Mortgage & Banking Madness

NetBank Inc. reported a third quarter an after-tax net loss of $73.3 million — $42.0 million worse than in the second quarter.

As part of a capital preservation effort to significantly revise its operating plan and return to profitability, the company said its board of directors voluntarily entered into a supervisory agreement with the Office of Thrift Supervision to develop and execute a written, multiyear plan based upon the change in strategy.

The Office of Finance of the Federal Home Loan Banks announced that its 2005 combined financial report reflects revised statements for the years ended Dec. 31, 2003, 2002 and 2001 as a result of restatements at seven of the 12 FHLBs. The net cumulative effect of these restatements resulted in a $168 million reduction in retained earnings as of Dec. 31, 2004.

“These restatements were due primarily to technical misapplications and interpretations of SFAS 133, and arose mainly from the rigorous accounting reviews undertaken during the SEC registration process,” the office said in the announcement. “The majority of the FHLBanks’ hedges involved in the restatements were economically highly effective and would have been eligible for hedge accounting if they had been appropriately documented at hedge inception.”

National City Corp. will revise its third quarter 2006 earnings from $0.90 to $0.86 per diluted share to reflect an estimate that’s $21 million lower for mortgage servicing rights and an estimate $18 million higher for reserves for repurchased mortgage loans than previously reported, according to a press release.

The Cleveland-based lender said additional information related to the performance of the underlying portfolios became available after it had reported and computed estimates for the third quarter. The revised lower value of mortgage servicing rights will decrease previously reported loan servicing revenue for the third quarter to $104 million and the higher value of reserves for repurchased loans will decrease loan sale revenue to $215 million.

Fannie Mae announced that it will not file its quarterly Form 10-Q on time with the Securities and Exchange Commission because it has not completed financial statements for the third quarter.

Opteum Inc. announced that it will delay the filing its third quarter report on Form 10-Q and restate its consolidated financial statements for the first and second quarters 2006, due primarily to the application of an accounting policy by its subsidiary Opteum Financial Services LLC that was not in accordance with generally accepted accounting principles.

The Florida-based real estate investment trust believes that its restated consolidated results of operations before income taxes for the first two quarters of the year will be reduced by less than $1 million from the amount previously reported and expects an offsetting increase to consolidated results of operations for the third quarter, the announcement said.

The residential finance group of Residential Capital LLC will fully integrate its primary, subservicing and master U.S. servicing operations. This includes the servicing operations of GMAC Mortgage, Homecomings Financial and GMAC-RFC Master Servicing to form a Debt Servicing Utility for ResCap’s domestic servicing portfolios.

ResCap said its utility is a common servicing platform capable of supporting any loan product and brand or any servicing requirement.

Allied Home Mortgage Capital Corp. announced last week that it opened a branch in Braintree, Mass., and another in Haddon Township, N.J., its first in the latter city.

TCF Bank Michigan, a subsidiary of TCF Financial Corp. agreed to sell 10 branches in Michigan to Independent Bank Corp. in a deal expected to be completed in March 2007, according to a written statement. The transaction mutually benefits both banks as TCF’s branch expansion initiatives primarily focus on larger urban demographics, while Independent Bank primarily serves rural and suburban communities.

Fidelity National Financial Inc., which provides a suite of data processing, payment and risk management services, has merged with and into and Fidelity National Information Services Inc., which processes nearly 50 percent of all U.S. residential mortgages, according to an announcement Thursday.

First Banks Inc. agreed to acquire Texas-based Royal Oaks Bancshares Inc. for approximately $38.6 million in a transaction expected to be completed during the first quarter 2007, the companies reported. The merger will allow First Banks to further expand its banking franchise in the Houston market.

U.S. Bancorp said it will buy United Financial Corp. to nearly double the branch presence in Montana for U.S. Bank National Association, among other reasons. Completion of the transaction is expected to occur next quarter.

At a meeting Wednesday, FirstBank NW Corp. shareholders approved for the company to be acquired by Sterling Financial Corp., according to a press release. The deal is expected to close this quarter.

Capital One Financial Corp. received approval from the Fed on Wednesday to acquire North Fork Bancorporation Inc., a transaction expected to occur on Dec. 1, the companies announced.

On. Nov. 4, Mercantile Bancorp Inc. merged State Bank of Augusta and Security State Bank of Hamilton into Marine Bank & Trust, according to an announcement. The company decided to consolidate its Illinois-chartered banks into a single entity to reduce administrative, regulatory and compliance costs.

On Monday, Mercantile announced it completed buying Royal Palm Bancorp Inc. in a $42.7 million deal. The acquisition gives Mercantile a presence in Naples, Fla., “one of the nation’s fastest-growing and most affluent metropolitan areas.”

Countrywide Financial Corp. announced Friday that it notified banking and thrift regulators of its intent to convert its national bank charter to a federal savings bank charter.

With approval, the Calabasas, Calif.-based company, which reported third quarter volume of $113.7 billion — more than any other mortgage banker, would move from being regulated by both the Federal Reserve Board and the Office of the Comptroller of the Currency to being regulated by just the Office of Thrift Supervision.

“We believe that the OTS’s focus on the housing market and its unitary supervisory approach aligns more closely with Countrywide’s existing business activities and future diversification efforts,” said Chairman and Chief Executive Angelo R. Mozilo in the announcement.