The subprime lender BNC Mortgage has agreed to acquire America's Lender Inc., an on-line wholesale lender, for an undisclosed price.
Both companies are based in Irvine, Calif.
The deal is a diversification move by BNC a fast-growing specialist in buying and selling nonconforming loans for cash.
With the acquisition, "50% of our business will be subprime and 50% will be prime," said Peter R. Evans, vice president of finance at BNC. "We started a division to do prime loans, and this is a faster way to increase diversification."
America's Lender's Web site is designed to link 300 independent mortgage brokers to an automated underwriting system, giving them access to borrowers' credit reports and letting them receive loan approvals on-line.
Aaron Wade, vice president of secondary marketing at America's Lender, said there would be no changes after the sale in the way the company operates.
In the year that ended June 30, America's Lender originated $843 million in prime mortgage loans, 30% in its retail lending group.
Steven Eisman, a CIBC Oppenheimer Corp. analyst, said BNC escaped the troubles that hit other subprime lenders in the past year.
Because BNC does not securitize loans-it only sells them for cash-it is in better shape than companies that took hits and restated earnings last year when prepayment assumptions on their securities proved overly optimistic, Mr. Eisman said.
Such companies "will be making less money for a while," he said. "Because of what's happening in the home equity market, prices have fallen."
Mr. Eisman said he does not expect other subprime to get into prime lending to protect themselves from the home equity market. "The other guys don't have any money to do anything," he said. "They are all finished."
BNC closed $788 million of loans in the year through last June, up from $532 million the preceding year and $200 million the year before that.
Mr. Evans said the America's Lender deal has been structured as an asset sale. The assets include loans, personnel, management, pipeline, facilities, and leases.
"It's just a way to buy the company but not have the liabilities," Mr. Evans said. "Eventually the name 'America's Lenders' goes away."
The deal is expected to close by March. The companies declined to discuss the conditions of the agreement.