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Big Business Goes Down

Recent mergers, acquisitions and corporate activity

May 4, 2007


photo of Coco Salazar

As one large Irvine, Calif.-based subprime lender received an extended lifeline, another completely collapsed. Among other recent deals are a Canadian branch operation's attempt to infiltrate U.S. markets and the formation of a bulk REO buyer.

Pacific Coast National Bank appointed David L. Adams to lead the Real Estate Industries Group, which will offer traditional acquisition, redevelopment, construction and permanent financing options for a wide variety of property types, according to an announcement. Adams has a 37-year banking career.

Freddie Mac's president and chief operating officer, Eugene M. McQuade, declined the offer to become chief executive officer and will leave the company when his current employment contract expires on Sept. 1, 2007, according to an announcement Tuesday. However, he has agreed to accept stand for re-election as a board director.

At Fannie Mae, Robert T. Blakely will step down from his position of chief financial officer at the end of the year and be succeeded by Stephen M. Swad. With previous years' restatement and filing of financial results out of the way, Blakely will focus on completing the 2006 10-K filing.

At Countrywide Financial Corp., the base salary of CEO Angelo R. Mozilo was reduced to $1.9 million from $2.9 million as part of his employment agreement. In addition, the formula for his annual incentive award has been revised and his maximum award opportunity reduced. Mozilo's target annual award for 2007 is $4 million and the maximum has been capped at $10 million. His payout for the year will be equal to a percentage of the company’s net income, which is determined by return on equity.

"This revision and reduction is intended to enhance the award's relationship to the performance of the company, while remaining competitive and consistent with our retention objective," Countrywide said.

Last month, Saxena White P.A. filed a lawsuit in the U.S. District Court for the Middle District of Florida on behalf of purchasers of Coast Financial Holdings Inc. securities on Jan. 21, 2005 through Jan. 19, 2007. The firm accuses Coast of failing to disclose that a significant portion of its residential construction loan portfolio concentrated in projects dealing with risky construction loans and failing to increase related loan loss reserves, among other things, that ultimately led to stock prices to plummet.

In the U.S. District Court for the Southern District of California, Gutride Safier Reese LLP commenced a class action in on behalf of purchasers of Accredited Home Lenders Holding Co. common stock from November 1, 2005 to March 12, 2007, the day prior to the company's stock price plunging 65 percent, according to a press release. Accredited, which early in the year disclosed it was seeking waivers and extensions related to warehouse and repurchase facilities, is accused of issuing materially false and misleading statements that ultimately caused its stock to trade at artificially inflated prices.

UBS will close its Dillon Read Capital Management hedge fund arm and transition its proprietary funds to the Investment Bank because "operating a proprietary trading platform outside the Investment Bank and managing client money alongside became too complex and expensive." While Dillon's principal finance, credit arbitrage and commercial real estate businesses will be merged into Investment Bank, third party funds will be redeemed. The transition is expected to complete in the third quarter.

ABN AMRO's sale of LaSalle to Bank of America has been frozen, according to a press release today. The Enterprise Chamber in Amsterdam ruled that the sale could not proceed without the prior approval of shareholders. ABN AMRO said it is studying the details of the chamber's full decision but has asked for clarification as to whether it can comply with the "go-shop" provision, which lasts until Sunday and allows other parties in addition to BoA to bid for LaSalle. The chamber has asked the parties involved for their opinion regarding the request for clarification.

BoA has filed a lawsuit against LaSalle parent ABN AMRO Bank NV seeking an order to block the sale, or negotiation of, to another party, according to the Wall Street Journal.

In an April 25 announcement, BoA stated that it "has a legal contract to acquire ABN AMRO North America Holding Company and expects that contract to be fulfilled under its current terms."

Fidelity National Information Services Inc, a provider of mortgage loan processing products, acquired Marketing Solutions Inc., a provider of customer relationship management and profitability offerings to community financial institutions, according to an announcement.

Meanwhile, 1st Source Bank completed acquiring Trustcorp Mortgage Co. from its parent 1st Source Corp., according to a press release. The merger will allow 1st Source to focus its home mortgage efforts on customers within the bank's retail footprint in Indiana and Michigan, plus "lessens the possibilities of confusion or duplication of efforts." Trustcorp primarily has focused on the wholesale mortgage market in the Midwest.

National City Corp. will enter the Wisconsin market through its purchase of Illinois-based MAF Bancorp Inc. The $1.9 billion acquisition of the MidAmerica Bank parent is expected to close in the last quarter of the year.

While New Century Financial Corp. could not find a buyer for its loan originations business and will layoff 2,000 workers as a result, Ellington Management Group LLC bid $58 million to win mortgages and related securities from the company, New Century spokeswoman Laura Oberhelman confirmed.

Additionally, New Century said the audit of its financial statements for 2006, in which results needed to be restated due to loan repurchase losses, has not been completed and that it received a resignation notice from its auditor KPMG LLP, according to a SEC filing. The lender noted that KPMG did not include any adverse opinion in its audit reports for the years ended Dec. 31, 2005 and 2004. In case New Century engages a successor accounting firm, it has authorized KPMG to respond fully to any inquiries from the firm.

Wells Fargo & Co. will acquire Greater Bay Bancorp in a stock-for-stock deal expected to be completed in the fourth quarter. Greater Bay has $7.4 billion in assets, over 1,800 employees, and its businesses are regional community banking, commercial insurance brokerage, specialty finance, and trust.

Williams & Williams announced it created a new division that will purse bulk portfolios of foreclosed real estate assets of up to $100 million and facilitate the bulk REO properties' ensuing sale through real estate auctions. Toby DeWeese will head the division.

Option One Mortgage Corp. has amended several warehouse facilities, according to a filing by parent H&R Block Inc. with the Securities and Exchange Commission. Citigroup Inc.'s $1.5 billion warehouse facility was extended through July 30, 2007; Greenwich Capital Financial Products Inc. warehouse facility of $2 million committed funding and $1 million in uncommitted funding was extended through April 25, 2008; UBS Real Estate Securities Inc. reduced its warehouse facility in half to $0.75 billion; and Wells Fargo Bank terminated the $1.5 billion warehouse financing facility maintained with Merrill Lynch Bank USA that was supposed to be in effect until this October.

MortgageBrokers.com Inc. of Toronto, Canada, said that it is awaiting regulatory approval to begin operations in the United States. The net branch, which currently has 192 mortgage brokerages and independent mortgage brokers working under its name, said the territorial expansion would raise its projection of having 350 brokers by the end of 2007 to over 500 brokers.

Wednesday, GB&T Bancshares Inc. announced the establishment of GB&T Mortgage, the umbrella company holding the mortgage lending services of its seven affiliate banks. Derek T. Watkins has assumed the positions of president and CEO of the new subsidiary.

Coco Salazar is an associate editor and staff writer for MortgageDaily.com.

e-mail: [email protected]

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