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Subprime Shakeout Dominates M&A

Subprime Shakeout Dominates M&A

Recent mergers, acquisitions & other corporate activity

March 13, 2007


photo of Coco Salazar
As subprime tremors reverberate throughout the industry and economy, some regions will be affected more than others. Meanwhile, the latest mortgage mergers and acquisitions include the launch of a company that will acquire the lower tranches of residential mortgage-backed securities.

OceanFirst Financial Corp. will reduce 2006 earnings because of early-payment defaults on 100 percent loan-to-value loans originated by subsidiary Columbia Home Loans LLC, according to an announcement Monday.

Recent subprime mortgage woes may greatly impact office space in Orange County, Calif.

Among the area’s players are New Century Financial Corp., Ameriquest parent ACC Capital Holdings and Option One Mortgage Corp. — each of which are either on the block or on their way to insolvency.

Subprime lenders occupy about 5 million square feet of office space in Orange County — with nearly one-half million square feet by New Century, according to an announcement today from the company’s landlord, Maguire Properties Inc. But expanding demand from other sectors, including healthcare, technology and other firms, will offset potential losses.

KeyBank Mortgage has a new president, Myron “Mike” Filarski, according to an announcement from parent KeyCorp. Filarski responsibilities include spearheading a significant effort to increase mortgage originations throughout Key’s 13-state footprint.

First Federal Bank of California announced it has named Brian Leonard president of its Residential Wholesale Lending Division.

At ECC Capital, Roque Santi, president and chief financial officer, will assume the responsibilities of Greg Lubushkin, who will resign from the chief accounting officer post at the end of March, according to an announcement on Friday.

ECC announced its ability to distribute a cash dividends is dependant on potential increases in loan delinquencies and losses. The company, which recently sold its mortgage banking operations, announced today it was delisted from the New York Stock exchange.

Delta Financial Corp. announced it has been approved to list its common stock on the NASDAQ Global Market and will be able to retain its “DFC” ticker symbol when it begins trading on the list on March 22, a day after it ceases trading on the American Stock Exchange.

American Home Mortgage Investment announced that it believed “confusion may have arisen regarding the types of loans it holds and originates.” The real estate investment trust reported only 1.3 percent of its loans held for investment had a FICO sore below 620, and noted that it focused on earning net interest income from self-originated loans and mortgage-backed securities, and, through its taxable subsidiaries, from originating and selling mortgages and servicing loans for investors.

Following American Home’s clarification, Zacks Investment Research Inc. said shares of American Home satisfied the criteria to be placed on the High Rank Value Profit Track, “a successful stock picking strategy,” due to the company’s price-to-earnings multiple of 5.21 and a price-to-book multiple of 1.19, and fourth-quarter earnings of $1.21 per share, which surpassed the previous year’s level of $0.27 per share and the consensus estimate by nearly 2 percent.

Fidelity National Real Estate Solutions announced it that its acquisition of the assets of Realigent will give it ownership of Realigent’s software solutions for real estate professionals and brokers, including lead-generating tool VantagePoint.

BOK Financial Corp. has agreed to acquire Texas-based Worth Bancorporation Inc. as part of its strategy to increase market share in the Dallas/Forth Worth Metroplex by growing its full-service banking presence, according to a press release.

RBC Centura Bank announced that it has stepped into Alabama with the acquisition of 39 AmSouth Bank branches that also make it the seventh-largest bank in that state. The U.S. Department of Justice and the Federal Reserve Board required that AmSouth divest the branches to enable its merger with Regions Financial Corp.

Nevada-based Shearson Home Loans has entered into a joint venture agreement that will allow Stinson Financial’s 30-branch loan origination platform to operate within Shearson’s mortgage banking infrastructure, according to an announcement. The platform will give Shearson a broader reach into the Southern California market.

1st Source Bank will acquire Trustcorp Mortgage Co. from parent 1st Source Corp. The transaction, expected to be complete by May, will allow the parent to focus home mortgage efforts in the bank’s retail footprint in Indiana and Michigan and minimize brand identity confusion amongst consumers. Diana Ringer will assume the title of president of Trustcorp upon the merger.

Home Energy Savings Corp. announced that it will sell Texas-based AIM American Mortgage Inc. to X-Press America Inc. for $100,000.

Home Energy, a provider of energy-efficient home improvement products and services, bought AIM in December 2005 to enter the mortgage and lending industry and recently acquired mortgage broker and lender MLI Capital Group Inc., formerly known as Money Lenders Inc.

“The recent acquisition of MLI Capital affords us the opportunity to consolidate the financing side of our business in one location while simultaneously obtaining value for our Texas subsidiary and improving our balance sheet,” said a Home Energy executive in the announcement.

Ocwen Financial Corp. announced that it obtained definitive commitments from affiliates of Angelo, Gordon & Co., Metalmark Capital LLC and other lead investors to form and capitalize a new business, Ocwen Structured Investments LLC, which will invest in the lower RMBS tranches and residuals, related mortgage servicing rights, ABX Index Protection and other similar assets.

“In the current environment of rising mortgage delinquencies, our new venture presents an exciting opportunity to leverage our superior loss mitigation capabilities and knowledge of collateral to generate attractive returns for the investment partners,” Ocwen Chairman and CEO, William C. Erbey, said in the written statement.

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