Mergers and Acquisitions; Jumbo Loan Trends
Today on “Jobs Friday,” don’t think California has some pull? It is home to 1 in 8 Americans and its economy is the 6th largest in the world. It has 58 counties; there are a total of 3,143 counties and county-equivalents in the United States. I mention this not to give you some trivia for Cinco de Mayo, but to show how narrowly confined the much-discussed coal jobs are: 50 percent of the U.S. coal mining jobs are in a mere 25 counties in the United States, and the number of coal mining jobs roughly equals that of florists in the U.S. (Nothing against either profession!)
Bank News
Apparently, we've entered in to bank merger & acquisition season, if there is such a thing. Things are heating up, which is interesting as the number of announced mergers this year has declined slightly. S&P Global Market Intelligence reports the number of banking sector deals for Q1 2017 was 58 compared to 61 (Q1 2016) and 65 (Q1 2015) for the same quarter in the prior 2 years. And are there green shoots in banking? Bank Director Magazine reports the FDIC has approved 5 de novo bank applications since 2009 or about 1 per year vs. an average of 154 per year for the 8 years prior to the crisis.
Just in the last week a whole new slew of bank M&A announcements came out from around the nation. In California, Central Valley Community Bank ($1.4B) will acquire Folsom Lake Bank ($200mm) for about $33.6mm in stock (100%) or about 1.71x tangible book, Bank of the Sierra ($2.0B) will acquire Ojai Community Bank ($257mm) for about $35.7mm in stock (100%), and Seacoast Commerce Bank ($572mm, CA) will acquire Capital Bank ($306mm, CA) for about $53.6mm in cash (20%) and stock (80%) or about 1.96x tangible book.
In Kansas First Commerce Bank ($65mm) will acquire The State Bank of Blue Rapids ($46mm), and Mid-America Financial Corp (KS) will merge Morgan Federal Bank ($113mm, CO) into Golden Belt Bank ($138mm, KS). Towne Bank ($8.0B, VA) will acquire Paragon Commercial Bank ($1.5B, NC) for about $323.7mm in stock (100%) or roughly 2.37x tangible book. South State Bank ($9.0B, SC) will acquire Park Sterling Bank ($3.3B, NC) for about $690.8mm in stock (100%) or roughly 2.43x tangible book.) National Bank of Commerce ($2.0B, AL) will acquire Patriot Bank ($155mm, FL) for cash and stock. First Tennessee Bank ($30.0B, TN) said it will acquire Capital Bank ($10.0B, NC) for $2.2B in cash (20%) and stock (80%) or about 2.0x tangible book. First Bank ($4.4B, NC) will acquire Asheville Savings Bank ($795mm, NC) for about $175mm in cash (10%) and stock (90%).
Things aren't always peachy, of course. BB&T said it will close 100 branches of its total footprint of 2,193 or about 5% this year. Bank failures still happen but at a much, much slower pace than in the last few years. There have been only four this year, but recently the FDIC closed First NBC Bank ($4.7B, LA) and sold it to Whitney Bank ($25B, MS). Whitney picks up 29 branches, deposits excluding CDs, IRAs and brokered (for a $35mm premium), and $1B in assets. This is the largest bank failure since 2015 (which was Doral).
Jumbo News
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.23% from 4.20%, for 80% LTV ratio loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.18% from 4.15%, for 80% LTV loans. The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 4.06% from 4.03%, for 80% LTV loans. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.51% from 3.46%, for 80% LTV loans. The average contract interest rate for 5/1 adjustable-rate mortgages increased to 3.29% from 3.22%, for 80% LTV loans.
MWF posted a new email address for Jumbo scenarios. Any questions or scenarios regarding any MWF Jumbo product should be addressed to: scenariosCU@mwfinc.com
Mountain West Financial has updated and changed various underwriting guidelines. Effective May 1, 2017 a one-on-one homebuyer counseling session in addition to the homebuyer education class is required on its CALHFA program. Changes have also been made to its JUMBO II product which include information on Ineligible Transactions, Second Home and Investment Properties and Gift of Equity.
MB Financial Bank's Jumbo Enhancements include 90% LTV Purchase to $1.5 Million, and Non-Owner Occupied to 60% LTV.
NewLeaf announced the new NewLeaf Prime Jumbo and NewLeaf Prime 90% High LTV Products - QM products that must meet all ATR requirements. These products are available immediately.
Effective immediately, loans with properties in the state of California, home to plenty of jumbo loans, are eligible for purchase by Fifth Third Mortgage Company.
Capital markets
What are bond traders talking about these days? In no order, the NBA playoffs, overall business spending accelerating in March, the Stanley Cup, the sharp decline in oil prices, rising unit labor costs, Wednesday's FOMC statement, a flat yield curve, and the House of Representatives passing a partial repeal of the Affordable Care Act. (The bill still needs to get through the Senate, which could be a more difficult undertaking but that would pave the way for making corporate tax cuts easier to do. And corporate tax cuts could spur the economy, which in turn typically leads to higher rates.)
Yes, that's a lot to talk about, but it all conspired to weigh on bond prices and drive rates higher: as a proxy for other rates, the 10-year T-note worsened .375 to yield 2.36% while the 5-year and MBS prices worsened .125-.250 depending on coupon and security type.
Do the markets care about unemployment when there is a 90% chance of the Fed increasing short-term rates at its meeting next month? Yes. Say what you want about the validity of the numbers, the April employment numbers came out: nonfarm payrolls (+211k, but March was revised downward), the unemployment rate (4.4% - strong), and average hourly earnings (+.3%). After the employment numbers we find rates roughly unchanged versus Thursday's close: the 10-year is yielding 2.35% and agency MBS prices have barely budged.
