On one side of a long conference table in a room deep inside the headquarters of the Federal Deposit Insurance Corp. sat the management team of FirstFed Financial Corp. On the other side, about a dozen regulators.

It was a Wednesday afternoon in early December, and the FirstFed executives, jet-lagged from cross-country flights, had descended on Washington, D.C., to plead for the survival of one of California’s oldest financial institutions.

The holding company for First Federal Bank of California, a savings and loan with branches across Los Angeles, was up against the wall. Saddled with toxic adjustable rate mortgages, the thrift had endured more than a half-billion dollars in losses since the collapse of the housing market.

FirstFed’s failure seemed inevitable, but executives requested the emergency meeting with the FDIC and Office of Thrift Supervision to beg for a stay.

Babette Heimbuch, the thrift’s brash chief executive, argued that by many measures, the situation was improving. Chief Operating Officer James Giraldin detailed expected losses under the worst-case scenario. Others attested to the likelihood of new investment.

The FirstFed contingent left that afternoon confident. They had nailed the presentation.

“My read of the meeting was it couldn’t have gone better,” said one person in attendance.

Two weeks and two days later, regulators closed FirstFed, the sixth largest depository institution in Los Angeles.

To most, FirstFed was by then a familiar story: Mortgage lender dives headlong into adjustable rate loans, losses pile up, regulators shutter the institution. IndyMac Bank, Downey Savings & Loan and BankUnited, to name a few, had already suffered a similar fate.

On closer examination, however, FirstFed’s failure was hardly typical. Unlike many failed institutions, its bottom line and long-term outlook actually seemed to be improving.

Quarterly losses had narrowed all year. It still had significant capital and strong liquidity. Problem assets had been declining for months. Better still, the thrift was on the verge, insiders insisted, of a dramatic recapitalization.

“Our numbers were trending positively,” maintains Nicholas Biase, a New York-based investor and former director of FirstFed.

The details of banks’ interactions with regulators are almost never made public and the execution of bank closures is intentionally secretive; not surprisingly, many of those with knowledge of FirstFed’s final days asked to remain anonymous.

But through dozens of interviews with former FirstFed executives and directors, government regulators and banking industry leaders, as well as examination of hundreds of pages of internal e-mails and other documents, the Business Journal has reconstructed the months, weeks, days and hours leading up to the thrift’s closure.

It’s a story that typifies the challenges that many struggling banks and thrifts faced over the last several years as they tried to recover from self-inflicted wounds during the real estate boom – only to find overwhelmed regulators less than sympathetic.

It’s also a nuanced picture of a deeply troubled institution that perhaps could have been saved, if not for a convergence of unfortunate events – not the least of which was FirstFed’s shelving of a planned stock offering when its auditor suddenly quit. It also didn’t help when Heimbuch was forced out by regulators, who some believe had enough of her outspokenness.

And just when it seemed like a turnaround was possible, regulators went back on a pledge to give FirstFed more time to save itself. FirstFed, it turns out, survived multiple takeover attempts before it was closed Dec. 18 and its $6.1 billion in assets sold to Pasadena’s OneWest Bank, a rapidly growing thrift created from IndyMac’s failed assets and backed by financial heavyweights such as George Soros.

Regulators insist FirstFed was simply unfit to continue operating, but the timing of and circumstances surrounding the failure left some wondering if a weaker thrift was sacrificed to build up a growing one.

“I don’t think anybody exactly knows what the rationale behind (the closure) was,” Biase said.

FDIC officials, who declined to make available any examiners who worked directly with FirstFed, bristled at any allegations of favoritism.

“We take the bid that would cause the lowest hit to the deposit insurance fund,” said FDIC spokeswoman Lajuan Williams-Young.

Deep roots

The story of FirstFed’s decline and fall is inextricably linked with Heimbuch. During her tenure as chief executive, she presided over the most aggressive expansion in the bank’s 80-year history.

Heimbuch joined the thrift in the early 1980s, and she didn’t take long to establish a reputation.

With a slight, 5-foot-1-inch frame and an unmistakable bob of copper-colored hair, she became known for a personality far out of proportion to her small stature. Strong-willed and sometimes abrasive, Heimbuch was a passionate defender of FirstFed and the smaller-scale community banking model. It was a passion that would lead to butting heads with regulators up until the institution’s final days.

