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We’re Not Subprime!

We’re Not Subprime!

Recent mergers, acquisitions & corp activity

March 6, 2007


photo of Coco Salazar
A California-based real estate investment trust proclaimed it is not subprime and doesn’t appreciate the recent treatment of its shares. Meanwhile, a net branch operation grew while several mortgage companies will get swallowed up in some of the latest corporate and merger activity in real estate finance.

MBI Financial Inc., which is consolidating regional mortgage brokerage companies into its mortgage banking subsidiary, MBI Mortgage Inc., appointed Robert Currier as its chief financial officer, according to a news release.

“The company is seizing the opportunity to become a strong diversified financial services organization,” Currier said in the statement. “With a mortgage brokerage consolidation strategy as a first step, I believe that now is a perfect time to be part of this group.”

Allied Home Mortgage Capital Corp. stepped into new territory with the opening of a branch in Ashland, Ky., and another in Vallejo, Calif.

The two branches pushed to seven the number of branches reportedly acquired so far this year by Allied, which claims it is the largest privately held mortgage banker/broker in the country and that in funded over $10 billion in loans last year.

In preliminary results announcement of its tender offer to purchase up to 75 million shares of its own common stock at a price between $35.00 and $38.75, National City Corp. said approximately 39.9 million shares of common stock were properly tendered and not withdrawn at a price at or below $38.75 per share, including shares that were tendered through notice of guaranteed delivery.

Countrywide Financial Corp. announced Monday the Office of Thrift Supervision formally approved an application to convert its existing national bank charter to a federal savings bank charter. Countrywide Bank N.A. will begin to operate as a federal savings bank under the name Countrywide Bank FSB on March 12.

The conversion to a savings bank charter better aligns the regulatory supervision of the company with our strategic objectives, and will help us better leverage our real estate finance-focused business model for competitive advantage in the current market place,” said founder, CEO and Chairman Angelo R. Mozilo in the announcement.

HSBC Holdings plc said in its annual report that pre-tax profits fell by $725 million in U.S. personal business.

“This was caused by one portfolio of purchased subprime mortgages in our U.S. consumer finance subsidiary, mortgage services, which evidenced much higher delinquency than had been built into the pricing of these products,” a statement from the company’s chairman said. “We are restructuring this business to avoid any repetition of the risk concentration that built up over the past two years. As part of this exercise we have effected broad changes in management and strengthened risk controls and processes.”

Impac Mortgage Holdings Inc. issued a seven-point press release Monday highlighting how it is an Alt-A originator — funding borrowers with good credit — and not subprime.

“It is unfortunate for our stockholders that the company continues to be put in the same category as subprime lenders, when essentially we have no exposure to subprime loans,” said the REIT’s Chairman and CEO Joseph Tomkinson in the statement. “In anticipation of a downturn in the industry, Impac, since January 2006, began increasing its loan loss reserves, preserving capital, increasing its pricing and tightening its underwriting guidelines with the intent to further improve the performance of our Alt-A mortgage portfolio.”

Shares of Impac, which had traded near $12 in July, closed Monday just above $4.


Community Bankshares Inc. is closer to completing its purchase of Citizens Financial Corp., as the Federal Reserve Board recently announced it approved of the deal.

LSB Bancshares Inc. and FNB Financial Services Corp. announced they have agreed to combine in a merger of equals transaction expected to yield approximately $5 million in near term annual cost savings and scheduled to be completed during the third quarter.

“This combination will create the sixth largest bank based in North Carolina,” LSB said in the announcement.

BancorpSouth Inc. completed acquiring City Bancorp in a transaction valued at $170 million that will expand its presence into an eight state: Missouri. City’s subsidiary will continue operating under The Signature Bank name.

Home Energy Savings Corp. will acquire mortgage broker and lender MLI Capital Group Inc. for $50,000, according to a press release. MLI previously operated as Money Lenders Inc. and is licensed in Virginia, Tennessee, and North Carolina.

CoastalStates Bank announced it intends to buy Homeowners Mortgage Enterprises Inc., a Columbia, S.C.-based regional mortgage banker with 78 employees and one of the largest privately owned mortgage banking firms in that state.

“The move will significantly increase the mortgage banking and related capabilities of both firms on a state-wide basis,” by, among other things, expanding CoastalStates’ mortgage menu by hundreds of additional products and providing Homeowners with a “well-established” growth orientation and access to capital and improved fundings, according to the announcement.

Stonegate Mortgage Corp. completed purchasing mortgage broker 1st Signature Lending, according to an announcement. The combined companies, which will operate under the Stonegate name, originated over $100 million in mortgage loans in the Indianapolis metropolitan area last year.

1st Signature said its origination capabilities will expand due to “Stonegate’s ability to underwrite, close and fund loans in-house.”

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