Mortgage Monopoly

Marietta, Ohio-based Peoples Bancorp announced its subsidiary, Peoples Bank, has reached an agreement to acquire two full-service banking offices from Advantage Bank, a subsidiary of Camco Financial Corp. It will pay approximately $6.6 million in cash for $65 million in deposits and will acquire about $45 million in loans at book value. Peoples expects the transaction to close next quarter.

Peoples Bancorp president and chief operating officer Mark F. Bradley said he was “pleased” with the transaction as it will enhance business and provide leverage to its recent expansion in northeastern Kentucky. Peoples Bank will reportedly improve from third to first in the Ashland, Ky., area with 14% of the market’s total deposits.

The two offices to be acquired are located in Ashland and Summit, Ky., but because several offices will be “located too closely together” after the purchase, the Ashland location and one Peoples’ existing offices in the area will be closed.

Advantage Bank president Richard Baylor said the transaction was based on the company’s decision to “redirect resources and management attention to other markets that will drive the execution of our long-term strategic plan. Our branch strategy involves narrowing our geographic footprint, building a more efficient branch network and improving long-term shareholder value.”

Peoples Bancorp reportedly has $1.8 billion in assets, and with its subsidiaries operates through 51 locations in Ohio, Kentucky and West Virginia. In its second quarter earnings announcement, the financial services company said it had $807,000 of fixed-rate real estate loans originated and held for sale into the secondary market, and that it was servicing $95 million of fixed-rate real estate loans.

Camco has assets of $1.13 billion and its subsidiary operates from 32 offices in 23 communities in Ohio, Kentucky and West Virginia. The Cambridge, Ohio holding company reported that loan originations during first two quarters this year were comprised primarily of $113.9 million of loans secured by one-to four-family residential real estate and $47.3 million in loans secured by commercial real estate.

Two other Ohio-headquartered lenders that are expecting to close a deal next quarter are National City Corp. and Wayne Bancorp Inc. The two companies announced in June that a definitive agreement had been reached for National City to acquire Wayne Bancorp for $180 million in cash, or $28.50 per share.

National City announced that Wayne shareholders will vote Sept. 22. on the transaction, which has already been approved by the Federal Reserve Board. The Fed stated that upon consummation, National City would remain the ninth largest depository organization in the nation, with total consolidated assets of approximately $131.5 billion, and controlling approximately 1.5 percent of the total deposits insured by U.S. depository institutions.

Wayne Bancorp, which originates mortgages through its subsidiaries Wayne County and Savings Bank & Trust, says it is an $825 million banking company that operates 26 branches in several northeastern Ohio counties.

National City said the acquisition compliments its strategy for growth in its core banking business as “Wayne Bancorp operates in communities that are contiguous to the existing National City branch network in northern Ohio” — one of its strategic markets. The company is also expanding its branch network in the Chicago market and entering new markets in St. Louis, Mo., with the recent acquisition of Allegiant Bancorp and in Cincinnati with Provident Financial.

National City currently has about 10,000 employees that support its consumer finance business, which includes mortgage banking, and will acquire about 370 from Wayne, according to spokeswoman Amber Garwood.

Wayne president David Boyle commented he sees the deal “as a great opportunity to enhance Wayne Bancorp’s current and prospective customer relationships.”

Due to focus on strategic growth in its core banking business, National City will sell its 83%-owned subsidiary National Processing Inc. to Bank of America. The deal, announced in July, is expected to close next quarter as it is pending shareholder approval and satisfaction of closing conditions in the merger agreement. BoA will pay $1.4 billion in cash, or $26.60 per outstanding National Processing share.

National Processing is reportedly a provider of merchant credit and debit card processing, with over 700,000 merchant locations it represents one out of every six MasterCard and VISA transactions processed nationally.

BoA said it is currently the nation’s No. 1 debit card issuer and No. 4 credit card issuer, thus the acquisition will be “uniquely positioning the company to innovate and create efficiencies in electronic payments.” The newly combined Bank of America Merchant Services will be headquartered in Louisville, Ky, where National Processing is currently based.

