million a year earlier, according to FDIC data.

The Paulson letter indicates that OneWest was valued at $2.89 billion as of January, based on the $704 million valuation Duff & Phelps Corp. placed on Paulson’s 24.4 percent stake. While OneWest’s private-equity owners prefer a sale to an IPO, it’s seeking a higher price than suitors are so far willing to pay, one person said.

IndyMac made loans that required no income verification from borrowers. Suitors are concerned about the quality of its mortgages, and they also fear that regulators may find fault with certain loans, the people said.

Unpaid Loans

Borrowers failed to pay interest on about 13 percent of OneWest’s loans as of Sept. 30, according to regulatory data. That compares with a median unpaid loan percentage of less than 2 percent in the fourth quarter for the almost 400 banks on the Nasdaq Bank Index, according to data compiled by Bloomberg.

Potential bidders also want to know whether regulators would be willing to extend a government loss-sharing agreement on certain IndyMac assets to a new buyer, according to the people.

U.S. Bancorp had more than 670 branches in California and over $350 billion in assets nationwide, according to FDIC data. OneWest Chief Executive Officer Joseph Otting worked at U.S. Bancorp before taking his current role in 2010.

UnionBanCal, based in San Francisco, is owned by Mitsubishi UFJ Financial Group Inc., which last year merged the lender with Pacific Capital Bancorp of Santa Barbara, California.

To contact the reporters on this story: Matthew Monks in New York at mmonks1@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.