The formerly high-flying mortgage lender that operated as IndyMac Bank FSB is being acquired by a company that previously abandoned the mortgage business.
One of the first major casualties of the financial crisis was IndyMac, a thrift that was among the nation’s largest nonprime mortgage lenders at one time.
Following a run on the bank’s deposits sparked by a letter to banking regulators from Sen. Charles Schumer (D-N.Y.), the Office of Thrift Supervision seized and closed down the Pasadena, Calif.-based company in July 2008.
At the time, it was the biggest thrift failure in U.S. history.
The financial institution was operated as IndyMac Federal Bank FSB by the Federal Deposit Insurance Corp. as receiver until the following year.
OneWest Bank FSB eventually emerged as the acquirer in March 2009. Investors in OneWest included a consortium of private investors with ties to J.C. Flowers & Co. LLC, Paulson & Co., MSD Capital L.P., Stone Point Capital LLC, SSP Offshore LLC and SILAR MCF-I LLC.
On Tuesday, CIT Group Inc. disclosed that it reached an agreement with OneWest Bank, N.A.-parent IMB Holdco LLC to acquire the 73-branch company for $3.4 billion in cash and stock.
Once the deal is done, OneWest will be merged into CIT Bank and have $67 billion in assets and $28 billion in deposits.
New York-based CIT Group is headed by Chairman and Chief Executive Officer John Thain, who led Merrill Lynch until is was acquired by Bank of America Corp. during the financial crisis. Merrill Lynch was the former parent of subprime lender First Franklin Financial Corp. — which closed down in early 2008.
CIT, itself, exited the mortgage business in August 2007.
Interestingly, rumors of a merger between CIT and OneWest surfaced in late 2009 — though speculation was eventually quashed.
Today’s statement indicated that IMB Holdco Chairman Steven T. Mnuchin will join CIT Group as vice chairman and will join IMB Director Alan Frank on CIT’s board.
“This transformational transaction will combine CIT’s national middle market lending platform with OneWest’s wholesale lending and branch banking franchise to create a unique provider of retail and institutional financial services,” Thain said in the statement. “The transaction diversifies and lowers the cost of CIT’s deposits, broadens the products we can offer to our middle market clients, is accretive to earnings and return on equity, and accelerates the utilization of our NOL, while maintaining a strong capital position. We look forward to welcoming OneWest Bank’s talented employees to CIT as we build our franchise and meet the financing needs of our customers.”
Both companies’ boards of directors have approved the transaction, which is subject to customary closing conditions and regulatory approvals.
No closing date was mentioned.