One merger deal that was announced as definitive in May and recently got the thumbs up from both regulators and shareholders is that of SunTrust Banks Inc. and National Commerce Financial Corp., which announced they will merge in early October in a cash-and-stock transaction valued at nearly $7 billion, or about $34 per National Commerce share.

Shareholders will have the right to elect to receive their merger consideration in the form of SunTrust common stock or cash, the companies said. The total consideration consists of approximately $1.8 billion in cash and approximately 75.4 million SunTrust shares.

The combined company will operate as SunTrust and rank as the seventh-largest U.S. bank with $148 billion in assets, $97 billion in deposits, and 1,723 full-service offices in 11 states plus the District of Columbia, according to the company, and will have the highest growth geographic “footprint” among the top 20 U.S. banks.

After the acquisition, about 60 branches will close due to overlapping in some areas, but full information on the effects of those closings will be issued until next month, according to published reports.

National Commerce, of Memphis, Tenn. is the holding company of several banks, including Central Carolina Bank, National Bank of Commerce. With reportedly $23 billion in assets, it operates almost 500 branches in 14 southeast metropolitan areas.

SunTrust, in Atlanta, Georgia, says it has assets of $128.1 billion, total deposits of $85.5 billion, and in the second quarter reported mortgage production of nearly $9 billion.

In California, First American Corp., has acquired 75% equity ownership interest in Matrix Asset Management, a subsidiary of Matrix Bancorp Inc., in exchange for a combination of cash and notes totaling about $15 million, according to joint announcement by the companies.

Denver-based Matrix Bancorp, which is also the thrift holding parent of home loan lender Matrix Capital Bank, will retain a 25 percent interest in Matrix Asset, which offers asset disposition and default management services on foreclosed properties to mortgage bankers, investment bankers and financial institutions, the announcement said. Matrix Asset is reportedly the second largest asset-management outsource company and has approximately $320 million in assets under management.

“Asset management services are an important element of offering a complete default management solution,” said Parker S. Kennedy, First American president and CEO, in a written statement. “The demand for outsourced default management services is growing rapidly as large and middle-tier mortgage lenders are increasingly looking to streamline their operations and have complex services managed by experts. Matrix’s strong reputation and client base offer tremendous growth opportunities for our default-related businesses, and will also help to drive additional business to our title and property valuation operations.”

First America also provides “products and services necessary to grease the wheels of the real estate transfer process,” such as those found on HUD-1 statements; appraisal, credit, title and escrow report services to name a few, spokesman Tom Wawersich said.

A Matrix Bancorp executive said the transaction allows the company to streamline and focus on its core businesses.

Meanwhile, subprime mortgage banker Paragon Financial Corp. reported that it signed a letter of intent to acquire First Charleston Mortgage LLC by mid-October, a transaction that will extend its footprint into the Charleston, S.C., area.

The announcement comes after Paragon sold its largest subsidiary, PGNF Home Lending Inc., in June because of the mortgage brokerage’s “inability” to raise required capital. Currently, the financial services company only originates mortgages through Paragon Home Funding Inc.

Paragon spokesman Chris Liston said the company currently has about 20 mortgage employees and would acquire about the same amount from First Charleston.

But, both employee numbers and subsidiaries may multiply as this is the first of a number of similar planned announcements the Ponte Vedra Beach, Fla. corporation said it will make in pursuit of its renewed acquisition strategy.

“I’m extremely pleased and gratified to announce this deal,” Paragon chairman and CEO George Deehan said in the annoucenement. “Over the past several months, we have been focused on finalizing the divestiture of our mortgage banking operation, as well as restructuring our board of directors and roles and responsibilities of senior management.

“Now that these essential adjustments are complete, I’m confident we’re prepared to move the enterprise forward in pursuit of our original business plan of acquiring residential mortgage origination companies.”

First Charleston, which has originated mortgages since 1991, said that joining Paragon’s growing venture “at such an early stage provides an extraordinary opportunity to improve our market presence while at the same time leverage and control our administrative overhead.”