RAC Financial Group Inc., Dallas, is continuing an ambitious acquisition strategy, announcing last week its intent to buy Mortgage Plus Inc., Denver.
Terms of the agreement were not disclosed, but one analyst said that RAC Financial is getting a "very, very good deal."
"There's consolidation occurring in the industry," said Daniel T. Phillips, RAC's chief executive. "Part of our strategy is to participate in that consolidation aggressively."
RAC Financial and its subsidiaries will now operate under the name First Plus Financial. The common name will let First Plus build recognition and achieve efficiency in its advertising budget, Mr. Phillips said.
The company's appetite is not sated yet, and First Plus will be looking for additional acquisitions, he added, though improving efficiencies and refining existing products will take up about 60% of the company's efforts. The company is also investigating non-real-estate assets, he said.
Mortgage Plus originates conventional mortgages and Title 1 home improvement loans through offices in Seattle, Denver, and Atlanta and through a telebanking division in Denver. The company also originates government-guaranteed Title 1 loans and conventional second-lien loans on a wholesale basis through offices in Denver, Chicago, Houston, Atlanta, and Newport Beach, Calif.
Mortgage Plus and RAC Financial make a strong match, Mr. Phillips said, because they share the same technology. Mortgage Plus is a loan correspondent for RAC Financial, among other lenders.
The deal could bring RAC Financial an additional $80 million to $90 million in originations, according to an analyst.
Once the merger is complete, the Denver telebanking facility will be an operations center for First Plus Financial's three subsidiaries: First Security, Remodelers National Funding, and Mortgage Plus. All three will change their names to First Plus Financial.
First Plus also plans to build a telemarketing facility in Dallas and expand its 700-plus-employee staff by 50% in the next 18 months, Mr. Phillips said.
Mortgage Plus will continue to be managed by its current executives after the acquisition.
The deal is subject to execution of a definitive merger agreement and approval by both boards of directors.
In the 24 hours after last Tuesday's announcement, RAC Financial's stock price rose $2, to $26 a share.
