Southwest Securities Group Inc., a Dallas investment bank, has apparently found just what it was looking for in Matrix Bancorp, a Denver thrift company: tens of thousands of customers to cross-sell to.
Southwest recently signed a letter of intent to acquire $1.3 billion-asset Matrix for about $100 million.
Matrix's subsidiaries include Matrix Capital Bank; the mortgage servicing firm Matrix Financial Services Corp.; and Sterling Trust Co., which manages more than $2.5 billion of assets.
Southwest's subsidiaries include Southwest Securities Inc., an investment banking firm that offers securities clearing services; Mydiscountbroker.com; and SWS Financial Services Inc., a brokerage firm.
Ken Hanks, Southwest's chief financial officer, said Matrix has 91,000 mortgages and Sterling Trust has 36,000 trust customers. "These are people who could possibly be contacted regarding other financial services our firm offers," he said.
Matrix had been hunting for a deep-pockets suitor to feed its fast-growing mortgage servicing business. "We have a $6 billion mortgage service platform attached to a $1.3 billion bank," said Guy A. Gibson, president and chief executive officer. "We've been looking for an acquirer who could bring substantial deposits to the table so that we could leverage up our balance sheet."
As for cross-selling, "we have a call center at the bank that is contacting our mortgage clients to see if they have any needs that we could meet," Mr. Gibson said. "For Southwest's brokerage customers, we could offer them the same services, such the refinancing of mortgages or mortgage origination."
Under the letter of intent, Southwest would exchange 0.4715 shares of its stock for each share of Matrix.
Since July 14, when Southwest and Matrix announced that they were in negotiations, Matrix's stock has climbed more than 50%, to $10.50 at midday Thursday.
Mr. Hanks said the companies are expected to complete negotiations and announce a formal agreement within a month. Southwest has already bought a thrift this year - $300 million-asset First Savings Bank of Arlington, Tex., in April.
Matrix was formed in 1989 and acquired the mortgage servicing company, now based in Phoenix, in 1991. Two years later it acquired Dona Ana Savings Bank of Las Cruces, N.M., and changed the name to Matrix Capital Bank, which has $1 billion of assets and branches in New Mexico, Arizona, and Colorado.