The employees of Fleet Mortgage Group must be getting really good at organizing farewell parties. Yet another high-level executive has left the beleaguered company, the fifth this year.
Kevin Race, promoted to president in July, resigned last week to take a job at Homeside Lending Corp. Mr. Race replaced Robert Golitz, who resigned in February.
Next week, Mr. Race will begin his duties as chief financial officer of Homeside. He was CFO at Fleet Mortgage from 1993 until being named president. As CFO, he was widely credited by industry observers with building up Fleet's servicing portfolio through key acquisitions. Fleet is one of only six mortgage banks with more than $100 billion in servicing assets.
Mr. Race's departure comes at a turbulent time for the Columbia, S.C.- based mortgage bank. Originations have slowed, and as a result, analyst Gerard Cassidy of Hancock Institutional Equity Services says the division's profits will not be as high as he had forecast earlier this year.
Some industry sources say that last November's acquisition of Shawmut National Corp by Fleet Mortgage's parent, Boston-based Fleet Financial, has been tougher to digest than expected and that these problems may have rippled down to the mortgage unit.
But Mr. Cassidy said that it would be premature to write off Fleet Mortgage, since chairman Richard Mirro just took the helm in early July. Mr. Mirro, formerly the chief operating officer of Chase Manhattan's mortgage subsidiary, replaced Gerald Baker, who resigned at the end of June.
While it is unclear how Mr. Race's departure will affect Fleet, officials at Homeside said they were delighted to be able to lure away Mr. Race.
Joe Pickett, chairman and chief executive of Homeside, said that Mr. Race's Wall Street relationships and knowledge of investment banking and the secondary mortgage markets would strengthen the company's overall financial position.
The Jacksonville, Fla.-based mortgage bank was founded last March as a hybrid of Bank of Boston's BancBoston Mortgage and Barnett Banks' mortgage unit. Each bank owns a third of Homeside. The other third is owned by two venture capital firms, Thomas H. Lee & Co. and Madison Dearborn Partners.
Mr. Race said the unusual ownership structure was one of the main factors that attracted him to the company. As many banks are pondering what to do with their wholly owned mortgage subsidiaries, he said Homeside's ownership arrangement is "turning heads" and could be a model for the industry.
Homeside is inching closer to gaining admission to the exclusive ranks of $100 billion servicers, and analysts say the hiring of Mr. Race could help push Homeside over the $100 billion mark.
Todd Vencil, an analyst with SNL Securities, said that Mr. Race's knack for making sound acquisitions would benefit the company. "It's no secret that Homeside is planning on buying some stuff," he said.
At the end of August, Homeside's servicing portfolio stood at $86 billion, making it the seventh-largest mortgage servicer.