IndyMac, which posted $342.9 million in profit in 2006, had been a leader in so-called alt-A mortgages, which were made to borrowers with decent credit who often weren't required to verify their income to get the loan. That year, the company's stock price peaked at $50 a share, valuing IndyMac at a tidy $3.5 billion.
However, as the real estate market slowed, the company's loan losses ballooned. In its March report to regulators, the company said that 8.86% of its loans were delinquent, up from 1.51% the year before. By the end of 2007, the company's shares were selling for $6. They closed at 28 cents Friday.
IndyMac, which has been selling and closing offices, revamped its business to focus solely on so-called conforming loans, which are relatively small-balance mortgages made to people with good credit and that can be immediately resold on the secondary market. Reich said it was unclear whether the moves would have proved sufficient to save the troubled thrift.
"Would the institution have failed without the deposit run?" he said. "We will never know."
At 3 p.m. Friday, IndyMac shut the doors to its main branch in Pasadena, three hours early, leaving customers angry and surprised. Georgi Arnold of El Monte had come to deposit $230 into her checking account but wasn't allowed inside. "I am livid," said Arnold, 32. "I'm glad I closed my savings account already."
Arnold said she had "a few thousand dollars" in the bank, money she uses for her children, small bills and vacations. "Best believe first thing come Monday I'll be drawing out all my money and closing my account because this is ridiculous," she said.
Jagdish Belgaum rushed to the bank after hearing the news, only to be locked out. The 42-year-old South Pasadena resident said he had about five CD accounts totaling just under $100,000.
"Luckily I don't need the money right away," said Belgaum, a chief technology officer at a medical management company. "I'm more afraid of the long line on Monday. That's why I came running."
IndyMac announced Monday that it was laying off 3,800 employees. FDIC spokesman David Barr said Friday outside IndyMac headquarters that "the bulk of the employees will be needed to run this as a full-service bank."
But a handful of employees who were leaving the building appeared to be preparing for the worst, lugging boxes of belongings and saying goodbye to one another. One woman carried out a potted plant. Regulators said they hoped to sell the bank within 90 days.
The FDIC has set up a toll-free phone line -- (866) 806-5919 -- and a page on its website -- www.fdic.gov/bank/individual /failed/IndyMac.html -- for bank customers to obtain information.
IndyMac Bank is the main subsidiary of IndyMac Bancorp. It was unclear what would happen to the holding company in light of the seizure.
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kathy.kristof@latimes.com
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andrea.chang@latimes.com
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IndyMac Bank
Headquarters: Pasadena
Chief executive: Michael W. Perry
Founded: 1985 by Angelo R. Mozilo and David Loeb
2007 loss: $614.8 million
Employees: 3,400 (after 3,800 layoffs announced Monday)
