CIT buying Mutual of Omaha Bank, but not its mortgage business

Mutual of Omaha Mortgage, formerly known as Synergy One Lending, not in deal

CIT Bank, the banking subsidiary of CIT Group, is set to grow its operation by acquiring Mutual of Omaha Bank, the banking arm of insurance giant Mutual of Omaha, for $1 billion, but one area where CIT won’t be growing is in its mortgage business.

Much of Mutual of Omaha Bank’s business is focused on homeowners association banking, but the company does have a growing mortgage arm, and the company likes its mortgage business so much that it won’t be included in the sale to CIT.

Last year, Mutual of Omaha Bank expanded its mortgage business when it acquired Synergy One Lending, a mortgage lender that is licensed in 45 states and offers a variety of home financing products and services, including mortgages and reverse mortgages, through a network of loan officers, mortgage brokers, and direct sales channels. Synergy One later expanded by acquiring Illinois-based BBMC Mortgage.

Synergy One now operates as Mutual of Omaha Mortgage with offices across the country, but according to Mutual of Omaha, the company’s mortgage business is not included in the sale to CIT.

“Mortgage is a good strategic fit with Mutual of Omaha’s mission and customer-focused business strategy, so Synergy One Lending and Mutual of Omaha Mortgage will transition from Mutual of Omaha Bank to Mutual of Omaha Insurance Co.,” Mutual of Omaha Spokesperson Jim Nolan told HousingWire. “Our mortgage business will continue to operate as normal.”

For CIT, the acquisition of Mutual of Omaha Bank is about diversifying its base of business.

“The transaction will diversify and enhance CIT’s funding profile with stable, lower-cost deposits from Mutual of Omaha Bank’s market-leading homeowner's association banking business,” CIT said in a release. “In addition, it will advance CIT’s strategic plan, extend its commercial banking capabilities and enhance profitability.”

According to the companies, the deal includes $6.8 billion in deposits, $4.5 billion of which are HOA deposits from more than 31,000 communities across the country, and $2.3 billion of which are from commercial and consumer financial centers in “key” markets.

The move to acquire Mutual of Omaha Bank is just the latest in a string of big changes for CIT.

Last year, CIT Group and OneWest Bank completed the sale of its reverse mortgage company Financial Freedom to an unknown buyer.

At the time, the company also revealed that it was exiting the mortgage servicing business. According to CIT, the company “outsourced the payment, servicing and administration of duties” on its $5.2 billion mortgage servicing portfolio to a “leading national provider” of residential servicing.

According to CIT, the moves to exit reverse mortgages and servicing are part of a plan to “simplify” its mortgage business.

And now, with Mutual of Omaha eventually coming into the fold, CIT is moving into its next phase.

“Following our multi-year strategic transformation, we entered the next phase of our plan focused on thoughtful growth and value creation,” CIT Chairwoman and CEO Ellen Alemany said.

“This transaction squarely aligns to those goals by immediately enhancing our deposit and commercial banking capabilities and improving our profitability,” Alemany added. “This is a unique opportunity to accelerate our strategic plan through the addition of a market-leading HOA deposit franchise, a broader set of product and technology solutions and an expanded business footprint that complements CIT’s existing franchise.”

With the sale, Mutual of Omaha will focus on both its insurance business and its mortgage business.

“Mutual of Omaha Bank has a talented and dedicated team that built a successful, vibrant institution. The integration of Mutual of Omaha Bank into CIT creates great opportunity to leverage the strengths of both institutions,” said Mutual of Omaha Chairman and CEO James Blackledge. “This transaction allows Mutual of Omaha to focus on, and invest in, growth in its core insurance businesses.”

The deal is expected to close in the first quarter of 2020.

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