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Mergers Dissolve

Mergers Dissolve

Latest mortgage M&A’s, corp activity

April 6, 2007


photo of Coco Salazar
While there are plenty of mortgage mergers going down, two deals recently fell apart. Meanwhile, a Connecticut-based bank has shut down its mortgage subsidiary.

Sun America Mortgage will change its name to SunTrust Mortgage Inc., according to a message on its Web site.

“Sun America has been a part of the SunTrust Mortgage family for years,” the message read. “We believe that by using the SunTrust name, we can offer additional services to benefit our customers and be more accessible through the use of the latest technological tools.”

M&T Bank said “unfavorable market conditions and lack of market liquidity impacted M&T’s willingness to sell Alt-A loans in the first quarter” because bids at a recent auction were lower than expected. As a result, the company expects an after-tax reduction of net income of $7 million for the first quarter.

Additionally, the company accrued $6 million to provide for declines in market value of previously sold Alt-A mortgage loans that are expected to be repurchased, which will result in a net income reduction of $4 million.

Moody’s Investors Service downgraded the servicer rating of New Century Mortgage Corp. to SQ4- from SQ4 and said it is keeping the company’s SQ rating on review, direction uncertain because of the continued uncertainty surrounding the servicing platform, which will be sold to Carrington Capital Management LLC.

“Areas of particular concern are servicing staff morale and retention,” the ratings agency said, noting the Chapter 11 bankruptcy filing by parent New Century Financial Corp, the firing of 3,200 employees and the sale agreement with Carrington.

As of March 27, Jeffrey M. Davidson became the chairman of the Oxford Bank Corp. and Oxford Bank. Davidson, who retained his roles of president and CEO of the companies, replaced Randall G. Fox, who retired as the chairman but will remain an active member of both boards, serving as their vice chairman.

Richard I. Linhart will succeed Carroll C. Markley, who retired, as president and CEO of Millennium Bankshares Corp. and chairman, president and CEO of Millennium Bank N.A. in mid-July, according to a press release.

On March 29, Kathleen Brown resigned from Countrywide Financial Corp. board of directors and Michael E. Dougherty notified that he does not plan to stand for re-election to the company’s board after his term ends at the 2007 annual meeting of stockholders, according to a filing with the Securities and Exchange Commission.

Brown cited “both personal and business reasons” for her immediate departure, while Dougherty said he had “absolutely no disagreement” with Countrywide in any matters and that his decision to leave was based on his “other substantial business commitments that need my full time attention.”

Allied Home Mortgage Capital Corp., which claims to be the largest privately held mortgage banker/broker in the country, opened a branch in Opelika, Ala. — its first in this city.

American Home Mortgage Investment Corp. announced it estimates first quarter earnings per share will be from $0.40 to $0.60 per share, down from previous estimates. For the full year, earnings guidance has been lowered to $3.75 to $4.25 per diluted share.

First quarter results were adversely affected by lower gain-on-sale margins, write-downs of low investment-grade and residual securities and ongoing charges for non-performing reserves, American Home indicated. Also, a disproportionate share of non-performing loans were Alt-A, leading to the termination of those programs.

Meanwhile, Shearson Financial Network Inc. announced that it rescinded its acquisition of Real Property Technologies LLC and will receive back stock valued at $40 million.

“When we purchased [Real] in June of last year, we believed we could incubate the company, restructure their financial systems, and subsequently take it public with its own IPO and deliver value to our shareholders,” stated Michael Barron, Shearson’s CEO, in an announcement. “We were able to secure an underwriting with a prominent New York investment banker, but the promised earnings from [Real] never materialized. Our decision was to rescind the transaction and return the Preferred Shares which substantially reduces the dilution to our shareholders.”

In Connecticut, Savings Institute Bank & Trust Co. has decided to terminate its agreement to acquire Fairfield Financial Mortgage Group Inc. because the merger was not consummated by March 31, parent SI Financial Group Inc. announced. Savings had agreed to buy the mortgage company last September.

Missouri-based Commerce Bancshares Inc. will acquire Colorado-based Commerce Bank in a $29.5 million cash deal expected to be completed either late this quarter or early next quarter.

In Milwaukee, Wis., Marshall & Ilsley Corp. announced that it completed its acquisition of United Heritage Bankshares of Florida Inc.

On Tuesday, New York Mortgage Trust Inc. announced that it completed the $13.5 million sale of certain assets of its retail mortgage lending platform, The New York Mortgage Company LLC, to IndyMac Bank F.S.B.

New York Mortgage Trust also said that its fourth-quarter loss was $9.6 million, larger than the $8.8 million previously reported, due to an increase in loan loss reserves associated with its loans originated in 2006 and repurchased in February and March 2007.

Barclays Bank PLC announced that it completed purchasing EquiFirst Corp., the nonprime mortgage origination business of Regions Financial Corp., for $76 million.

In May, W.J. Bradley Company Merchant Partners LLC expects to acquire Modesto, Calif.-based MortgageTree Lending Corp., which originated $788 million in residential mortgages last year and has about 390 employees and 55 retail branch offices, according to a press release.

“We were looking for a partner who could help us work through the current, challenging market environment and give us better platform to grow when market conditions improve,” said Diana Grossmann, MortgageTree’s CEO, in the statement. “We are already taking steps to restructure our operations to reduce costs and eliminate redundancy as we move onto W.J. Bradley’s centralized fulfillment platform.”

MortgageTree is the latest conquest in W.J.’s mission to consolidate small- and medium-sized mortgage brokers and banks. Just last week, W.J. announced it will acquire SB Financial Inc. in a deal that would represent its 10th mortgage company acquisition in the past two years.

On Thursday, Webster Financial Corp. said that it decided to close down Peoples Mortgage Co. because it determined the mortgage operations no longer fit its core business model. As a result, Webster will record a pre-tax charge of $2.3 million in its first quarter results.

The mortgage operations shutdown follows a March 30 announcement of the sale of three People’s offices to First Mariner Bank, two in Maryland and one in Connecticut. First Mariner said People’s 40 employees provided over $1.5 billion in mortgages those two states since 1995.

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