It’s official: Pasadena’s OneWest Bank actually is a bank. And now Los Angeles County’s third largest by assets.
OneWest, built out of the ruins of failed mortgage lender IndyMac, had been chartered as a thrift, or savings and loan, a type of institution that typically focuses on mortgages and can only make a certain number of commercial loans. In July, OneWest asked the federal Office of the Comptroller of the Currency to convert from a thrift to a bank. The application was approved and took effect at the end of last month.
OneWest executives declined to comment and have not touted the conversion publicly, though the institution has made a few label changes. A line at the bottom of the bank’s website, for instance, has been changed from OneWest Bank FSB (for federal savings bank, a title used by thrifts) to OneWest Bank N.A. (for national association, a title used by banks).
OneWest is expected to go public this year, something the bank’s private equity owners have long planned. Owners include OneWest Chairman Steven Mnuchin, a former Goldman Sachs partner, and billionaires George Soros and John Paulson. The charter change could be a prelude to a public offering.
Banks and thrifts used to have different federal regulators and different capital requirements, but the two types of institutions are almost identical today. One of the few remaining differences is that thrifts are limited in the amount of commercial lending they can do.
Bank analysts and investors told the Business Journal last year that OneWest’s owners likely think a bank will command a better price than a thrift in an initial public offering.
Wayne-Kent Bradshaw, chief executive of Broadway Federal Bank, one of the five remaining thrifts in Los Angeles County, said investors might shy away from a thrift.
“The market would respond much better to a bank in an IPO,” he said. “The market knows banks. If you’re a thrift, a lot of the market might not have the interest or knowledge about what you do.”
With $23.5 billion in assets as of Dec. 31, OneWest now ranks third among local banks by assets, following downtown L.A.’s City National Bank with $29.4 billion and Pasadena’s East West Bank with $24.6 billion.
But, by the numbers, the new bank still looks like a thrift. As of Dec. 31, more than half of OneWest’s loans were for single-family homes and other small residential properties, according to the Federal Deposit Insurance Corp. At East West, such loans make up less than a quarter of total loans.
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