BancPlus Mortgage Corp., a large privately held mortgage bank, is the latest company to acknowledge wounds from the refinancing boom.
Stung by accelerated prepayments of mortgages it services, the San Antonio-based company is writing down $12.9 million of the value of its servicing portfolio, its top executive confirmed.
The company is also rejiggering its financing plans.
BancPlus had been in the process of obtaining a $475 million package of bank loans as well as preparing to sell $150 million of senior notes.
The sale of notes, to have been led by Donaldson Lufkin & Jenrette and J.P. Morgan Securities, has been put on hold. The bank deal, led by Bank of New York and Banc One, Columbus, Ohio, will restructured "to reflect the changed needs of the company," according to market sources.
Falling rates have led to unprecedented runoff in many mortgage banks' servicing portfolios, forcing them to change their accounting of purchased servicing rights.
BancPlus, which services some $15 billion of mortgages, has been one of the fastest-growing mortgage banks in the country. In the 12 months through June 30 it bought the rights to service $5.8 billion of loans.
The surge began in 1991, when Mr. Carrel and his management team, backed by Texas billionaires Sid and Lee Bass, purchased the company from the Resolution Trust Corp.
BancPlus has taken a $6.9 million writedown for prior servicing runoff and will take $6 million more over several months.
"We think we are being conservative," said Herbert Carrell, president of parent BancPlus Financial Corp.
The company had earmarked most, if not all, of the proceeds from the note sale to pay down bank debt incurred during earlier purchases of servicing rights.
Instead of the note sale proceeds, BancPlus will now use a $75 million to $100 million term-loan portion of the bank loan to refinance the existing bank debt as well as existing senior notes.
Once the existing debt has been retired, the remainder of the term loan will be available as a servicing war chest.
The mortgage warehouse component of the bank loan package should remain essentially unchanged. Warehouse lines are used to provide short-term funding for loans awaiting sale in the secondary market.
Pricing on the deal is not expected to rise.
Banc One officials did not return calls. Bank of New York officials declined to comment.The High Cost of PrepaymentsSome other companies that have taken financial hits because ofmortgage prepayments Amount Present reserveFleet Mortgage July $40 million $60 millionMargaretten Financial September $35 million $25 millionUnited Companies Financial * May $17.5 million NA(*) Parent of Foster Mortgage!!!END TABLE