OneWest (fka IndyMac) Turns Q2 Profit

NEW YORK (Reuters) – Failed mortgage lender IndyMac Bancorp, now known as OneWest Bank, turned a profit in its first full quarter under new hedge fund and private-equitiy ownership, according to reports filed with U.S. bank regulators.

For the second quarter ended June 30, Pasadena, California-based OneWest posted profit of $182 million. OneWest generated $245.6 million of net interest income, offset by a $9 million provision against future losses.

The thrift also said nearly a third of the bank’s mortgages were behind on their payments, though the value of repossessed homes on its books rose to $137 million from $18 million.

The bank had $2.5 billion in mortgage-backed securities and $6.6 billion of mortgage loans at the end of June.

A group of investors including Paulson & Co; a hedge fund controlled by billionaire George Soros; buyout firm J.C. Flowers & Co and Dune Capital Management purchased IndyMac from the Federal Deposit Insurance Corp in March for $13.9 billion.

The profitable quarter comes as U.S. officials debate what role buyout firms should play in reviving the country’s banking system. Private funds want to acquire failed and struggling banks at distressed prices, though regulators worry they may not act in the best long-term interests of the banking system.

IndyMac specialized in Alt-A mortgages, loans made with little down payment or proof of wealth. The thrift, weakened as the U.S. housing market tumbled, was seized by the government in July 2008 after a run on the bank by depositors.

Under the terms of the takeover agreement, the owners absorb the first 20 percent of credit losses, but the FDIC is on the hook for an estimated $10.7 billion of further losses.

(Reporting by Joseph A. Giannone; Editing Bernard Orr)