Irwin Mortgage Corp. is selling 40 retail and net branches and getting out of net branch and credit union lending through a pair of deals announced Monday.
Irwin Financial Corp. said that in one of the deals the mortgage unit agreed to sell 23 retail and retail/net branches; its Concord, Calif., loan operations center; and its credit union operations to American Home Mortgage Corp. of Melville, N.Y.
In the other one the unit is selling 17 retail branches and its Carson, Calif., retail loan operations center to Pinnacle Financial Corp., a retail and wholesale lender based in Orlando.
Irwin Mortgage will keep 21 traditional retail branches, mainly in the Midwest and East.
Irwin Financial said in a press release that the moves would help the unit "concentrate on the growth of its most profitable channels in wholesale, correspondent, and consumer direct lending" and sharpen "its focus in traditional retail lending" on low- to moderate-income borrowers and emerging markets.
The operations to be divested did less than 20% of its originations last year, the company said.
Irwin said the deals are expected to close by early April and that the mortgage unit expects to cut 100 managerial and other personnel at its headquarters in Indianapolis.
Both Pinnacle and American Home confirmed they would keep the employees working at the branches and operations centers.
American Home, a national lender based in Melville, N.Y., became a real estate investment trust last year. The Irwin deal will mean new sources of originations to fuel growth in its portfolio.
Michael Strauss, American Home's chairman and chief executive, said in an interview Monday that his company wants to build the proportion of securities backed by self-originated loans in its $7.5 billion REIT portfolio.
"We are pursuing a strategy of substituting self-originated securities for market-bought securities, because we have been able to originate [our own loans] at less than the capital markets cost" to acquire them, Mr. Strauss said. "It's our desire to enhance our ability to originate loans both for the REIT portfolio and for sale because it drives our revenue model."
Of American Home's $23 billion of originations last year, about $8.5 billion went into the REIT portfolio, while about $5 billion of the loans were retained in the portfolio as securities.
Mr. Strauss said the branch acquisitions would bolster American Home's network of 350 branches. Though some of the ones being acquired are in northern California, where American Home already has branches, "we're excited about the chance to increase our market share in northern California and in Arizona and Colorado and other states," he said.
Mr. Strauss said he expects that the net branches will become traditional retail branches.
The credit union operations, he said, will give American Home inroads into lending at about 50 credit unions, mainly on the East Coast.
"We actually go on site at our credit union partners and offer our products to credit union members at their offices," Mr. Strauss said. American Home will essentially "step into Irwin's shoes in its relationships and agreements with credit unions and … will serve them in the same way Irwin did with the same staff."
American Home will keep "certain loans for permanent investment," Mr. Strauss said. On others it will "originate and service them and sell them to the credit unions."
The Concord site is a retail operations center. It has about a dozen other operations centers, Mr. Strauss said.
He said American Home will keep the branch and operations center employees as well as the salespeople from the credit union operation, but not all of its staff.
Pinnacle, a national retail and wholesale lender, has 55 retail branches, mainly on the East Coast. This acquisition would give it an "out of footprint" western retail presence, a spokeswoman said Monday.
It will boost Pinnacle's head count by about 25%, to just under 1,000, and the move is part of an "aggressive growth strategy over the next few years," the spokeswoman said.
Pinnacle, primarily a purchase lender whose originations are split in half between its retail and wholesale units, produced more than $2.7 billion of loans last year. It has wholesale operations centers in Phoenix and Orlando and retail operations centers in Orlando and in Vienna, Va.
