McLean Mortgage halts M&A talks with Congressional Bank
McLean Mortgage is not going forward with a potential acquisition by Congressional Bank of Bethesda, Md., saying reaching an agreement that made sense for all parties wasn't possible.
"There are many advantages to being part of a depository and that was very attractive," said McLean Mortgage President and CEO James Nader. Referring to the $950 million-asset Congressional Bank, he said "they're a class organization." He would not comment further on why the transaction fell apart beyond that, along with what was said in a press release.
"Months of due diligence was performed by both sides for this transaction as well as by our advisers, but in the end reaching a final agreement that made sense for all parties wasn't possible," Nader said in the release. "We are very proud of our relationship with Congressional Bank and hope to continue to enjoy the mutual benefits of that relationship for years to come."
When gain-on-sale margins get tight for independent mortgage bankers, depositories are seen as a source of liquidity to support operations.
In addition, mortgage lenders and their loan officers are exempt from certain state regulations, including licensure.
In the summer of 2018, Fairfax, Va.-based McLean entered into an agreement in principle with Congressional Bank. The negotiations were started by then-CEO Larry Patrick Peavley. Peavley died on Dec. 23, and Nader, who was at the time the president and chief operating officer, took on his current role.
But nearly three months later, McLean's board declined to further pursue the transaction, the company said in the press release.
In 2018, McLean originated $1.58 billion. It predominantly sells its originations into the secondary market on a servicing-released basis. It does have a very small, $60 million mortgage servicing portfolio. It is licensed in 10 states and the District of Columbia.
Going forward, "we're just going to continue operations as usual," Nader said.