IPO / M&AMortgage

Cornerstone Home Lending to acquire Roscoe State Bank

Relatively rare instance of nonbank acquiring a depository lender

Houston-based nonbank mortgage lender Cornerstone Home Lending is buying Roscoe State Bank, a traditional depository bank headquartered in Roscoe, Texas.

The transaction is subject to customary regulatory approvals. Financial terms of the deal were not disclosed and it’s unclear when the deal will close.

The prospective merger – relatively rare for a nonbank mortgage lender – would create an organization with approximately $2 billion in assets and more than $300 million in equity capital, the companies said in a joint release. The merged organization is to be known as Cornerstone Capital Bank, and the mortgage division will continue to be known as Cornerstone Home Lending.

The name Roscoe State Bank will be kept at the Bastrop, Texas locations.

Owning a bank allows the mortgage lender “to significantly expand product and service offerings to our hundreds of thousands of customers and referral sources throughout the country,” said Marc Laird, Cornerstone CEO, in a release.

Increasing Lending and Servicing Capacity – Regardless of Rates

The low-rate environment won’t last forever, and both lenders and servicers need to be able to keep their costs down while managing volume fluctuations once things start to normalize.

Presented by: Sutherland

“This combination of two great teams will provide a vast array of additional home lending products and services to the customers and communities served by Roscoe State Bank, and will produce additional growth opportunities for team members at both Cornerstone and Roscoe,” Laird said.

Cornerstone currently originates mortgage loans in 39 states, plus the District of Columbia. It typically does conventional, government mortgages and also has a jumbo product.

According to Inside Mortgage Finance, Cornerstone, independently held, is a top-50 mortgage lender. It funded $4.2 billion in loans during the first quarter of 2021, good for 42nd nationwide in production volume. In 2020, Cornerstone originated roughly $16.4 billion, according to IMF data. Cornerstone has roughly 300 mortgage loan officers and does in-house processing and underwriting.

Roscoe, which has $212.6 million in assets, does very little, if any, mortgage business. In 2019, it originated just $6.3 million in mortgages, according to HMDA data gathered by Polygon Research. No mortgage data was available for 2020. Roscoe’s website suggests it has five mortgage loan officers.

Judy Belanger, Cornerstone president, said Roscoe State Bank has served Texas suburbs Roscoe, Sweetwater and Bastrop for 115 years — the last 46 under CEO John Jay and Clyde Jay. John Jay is expected to join the new board of directors at closing.

“I believe Cornerstone is the perfect fit for our bank as we combine two family-owned organizations that share a similar culture and a commitment to building long-term relationships,” Jay said in the release. “Their respectful approach to integrating our own successful business model makes me confident that this deal will result in stronger growth and investments in markets we currently serve, and in expansion markets. We are very proud of Roscoe’s history of serving our communities through every economic cycle since 1906.”

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