First Horizon and IBERIABANK complete merger

First Horizon National Corp. (FHN) and IBERIABANK Corporation have completed their previously announced “all-stock, merger of equals,” creating a combined company with $79 billion in assets, $60 billion in deposits and $58 billion in loans, as of March 31, 2020.

Headquartered in Memphis, Tennessee, the company will operate under the First Horizon name and trade its common shares on the New York Stock Exchange under ticker symbol “FHN.” Depositary shares representing interests in First Horizon Series B, C and D preferred shares trade under the ticker symbols “FHN PR B,” “FHN PR C,” and “FHN PR D,” respectively.

Shares of IBERIABANK ceased trading before the opening of the NASDAQ stock market on July 2, 2020.

Under the terms of the merger agreement, IBERIABANK shareholders received 4.584 shares of First Horizon for each IBERIABANK share they own. As a result 44% of the combined company is held by legacy IBERIABANK shareholders, and approximately 56% is held by legacy First Horizon shareholders.

“The completion of this merger marks a significant milestone,” said Bryan Jordan, president and CEO of First Horizon. “The combined company’s enhanced scale, diversified business model and expertise in financial services uniquely position” the company to accelerate its growth for the long term.

The merger “reflects hard work, dedication and collaboration across the platforms as we work to build a premier southern-based bank,” said Daryl G. Byrd, Executive Chairman of the Board of First Horizon. The plan is “to combine the best of both companies,” which bring legacies that include more than 288 years of combined financial experience.

The bank now operates 460 bank locations in 11 states across the Southeast.

Until all the systems are integrated, First Horizon or IBERIABANK branches, websites, mobile apps, financial advisors and relationship managers will continue to serve their respective clients. IBERIABANK will adopt the First Horizon name following the complete conversion of operating systems, which should occur by mid 2021. Meanwhile clients will have access to the full ATM network of both banks for cash withdrawals at no charge.

The executive leadership team is comprised of members from both companies, as is the Board of Directors, which consists of nine directors from First Horizon and eight directors from IBERIABANK.



LoanStream provides liquidity for non-QM market

Many lenders exited the non-qualified mortgage (Non-QM), non-agency lending space during the initial stages of the COVID-19 pandemic. Now, citing a need to fill that void, LoanStream Mortgage has expanded its product offering and is calling of peers to follow suit.

As of July 1, 2020, the Irvine, Calif., based lender is offering all of its Non-QM loan options including the return of many of its original programs, according to a company statement. Some of the expanded programs include loan-to-value (LTV) ratios to 85%, debt service coverage ratio LTVs to 80%, FICO scores down to 640, and loan amounts up to $3 million.

Despite the COVID-19 pandemic, LoanStream continued to provide financing for non-agency borrowers with a limited product set, said LoanStream’s CEO, Rabi Aziz. “We were one of the first to provide financing back in 2013. We continue to be committed to the Non-QM space.”

While the market has changed, he added, the number of loans in forbearance, companies stuck with old product, “and challenges related to warehouse financing will plague the space for a while.” Yet, these market conditions make it more important than ever for LoanStream, “to help fill that void.”

LoanStream is a privately held diversified mortgage lender specialized in residential financing through mortgage brokers, bankers, and through its consumer direct branch network for over 30 years.

The company has released the expanded loan programs through its wholesale, correspondent, and retail channels, which operate on LoanStream’s proprietary QualOne AUS (automated underwriting system) platform. All loans are underwritten in-house.

This crisis had nothing to do with credit or performance of the Non-QM products, said Serene Vernon, LoanStream’s President. “The government jumped in and propped up agency products, but left the non-agency space to fend for itself. We hope by expanding so early after the crisis that others will follow.”

CastleRock sells 15,000 REOs since 2010

The supply of bank-owned, previously foreclosed homes known as REOs, or real estate owned properties is relatively small. But when available, REOs bring affordable housing to market. Earlier this year, CastleRock REO, a wholesale buyer of single-family REO homes across the US, reported it has sold more than 15,000 homes since the company’s inception in 2010, which amounts to more than $300 million. 

Headquartered in White Plains, New York, the real estate investment firm sells REO homes to owner occupants, first-time buyers and investors, through banks and other financial institutions.

The company’s initial goal, according to its co-founder and president Jason Epstein, was to leverage the REO niche to provide a supply of low-cost homes to local communities across the US in the midst of the country’s economic downturn. CastleRock continued to grow revenue “through its long-standing relationship with banks,” and its proprietary software designed to match buyers with low-cost properties, he said.

In 2019, CastleRock’saverage inventory of foreclosed houses grew to 1,000 homes “at any given time,” providing listings at a discounted price, said co-founder and CEO, Victor Naar. On numerous occasions, CastleRock has to be able to sell homes back to the original occupants who lost the home from the bank “at up to 80 percent less than their original mortgage amount.”

Currently, the COVID-19 crisis coincides with a declining foreclosure market alongside supply and affordability challenges.

Even after buying and selling 15,000 homes, CastleRock’s objective remains the same, Naar explained. “We want to give buyers a better value alternative to acquiring a house through traditional routes. We do that by bulk buying previously foreclosed homes from financial institutions, and passing on the discount to the buyer.”

Typically, the company said it sells homes priced at around $50,000 or less and offers buyers a discount of up to 20% on market value. CastleRock’s average turnover time between purchasing and selling homes is 110 days.

“Institutional sellers are often willing to take lower prices from CastleRock because we can purchase either large blocks of properties, or one house at a time,” according to Naar. “And we close cash, we close quickly, and most importantly, if we put a bid on something, we close on it at the bid price 99% of the time.”

The preferred marketplace is Auction.com, where CastleRock is one of the most active and reliable buyers, according to James Harp, senior vice president of operations at Auction.com, and “offers readily available funding, the ability to produce volume within days.”

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