Talk about odd timing.
Solera National Bank in Lakewood, Colo., has let the mortgage giant Countrywide Financial Corp. set up shop inside its lone branch to offer home loans to Solera customers.
What is strange about the joint venture, of course, is that Countrywide is selling itself to Bank of America Corp., and even Paul Ferguson, Solera's president and chief executive, acknowledges he is not sure what will happen to the arrangement once Countrywide is folded into B of A.
"There are some uncertainties," Mr. Ferguson said in an interview Thursday.
B of A, which said Thursday that it expects to close the deal by July 1, has said it would eliminate the Countrywide brand. That would appear to leave the $50 million-asset Solera with two choices: Terminate the agreement, or keep it going with the nation's largest retail banking company as its partner.
Mr. Ferguson has not had discussions with B of A, but he did not dismiss the idea of letting the Charlotte giant make home loans through its branch. Because B of A has no branches in Colorado, he does not view it as a competitor, he said.
Scott Silvestri, a spokesman for B of A, said he could not speculate on whether it would go along with such an arrangement. It would be a first — B of A currently has no agreements in place to make home loans to community banks' customers.
Also unclear is what might become of other agreements in which Countrywide originates home loans for community banks.
Countrywide officials did not return calls for comment.
Solera, which opened last year, is primarily a commercial bank targeting the Hispanic community. Mr. Ferguson said it decided to let Countrywide offer mortgages in its single branch, as well as future branches it plans to open, because more customers have been asking for home loan products.
"We are primarily a commercial-focused community bank, [but] we do have a tremendous number of retail customers and a large number of requests for residential mortgages," Mr. Ferguson said. "With this partnership, we are able to offer them a complete menu of residential product services that we wouldn't be able to offer ourselves."
Countrywide began offering home loans through the Solera branch Monday. Two Countrywide lenders with experience working in the Hispanic community are stationed inside the branch in a newly designated mortgage section with Countrywide signage.
How long the partnership lasts, however, remains to be seen.
"We take Countrywide at its word that they have had discussions with Bank of America," Mr. Ferguson said. "We'll continue to evaluate the arrangement on an ongoing basis to make sure it makes sense after the merger is completed."
Larry Martin, the president of the Denver consulting firm Bank Strategies LLC, said most small community banks do not offer their own mortgage products, and many sell products from larger companies under a private label. It is fairly unusual for a large company to have a physical presence in a community bank's branch, he said.
The arrangement could create cross-selling opportunities for Solera, Mr. Martin said. "It certainly makes it visible to their clients that they offer mortgage products, and if that office is developing business on its own, it will create more traffic into Solera's branches. That would enable them to sell other banking products."
There could be a downside if B of A nixes the agreement shortly after completing its purchase of Countrywide, he said. "At some point in the future, if they leave, Solera is faced with either replacing or rationalizing to their customers why that office isn't there anymore."
Countrywide would not be the only financial services company occupying space in Solera's branch. Last month Solera announced an agreement with Allstate Insurance Co. and a local insurance agent to open a satellite office in the branch. Future Solera branches would also house Allstate offices.
First National Bank of the Rockies, a $430 million-asset unit of FNBR Holding Corp. in Grand Junction, Colo., also has a joint venture with Countrywide. Bruce Penny, First National's chief credit officer, said he is unsure if the arrangement would continue after the Calabasas, Calif., lender is sold.
"We can't talk to what will happen, because we don't know," he said.
First National's partnership, established two years ago, is different in that each company owns 50% of a lender called First National Bank of the Rockies Mortgage Powered by Countrywide.
Mr. Penny said keeping the partnership going would make sense for B of A, simply because it would generate business in a region where it does not have much of an operation.
He said he is open to the idea of a joint partnership with B of A, though he likely would push for a name change.
"We aren't going to have First National Bank of the Rockies Mortgage Powered by Bank of America, I can tell you that," he said.
