M&A Deals: Capital One Buys Hibernia, Regions Sells
Credit card giant Capital One Financial here has agreed to buy Hibernia Corp., New Orleans, one of the largest lenders in Louisiana, for $5.3 billion in stock and cash.
The deal, once completed, will bolster the credit card company's presence in the residential mortgage market.
Late last year, Capital One acquired eSmartLoan, an online originator of home-equity loans from National Bank of Kansas City, paying $155 million in cash. (Capital One also bought a related escrow company from eSmartLoan's management.)
Hibernia National Bank is the largest residential lender in the New Orleans metropolitan area, according to figures compiled by the Federal Reserve under the Home Mortgage Disclosure Act.
However, in the fourth quarter, Hibernia's residential loan production fell dramatically to $150 million compared to $911 million in the year-ago quarter. (An official at Hibernia blamed its production falloff on declining refinancings.)
Not only is Hibernia's residential production off, but last fall the bank exited the servicing arena, selling its $11 billion portfolio to CitiMortgage of St. Louis. (A few years ago it exited the warehouse lending business as well.)
Capital One services $79.9 billion in receivables - most of it credit cards or auto loans.
The purchase, once completed, will give Capital One 293 branches in Louisiana and Texas. The sale is expected to close in the third quarter.
In other mortgage-related deals, Regions Financial, Birmingham, Ala., has agreed to sell its wholesale mortgage operation to M&T Bank Corp., Buffalo, N.Y., for an undisclosed amount.
At year-end, Regions ranked 30th among residential wholesalers, M&T, 40th. Combined, the two wholesale divisions will rank 25th, based on fourth-quarter production figures compiled by this newspaper. Regions Mortgage table-funds about $3.5 billion a year.
Mortgage company chairman Robert Goethe said remaining in the wholesale channel would not "further the company's core strategies of growing its banking franchise and cross-selling Regions' products and services to mortgage customers."
It was widely known in the industry that the wholesale division of Regions was on the auction block.
The sale does not include Regions' nonconforming wholesale division, EquiFirst, which is based in Charlotte, N.C. Regions said it will remain a correspondent lender of both prime and subprime loans.
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