American Home Mortgage Investment Corp. announced this week that it has signed an agreement to purchase Waterfield Financial Corp., a subsidiary of Union Federal Bank of Indianapolis, which includes 46 retail, wholesale and correspondent mortgage loan production branches in 16 states.
American Home expects to purchase 100 percent of the capital stock of Waterfield Financial at a purchase price equal to the book value of Waterfield’s net assets on the closing date of the acquisition, according to the announcement.
Waterfield’s primary assets are newly originated loans carried at the lower of cost or market which American Home expects to sell shortly after the acquisition is consummated. In addition, Waterfield has a nominal amount of fixtures and other property associated with its loan production businesses that will remain on American Home’s books.
The acquisition of Waterfield is expected to close in January 2006, and is subject to customary closing conditions. American Home expects the acquisition of Waterfield to increase American Home’s loan volume and to have a limited accretive affect on earnings. Potential benefits from the transaction however are difficult to quantify and will depend on a number of factors, American Home announced.
Michael Strauss, American Home’s chairman and CEO, commented, “I appreciate that the timing of American Home’s acquisition of Waterfield is awkward given our company’s news release yesterday indicating that we expect to earn only a small profit in the fourth quarter of 2005. We have been attempting to negotiate terms to enable us to acquire Waterfield for some time, and it is unfortunate that an agreement was reached nearly coinciding with our determination that it was necessary to lower our earnings guidance.
“Still, I am glad for the opportunity to expand our production business through a book value acquisition of a proven franchise, and I believe Waterfield will further strengthen our company.” He also said, “The acquisition of Waterfield is consistent with American Home’s ongoing strategy of expanding our origination franchise through low-cost acquisitions.”
American Home Mortgage Investment Corp. is a mortgage real estate investment trust that is focused on earning net interest income from self-originated mortgage-backed securities, and through its taxable subsidiaries, from originating and servicing mortgage loans for institutional investors. Mortgages are originated through a network of loan production offices as well as through mortgage brokers and correspondents and are serviced at the Company’s Irving, Texas servicing center, American Home officials stated in the announcement.
According to a 2003 news announcement at the company Web site, Waterfield Financial was at that time one of the largest privately held mortgage companies in the United States, more than 40 offices, 250 loan officers and more than 2,300 employees, and operations in Arizona, California, Colorado, Florida, Illinois, Indiana, Maryland, Michigan, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia and Washington.
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