But Heimbuch, now 61, ended up at FirstFed somewhat by accident.

Founded in downtown Santa Monica in 1929 by a local philanthropist, the institution’s local focus and family ownership quickly established it as a prominent community establishment.

“They lent money to thousands of GIs after World War II, got people started in homes. They’ve lent money for just ordinary purchases – washing machines, refrigerators, record players,” said Bob Holbrook, a FirstFed customer and longtime Santa Monica councilman who was born and raised in the beachside city.

The thrift was still being run by the founding family in 1982 when it needed a new chief financial officer. Chief Executive William Mortensen, the grandson of the founder, settled on Heimbuch, an accountant at KPMG Peat Marwick who was FirstFed’s auditor. With a degree in abstract math, the young firebrand came highly recommended.

“She’s probably one of the brightest people that I’ve ever known,” said Al Kang, Heimbuch’s boss and mentor at KPMG and now chief executive of Nara Bancorp Inc. “If you were debating with somebody, it would be nice to have her on your side.”

Heimbuch, who is still working with FirstFed’s bankrupt holding company to wind down its affairs, declined to comment for this article. But she has spoken with the Business Journal several times over the past year.

A year after her arrival, FirstFed began making adjustable rate mortgage loans, and within a few years they constituted 90 percent of its portfolio. The thrift specialized in option adjustable-rate mortgage loans, or option ARMs for short, which give borrowers choice in how much to pay each month.

When Heimbuch took the helm as chief executive in late 1996, she said she wanted to expand the institution’s focus on small business and commercial lending. But after a few years, the housing market got hot and FirstFed focused on writing option ARM loans.

It did just fine for several years, but as the housing market exploded in the middle of the last decade, the thrift found competitors on its heels. New competitors, such as EMC Mortgage Corp., flooded into the option ARM market, given the willingness of investment banks to buy the loans, then bundle and sell them as mortgage-backed securities.

The thrift felt it had little choice but to try to compete to protect its bread-and-butter loan business.

In an interview in June, Heimbuch admitted FirstFed began extending loans to borrowers with little or no documentation of income or assets. It even wrote increasingly popular negative amortization loans, in which a borrower’s monthly payments did not even cover the interest and the loan balance would rise. She thought the thrift could make it work.

“In 2005, we started trying to compete, but we tried to compete smarter,” she said. “We tried to do a better underwriting job. We didn’t do subprime loans.”

That year, FirstFed originated roughly $3 billion in option ARMs, nearly increasing by half the size of its mortgage loan portfolio to more than $9 billion. Quickly, though, executives began to get nervous, fearing that easy Wall Street money was creating a bubble in the housing market. In particular, they were dumbfounded by the risky loans EMC was willing to make. Then, executives discovered that EMC was owned by Bear Stearns, the investment banking giant that would suffer a spectacular collapse within a few years.

“Oh, man,” Giraldin said to Heimbuch one day in late 2005, “this is over.”

To save cash in the event of future losses, FirstFed reduced lending and began taking cost-saving steps both big (moving its headquarters from Santa Monica to cheaper digs near Los Angeles International Airport) and small (employees couldn’t buy Post-it Notes with company money).

But the damage was done.

“Most of our pain and suffering comes from that ’05 production,” said Giraldin in an interview in June. He declined to comment for this article.

‘We’d go down next’

FirstFed’s problems spilled out in the open in July 2008.

IndyMac, the now-infamous Pasadena mortgage giant that made its name with adjustable rate loans, suffered a very public billion-dollar deposit run and was closed by regulators July 11.

Immediately, commentators began speculating on FirstFed’s possible failure, with at least one prominent bank analyst publicly listing FirstFed among those most likely to be next to go down. In less than a week, the thrift’s stock price fell by nearly half.

When the financial crisis hit Wall Street a few months later, the major thrifts began falling like dominoes. Washington Mutual. PFF Bank & Trust. Downey Savings & Loan. FirstFed, meanwhile, reported a whopping $245 million loss for the fourth quarter.

“After Downey went down, we figured we’d go down next,” said a former FirstFed executive. “We knew the FDIC wanted to take us over in January (2009).”

Indeed, according to an FDIC official who was not authorized to speak about the case and requested anonymity, the agency was itching to take down FirstFed because its failure was seen as inevitable and delaying it could mean greater losses in the end.

