A portion of the banking business that Mutual of Omaha Insurance Co. effectively exited then re-entered stands as a notable exclusion from CIT Group Inc.'s proposed $1 billion acquisition of Mutual of Omaha Bank.
San Diego-based forward and reverse residential mortgage lender Synergy One Lending Inc. will remain part of the insurance company after the deal closes, which the parties expect to occur in the first quarter of 2020.
There remains a "strong strategic fit for both entities and the customers we serve," Mutual of Omaha spokesman Jim Nolan said in a statement.
"With the purchase of a home comes the need for insurance solutions to protect a customer's family and income," he added. "And as customers seek advice to plan and secure their retirement, today's reverse mortgage can play an important part in that process."
Mutual of Omaha Bank agreed in May 2018 to acquire Synergy One in a transaction billed as a way to add "a comprehensive product portfolio, dynamic distributions and robust mortgage back office operations." Three months after that deal closed in July 2018, Synergy One announced an agreement to buy select assets of Lombard, Ill.-based BBMC Mortgage LLC from Bridgeview Bank Group.
Data collected under the Home Mortgage Disclosure Act attributed aggregate loan fundings of $786.9 million to Synergy One in 2017 and $1.67 billion to BBMC Mortgage in 2016, the most recent periods for which results are available for the respective companies. In addition, Mutual of Omaha Bank Chairman and CEO Jeffrey Schmid said in the company's 2018 annual report that the deals brought in more than 1,000 new associates, doubling its existing employee base.
"With a national production platform exceeding $3 billion annually, our forward and reverse mortgage products will help thousands of our clients finance their homes and futures," Schmid wrote.
Mutual of Omaha Bank once touted its offering of a full suite of mortgage lending solutions on a nationwide basis, but the October 2014 expansion of a lending relationship with Guild Mortgage Co. signaled its retreat from the origination side of the business. Guild offered a range of products to Mutual of Omaha Bank customers under the correspondent lending relationship. As such, Mutual of Omaha Bank showed zero single-family residential mortgage originations on its call reports during an 11-quarter stretch from the first quarter of 2015 through the third quarter of 2017. Its volumes averaged $67.9 million per quarter in the four full reporting periods leading up to the announcement of the Guild relationship. They were substantially higher in the previous four-quarter stretch, averaging $157.8 million per period.
Mutual of Omaha Bank subsequently announced a residential mortgage joint venture with PrimeLending a PlainsCapital Co. that launched in the third quarter of 2016 under the Mutual of Omaha Mortgage name. It was not until the fourth quarter of 2017, however, that the bank again showed single-family residential mortgage originations on its call reports.
Quarterly volumes increased to more than $400 million in each of the third and fourth quarters of 2018 following the completion of the Synergy One deal, from between $32 million and $40 million in the three prior reporting periods. They soared to $808.6 million and $1.25 billion in the first and second quarters of 2019, respectively.
Synergy One is a direct subsidiary of the bank, which, in turn, is directly controlled by Omaha Financial Holdings Inc. The merger agreement calls for Mutual of Omaha Bank to take the necessary action, potentially including the payment of stock dividends to the insurance company, that results in it not retaining any direct or indirect subsidiaries at the time of closing. The bank's other subsidiaries are OMAFIN Inc. and SB Capital Investment Fund LLC.
The retention of a mortgage origination capability is notable in that another insurance company with a banking subsidiary, State Farm Mutual Automobile Insurance Co., has opted to follow an approach to mortgage production akin to Mutual of Omaha Bank's earlier relationship with Guild. All loans originated by State Farm agents will eventually be produced by Quicken Loans Inc. under the terms of the parties' recently announced agreement. State Farm Bank FSB reported single-family residential mortgage originations in its most recent call report of $149.7 million for the second quarter.
