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Banks Busy With M&As

Banks Busy With M&As

Recent mortgage mergers, acquisitions and other corporate activity

May 30, 2006

By COCO SALAZAR

photo of Coco Salazar
Corporate activity in the banking sector has recently overshadowed mortgage mergers and acquisitions.

But first, the Mortgage Bankers Association recently wrote a letter to Congressman Tom Freeney in support of the COMPLETE Act he introduced for relief to Section 404 of the Sarbanes-Oxley legislation to reduce lenders’ “excessively high costs” of reporting internal controls because of the many repercussions, not reducing could stagger economic growth being that many emerging companies could decide against going public to not incur costs of internal reporting controls.

National Bank of Kansas City saw a business opportunity in writing mortgages for buyers of fractional shares of resort properties and launched First Fractional Funding, according to the Kansas City Business Journal. The new unit reportedly opened in mid-May with a four-person office in suburban Denver, Colo.

MainSource Financial Group Inc. announced Thursday it completed acquiring Indiana-based HFS Bank, which now operates as MainSource Bank – Hobart.

While HFS will gain business services and retail product expansions, the merger will provide MainSource with a geographic connection between its Indiana and Illinois banking centers, according to the statement.

Capital Bank & Trust Co. received approval from shareholders to form a holding company, according to Bizjournals.com.

The plan, first announced in late April, calls for reorganization under which Capital will become a subsidiary of Fort Orange Financial Corp., which was incorporated in March 2006 for the purpose of becoming the holding company in order to achieve the longer-term objectives of Capital’s strategic business plan.

Birmingham, Ala., hometown rivals Regions Financial Corp. and AmSouth Bancorporation announced they agreed to merge in a deal expected to close in the fourth quarter.

The combined entities, which will retain the Regions name, will form the 10th largest bank holding company headquartered in Birmingham, consist of 2,000 branches across 16 states in the South, Midwest and Texas, and will have “a broad, balanced mix of businesses,” including mortgage services, according to the announcement.

The Federal Reserve approved for Banco Santander Central Hispano to acquire 24.99 percent of the voting shares of Sovereign Bancorp Inc.’s voting shares, and indirectly acquire control of Sovereign’s subsidiary savings association, Sovereign Bank, both of Pennsylvania, and Independence Community Bank Corp. and its subsidiary savings bank, Independence Community Bank, both of New York, according to a Fed order document.

A commenter reportedly opposed the transaction, alleging Sovereign made higher-cost home loans to African Americans and Hispanics more frequently than to non-minorities, but the Fed said Home Mortgage Disclosure Act data could alone not conclude lending discrimination and that its investigation showed Sovereign was active in meeting the needs of its entire communities.

The deal with Santander, the 19th largest banking organization in the world and largest in Spain, must be consummated before September, the Fed said.

Along with other mergers, JPMorgan Chase’s yet-to-be acquisition of Bank of New York Co.’s 338 retail branches is prompting concerns of predatory lending, NorthJersey.com reported.

Chase, which expects the deal to close later this year, can use its national charter to avoid state regulation of the soon-to-be former BNY branches.

One activist is calling for the OCC to hold public hearings on the merger, but Chase, while concerned about disparities, said the Home Mortgage Disclosure Act data the activist used are “widely acknowledged to be inadequate to form a judgment that a lender engaged in unlawful discrimination,” according to the publication.

TD Banknorth of Maine recently rolled in state-chartered Hudson United into its national charter and plans to do so the same when it acquires Interchange Bank, Capital One of Virginia is planning to do this with North Fork and Sovereign Bank is likely to flip the charter of Independence Community Bank this week, the publication reported.

Concerns are stimulated by the rapid growth in the number of bank branches that are or soon will be exempt from state laws — since 2000, bank assets under OCC control have grown by 70 percent and it now oversees 1,878 banks, with $6.12 trillion in assets, or 56 percent of the industry, according to NorthJersey.

But bankers say federal preemption is more practical and cost-effective than to comply with a patchwork of different laws.

Meanwhile, in Georgia., Appalachian Bancshares Inc. announced it broadened its mortgage banking offerings by establishing a full-service mortgage lending unit under Appalachian Community Bank.

The mortgage department offers traditional mortgage lending products, including FHA loans, as well as more creative, non-traditional products for less-than-perfect-credit borrowers, according to the announcement.

Minnesota Mortgage Financial Corp. recently changed its name to American Mortgage Financial Group in order to unify and align it with its recent acquirer American Bank of Saint Paul, the parent company announced.

The St. Paul-based residential lender, acquired by American Bank last December, is reportedly licensed in Minnesota, North Dakota, South Dakota, Wisconsin and Florida.

Atlanta-based Equus Resources Inc. will acquire Wealthcare Solutions LLC, a Michigan-based firm, according to an announcement today. The acquisition includes affiliated residential mortgage operations.

Allied Home Mortgage Capital Corp. added three branches to its network, according to announcements today.

A New Braunfels, Texas, location is managed be Ken Calvert, the Houston-based broker reported, while a Norcross, Ga., branch is managed by Maxine A. Lowe. Amy Germundsen is managing a new branch in Milwaukee.

Standard Mortgage Corp. purchased the assets and name of mortgage company Aulds, Horne & White and the acquisition will take effect Thursday, according to The Louisiana Weekly.

The acquisition will extend the Louisiana footprint of Standard, which originated $600 million in mortgages last year, and grow its servicing portfolio to $2.5 billion, the paper reported.

Berkshire Hathaway further extended its mortgage footprint, as its affiliate, HomeServices of America Inc., recently acquired Harry Norman Realtors and its subsidiaries.

Harry Norman, whose mortgage subsidiary, Academy Financial Services, closed $239 million in mortgages last year, expands HomeServices Atlanta market presence.

Berkshire Hathaway, owned by reportedly the world’s second richest-man Warrant Buffet, stepped into the mortgage arena with its acquisition of mobile home maker Clayton Homes Inc., the parent of Vanderbilt Mortgage and Finance Inc. and 21st Mortgage Corp.

The mortgage department offers traditional mortgage lending products, including FHA loans, as well as more creative, non-traditional products for less-than-perfect-credit borrowers, according to the announcement.


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

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