Despite suggestions that the consolidation of mortgage banking would hibernate for the winter, the market has remained warm as many sellers have found their desired buyers.
Two of the three biggest deals to be announced in the past three months have one thing in common: Norwest Corp. was the buyer.
Norwest made the first of those buys in early December when it agreed to acquire Directors Mortgage Loan Corp. for a reported $250 million. Then, in January, Norwest came to terms with Barclays Bank to buy a $15 billion portfolio of home loans.
The third large deal in recent months came January, when Barnett Banks Inc. ponied up $162 million for Bancplus Financial Corp. Like Norwest, Barnett was no newcomer to the consolidation game. In 1994 the Jacksonville-based company bought Florida wholesaler Loan America Financial and Equicredit Corp., a company that specializes in lending to less creditworthy borrowers.
The fast pace of deals seems to indicate that both the buy and sell sides remain motivated. However, some recent developments may have implications for continuing consolidation.
Bank of New York Co. has been unable to find a buyer for its Arcs Mortgage unit, despite a $9 billion servicing portfolio and a production franchise that is heavily tilted towards retail shops. The reason: continued price competition from portfolio lenders and other mortgage banks has killed profitability and eroded the perceived value of production franchises.
Smaller deals were also in vogue this winter. Long Island Savings Bank, making a break out of the Northeast, purchased two small southern mortgage lenders, Entrust Financial Corp. and Developers Service Corp.
Also a highlight: former Mortgage Bankers Association of America president Herbert Tasker sold his All Pacific Mortgage Co. to Irwin Financial, a diversified financial services company based in Indiana.
And there's no lack of deals in the offing. Keycorp Mortgage, a unit of the Cleveland-based superregional, is said to be close to finding a buyer. For sale is about $27 billion of servicing rights as well as selected Keycorp production offices.
Hamilton Financial Services Corp. ($2.4 billion of servicing) and Lomas Financial ($33 billion) are looking for buyers. Lomas has been on the block nearly a year.
And AmSouth Bancorp. is seeking a home for its $10 billion servicing portfolio.