Seeking a bigger presence in the Midwest, a mortgage unit of Michigan's Republic Bancorp has acquired First of America Corp.'s residential lending business in eastern Missouri.
The Republic unit, Cub Funding, obtained six offices with 30 lenders in greater St. Louis - including Illinois.
Terms were not disclosed.
First of America shed the offices because they were no longer a strategic fit, said David Stimpson, president of First of America Mortgage, Kalamazoo, Mich.
"We decided to concentrate our efforts on offices where we have our banks or have contact with our customers," Mr. Stimpson said.
For Cub Funding, the transaction represents an expansion eastward for retail operations. Until now, the Calabasas, Calif.-based company has operated loan offices in Western markets from Phoenix to Seattle.
The acquisition will serve as a starting point for Cub Funding to build its regional business, said chairman Doug Jones. "We would like to geographically fill in from the Midwest," Mr. Jones said.
Cub Funding - one of three mortgage units operated by Ann Arbor-based Republic - is already scouting the Denver and Salt Lake City areas, he said.
In looking to the Midwest, Cub Funding is aiming at areas that are more secure than its current base.
"We've learned in California that things go up dramatically and go down dramatically," Mr. Jones said. "We're looking for stable 2%, 3%, and 4% growth rates."
To be sure, the Midwest didn't experience the kind of dramatic downturns that California and the East did. But the central states did see housing activity slide in 1995 - along with the rest of the country in 1995 - said Nima Nattagh, analyst with TRW Redi Property Data, Anaheim, Calif.
Mr. Jones is undeterred. He said although margins were extremely tight industrywide, loan volume and quality were beginning to improve.
The St. Louis operation, he said, should originate $200 million of mortgage loans this year.
Republic Bancorp will support the venture through new hirings and marketing initiatives, Mr. Jones said. "This is a company we want to put on the offensive and give them a chance to gain market share."
Together, $1.5 billion-asset Republic's three mortgage units have 102 offices and, through retail and wholesale operations, originated $2.8 billion of loans last year.
