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Acquire Or Be Acquired

Acquire Or Be AcquiredMergers and acquisitions in the mortgage industry

January 4, 2005


The wheels on deals keep spinning with consolidations involving not only mortgage companies, but also vendors that service mortgage companies. And for some of the latest mergers and acquisitions participants, this isn’t their only recent deal.

On Monday, Park National Corp. announced it closed on the acquisition of First Clermont Bank.

First Clermont became a division of Park National Bank, but will continue operating under its own name and retain its board of directors as an advisory board as well as retain its management, associates and customers, the announcement said.

Park, a holding company based in Newark, Ohio, reported it originated and sold approximately $174 million of fixed-rate mortgage loans during the first nine months of 2004.

On New Year’s Eve, prior to this transaction, Park announced it closed on a deal to consolidate with First Federal Bancorp Inc.

As a result of that transaction, First Federal’s banking subsidiary, First Federal Savings Bank of Eastern Ohio, will operate under the name of Park affiliate Century National Bank. First Federal Savings, based in Zanesville, Ohio, has approximately $250 million in assets and operates from six full-service financial service offices and a loan production office, according to an August announcement of the agreement to merge.

Park said its assets of more than $5.3 billion following the merger with First Federal at year’s end has grown to over $5.5 billion with First Clermont.

In Oak Brook, Ill., residential and commercial originator United Financial Mortgage Corp. announced it will acquire Carlsbad, California-based Plus Funding. Terms were not disclosed.

Heading United Financial’s new division will be Plus Funding’s founders, Thomas Phanco and Phillip Ramsey, who will respectively serve as president and vice president, the announcement said.

The merger is expected to improve Plus Funding’s financial performance due to United Financial’s secondary market execution, lower cost of warehouse financing, and introduce administrative synergies. For United Financial, the acquisition will mark its “first retail presence in the state of California,” increasing its total number of retail branches to 47, according to the acquiring company’s CEO, Steve Koshabe.

Plus Funding, a privately held retail originator of residential loans, originated $275 million in the first eleven months of 2004, United Financial reported. The mortgage banker and broker has 66 full-time employees operating seven southern California branches and one Nevada branch.

United Financial, a residential and commercial originator, had mortgage production of $2.7 billion and a servicing portfolio of $1.4 billion during its fiscal year ended April 30, according to Koshabe.

The announcement follows United Financial’s acquisition of Vision Mortgage Group in August.

In a move to expand its breadth of lending compliance management solutions, New York-headquartered Wolters Kluwer Corporate & Financial Services announced it acquired PCi Corp.

PCi will continue operating from its Boston location, but will do so as a subsidiary of Wolters’ company Bankers Systems Inc., which is parent to VMP Mortgage Solutions Inc., a mortgage-lending compliance and technology tools provider, the announcement said.

“The focus on Fair Lending, CRA, HMDA, and predatory lending compliance is increasing and failure to deal with the issues can result in stiff fines and penalties,” Wolters’ and Bankers Systems’ CEO Bob White said in a written statement. “PCi Corporation understands these complex compliance issues better than any provider in the industry…many federal and state regulatory and enforcement agencies also rely on PCi products to analyze lending activities of the banks they regulate.”

In Clearwater, Fla., Market Street Mortgage announced it executed a purchase agreement to acquire 14 residential production officers from Guaranty Residential Lending Inc.

The offices, located in Georgia, Illinois, North Carolina, Tennessee and Virginia, are in addition to five Guaranty offices in Arizona, Arkansas and Texas, that became part of Market Street on Dec. 6, according to the announcement.

During 2003, the 19 Guaranty offices reportedly originated more than $875 million in mortgage loans.

Market Street, a subsidiary of NetBank with reportedly $3.1 billion mortgages originated in 2003, said the move builds on the company’s strategic plan to further diversify its retail mortgage operations by growing presence in desirable mortgage markets throughout the country, and that it will continue pursuing additional branch acquisitions.

In May 2003, Market Street expanded into Texas when it acquired the operational assets of Houston-based Memorial Park Mortgage.

The sale of Guaranty’s branches follows announcements by its parent company, Temple-Inland, that it would reposition mortgage origination activities to reduce costs and earnings volatility in the slowing refinance environment.

Coco Salazar is an assistant editor and staff writer for

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