Thrive Mortgage acquires Ohio-based regional lender

Thrive Mortgage has struck a deal to acquire American Mortgage Service Co. in the latest merger among lenders announced this year.

Georgetown, Texas-based Thrive, a lender licensed in 40 states, reached an agreement with AMSC that will expand its presence within the Midwest and South and add over 200 employees to its team. 

"We've already been licensed in all the states they are, but they've got a brick-and-mortar presence, and that's what adds to our network," said Randell Gillespie, Thrive Mortgage's executive vice president, national sales manager, in an interview.

The combined loan production volume across all channels for the two companies is expected to approach $3.6 billion by the end of 2022, Gillespie said. 

Selene Kellam, Thrive's current chief operating officer, will take over as CEO in 2023. The deal is expected to close in the fourth quarter, and financial terms were not disclosed. Roy Jones, a co-founder and current CEO, will step into a chairman role. 

The agreement between Thrive and Cincinnati-based AMSC comes as home finance and housing markets continue to grapple with plunging volumes after almost two years of record growth. The current market's normalization alongside higher interest rates and lower profit margins has been met with numerous layoffs, as well as consistent M&A activity, although perhaps not as elevated many anticipated it would be thus far, said Ken Richey, co-founder and leader of transaction services at Richey May, the advisory firm serving financial companies, including the mortgage industry.

Although current conditions would normally support deals, mortgage companies have the resources to move slowly and appear to be taking a wait-and-see approach to sell at the right opportunity, he said. 

"Many of them have plenty of capital to get through the cycle and I've been through cycles before, and so they're pretty resilient," Richey said in an interview.  "Right now, the valuations are down, and so the sellers really aren't motivated to sell to the low part of the market unless they have to."

Acquisitions could accelerate if profits remain depressed in the upcoming quarters, Richey said, but moves are likely to be based on sound business decisions instead of economic necessity.

"We'll see isolated financial-pressure based transactions, but for the most part, companies most often are looking for a partner to sort of be better together than they are apart," he said, 

That was the reasoning behind Thrive's decision to acquire AMSC, according to Gillespie, who cited its reputation and high rate of staff retention, in addition to the complementary network. 

"They've been around for almost 50 years, so they certainly know how to make it through tough times. And they've done it with incredible retention of their people," he said.

In another sign of how the environment has shifted in the mortgage market, Toronto-based real-estate brokerage platform Real Brokerage this week also announced a purchase of fellow broker LemonBrew Lending Corp., the New Jersey-based company that is licensed as a loan originator in several other states.

Business deals have not been limited to the originations side of the industry either. Last week, Select Portfolio Servicing announced it would acquire Rushmore Loan Management Services, while the mortgage technology space continues to chart the course of the merger between Black Knight and ICE Mortgage Technology.  

At the same time, some mortgage lenders have responded to the diminished production volumes this year with the selloff or elimination of business divisions, particularly correspondent and wholesale channels.