Mortgage rates are on a downward trend, but don’t be fooled – the industry’s efforts to right-shape itself from a post-pandemic boom will continue through 2023. Up to 30% of the 1,000 largest independent mortgage banks will disappear by the end of this year, either through sales, mergers, or failures amid still-high inflation and rising interest rates, according to projections from the M&A advisory firm. Sterling Point Advisors.
Thank you for reading this post, don't forget to subscribe!But american pacific mortgage ,APM), a california based retail lender About 3,600 employees and 1,500 mortgage loan originators are unaffected by the bleak outlook. Rather, APM sees this as an opportunity to expand geographically beyond its core California market into the Midwest and Southeast.
In 2022 alone, APM to acquire 11 Arizona-based branches sunstreet lending and 25 branches of the Sunstreet, Minnesota retail lender Lend Smart Mortgage and from 51 branches Amerifirst Financial Inc.
The lender also brought over 45 former retail branches Finance of America Company Inc. (FoA) closed its forward mortgage segment months later. However, Bill Lowman, CEO of APM, said the number of branches could increase from the time it was first reported, as it includes secondary branches or additional license locations.
Overall, 900 employees joined the company, Lowman said in an interview, from the four deals APM completed last year, including 540 LOs. housing wire,
However, this does not mean that APM is safe till 2022.
“We had some layoffs throughout the year,” Lowman said, declining to mention specific numbers.
The executive said the lender sees a decline of about 42% in 2022 to $13.8 billion due to the interest rate environment and the departure of the referee business, just like every other lender.
“I think industry volume is going to be down about 50%. So in that regard, we think we’ve outperformed the market,” Lowman said.
When asked how the firm obtains leads on potential deals, Lowman said it helps other lenders know that APM is collecting volume and is interested in acquisitions.
Getting leads for potential deals
“They all come in different ways – whether it’s presented to us by a consulting firm stratmore [Group]Does someone reach out to us because they know us, or is it through industry contacts,” Lowan said.
Not every deal proposal goes through, however.
APM vetted about six to eight M&A proposals in 2022 that didn’t pass the preliminary consideration stage — which the deal would bring into APM against the cost of onboarding the large number of employees.
The lender is currently deeply entrenched in California, which accounts for about 45% of its total origination volume in 2022. The goal for 2023 is to get that figure down to 40% in California, while spreading to other areas of the country.
When branches are acquired, APM brings LOs and processors down to the point that they can remain profitable.
“We do a pro forma, we work with their branch manager and say, ‘Okay, you’re fine, come over,’ or ‘You might need to reduce your staff a little bit because you’re not profitable. Are.’ We want all of our branches to be profitable,” Lowman said.
After APM acquires branches, it either leases physical office space or finds a smaller office space – which was the case for some of the America’s Finance and AmeriFirst Financial branches.
SunStreet Mortgage’s branch managers and LOs were able to keep their existing 11 branches. APM is also planning to take over a number of retail leases spread over 24 branches, although this is still under negotiation.
Branding as American Pacific Mortgage
Acquired branches may still brand themselves as their existing names but become a division of APM. While Lend Smart, SunStreet and AmeriFirst Financial continue to brand themselves under the existing names, the former America’s Finance branches now refer to themselves as APM.
“They are a part of our company policies, procedures and culture. We are an ESOP. 49% of our company is owned by its employees in the form of an employee stock ownership program, so they are a part of that. are part of the thing that is American Pacific Mortgage,” Lowman said.
Buoyed by M&A activity in the second half of 2022, Lowman forecasts 25% volume growth for APM’s production in 2023 – at a time when origins for the industry are expected to decline approximately 10 to 15% from 2022. Is.
Lowman said the California lender is in talks with “a lot of lenders.” He declined to mention further details.
“The more disruption, the more opportunity. When it’s tough for them, it’s tough for us. We went into this bear market ready to take advantage of it,” Lowman said.
