Under Jay Sidhu, the former chairman and chief executive of Sovereign Bancorp, New Century Bank of Phoenixville, Pa., plans to launch an aggressive mortgage warehouse lending initiative.
In a brief interview last week, Sidhu would not discuss the matter in detail but acknowledged, "It's something we're looking at."
Officials close to the situation said New Century Bank has hired a warehouse lending manager with 10 years' experience and a number of contacts among nonbank mortgage firms that could become clients.
The $265 million-asset bank plans to kick off the effort in early August.
It has set a goal of having $100 million in warehouse commitments by yearend and possibly $300 million next year, the sources said.
The bank plans to keep all the risk on its balance sheet without syndicating out any of the loans.
"Each line will be in the range of $10 million to $20 million," said an official involved in the project. "It's all short-term paper that turns over every 30 to 40 days."
There appears to be a growing perception among midsize depositories that they can make a good return by providing warehouse lines to nonbank lenders especially if those clients are only originating mortgages with guarantees from Fannie Mae, Freddie Mac or the Federal Housing Administration.
Sovereign, now a part of Banco Santander SA of Spain, used to be an active warehouse line provider as well.
Sidhu is the chairman of New Century Bank, which was recently sold to a private investment group and recapitalized.