But it’s the OTS that decides when thrifts are closed, while the FDIC’s Division of Resolutions and Receiverships finds a buyer and carries out the closure. Still, anticipating OTS action, the FDIC began preparing to close FirstFed – including examining the institution’s books, marketing it to prospective bidders and, in some cases, mobilizing FDIC employees – at least three separate times during 2009.

The OTS had other ideas.

The agency, which also oversaw beleaguered American International Group, was under heavy fire in early 2009. The agency’s Western region head, Darrel Dochow, stepped down in February after officials found that he had inappropriately allowed IndyMac to backdate a capital infusion. OTS Director John Reich retired around the same time, and his replacement, Scott Polakoff, was ousted a month later.

Calls began to grow for the dissolution of the agency. Even President Obama recommended that the OTS be merged with the Office of the Comptroller of the Currency, which regulates nationally chartered banks.

According to sources, the OTS, a notoriously lenient regulator, intentionally delayed closures of thrifts during that difficult stretch in an effort to save face.

“Their survival was on the line,” said the FDIC official. “There was a sense that OTS was reluctant to close (FirstFed) because they’d had so many failures, particularly in the West.”

Indeed, a Business Journal analysis of all bank failures in 2008 and 2009 shows that the rate at which the OTS closed thrifts declined dramatically at the beginning of 2009.

During the last six months of 2008, the OTS was responsible for approximately one out of every four closures, including the three largest during that period. During the first six months of 2009, however, the agency only closed one out of every 11 institutions. But after the political heat cooled, the rate went back up in the second half of the year, when it handled one out of every six closures.

In January, rather than close FirstFed, the OTS issued a cease-and-desist order that called for a capital maintenance plan, and placed limitations on its capital distributions and debt issuance.

Having dodged a bullet, FirstFed executives immediately instituted drastic changes in order to stay alive. The thrift stopped lending entirely and sold branch real estate. It laid off 10 percent of its staff and top executives took pay cuts.

In late May, Heimbuch met with C.K. Lee, the Western region director for the OTS, to follow up on the thrift’s capital raising efforts. FirstFed was not going to be given forever, Lee explained, and he offered June 30 as a deadline to raise capital.

Heimbuch, exasperated, argued that such a deadline just weeks away would not give executives sufficient time to raise capital. They settled on a Sept. 30 deadline.

The message, though, did not get to the FDIC, which sent an examiner to FirstFed in July to begin collecting information in preparation of a shut-down, according to a former FirstFed executive familiar with the incident. Heimbuch was not happy.

“What the f— are you doing here?” she demanded.

He had come to begin the closure process, the examiner explained. “Didn’t your board sign a resolution allowing this?”

“No.”

The FDIC backed off, but the agency was quickly growing tired of FirstFed and, in particular, its outspoken chief executive.

Heimbuch did not shy away from the press, even when the thrift ran into trouble. She talked to the Business Journal, to the Associated Press, to the Los Angeles Times and others. She spoke her mind even about regulators, who do not take kindly to being called out in public. To industry paper American Banker, she questioned why regulators closed Downey quickly but gave BankUnited, a thrift similar in size and focus, more time. “Nobody knows what regulators are going to do,” she told the publication.

The FDIC began monitoring Heimbuch’s public statements and collecting newspaper clippings. Employees gossiped in the hallways about her.

Heimbuch’s colleagues said she is not one to be muzzled. But Bert Ely, a bank consultant who had heard rumblings about the stubbornness of FirstFed’s management well before its failure, said it’s never wise to anger those who have great influence over the fate of the institution.

“You wonder to what extent the regulators were frustrated with FirstFed’s management,” he said. “This is one of these situations where if the management stroked the regulators a little better … maybe it would have been a different outcome.”

Numbers improve

With the Sept. 30 deadline fast approaching, FirstFed needed capital – about $500 million of it, according to regulators’ loss projections. So executives hatched a bold plan.

The thrift, which had seen its stock decline 95 percent over the previous year to less than $1 a share, planned to raise about $600 million in a public stock sale. Executives engaged John Hamel of FBR Capital Markets to handle the offering, and he told executives, directors and regulators that investors were ready to put capital into the thrift because its finances were improving.

Nonaccrual single-family loans, on which payments are at least 90 days late, peaked in June at $544 million and declined by 43 percent in the latter half of 2009. The ratio of total nonperforming assets in its loan portfolio declined over that same period from 10.15 percent to a hair more than 8 percent.

