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Citizens Bank Adds 200K Households to its Servicing Portfolio

Franklin American

Rhode Island-based Citizens Bank (Citizens) has acquired Franklin American Mortgage Company, a Franklin, Tennessee-based, national mortgage servicing and origination private, nonbank mortgage company. Franklin American Mortgage managed a $41.4 billion mortgage servicing portfolio and generated approximately $13.7 billion in annualized originations for the first quarter 2018, nearly 100 percent of which was conforming.

“This transaction takes our mortgage business to the next level, expanding our reach and adding immediate scale in servicing as well as innovative correspondent and wholesale solutions,” said Brad Conner, Vice-Chairman, and Head of Consumer Banking at Citizens. “Franklin American Mortgage’s strong history of excellence in customer service is a great cultural fit with our organization and we are excited to welcome a new group of colleagues to Citizens.”

“We view this transaction as an opportunity to add scale and capital to the outstanding platform and customer-centric culture that our employees have created,” said Dan Crockett, Owner, President, and CEO of Franklin American Mortgage. “Citizens shares our deep and enduring focus on delivering for customers, as well as our strong commitment to colleagues and communities, which Franklin American Mortgage employees have long embraced. Together, we’ll be able to increase our positive impact on customers and grow the business platforms that are a great source of pride for us.”

In a statement on Thursday, Citizens Bank said that the deal would triple the size of its off-balance sheet mortgage servicing portfolio and more than double its origination platform. It would also significantly diversify the bank's origination capabilities with the addition of correspondent and wholesale channels. "We have a little over $30 billion of service portfolio at present and with Franklin’s additional portfolio we will be close to $80 billion in serviced mortgages, which also puts us among the top 15 originators in the U.S.," Eric Schuppenhauer, President of Home Mortgage, Citizens Bank told MReport.

Through this deal, the bank plans to add approximately 200,000 servicing households along with more than 600 correspondent relationships and 1,000 wholesale-broker relationships. The acquisition will also help Citizens to improve its mix of confirming originations from 45 percent to around 85 percent with approximately 70 percent of combined originations by purchase volume. Most importantly, the acquisition would create a strong correspondent and wholesale lending arm for the bank, which has traditionally been on the retail side of the mortgage business.

"Franklin American has built an enviable correspondent and wholesale operation," said Schuppenhauer who will lead the combined business. "We will be operating their third-party origination (TPO) business as a division of Citizens Bank and by providing our cost of funds and capital we will be growing into that business first. Franklin American has a smaller retail component and we'll combine our forces on the retail side to bring our product and pricing capabilities to Franklin American's retail business."

Following the completion of the transaction Scott Tansil, CFO and COO, of Franklin American Mortgage will lead the acquired correspondent and wholesale origination businesses headquartered in Franklin, Tennessee. The bank would also be adding 900 people from Franklin American by virtue of this deal to its existing team. "The addition of Franklin American's team would take the size of the mortgage lending team at Citizens Bank to around 2,000 to 2,500 people," Schuppenhauer said.

In a statement, Citizens said that the bank would maintain a significant presence in Tennessee and Texas. Dan Crockett will remain involved in the business in an advisory role with Citizens Home Mortgage.

About Author: Radhika Ojha

Radhika Ojha is an independent writer and copy-editor, and a reporter for DS News. She is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her masters degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha, also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Houston, Texas.

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