Utah bank acquires in-state mortgage lender

A Provo, Utah bank has expanded its presence in the mortgage business at a time when depositories are reportedly rethinking their involvement in home lending.

Capital Community Bank purchased Security Home Mortgage of Orem, Utah. Terms of the deal were not disclosed.

Security Home was founded in 1999 by Jon Chamberlain and has between 75 and 80 employees. Charles Green became a co-owner and vice president in 2006 according to its website.

Besides Orem, Security Home has an office in Salt Lake City.

Security Home did approximately $250 million in originations last year. In 2016, it became a direct seller to Fannie Mae. It also handles Federal Housing Administration and Veterans Affairs loans but is not a direct lender for those programs. 

An undisclosed amount of mortgage servicing rights is also being acquired.

This is a partnership that can bring Security Home to the next level, said Chamberlain, who is remaining as the president of the company. Green will stay with Security Home as well.

Capital Community, on the other hand, was not active in mortgage in 2023, Matt Field, president and chief financial officer said in an emailed response. This deal allows it to expand the portfolio of financial services it offers to consumers.

The bank never had a great mortgage offering and this is an opportunity to gain serious expertise in this area, as well as capture more of the lifecycle with the residential construction builders and developers it finances, Field added.

"Rates are high, but are expected to come down and as always, are cyclical — this is a long term, critical lending product," Field said. "As for the timing, opportunities are greater in down markets [and] we saw it as an opportunity to get in with a great company and be ready for future rate reductions."

Both Field and Chamberlin spoke of the synergies the two organizations bring to the table with this deal.

The deal is notable given industry conversation about the shifting shares of banks and nonbanks involved in home finance. The head of one of the nation's largest nonbank mortgage lenders recently took aim at the depositories it competes against.

During Rocket Cos.' first quarter earnings call, CEO Varun Krishna claimed his firm's market share gains during the period primarily came from banks.

"In recent years, banks have faced profitability challenges with their mortgage operations made more apparent against the backdrop of difficult market conditions," Krishna said.

Basel III capital requirements are likely to further deter banks from expanding their home lending businesses, he said, adding, "In fact, we believe many banks are reevaluating their mortgage lending operations altogether."

Among recent M&A transactions among nonbanks, ML Mortgage acquired the retail production business of Mountain West Financial; CMG Mortgage's latest deal was to add Norcom Mortgage's retail unit; and Guild Mortgage's buying spree netted it Academy Mortgage.