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Mergers Multiply

Mergers MultiplyMortgage industry mergers, acquisitions & other corporate transactions

September 3, 2005

By COCO SALAZAR

Mortgage industry acquisitions are occurring so fast that some companies barely finish buying one company before they are acquired themselves.

Tower Bancorp Inc. and FNB Financial Corp. recently disclosed they have agreed to combine their companies in a transaction valued at $31.2 million.

With the strategic merger, the parents of First National Bank of McConnellsburg and First National Bank of Greencastle will widen the menu of banking products, including those in mortgage and consumer lending, according to an announcement.

“Together, Tower and FNB serve one of the fastest growing and dynamic markets for community-focused banking in the South Central Pennsylvania/Maryland region,” said FNB Financial President and CEO John Duffey in a written statement.

In Anaheim, Calif., First American Real Estate Solutions announced it purchased a minority interest in regulatory compliance and risk management solutions provider ComplianceEase.

As part of the strategic alliance, ComplianceEase’s flagship product will be integrated into First American’s mortgage technology platforms. The combination will enable clients to avoid costly fines and lawsuits that have come about due the “ever-changing landscape of federal, state and municipal anti-predatory and consumer lending laws and regulations,” according to the announcement.

“Our clients require more advanced methods of ensuring that regulatory requirements are met,” said George Livermore, president of First American unit, in a written statement. “By joining forces with ComplianceEase, we are able to deliver a comprehensive solution that can be easily implemented for immediate results.”

MainSource Financial Group Inc. recently said it will acquire Peoples Ohio Financial Corp. in a $41.8 billion deal expected to close first quarter 2006. The move will be Greensburg, Ind.-based MainSource’s first venture into Ohio and will give it a presence in the west central part of the state.

Peoples Savings Bank of Troy will be merged simultaneously into a newly formed subsidiary of MainSource, which plans to continue operating all of Peoples’ current offices under the new name “MainSource Bank – Ohio.”

In Cedarsburg, Wis., Spectrum Equity Investors announced Wednesday that it acquired a majority stake in Mortgagebot as a result of a recently completed $84 million recapitalization of the company.

The companies have reportedly talked about financing alternatives for the past few years.

In a separate announcement, Technology Investment Capital Corp. said its $11 million investment in Mortgagebot LLC senior second lien notes supported the recapitalization by Spectrum.

“Mortgagebot is a perfect fit for Spectrum, given our firm’s focus on recapitalizations of profitable software and information services companies with strong growth potential and recurring-revenue business models,” said Michael Kennealy, Spectrum managing director, in the announcement.

Associated Banc-Corp and State Financial Services Corp. have amended an agreement to close on a merger transaction today, the companies announced.

State Financial, which provides secondary market mortgage loan originations throughout its banking network in Wisconsin and Illinois, will convert its operating systems to Associated’s platform in early November, the announcement said.

The combined companies will reportedly have locations throughout eastern Minnesota, Wisconsin and Illinois.

In Florida, Bimini Mortgage Management Inc. announced Friday it will acquire privately-held Opteum Financial Services in a deal expected to close next month.

“From our standpoint, we are diversifying our revenue stream while remaining in our area of expertise — the residential mortgage market,” commented Jeffrey Zimmer, Bimini chairman, cofounder, president and chief executive, in the announcement. “At the same time, we are establishing a broader base for future growth.”

Opteum will operate as a taxable subsidiary of Bimini. Under the merger, Paramus, N.J.-based Opteum, which has nearly 1,000 associates and lends in 44 states, expects to originate or acquire approximately $7.4 billion in mortgage loans for the fiscal year ending Nov. 30, 2005.

“The management team at Bimini is highly regarded for their in-depth knowledge of mortgage backed securities, their liquidity management skills, their capital markets expertise and their commitment to the application of best practices and low cost operations,” said Peter Norden, Opteum chairman, cofounder, president and chief executive, in a written statement.

Under the agreement, Bimini will reportedly lend approximately $65 million to Opteum to repay existing debt and pay Opteum’s stockholders a contingent cash earn-out of up to $17.5 million over the next five years, based on Opteum’s achievement of certain specific financial objectives. In return, Opteum reportedly agreed to maintain a $60 million book value at the time of the merger.

The merger agreement with Bimini follows Opteum’s Sept. 1 announcement that it acquired privately-owned Integrity Home Funding LLC.

A similar transaction occurred with United Financial Mortgage Corp., which had barely completed acquiring offices from AmPro Mortgage Corp., and was then bought by FNB Corp.


Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.E-mail: s3celeste@aol.com

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