Old Kent Mortgage Corp. is expanding its territory with an agreement to acquire Republic Mortgage Corp., Salt Lake City.
Old Kent Mortgage, a unit by Old Kent Financial Corp., Grand Rapids, Mich., will incorporate Republic's $130 million servicing business, and $5 million to $6 million annual mortgage production capability into its portfolio.
Terms of the acquisition were not disclosed, but such deals typically fetch about 1.5% of the servicing portfolio, according to industry experts. That would put the price tag at around $1.95 million.
Republic will give the $7 billion loan servicer access to three markets it currently does not cover - Boise, Las Vegas, and Salt Lake City.
"It's a continuation of our stated strategy of expansion of our (loan) production in the U.S.," explained David Schneider, chief financial officer and vice president of Old Kent Mortgage.
Republic's 19 offices are expected to originate about $5.5 million in mortgage loans this year, Mr. Schneider said, supplementing Old Kent's $2 billion in annual originations.
Old Kent has mortgage operations in Michigan, Florida, Texas, Ohio, and Illinois. The two companies do not overlap geographically.
Republic will retain its name, as well as its chief executive, Marion "Buzz" Woods, and all 200 members of its staff, Mr. Schneider said. Mr. Woods will now report to Don Britton, national product manager for Old Kent Financial.
Although Old Kent has not named any future acquisitions, Mr. Schneider said the company will be looking at expanding in the Southeast and West, excluding California. In addition, he said, the company may be "filling in some gaps in the Midwest."
Whatever Old Kent's plans are for its mortgage division, analysts are optimistic. Joseph A. Stievens, an analyst with Stifel, Nicolaus & Co. in St. Louis noted the company has had two decades of record earnings.
"Old Kent is operating on all eight cylinders; their engine is tuned up, and they have gas in the tank," he said.
