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Wednesday, September 14, 2005

California buy to extend reach in mortgages

By Richard Craver
JOURNAL REPORTER

Wachovia Corp. accelerated the pace of its West Coast expansion yesterday with its plans to buy a California mortgage bank for $83million.

Wachovia said that its purchase of AmNet Mortgage Inc., the parent company of American Mortgage Network, would expand the bank's national presence in residential mortgages.

AmNet serves more than 7,000 mortgage brokers. It has loan-production offices in 20 states, including North Carolina. The company said it wrote about $9 billion in mortgage loans in 2004 and expects to write at least $12 billion in 2005.

AmNet will remain based in San Diego and operate as a wholly owned subsidiary of Wachovia Bank. The deal, which is subject to regulatory and shareholder approval, is expected to close in the fourth quarter.

"The expansion of our residential-mortgage business reflects an important enhancement to our market-leading structured-products capabilities," said Curtis Arledge, the managing director and the head of the fixed-income division of Wachovia Securities.

It was the second time this week that Wachovia said it was going to buy a financial-services company based in California.

Wachovia said Monday that it was buying Westcorp, a financial-services company based in Irvine, Calif., for $3.9 billion in stock. That deal is projected to increase the size of Wachovia's automobile-financing business, as well as provide the bank with its first 19 branches in California.

The bank said it would continue to originate residential mortgages and home-equity lines through Wachovia Mortgage Corp.

Besides giving Wachovia more brand recognition on the West Coast, analysts said, both deals would provide the bank with opportunities to cross-sell its services to new customers.

"The deal with AmNet increases Wachovia's general presence in the California market without having to do another bank deal," said Meganne Warner, a senior analyst for SNL Financial. "I do think they're still hungry for a big bank deal - just don't have the means to do it quite yet."

"I'll think Wachovia will continue to work on their Texas and New York expansion plans in the near future.

"But after these two acquisitions, they will have a better understanding of the California market, and we will likely start seeing branch plans next year," Warner said.

Wachovia shares closed yesterday at $49, down 57 cents.