Download - Mortgage Presentation for Board
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MortgageStrategyInformationfortheBoardofDirectors
andSeniorManagementTeam
October2015
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Currentsituation
Weoperateasabrokerforahandfulofcompaniesthatagreedtobuyourloans
4originatorswhodedicatepartoftheirtimetosecondarymarketloans
Ourproductionisinconsistentandnotveryprofitable
Ourproductsanddeliveryarenotcompetitive Weeitherneedtogrowtoaprofitableandcompetitivelevelorexitthelineofbusiness
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Mortgagemodels
Broker Correspondent Direct Originate loans funded by third parties
Originate loans in our name Originate loans in our name
Loans closed in third party name Loans closed in our name Loans closed in our name Loans never held by us Loans held for sale on our
balance sheet for 30 45 days until sold to third parties
Loans held for sale on our balance sheet for 30 45 days until sold to third parties
Minimal level of products Medium level of products Maximum level of products Little customer pricing flexibility
Moderate customer pricing flexibility
Maximum customer pricing flexibility
Underwriting done by third party
Underwriting in house for most products (can be outsourced)
Underwriting in house
Underwriting standards determined by third parties
Underwriting standards determined by third parties
Underwriting standards determined by us
Low risk Medium risk High risk Low return Medium return High return Best suited for annual production under $100 million
Best suited for annual production from $100 million to $500 million
Best suited for annual production over $500 million
Loans locked with third party Loans locked with third party Loans locked internally No interest rate risk Little interest rate risk Maximum interest rate risk Buyback risk generally limited to fraud
Limited buyback risk Maximum buyback risk
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Currentopportunity
StartupapurchasebasedmortgagebusinessinMiddleGeorgia
HeadquarteredinWarnerRobins,possibleoperationsalsoinMacon
LedbyacandidatethatBillDanielintroducedtotheBank
Currentlyheworksforalargebankwithasignificantmortgagedivision
SalesmanagerforAtlantaregion,basedinMarietta
SuccessfulinrecruitingoriginatorsintheAtlantamarket
Hasrunhisownmortgagecompanyinthepast
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Currentopportunity(continued)
Consultantwithsignificantexperienceinstartingandrunningmortgagecompanieswhohasagreedtohelpussetuptheoperationsofthemortgagedivision
CandidateforanoperationsmanagerwithsignificantexperienceandknowledgeofmiddleGeorgiamarkets
Windowofopportunitytogainmarketshareandrecruitoriginatorsbasedonthetimingandthepreviousemployerofallthreeindividuals
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Currentopportunity(continued)
PattiDeal/RobinBratcherwouldhandleinhousemortgageloansandwewillcentralizedthatprocess
Otheroriginatorswillfocusontheirprimaryjobduties generallycommercialandsmallbusinesslendinganddeposits
Windowofopportunitytogainmarketshareandrecruitoriginatorsbasedonthetimingandthepreviousemployerofallthreeindividuals
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Comparison
Secondarymarketmortgageloanstodaycomeprimarilyfromourbranchnetworkorfromcallingonindividualcustomers
Theproposedmodelwillgeneratestandalonebusinessindependentofourbranchnetwork
Primaryoriginationwillcomefromreferralsfromrealtorsonpurchasetransactions
Thisprovidesamorestablerevenuesourcethanbrancheswhichrelymoreheavilyonrefinanceactivity
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Personneltiming Lookingtostartwithkeypersonnelhiresinthenext10to20days
WouldliketobringoriginatorsoverinJanuary/Februaryintimetopickupthespringhomepurchasebusiness
Add7originatorsinthefirst12months Add5originatorsinthenext12months 14totalstaffbytheendofyear1 22totalstaffbytheendofyear2
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Compensation Divisionpresident
Salaryplusabonusbasedona%ofdivisionprofits
Originators Commissionbasedona%ofloansoriginated
Operationsmanager Salaryplusadiscretionarybonus
Processors Salaryplusaperfilefee
Operationsstaff Salaryplusaperfilefeeforsomepositions
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Georgiamortgageoriginators
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MortgageoriginationsbyMSA
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Marketopportunity WarnerRobins
