Taylor, Bean Says Thrift Deal's Not About Liquidity

A mortgage company buying a thrift: must be a funding play, right?

Surprisingly, Taylor, Bean & Whitaker Mortgage Corp. says it has a different motivation for buying Platinum Bancshares Inc., the Rolling Meadows, Ill., parent company of the $110 million-asset Platinum Community Bank.

The Ocala, Fla., wholesale lender — which buys loans from community banks — said it plans to use Platinum to showcase the benefits to such institutions of using Taylor, Bean's technology and services.

"Liquidity through the bank was not a reason for the purchase," said Ray Bowman, Taylor, Bean's president. "Our objective in buying this bank is we want to show other banks what great results the mortgage department can produce."

Of course, with the credit markets in turmoil, the reliable access to funds that comes with a depository can't hurt. Countrywide Financial Corp. and IndyMac Bancorp Inc. have credited thrift deposits with helping them slog through the downturn.

"Our volume is extremely strong, but we're subject to the same credit parameters as everyone else and no one wants to lend money to mortgage bankers," Mr. Bowman acknowledged. "It's very difficult to do anything but agency-eligible loans, and even those are harder to do."

Still, he said, with $30 billion of annual production and a servicing portfolio of $62 billion, "our business is as strong as it's ever been, and we attribute it to the niche with community banks that are weathering the storm a little bit better."

Taylor, Bean signed the deal to buy Platinum with little fanfare last month. The lender would not say how much it agreed to pay for the thrift. (Both companies are privately held.) The deal requires the approval of the Office of Thrift Supervision and is expected to close in the second or third quarter.

Platinum has made money in only two of the years since it was founded in 1999; it lost $5.5 million in the first nine months of last year, mostly from writedowns of mortgage assets. A subsidiary, Platinum Home Mortgage Corp., was not included in the deal. After the thrift is sold, some of its current executives would move to Platinum Home Mortgage, Mr. Bowman said. Taylor, Bean has recruited a banking veteran to run Platinum, he said, but he could not disclose the executive's name because he had not yet resigned from his job.

Taylor, Bean also plans to open a Platinum Community branch in Ocala to serve the wholesaler's 2,600 employees "almost like a credit union," Mr. Bowman said.

Under a deal signed last year, more than 800 member institutions of the Independent Community Bankers of America sell their loans — including the servicing rights — to Taylor, Bean. The banks also use the wholesaler's technology, such as the Community Banks Online origination system and the Taylor Made Payments system, which lets borrowers make monthly payments at the originating bank. The bank wires the funds through the automated clearing house to Taylor, Bean. The arrangement "gives the bank lobby traffic and they act as a lockbox for" Taylor, Bean, Mr. Bowman said.

David Petro, the president of ICBA Mortgage, a for-profit subsidiary of the trade group, said, "Taylor, Bean has the product and marketing tools to help community banks compete on price."

Acquiring Platinum would give Taylor, Bean an opportunity to "help community banks recognize and see some of the benefits" of offering mortgages, Mr. Petro said. "This is a way for them to test in a real environment instead of sitting at the mortgage company telling community banks to use their products."

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