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Forge Ahead

Forge Ahead

Recent mortgage mergers, acquisitions & corporate activity

April 18, 2006

By COCO SALAZAR

photo of Coco Salazar
Despite a mortgage industry slowdown, new players are entering the market while others are expanding.

Commerce Bancshares Inc. signed a definitive agreement to acquire West Pointe Bancorp Inc. in $80.9 million stock-and-cash deal, according to a joint announcement by the two companies.

The merger transaction, expected to be complete next quarter, will expand Commerce in the St. Louis., Ill., area, while West Point will benefit from the broader array of products offered by Commerce, the announcement said.

Meanwhile, subsidiary Commerce Bank, N.A., announced it will acquire the banking services and assets of Boone National Savings and Loan Association in transaction is expected to close this July.

Boone, which operates four branches in Maryland and two loan production offices, provides a significant opportunity to strengthen Commerce’s super-community bank in Central Missouri, according to the announcement.

In Frankfort, Ky., Farmers Capital Bank Corp. announced it agreed to acquire Citizens National Bancshares Inc. in a $30 million cash-and-stock transaction expected to close next quarter.

Interchange Financial Services Corp. will reportedly be acquired by TD Banknorth Inc. for $480.6 million.

Maine-based TD said the acquisition will continue its expansion in the “wealthy and dynamic” market of northern New Jersey, will make it the ninth largest bank in the state, and is an “excellent complement” to its recent acquisition of Hudson United.

TD will reportedly obtain about $405 million to finance the transaction by selling approximately 13 million of its common stock shares to TD Bank Financial Group, TD’s Toronto, Canada-based majority owner, which says its percentage ownership will rise 58.6 percent and sees the merger “moves us closer to our shared vision of a U.S. growth franchise.”

Residential Capital Corp. recently announced a senior offering of $1.75 billion in 6.5% fixed-rate notes due in 2013 and $750 million of floating-rate notes due in 2009, and subordinated floating-rate notes of $1.0 billion due in 2009. The sale of each of these offerings was expected to close Monday.

ResCap intends to use the proceeds toward repaying all domestic borrowings from parent General Motors Acceptance Corp.

Meanwhile, 1st Trust Bank for Savings is staying away from mergers and is instead planning to build eight new branches — at least three by 2007 — in the Memphis, Tenn., area, as well as expand services and possibly create a new name to try to capture “disgruntled and disenfranchised” customers of the former National Bank of Commerce and Union Planters National Bank, according to the Memphis Business Journal.

“This is not a business-as-usual deal,” 1st Trust chairman Kirk Bailey reportedly told the Journal. “This is an exceptional strategy we’re employing right now.”

The branches will include space for mortgage lending, expanding the outreach from the existing dozen mortgage lending offices 1st Trust has in Tennessee, the Journal reported.

The reported possible name change, which would include a logo and color scheme change as well, would be to distinguish 1st Trust from its many competitors that have “first” and “trust” in their names.

In New York, First Guardian Financial Corp. said it was holding negotiations to acquire a majority stake in an unnamed privately held residential mortgage lending company located in the Northeast.

Entrance into the residential mortgage arena “will increase revenues significantly company wide, while increasing visibility of the company’s other products and services,” said First Guardian, which reportedly currently provides short term financing within the commercial real estate market and investments/financing to businesses either in the start up or growth stage.

First Guardian said it intends to reveal the name of the lender until it has executed a definitive acquisition agreement that it expects will take place by before mid-May.

The moves at First Guardian and 1st Trust Bank come amid an industrywide decline. So far, lower first quarter production has been reported by CitiMortgage, Countrywide Financial Corp., New Century Financial Corp., and Wachovia Corp.


Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.e-mail: MortgageWriter@aol.com

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