“Our numbers were absolutely leveling off and improving in some areas,” said Biase, the FirstFed director.

Liquidity, too, was improving. During 2009, the thrift dramatically increased its core deposits – primarily stable checking and savings accounts. In November, 90 percent of its $4.5 billion deposit base consisted of core deposits, up from 63 percent a year earlier.

“FirstFed made a pretty good case that things were getting better,” said one person who had discussed the thrift’s finances with executives.

Though the offering would not be completed by Sept. 30, executives were not concerned because regulators typically give institutions additional time when there is a specific plan in place to raise capital.

At the end of September, FirstFed held a special stockholder meeting at which shareholders approved a reverse stock split and the issuance of additional shares. The reverse split would bring the price back up to a respectable level, which could interest institutional investors.

In early November, the thrift’s outlook got even brighter. Due to the Worker, Homeownership and Business Assistance Act of 2009, signed into law Nov. 6, the thrift would receive a federal tax rebate of roughly $90 million in early 2010.

At the end of the third quarter, the institution had more than $240 million set aside for future losses, and it had total risk-based capital of $307 million, giving it a total risk-based capital ratio of 8.91 percent. With the rebate, the institution’s capital ratio would have been comfortably above 10 percent – the level regulators consider “well-capitalized” – but still short of the 14 percent level regulators requested in the cease-and-desist letter.

By comparison, BankUnited, a large option ARM lender in Florida, had a negative capital ratio at the time of its May closure.

Walter Mix, a former head of the California Department of Financial Institutions who handled several dozen bank failures in the 1990s, said capital is an important indicator for regulators.

“There are specific triggers and bases for closing an institution. Typically, it’s inadequate capital,” said Mix, now managing director of the L.A. office of consulting firm LECG LLC.

Capital, though, doesn’t always tell the whole story. “In this case, there must have been some asset quality issues,” he said.

Indeed, when there are concerns about asset quality, all bets are off.

Dennis Santiago, chief executive of Institutional Risk Analytics in Torrance, noted a number of secondary metrics – such as risk-adjusted return on capital – that were trending in the wrong direction with “no sign of it getting any better.”

Even so, the capital markets had loosened in recent months for troubled banks. United Community Banks Inc. in Blairsville, Ga., which lost $238 million in 2009, raised $223 million in September. More recently, Koreatown’s Saehan Bancorp, which was “significantly undercapitalized” as of Dec. 31 and under a regulatory enforcement order, also found investors willing to bail it out with $60 million.

Turn for the worse

By October, as FirstFed was putting the finishing touches on its S-1 – the Securities and Exchange Commission filing required before a stock offering – everything fell apart.

FirstFed’s auditor, Grant Thornton LLP, abruptly resigned, sparking a disastrous chain reaction from which the thrift would not recover. The surprising move stemmed from a disagreement between FirstFed and the FDIC.

The thrift had been engaged in an ambitious loan modification program for more than a year. Aware of the risk in their mortgage portfolio, executives had thrown themselves headfirst into the modification program. Giraldin personally spent time on the phones with borrowers modifying loans.

As part of the program, FirstFed had converted many of its option ARMs to fixed-rate loans, reducing the percentage of option ARMs in its portfolio to less than 70 percent. By the end of the third quarter, the thrift had modified more than 2,700 loans with a combined balance of $1.3 billion.

According to a FirstFed analysis, its default rate on modified loans was about 30 percent, less than half the industry average for modified loans. Executives pointed to their ability to customize each modification rather than stick to broad guidelines.

Regulators, however, grew uneasy with FirstFed’s program, arguing that the borrowers were stuck in fundamentally bad loans and the thrift was merely delaying losses. So, the FDIC sent an examiner into FirstFed to analyze the modification program and assess the expected future loss rates.

Executives took issue with the FDIC examiner’s nonpublic reports, arguing over technical matters that they believed made their situation appear more dire than it was. The point of contention, according to sources familiar with the situation, was over the accounting treatment of its loan loss reserves.

Despite requests by the Business Journal under the Freedom of Information Act, the FDIC refused to release the reports, citing legal exemptions for “confidential business information” and documents related to regulatory supervision.

