A New Mexico mortgage banker is pursuing an aggressive growth strategy, acquiring mortgage banking and mortgage brokerage firms all over the country.
Prime Source Mortgage Holdings, Inc., the parent of Prime Source Mortgage Inc., is a Roswell, NM financial institution that has made or announced three acquisitions so far this year and is hungry for more.
“We have the capacity. Now we’re ready to grow,” said Rick Roque, senior vice president for growth and strategy at the 20 year old company.
PSMH currently has 30 offices around the country. “I suspect we’ll probably double that by the end of the year,” said Roque.
The firm is licensed in around 22 states, he said, and by yearend he expects it to be licensed in 35 states. “Our focus is smart, tactical growth,” he said. “Our goal is to have a significant presence in key markets around the country.”
What triggers his interest in a company as an acquisition possibility? He’s looking for a good quality company in a desirable MSA (metropolitan statistical area), with a good, steady production pipeline and a “higher than normal” market share.
“I have an acute understanding of companies that have done well, and those that struggle,” he said.
The firm’s model “leverages risk and enhances commitment to our consumers and shareholders,” he said. It employs 60 people, Roque said, with more on the way. Jeffrey Smith is the president and chief executive of the mortgage company, while Ron Hanna chairs the holding company.
Its offices are based mainly in the Southwest and Midwest, but recent acquisitions have opened the New York, New Jersey and New England markets to them.
A key element in PSMH’s acquisition strategy is its status as a stock-owned company, Roque said. (PSMH is traded on the Over the Counter Bulletin Board. It was trading recently for $0.75. It went public in October 2005.)
Stock status enables it to offer cash and stock to owners of prospective mortgage bankers and brokerages. Roque said he likes both kinds of companies.
“I don’t really have a preference. I love dealing with brokers because they’re passionate about the business,” he said. “I love dealing with bankers because they know the business.”
Many of PSMH’s loan officers and consumers own stock as well, Roque said. Having an ownership stake in the company sets PSMH apart from so-called “net branch” firms, where individual offices can be jealous of each other and the home office. Having stock also helps consumers to do repeat business with the firm, such as on refinancings of mortgages.
He is expecting to be able to announce an inflow of talented people in the next 30 days, including a nationally-known mortgage banker, and he thinks loan production at the company can jump by $40 million in the next 45 days and by $90 million in 90-120 days, due to its acquisitions.
So far this year PSMH has acquired UCMC, based in New Jersey, and announced it will acquire Brookside Mortgage in Tulsa and American Trust Mortgage Inc., based just outside of Boston.
It has a warehouse relationship with Spirit Mortgage in Oklahoma and sells its loans to investors via a correspondent status with big mortgage lenders such as Wells Fargo and Bank of America, Roque said.
Roque was formerly with vendor Calyx Software and on his own as an industry consultant. He said that he studied mortgage company production as a result of the Calyx affiliation.
