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Buy, Sell or Merge?

Buy, Sell or Merge?

Recent acquisitions and corporate activity

June 19, 2006

By COCO SALAZAR

photo of Coco Salazar
Bank deals dominate the latest corporate activity and merger transactions, but conflicting signals about shares of New Century have analysts’ outlooks at odds.

Shareholders of Lynnwood Financial Group Inc. approved Thursday for the company to be acquired by Sterling Financial Corp. in a stock-and-cash transaction expected to close July 5, according to an announcement.

“This merger is consistent with our growth plans as we continue to strengthen our leadership role in community banking in the Pacific Northwest,” said Sterling Chairman and Chief Executive Harold B. Gilkey in the written statement.

MainSource Financial Group Inc. announced it completed acquiring Peoples Ohio Financial Corp.

As a result, Peoples Savings Bank of Troy today changed its name to MainSource Bank – Ohio.

First Banks Inc. said it signed an Agreement and Plan of Reorganization that allows it to acquire TeamCo and subsidiary Oak Lawn Bank., providing it with “opportunity to expand our fast-growing footprint in Chicago” and some surrounding areas.

The merger is reportedly expected to cost First about $13.9 million and complete next quarter.

BB&T Corp. received approval from the Federal Reserve Board to acquire First Citizens Bancorp.

A commenter’s opposition to the merger because BB&T allegedly engaged in discriminatory treatment of minority individuals in its home mortgage lending was examined but dismissed by the board, which gave until about mid-September for the merger to be consummated.

Equity Mortgage Centre has emerged from the acquisition of Mortgage Centre by Equity Bank, according to The Wichita Eagle. The Kansas company will reportedly do business nationwide and originate in excess of $200 million this year.

In Richmond, Va., LandAmerica Financial Group Inc. recently purchased MSTD Inc., whose flagship product, BackIntheBlack, is the mortgage industry’s “most comprehensive, end-to-end default servicing technology platform,” according to an announcement.

“Our default management clients are increasingly challenged with delinquencies and foreclosures, as well as with an increased focus on regulatory compliance and loss mitigation,” said Albert V. Will, a LandAmerica executive, in the statement. “Blending the capabilities of LandAmerica Default Services with the technology expertise and products of MSTD enables LandAmerica to offer the mortgage industry the best and most integrated servicing solution in the marketplace.”

JMP Securities downgraded New Century Financial from “market outperform” to “market perform” Wednesday and reduced earnings-per-share estimates , according to newsratings.com.

JMP reportedly said that even though New Century’s margins are likely to improve in the near-term, the lender’s performance metrics would deteriorate to reflect the recent changes in Standard & Poor’s securitization model unless its mortgage pricing becomes more aggressive. EPS estimates for fiscal years 2006 and 2007 were reportedly lowered by $0.26 to $6.74 and by $1.15 to $6.00, respectively.

On the same day, however, the Irvine, Calif.-based company made the All Star Analyst portfolio of Zacks Investment Research Inc., which noted New Century’s first quarter $1.79 EPS rose from $1.48 a year prior due in part to increased mortgage production. However, the lender reported first quarter originations were down from the fourth quarter.


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

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