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Banks In Play

Banks In PlayRecent mergers and corporate activity

June 23, 2008

By SAM GARCIA

As the bankruptcy of a bank-holding company enables the sale of its subsidiary, another bank is being acquired by a financial behemoth. A third bank is hoping a successful public offering will boost its capital.

Before that, however, Luminent Mortgage Capital Inc. reported that it has eliminated $2.8 billion in repurchase agreement financing since July 31, 2007, all of which was with unrelated third parties. The paydown has left it with no further repurchase agreement financing with non-related third parties.

The Philadelphia-based real-estate investment trust accomplished the paydown through a combination of assets sales, the transfer of mortgage-backed securities and term-note executions.

“We continue to work toward resolution of the liquidity issues that resulted from the effects of the credit markets over the past year and the reduction in the value of our mortgage asset portfolio,” Chief Executive Officer Zachary H Pashel said in the statement. “As we move forward, we are focused on our fee-based asset management initiatives to take advantage of the opportunities the mortgage market is presenting.”

Fitch Ratings said Friday it has been closely tracking interest shortfalls on certain subprime transactions serviced by Ocwen Financial Corp. Discussions with senior management revealed that increased loan modifications beginning in April involved reductions to principal and interest rates.

The trustee in the transactions, Wells Fargo, told Fitch that it would likely be able to determine the proper allocation of funds or losses in the upcoming cycle when Ocwen is expected to implement an enhanced reporting format. Fitch expects principal losses to hit the most junior bondholders.

BankUnited Financial Corp. announced Wednesday a $400 million public offering of its Class A common stock. The net proceeds will be used for general corporate purposes, including contributing capital to its bank subsidiary. If the offering is successful, holders of its Class B common stock and its Series B Preferred stock, which include chairman and CEO Alfred R. Camner, will surrender the super-voting shares for shares of a new preferred stock that will have equal voting rights with its Class A common stock.

Fremont General Corp. filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code, clearing the way for it to sell most of the assets and all of the deposits of subsidiary Fremont Investment & Loan to CapitalSource Bank, the company said Wednesday. The deal was approved by the California Department of Financial Institutions and the Federal Deposit Insurance Corporation.

“The company wishes to make clear that Fremont Investment & Loan has not filed for bankruptcy and was not included as part of the bankruptcy filing by the company,” Fremont explained. “The bank will continue to operate its business in the normal course.”

Fremont originally disclosed last month its plan for the parent company to file bankruptcy.

Fortress Financial Group Inc. announced Thursday it is finally in a position to complete the first round of acquisitions that will create “a very substantial company in the consumer finance industry” with an initial concentration in mortgage lending. Earlier this month, the New York-based company said it had decided not to complete these acquisitions until it resolved “all outstanding issues such as the distribution of Hunt Gold Corporation Stock Dividends had been completed.”

Thursday’s press release, the eight since March, indicated that the remaining outstanding stock dividend distributions from Hunt have been resolved.

Wells Fargo & Co. will acquire the banking operations Farmers State Bank of Fort Morgan, parent F.S.B. Bancorporation Inc. announced Thursday. Farmers, based in northeastern Colorado, has $116 million in deposits, $66 million in loans of and 35 employees.

The acquisition of the bank, which is 93 years old, is subject to approval by regulators and is expected to close by the end of the year.


Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: mtgsam@aol.com


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