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Top-15 Mortgage Lender to Emerge from Acquisition

The acquisition of a home lender that maintains its headquarters in the Volunteer State will create a mortgage banking firm that ranks among the nation’s 15 largest.

During the first-three months of this year, Franklin American Mortgage Co. originated approximately $3.425 billion in single-family loans.

Retail originations accounted for 5 percent of production, while another 29 percent was wholesale lending, and two-thirds was correspondent acquisitions.

Nearly all of the loans closed during the first quarter were conforming mortgages.

Franklin American serviced roughly 200,000 loans with an aggregate unpaid aggregate principal balance of $41.4 billion as of March 31. Staffing finished the first quarter at around 900 employees, and branch count was 30.

Founded in 1994, Franklin American has reached a definitive agreement to be acquired by Citizens Financial Group , according to a filing Thursday by the financial institution with the Securities and Exchange Commission.

The deal calls for Citizens to purchase $488 million in assets, including mortgage-servicing rights valued at $550 million, for $511 million in cash.

With the acquisition, Providence, Rhode Island-based Citizens, which operates 1,150 branches, will see its annual mortgage originations ascend from roughly $5.5 billion to an estimated $19.2 billion — creating “a top-15 bank-owned, residential mortgage servicing and origination platform.”

Citizens’ servicing portfolio, including loans on its balance sheet, will increase from 353,000 loans for $61.6 billion to 415,000 loans for $78.9 billion as a result of the transaction.

“This transaction takes our mortgage business to the next level, expanding our reach and adding immediate scale in servicing as well as innovative correspondent and wholesale solutions,” Citizens Vice Chairman and Head of Consumer Banking Brad Conner said in the statement. “Franklin American Mortgage’s strong history of excellence in customer service is a great cultural fit with our organization and we are excited to welcome a new group of colleagues to Citizens.”

Citizens President of Home Mortgage Eric Schuppenhauer will run the combined mortgage business. Franklin American’s chief financial officer and chief operating officer, Scott Tansil, will  lead the acquired correspondent and wholesale origination businesses from Franklin, Tennessee.

“The transaction is expected to close in the third quarter of 2018, subject to customary closing terms and conditions and regulatory approval,” the statement said.

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