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WaMu Acquiring Providian

WaMu Acquiring ProvidianRecent mortgage related M&A activity

June 6, 2005

By COCO SALAZAR and SAM GARCIA

Topping the latest mergers, acquisitions and corporate transactions in the world of real estate finance is a giant whale that had previously lost its appetite.

Texas United Bancshares Inc. recently announced it will acquire Gateway Holding Company Inc. in a deal expected to be completed in the fourth quarter.

The merger is “a continuation of our strategy to expand into high-growth suburban markets in major metropolitan areas of Texas,” the acquiring company said, adding that it will provide it with a strategic location in the Dallas/Fort Worth market and improved earnings given Gateway’s asset sensitive balance sheet.

Through its subsidiaries, State Bank and GNB Financial, Texas United reportedly has 27 full-service banking centers and 18 mortgage loan production offices throughout the Lone Star State.

To keep consistent with its decentralized model, Texas United said Gateway National Bank will continue to operate as a separate subsidiary, retaining its name and board of directors.

Western Alliance Bancorporation recently filed with the Securities and Exchange Commission for an initial public stock offering.

The Las Vegas-based holding company listed several risk factors for those considering investment, including that the substantial growth it has had in recent years may not sustain.

Western Alliance said its portfolio of investment securities during the last three years has consisted primarily of mortgage-backed obligations and U.S. Government agency obligations.

ECC Capital Corp. reported its retail subsidiary, Bravo Credit Corp., will acquire certain assets and retail branches from America’s MoneyLine Inc.

The retail branches and related employees Bravo will acquire from the Saxon Capital Inc. subsidiary, are located in Connecticut, Maryland, New Jersey, North Carolina and Texas.

The deal, which ECC said is consistent with its 2005 business plan of expanding the retail origination platform, will allow Bravo to minimize costs and the ramp-up time required to open new retail mortgage branches.

North Dallas Bank & Trust Co. is launching a mortgage division, in which it plans to offer home mortgage financing and complement the bank’s construction lending activities, according to an announcement Wednesday.

Noting that although some consider the refi boom dead and the current climate unsuitable for starting a mortgage division, the bank said it is “anticipating continued demand from the bank customers for [mortgage] services.”

The bank also said the division’s products and services “are an opportunity to create added value to our shareholders and strengthen long-term relationships with our customers.”

In Kansas City, Mo., NovaStar Financial Inc. recently announced it has priced a public offering of 1.5 million shares of its newly issued common stock, at $35.00 per share.

Additionally, the subprime lender and real estate investment trust said it has granted the underwriters an option to buy up to 225,000 additional shares to cover any over-allotments.

Washington Mutual Inc. today announced it will acquire Providian Financial for $6.45 billion in a stock and cash deal expected to close during the fourth quarter. Providian will operate as one of four business units, Seattle-based WaMu said, and maintain operations at its San Francisco headquarters.

Providian’s management team and infrastructure will be maintained, WaMu reported.

“This transaction provides Providian shareholders financially attractive terms while allowing us to take the card business to the next level,” said Providian Chairman and CEO Joseph Saunders.

WaMu had taken a break from a plethora of acquisitions and subsequent integrations it made earlier in the decade — leaving it battling class actions and other lawsuits resulting from operating several different servicing platforms. As rates rose and the 2003 refinance boom ended, the lender wrote off huge hedge losses and announced massive layoffs. Some mortgage operations were also unloaded.

The Providian deal appears to mark a turning point for a company that had been contracting.

“Today’s transaction enhances Washington Mutual’s consumer banking growth while strengthening our leadership position in the middle-market customer segment,” WaMu Chairman and CEO Kerry Killinger said in the announcement.


Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.email: CocoSalazar@MortgageDaily.com

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