Products
Did you just get a mysterious cube in mail? I did. The Money Source Inc. sent me this intriguing package to announce SIME (pronounced Sim-mee) which stands for Servicing Intelligence Managed Easily. Get a sneak peek at getSIME.com.
In 2015, 28% of underwriters worked remotely according to the STRATMOR Compensation Connection Survey. STRATMOR believes the percent of Underwriters working remotely increased in 2016. Did you change where your Underwriters work in 2016 and how does that compare with your peers? Participate in our 2017 STRATMOR Compensation Connection to find out. This year we're digging deeper into benefits to look closer at PTO, Healthcare, 401K, and Educational Assistance offerings by lenders. The deadline has been extended to May 15, so don't miss out on your chance to find out how your compensation, compensation plans and benefits compare to industry standards and peers. To participate, visit our site. For questions regarding this program, please contact us at compconnection@stratmorgroup.com.
Nationwide mortgage lender Cardinal Financial Company, LP, launched its wholesale division and proprietary technology. "Cardinal Financial's end-to-end digital solution significantly streamlines the wholesale loan process by improving the loan manufacturing process from point of sale to close. The company's vision to lead and disrupt the mortgage industry by modernizing the way home loans are obtained is furthered by this significant initiative."
Upcoming Events
"2017 is an inflexion point for the mortgage industry, with many unknowns swirling around. To help you make sense of all these unknowns, String's 2017-Opportunies Webinar is pleased to host one of the most insightful housing market insiders: Doug Duncan, Fannnie Mae's Chief Economist, will share his insights on the current state of the housing market with a special focus on the current stage of the business cycle and discussion about whether public policy will extend the expansion, continuing housing affordability challenges in light of limited new construction and homes available for sale, and Fed policy and mortgage market conditions.
Join Garth Graham of STRATMOR Group and Todd Ballenger of Vantage Production for the webinar Borrower Satisfaction Insights on Tuesday, May 9 at 1 p.m. ET. Find out why measuring borrower satisfaction is one of the most critical ways to understand the impact of the loan process on your business. Click here to register now.
On June 13th at the Jacksonville Community Center, FHA is offering a free Appraisal Training. On June 14th FHA's free Underwriting Training is available at the Jacksonville Community Center.
Job Announcements
"Retail loan officers should know that loanDepot, now the nation's 5th largest retail lender, has been releasing some exciting news lately. Recall that imortgage and Mortgage Master joined the "loanDepot family" in 2013 and 2015 respectively, and since then, the company has been leveraging resources, systems, processes, and technology for the benefit our LOs. As of May 1st, the combined entity began operating under the loanDepot brand name to officially represent the nation's 5th largest retail lender. #TeamloanDepot is now comprised of over 6,000 employees operating out of 180+ locations nationwide. One reason for brand alignment was to bring the organization onto one origination platform. mello, loanDepot's end-to-end Digital Lending Platform, is now being rolled out to loanDepot's retail loan officers after a $100 million investment. The platform aims to transform the lending experience: Check out the mello launch video here. The future is bright for this unified powerhouse. Learn more by watching this video or reading their story."
Carrington Mortgage, Retail and Wholesale Lending, are looking for experienced and motivated professionals to join their team. "We offer great opportunities to grow your sales, underwriting, and management careers with a national lender. Wholesale Account Executives in the West: CA, WA, TX, CO, & UT, and East: FL, GA, AL, MS, SC, & NC. DE underwriters in Anaheim CA and Windsor CT. Plus, we have retail loan officer opportunities available nationwide. Contact John Cervantes (949.517.7127) for more information.
"Our business is growing fast!! It's a result of a work environment where people have fun and where innovation and creativity are strongly encouraged. If that sounds good to you, then we should meet. Guaranty Bank & Trust is currently seeking Retail Mortgage Loan Originators in the Dallas and Denton markets. Guaranty has been named One of the Best Companies to Work for in Texas for 8 straight years by Texas Monthly magazine. Please direct inquiries and resumes to Twila Baker or apply online. Equal Opportunity Employer - Veterans/Disabled and other protected categories. Member FDIC and Equal Housing Lender.
In MI job news, Essent Guaranty continues to grow and is looking for an Account Manager in the KC/KS area. "Essent Guaranty, a leader in the mortgage insurance industry and a great place to work, is looking for a results-driven Account Manager to call on mortgage lenders, banks, and credit unions. Essent offers a very competitive compensation and benefits package and makes it easy for serious professionals to transition. As an Account Manager, you will drive profitable mortgage insurance business using a risk centric approach and a goal of delivering value and added credit enhancement solutions. If you have significant mortgage lending experience and a minimum of 5 years of relevant business development experience within the financial services, mortgage, secondary markets, capital markets or mortgage insurance industries, this may be the job for you. If you are interested in joining our team, please send a resume to Robyn Donnelly, Human Resources Administrator.
"Commerce Home Mortgage Wholesale, one of the top mortgage employers in the country, is leading a nationwide expansion effort and is looking for strong Wholesale Account Executives and Regional Vice Presidents in the following key markets: AZ, CA, CO, FL, GA, OR, MD, TX, UT & WA. Headquartered in Irvine, CA, CHMW offers a full product line, the latest technology and strong operational support to provide our broker partners with exceptional customer service and quick closings. In addition to great compensation packages, our office culture is fun and dynamic and we are open to remote, "work from home" scenarios for the right candidates. Check out our careers site and reach out to Mike Massella at 949-629-3560 to learn more."