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Let’s Make a Deal

Let’s Make a DealRecent mortgage industry mergers and transactions

November 3, 2004

By COCO SALAZAR

There is no shortage of mergers and acquisitions in the mortgage industry, as some of the transactions go well beyond U.S. borders.

FSF Financial Corp. and MidCountry Financial Corp. jointly announced Monday they have completed merging.

Georgia-based MidCountry had two principal subsidiaries: MidCountry Bank and Heights Finance Corp. As a result of the consolidation, FSF subsidiary First Federal Bank merged its operations under the MidCountry Bank name. Homeowners Mortgage Corp. was renamed MidCountry Mortgage Corp. and Firstate Services Inc. was renamed Mid Country Investments Inc., according to the announcement.

MidCountry Financial Corp. operates through 23 MidCountry Bank locations in Minnesota and Illinois and through 106 Heights Finance offices in Illinois, Indiana, Missouri, Kentucky, and Tennessee.

FSF originated nearly $22.2 million in one-to-four family residential mortgages during the second quarter, which was down significantly from $65.1 million a year ago, according to a 10-Q SEC filing.

Another completed merger, announced Monday, was Wachovia’s $14.3 billion acquisition of SouthTrust Corp., which reportedly creates the largest bank in the Southeast. The full integration of the companies is expected to be complete in the fourth quarter 2005.

Wachovia reported the combined company’s employee base holds more than 95,000. The consolidation, however, will eliminate some 4,300 jobs, partly through attrition, “and employees that work directly with customers are not going to be part of that number,” Wachovia spokesman Kevin Bezner reportedly told The Ledger.

Wallace Malone, former chairman and chief executive of SouthTrust, became the vice chairman of Wachovia, according to an announcement.

In Missouri, Bank of Franklin County formed Franklin Mortgage Company, L.L.C., to offer a wider array of lending options to the community, which has had record levels of homeownership, The Missourian reported.

The new company, which will operate as a wholly owned subsidiary of the bank, reportedly opened last month in Washington, Mo. “We felt the location was the perfect atmosphere to open our first mortgage office,” bank director Ardell Schelich reportedly told the publication.

Meanwhile, GE Consumer Finance recently announced that it’s Australian business unit, GE Money Australia & New Zealand, reached an agreement to acquire mortgage originator Australian Financial Investments Group — whose assets include the Wizard Home Loans brand and distribution network, and Australia’s largest wholesale mortgage funder AMS. The transaction is expected to close in this quarter.

GE Money’s president, Tom Gentile, said in the announcement, that the company has grown rapidly in the Australian market since its entrance nine years ago, but “one area where we have long wanted to increase our presence is in mortgages. The acquisition of [Australian Financial] gives us one of the premier mortgage platforms in Australia, with assets of approximately $14 billion.”

The to-be-acquired company has a network of 230 branches in Australia and New Zealand, GE reported. The home mortgages business will continue under the Wizard brand name.

Australia Financial founder Mark Bouris will remain with the company as the non-executive chairman, and will continue to drive strategy development, branding, marketing, and actively assist in the integration of the company into GE Money, the announcement said.

“This is the ideal move for Wizard and a natural progression for us as the most successful non-bank mortgage originator in the country,” Bouris said.

As part of an aggressive expansion plan, Fiducial, a European-established business outsourcing services provider with U.S. headquarters in New York City, announced this week that it signed a definitive agreement to acquire Indianapolis, Ind.-based Frontier Lending Corp., Frontier Financial Consultants and Diamond Title & Escrow Inc. Terms of the transaction were not disclosed.

The lending and financial companies will operate as Fiducial Lending Corp. and Fiducial Investment Advisors Inc., respectively, while the title company will retain its pre-acquisition name, according to the announcement.

Fiducial, self-described as an international provider of business outsourcing services to small businesses and entrepreneurs, says it already provides financial services with registered representatives offering securities through other broker-dealers, but the acquisition of Frontier firms its position within the financial services industry.

“This acquisition — we are now a broker dealer and a mortgage banker — is a major step for Fiducial because it enables us to offer services that our small business clients expected from us and to be a one-stop-shop provider to them,” said Fiducial vice president Yves Morard-Lacroix in a prepared statement.

The agreement follows Fiducial’s earlier acquisition of the Frontier CPA group, which reportedly added 10 offices in Illinois, Ohio, Kentucky and Indiana, to its network of branches.


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

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