While FirstFed sparred with regulators, Grant Thornton resigned. In a brief letter to FirstFed explaining its decision, Grant Thornton cited “significant uncertainties” as a result of the “increased level of regulatory actions.” The firm declined to comment.

Making matters worse, Grant Thornton refused to allow FirstFed to use its previously audited financial data as part of the S-1 filing. The whole effort was thrown into limbo.

FirstFed scrambled to find a new auditor, signing with Squar Milner Peterson Miranda & Williamson LLP on Nov. 30.

But since the firm had to go back and audit data from past quarters, more time was needed before the stock offering could be completed. Executives requested a meeting in Washington to explain the situation to regulators.

On Dec. 2, FirstFed made its presentation to a roomful of FDIC and OTS officials.

Heimbuch; Giraldin; Hamel; and Tom Vartanian, FirstFed’s lawyer, detailed the condition of the thrift, the state of the market and the likelihood of raising capital. Several of FirstFed’s directors had come to show support; two other directors listened in via conference call.

When the presentations finished, regulators rattled off questions: What would happen if assets deteriorated faster than expected? How likely is it that they could raise the capital? Won’t investors be scared off by the thrift’s condition?

What – FDIC official Sandra Thompson asked in one of the most pointed questions – was FirstFed asking for?

Time, Vartanian responded. To complete the offering, the thrift needed until March. The meeting ended; the OTS said it would notify FirstFed of its decision within a few days.

Thrift executives returned to Los Angeles and waited. Nervously.

End game

Meanwhile, the thrift submitted a consent to receivership, which gave the OTS the right to close the institution without further notice – but it was a mere formality, executives thought.

Yet rumblings began to grow that the FDIC was taking bids for FirstFed and preparing to shut it down.

Then the call came. Lee, of the OTS, wanted to speak with William Rutledge, one of FirstFed’s longest-serving directors, the following morning, Dec. 9. The board insisted at least one other director participate in the call, so William Ouchi listened in.

According to several people familiar with the discussion, the OTS agreed to give the thrift until March to raise capital, but only if Heimbuch resigned from the company and the board. The OTS also made it clear that the request would not be put into writing.

Regulators declined to discuss their decisions regarding FirstFed. Sources familiar with the request did not know the reason, but several speculated that regulators were fed up with her outspokenness. Others suggested that they had simply lost faith in Heimbuch’s ability to lead the institution.

The board did not want to oust Heimbuch, but the directors saw no alternative. After a hastily assembled meeting, the independent directors voted Brian Argrett chairman and Rutledge vice chairman. Giraldin was chosen to succeed her as chief executive.

The board proposed to regulators that Heimbuch remain as a noncompensated member of the holding company’s board to help with capital raising efforts. Edwin Chow, regional deputy director for the OTS, informed the thrift that the agency did not want Heimbuch to maintain any affiliation with the institution. According to an e-mail circulated Dec. 10 among directors, “Edwin made it clear that this was a directive from above and in this instance he was the messenger.”

Heimbuch did not put up a fight.

“Babette’s a realist,” said Danna Campbell, a business consultant and one of Heimbuch’s oldest friends. “First and foremost, she wanted to do what was best for the company, (even) if that meant to take a different role, to step down, whatever it took.”

Publicly, the thrift portrayed it as Heimbuch’s decision. On Dec. 11, FirstFed issued a press release saying she “transitioned to retirement” because “both the bank and the economy are experiencing positive trends.”

William Ruberry, a spokesman for the OTS, declined to comment on FirstFed specifically, but he said generally that “the strength of management is always something that’s considered.”

The FDIC, meanwhile, had been preparing to shutter FirstFed that week. A number of prominent institutions – including OneWest Bank, Chase Bank, Bank of the West, People’s United Bank and New York Community Bank – had begun due diligence for a possible bid, according to people familiar with the process.

After the OTS’ decision, however, the FDIC quickly called off the closure and informed bidders that FirstFed would remain open indefinitely. The thrift, it seemed, had been saved.

Within a few days, however, the rumors started again – the FDIC was marketing FirstFed.

Executives, confused and upset, tried desperately to contact the OTS, which would make the final call on the closure, to find out if the rumors were true. Yet after months of near-constant contact between FirstFed and regulators, the OTS had suddenly fallen silent.