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Proformafinancials
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PlantersFIRST Mortgage Pro Forma Projections
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
Originations 750,000 4,500,000 10,000,000 15,750,000 21,000,000 Number of loans 5 30 67 105 140 Average size 150,000 150,000 150,000 150,000 150,000
Net interest income 859 5,156 11,458 18,047 24,063 Gain on sale 13,875 83,250 185,000 291,375 388,500 Origination fees 7,500 45,000 100,000 157,500 210,000 Other fees 6,375 38,250 85,000 133,875 178,500
Total revenue 28,609 171,656 381,458 600,797 801,063
Fixed expenses 96,820 117,420 126,690 162,225 131,325 Variable expenses 22,550 156,000 278,933 391,644 538,731
Total expenses 119,370 273,420 405,623 553,869 670,056
- - Quarterly net income (90,761) (101,764) (24,165) 46,928 131,006
Annual net income (90,761) 52,005
Annual originations 51,250,000
Percentages of origination
Gain on sale 1.85% 1.85% 1.85% 1.85% 1.85%Origination fee 1.00% 1.00% 1.00% 1.00% 1.00%Other fees 0.85% 0.85% 0.85% 0.85% 0.85%
3.70% 3.70% 3.70% 3.70% 3.70%
Expenses 15.92% 6.08% 4.06% 3.52% 3.19%
Net income -12.10% -2.26% -0.24% 0.30% 0.62%
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PlantersFIRST Mortgage Pro Forma Pro
OriginationsNumber of loansAverage size
Net interest incomeGain on saleOrigination feesOther fees
Total revenue
Fixed expensesVariable expenses
Total expenses
Quarterly net income
Annual net income
Annual originations
Percentages of origination
Gain on saleOrigination feeOther fees
Expenses
Net income
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
24,500,000 30,500,000 34,500,000 34,500,000 34,500,000 34,500,000 34,500,000 34,500,000 163 203 230 230 230 230 230 230
150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000
28,073 34,948 39,531 39,531 39,531 39,531 39,531 39,531 453,250 564,250 638,250 638,250 638,250 638,250 638,250 638,250 245,000 305,000 345,000 345,000 345,000 345,000 345,000 345,000 208,250 259,250 293,250 293,250 293,250 293,250 293,250 293,250
934,573 1,163,448 1,316,031 1,316,031 1,316,031 1,316,031 1,316,031 1,316,031
109,695 118,965 123,600 123,600 123,600 123,600 123,600 123,600 673,310 819,507 917,659 917,659 917,659 917,659 917,659 917,659
783,005 938,472 1,041,259 1,041,259 1,041,259 1,041,259 1,041,259 1,041,259
- - - - - - - - 151,568 224,976 274,772 274,772 274,772 274,772 274,772 274,772
926,088 1,099,088
124,000,000 138,000,000
1.85% 1.85% 1.85% 1.85% 1.85% 1.85% 1.85% 1.85%1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85%3.70% 3.70% 3.70% 3.70% 3.70% 3.70% 3.70% 3.70%
3.20% 3.08% 3.02% 3.02% 3.02% 3.02% 3.02% 3.02%
0.62% 0.74% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80%
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Otheradvantages ThismodelprovidesforinexpensiveexpansiontoothermarketswhencomparedtoafullbranchPossibilitiesinclude WarnerRobins Tifton Albany Athens Other
Mortgageisoftenaleadproducttodevelopnewcustomerrelationships
Experienceinnichebusinesscanleadtoothernichebusinesses
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Riskdiscussion Majorrisks
Interestrate Buyback/credit
Interestrateriskmitigation Centralizedlockdesk Centralizedmonitoringoflockactivity
Buyback/creditriskmitigation Centralizedunderwriting Correspondentmodel
Otherrisks Execution Reputation Compliance/regulatory Other
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Riskoversight Boardmonitoringandreporting Mortgageadvisoryboard/committee Seniormanagementoversight Roleofthirdpartyreview
Audit Compliance Qualitycontrol
Roleofinternalaudit/compliance
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HeathFountain MortgageExperienceatHBOS 2010 2012 MortgageoperationsreportedtomeandproductionreportedtoourChiefBankingOfficer
2012 2015 EntiremortgagedivisionreportedtomeandourChiefBankingOfficerjointly
Servedasamemberourmortgageadvisoryboard
Servedasamemberofourmortgageriskcommittee
2014originations>$1billion 2015originations approx.$1.8billion
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Nextsteps
Negotiatecontractwithdivisionleader Recruitoperationsmanager Bringthosetwoonboard Communicatedetailplanwithregulators Establisharrangementswithcorrespondentlenders
AcquireofficespaceinWarnerRobins/Macon Addbackofficestaff Addoriginationstaff Brandingdecisions
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Questions&Answers