Mortgage mergers were overshadowed this week by the collapse of a wholesale operation, the forced closing of a credit union and the planned divestiture of a mortgage unit. As earnings at financial institutions continued to be dragged down by subprime problems, one subprime lender saw its credit lines cut further.
But first, the Consumer Bankers Association recently announced it has a new chairman, Brendan McDonagh, chief executive officer of HSBC Finance Corp., and that its chairman-elect is John F. Stewart, a Citibank managing director.
CapitalSource Inc. reported third quarter net earnings fell to $28.3 million from $84.3 million during the second quarter. Despite the decline, the company’s chairman and CEO raved about the performance, noting the Chevy Chase, Md.-based company “successfully navigated the recent capital markets disruption with minimal impact on our business” and is poised to thrive amid falling competition and better spreads.
A third quarter impairment loss of nearly $177 million was taken by South Korea’s Woori Finance Holdings Co. on $491 million in U.S. collateralized debt obligations — of which about 27 percent was subprime. The move pushed year over year earnings down 45 percent.
The Securities and Exchange Commission has launched a probe to examine deals Merrill Lynch did with hedge funds, the Wall Street Journal reported. The investment banker is suspected of using the transactions to conceal or delay reporting CDO write-downs that have since been reported at $7.9 billion.
Fannie Mae today said it plans to file its first, second and third quarter reports with the SEC on Friday. The 10-Q filings will make the secondary lender current in its financial reporting requirements.
Washington Mutual Inc. is being sued by Coughlin Stoia Geller Rudman & Robbins LLP on behalf of purchasers of its common stock from Oct. 18, 2006, to Nov. 1, 2007. The class action suit alleges that WaMu issued materially false and misleading statements or failed to disclose important information regarding its business and financial condition. Among the allegations is that Wamu concealed that it engaged in a conspiracy and scheme to inflate the appraisal value of homes, which led to issuance of mortgages that were much riskier than represented.
The Office of the Comptroller of the Currency recently released a list of 11 enforcement actions it took against national banks and individuals starting Jan. 19, 2007, through Sept. 25. These included a cease and desist order against Community National Bank, North Branch in Minnesota; a civil money penalty and cease and desist order against Donna J. O’Toole of Lasalle Bank MidWest N.A., in Troy, Mich.; three formal agreements, two removal/prohibition orders; and terminations to three previous enforcement actions.
In late October, two warehouse line terminations and two reduced facilities decreased Option One Mortgage Corp.’s mortgage origination funding capacity by about $2.8 billion, parent H&R Block said in an 8-K filing with the Securities and Exchange Commission.
A $500 million warehouse facility by Deutsche and a $750 million line by UBS Trust that were to expire around mid-January were terminated early “in light of reduced mortgage origination volume in the current sub-prime mortgage environment and corresponding decreased need for warehouse financing capacity,” Block said.
Meanwhile, a line with Bank of America was reportedly chopped to $750 million through June 12, 2008, from over $2.25 billion and a facility by Citigroup was cut in half to $75 million through Nov. 15, 2007. Both of these lines are subject to various Option One performance triggers, limits and financial covenants.
Liberty American Mortgage stopped taking loan applications from brokers as of Thursday, an employee of the company told MortgageDaily.com. The Roseville, Calif.-based company, however, will continue to offer mortgage on a retail basis.
The California Department of Financial Institutions announced Friday it placed Cal State 9 Credit Union into conservatorship because it “had impaired capital and had become insolvent.” The credit union, originally chartered almost 60 years ago, has $338 million in assets and over 29,000 members.
The appointed conservator, the National Credit Union Administration, said it will continue the operations of Cal State with the goal of either merging it with or selling the company to another credit union.
IAC announced it will spinoff LendingTree as part of its overall plan to split itself into five publicly traded companies by the second or third quarter of 2008. The spinoff will include RealEstate.com, Domnia, GetSmart, Home Loan Center and iNest.
IAC Chairman and Chief Executive Officer Barry Diller cited investor difficulty understanding the “complex enterprise” the company has become in its decision to divest.
In merger and acquisition activity, the OCC recently disclosed it issued conditional approval for MidAmerica Bank FSB to convert to a national bank under the title of MidAmerica, N.A., and then merge into National City Bank; Kilgore National Bank to become a subsidiary of Kilgore National Financial Corp.; the establishment of two new national banks, First National Bank of Scottsdale and Bankers Trust Co., N.A.; and for First Tennessee Bank to establish FTN New Pathways LLC, a new third-tier subsidiary that will serve as the general partner to a newly formed private investment fund.
Wintrust Financial Corp. announced it completed acquiring Broadway Premium Funding Corp. from Sumitomo Corporation of America for an undisclosed amount of cash. Broadway, which finances commercial property and casualty insurance premiums, is complementary to markets Wintrust serves,
The Federal Reserve Board announced its approval for KeyCorp to acquire U.S.B. Holding Co. Inc. The deal must be consummated no later than Feb. 2.
SunTrust Banks Inc. said Friday it will acquire GB&T Bancshares Inc. in a $154 million deal expected to close in the second quarter 2008. The move to bolster its presence in several high-growth Georgia markets includes plans to integrate GB&T primarily into its Atlanta banking region and keep essentially all GB&T retail client contact employees.
Fifth Third Bancorp today announced it completed acquiring R-G Crown Bank on Friday for $259 million in cash, that resulted in the assumption of $50 million of Crown trust preferred securities. R-G’s Florida branches will be merged into Fifth Third Bank’s Michigan operations and its three Georgia branches will be merged into Fifth Third Bank, N.A. Fifth said it will also pay about $16 million in a separate transaction to R-G Crown Real Estate LLC in order to acquire the underlying real estate for 15 of the branches operated by Crown.
