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Mergermania in Full Force

Mergermania in Full ForceHost of mortgage related companies release merger announcements

July 2, 2004


As the second quarter wound down, the wave of consolidation in the mortgage industry was apparent — with four separate merger transactions announced.

Principal Financial Group Inc. today announced that Citigroup has acquired its mortgage operations unit. The parent of Citimortgage paid $1.27 billion in cash (subject to post-closing adjustments) for Principal Residential Mortgage Inc. Principal said its after-tax net proceedings from the sale are approximately $720 million — about $10 million more than it had estimated in May when the acquisition plan was announced.

About 6,500 mortgage employees are now under Citigroup’s arm — approximately 5,000 come from its franchise Citimortgage, while the remaining amount come from Principal, according to previous statements from the companies.

National City Corp. reported it acquired Provident Financial Group Inc. for a value of approximately $2.1 billion. The Ohio thrift said it bought Cincinnati-based Provident to enter into that city market and solidify its presence as the No. 1 bank in the state.

Earlier this week, Provident said it was also looking to sell its $12.5 billion subprime mortgage business.

National City also recently added the St. Louis market to its growing Midwestern presence with the acquisition of Allegiant Bancorp, which closed on April 9.

Union Planters Corp. today formally merged with Regions Financial Corp. — the name the combined business operations will be under, according to an announcement.

“Now that we are legally unified, our many hours of merger planning can be translated into action,” said Carl E. Jones Jr., Regions CEO, in the announcement. “We are focused on our customers, and this is reflected in the methodical and deliberate timing of the integration of our various areas of operations.”

While the companies’ merged mortgage operations, headquartered in Memphis, Tenn., reportedly create one of the country’s Top 20 mortgage companies under the name Regions Mortgage, it also called for the layoff of approximately 450 mortgage associate positions. Regions said it expects to begin major systems conversions in the fall.

One company that will be announcing a closing soon is Honolulu, Hawaii-headquartered BancWest Corp., which said it has signed a definitive agreement to acquire Community First Bankshares Inc. BancWest will reportedly pay $32.25 for each share of Community’s common stock in a cash transaction valued at $1.2 billion. The transaction is expected to close in the third quarter, subject to regulatory approval.

Community says it is a $5.5 billion financial services company based in Fargo, N.D., that provides a complete line of banking, investment, insurance, mortgage and trust products through more than 130 branches.

Following the acquisition, BancWest, a bank holding company whose principal subsidiaries are Bank of the West and First Hawaiian Bank, will have $44 billion in assets and operate about 500 branches, according to its Web site. Community First branches will reportedly become part of Bank of the West.

“Community First has a philosophy of local decision-making, supporting their communities and building long-term client relationships — a perfect match for Bank of the West,” said Don J. McGrath, a BancWest executive, in a statement. “Because there is virtually no geographic overlap in our branch structures, this is a transaction that’s about building, not cutting.”

Coco Salazar is an assistant editor and staff writer for


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