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Positive IndyMac Update

Most employees still on board, sale on track

August 15, 2008


IndyMac Federal Bank FSB, which still employs many of the people who worked there before it was taken over by government regulators, is operating under the Federal Deposit Insurance Corporation with fewer capital restraints in an environment with higher morale than in its final days as an independent company. Fewer layoffs are currently planned as the FDIC is apparently managing the company under a strategy that seeks to preserve value in the company's business units as ongoing entities.

The Pasadena, Calif.-based company was shut down by the Office of Thrift Supervision on July 11 following a run on deposits reportedly sparked by the public release of a June 26 letter from Sen. Charles Schumer of New York that expressed concerns about IndyMac's ongoing viability.

In an attempt to survive the devastating effects of a run on deposits, IndyMac announced on July 7 that it would immediately stop originating new business and layoff 3,800 employees, including around 1,500 retail employees and roughly 2,300 wholesale employees in nine centers. That move was expected to leave headcount at 3,400.

However, as of today, IndyMac's total workforce still stands at 7,500, Vice President of Corporate Communications Evan Wagner told MortgageDaily.com in an interview today. He explained that many of the laid off employees are still in their notice period, but the FDIC has been less inclined to make job cuts as the company is not operating under the severe capital restraints that existed just before the collapse.

Wagner noted that retail employees were let go, while 150 mostly corporate employees were released last week.

A Worker Adjustment and Retraining Notification filed with the Washington Employment Security Department indicated 51 employees are being laid off in Bellevue on Sept. 5, while a WARN filing with New Jersey's Department of Labor and Workforce Development indicated 127 employees in Marlton are being terminated by Sept. 7. Another WARN filing with the State of Illinois reflected 64 layoffs planned for Sept. 7.

But after all pending layoffs are completed, the company still expects the total workforce, including contractors and temporary workers, to be around 3,700. The total number of employees, excluding contractors and temporary, is projected to be 3,000 or less.

"As the FDIC gets to know more about IndyMac ... and as they just sort of progress, and learning about the business and running the business and marketing the business ... it's absolutely possible that there will be more staff reductions made," Wagner said.

But he added that most of the remaining employees don't have a lot worry about in that the bulk of them will be going with the assets in a sale, "though, again, we don't want to guarantee what a buyer is going to do."

An e-mail to employees on Aug. 12 from IndyMac Chief Executive Officer John Bovenzi obtained by MortgageDaily.com indicated that all terminating employees would be given 60 days' notice, while employees with at least five years of service will be paid $20,000 less salary paid during the 60 days.

Just prior to the FDIC takeover, IndyMac -- under mandate by its regulators to preserve capital -- had to abandon severance packages.

Wagner said the clarification of the 60-day notice provided some relief to many employees and enabled them to focus on doing their jobs. He also said retention bonuses are being considered in some cases.

In his e-mail message, Bovenzi said the sale of 70 branches to Prospect Mortgage was completed on Aug. 7. The deal included 1,000 employees and a $366 million pipeline.

Wagner indicated the company's most valuable assets are its 33 retail bank branches, its Financial Freedom Senior Funding Corp. unit and its servicing organization. He said the company has been meeting with interested buyers and is on track to meet its 90-day goal.

Bovenzi noted the company currently services 740,000 loans for more than $184 billion, of which 60,000 loans are 60 or more days past due. He said IndyMac owns 45,000 mortgages for $15 billion and 27,000 home-equity lines-of-credit for about $1.9 billion. HELOC borrowers are being offered 2 percent of their lines in cash, up to $1,500, to payoff their unpaid balances.


Schumer Letter Leads to Collapse of Biggest Thrift Ever
Troubled IndyMac Bank F.S.B. was shut down today by federal banking regulators. The government said a June 26 letter from Sen. Charles Schumer sparked the crisis that led to the collapse.

IndyMac Sells Retail Branches
IndyMac Bancorp has agreed to sell the majority of its retail operation.

IndyMac Halts New Business
The company formerly owned by Countrywide is taking drastic steps to survive, including laying off nearly 4,000 employees.

IndyMac Blasts Schumer
IndyMac Bancorp Inc. said a run on its deposits over the weekend has abated and blamed a U.S. senator for sparking the panic.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: [email protected]

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