OneWest Bank became Southern California’s largest depository institution by assets after December’s blockbuster acquisition of FirstFed Financial Corp.
Now the savings and loan created from the wreckage of failed mortgage lender IndyMac Bank is seeking to become a banking powerhouse across the West Coast.
The Pasadena thrift is preparing to open several branches, roll out an ambitious branding campaign and is even considering more acquisitions.
“There’s been an enormous amount of work here in the first nine months,” said Chairman Steven Mnuchin, a former Goldman Sachs Group Inc. banker. “The investor base is very focused on the long-term opportunities.”
OneWest was born in March when a group of investors acquired IndyMac’s assets from the Federal Deposit Insurance Corp.
In December, OneWest more than doubled its branches to 72 and upped its total assets to $24 billion by acquiring struggling Los Angeles-based thrift FirstFed in an FDIC-assisted purchase.
OneWest is the largest savings and loan operating in Orange County with $700 million in deposits (see story, page 20).
The thrift’s investors include private equity and hedge fund heavyweights such as John Paulson, George Soros and Michael Dell.
IndyMac largely had done business on the Internet. Adding FirstFed’s branches helped fill out operations for OneWest.
FirstFed had five branches in OC and ranked as the sixth largest thrift here a year ago.
Now OneWest plans to open several branches in 2010 before considering acquisitions that could raise its West Coast network to as many as 150 branches.
IndyMac and FirstFed based a substantial portion of their businesses on home mortgages, including the risky subprime and adjustable rate loans that got them into trouble.
OneWest hopes to offer a wider range of services, making it more akin to a community or regional bank.
One factor in OneWest’s favor is the loss-sharing arrangement with the FDIC, a benefit that has become a standard feature of bank failure acquisitions.
“Those loss-share agreements give the acquirer substantial coverage in terms of realized losses,” said Kendall Raine, executive managing director of the financial institutions group at Marshall & Stevens Inc., a financial advisory and valuation firm in Los Angeles. “The returns can be very attractive.”
Additionally, since IndyMac had been held in receivership for eight months, regulators had time to write down or sell off a substantial amount of the thrift’s soured assets.
But OneWest still has to contend with problems left over from IndyMac.
In November, a judge in New York reprimanded OneWest over its decision to foreclose on a home purchased by a couple in 1994 with a loan through IndyMac. OneWest is appealing the decision.
Upset over what they view as OneWest’s callous, bullying tactics, many former IndyMac customers have spoken out against the new institution. Angry homeowners have taken to online message boards to complain about the unwillingness of OneWest to renegotiate loan terms with former IndyMac customers.
Analysts and OneWest executives say the thrift is limited in its ability to modify loans.
Roughly 90% of the loans serviced by OneWest aren’t owned by the thrift, meaning OneWest can’t modify a loan or must obtain approvals from other parties first.
OneWest has modified more than 10,000 loans in the past year. Recently, the thrift signed up for the government’s Home Affordable Modification Program.
“Loan modification is a huge priority for the bank,” Mnuchin said.
Getting away from IndyMac has been a slow process.
It took months for the thrift to roll out its new Web site, logo and signature colors. The institution recently replaced all the IndyMac signs at branch locations.
“They just want to have everybody forget about IndyMac,” said Wade Francis, president of Unicon Financial Services Inc., a bank consulting firm in Long Beach.
Clough is a staff writer with the Los Angeles Business Journal.