Indeed, abruptly, the FDIC contacted potential buyers Dec. 14, a Monday, asking them to make bids for FirstFed immediately, according to people familiar with the process. Bidders were told to submit their offers Tuesday, a winner would be selected Wednesday and FirstFed would be closed Friday.

Regulators typically close banks on Fridays, which gives the acquiring institution several days to handle the changeover and open under new ownership the following Monday.

By Thursday, many of FirstFed’s upper management knew the end was near. Heimbuch did not come to the office Friday.

Around 4 p.m. Dec. 18, FDIC and OTS employees began arriving at FirstFed’s headquarters, a nondescript and sparsely decorated three-story office building on Jefferson Boulevard adjacent to the Playa Vista development.

By about 4:45, the FDIC began arriving at FirstFed’s 39 branches.

Heavy competition

Eighty-seven institutions submitted qualified bids for FirstFed – a huge number for a failed bank. By comparison, California National Bank, an L.A. bank with $7.8 billion in assets, and its affiliated institutions attracted 41 bidders when it failed in late October, which an FDIC spokesman said at the time was “the most I’ve seen in a while.”

It took an aggressive bid for OneWest to grab FirstFed. OneWest paid $401 million for FirstFed’s assets – a 6.6 percent premium, rare for failed bank acquisitions. The premium was so unusual that the Wall Street Journal in a recent article noted that it was among the first FDIC-assisted acquisitions in which the buyer did not get a discount.

The acquisition was a good fit for OneWest. Since IndyMac had been focused largely on Internet-based transactions, OneWest inherited a rather sparse branch network in far-flung reaches of Southern California. FirstFed, which had stable branches in enviable parts of Los Angeles, helped OneWest instantly establish a viable franchise.

As one FirstFed executive put it, “OneWest desperately needed us. Desperately.”

OneWest Chairman Steven Mnuchin declined to discuss the specifics of FirstFed’s failure, but he admitted OneWest had had its eye on FirstFed for a “significant period” of time.

“We did aggressively pursue it,” Mnuchin said. “We really saw this as a tremendous strategic opportunity for us.”

The FDIC estimates that the failure will cost its insurance fund $146 million, or 2.4 percent of FirstFed’s assets.

By that measure, according to an analysis by bank consultant Ely, FirstFed’s failure is “far and away” the least costly of any failure since at least 2007, suggesting that the institution’s financial situation was perhaps less dire than it appeared from the outside.

“It makes you wonder about the whole deal,” he said. “When you take a look at the FDIC loss estimate, you take a look at their Sept. 30 call report, you take a look at who the buyer was, this one makes you wonder, was there some favoritism here and was the deal kind of lined up for OneWest?”

Vartanian, a banking lawyer in Washington who was hired by FirstFed in October, said he was surprised to see the thrift go down while it still had relatively high capital levels.

“It’s very unusual,” he said.

Biase, meanwhile, was more direct: “I can only assume and hope that it was closed for legitimate reasons, but I can’t think of legitimate reasons.”

To some, though, FirstFed’s closure was long overdue.

Regulators have handled more than 200 bank failures since the beginning of 2008, and there are another 702 institutions in danger of failing on the FDIC’s private list of troubled banks.

Whether FirstFed could have survived will never be known, but the FDIC has too much on its plate, some say, to allow a troubled institution to further weaken the industry.

“The regulatory system had been basically giving (FirstFed) a chance for the last two years and it’s just not working,” said Santiago of Institutional Risk Analytics.

Many have suggested that regulators want fewer, stronger institutions.

Santiago noted that regulators “are being more aggressive in certain cases now. They’re cleaning out the banks that are on the weak side of the system.”

OneWest, which pledged to keep most workers for 90 days, began laying off former FirstFed employees this month. OneWest confirmed that about 50 former FirstFed employees, approximately 10 percent, were laid off in the past few weeks, though Mnuchin said efforts were made to retain as many employees as possible.

Within the next 45 days, the institution expects to replace the FirstFed signs at the branches across town with OneWest’s circular yellow logo.

As FirstFed’s legacy is scrubbed from the new institution, some are bemoaning the loss of a community-focused bank – one that had been a local stalwart since before most were even born – in favor of an institution with larger aspirations.

“It’s very sad,” said Councilman Holbrook. “I was a customer and a stockholder. I know literally a dozen people at least who have primary home mortgages with them. And unfortunately, I know people who were working there until the day that it failed.”