RESOURCE BANCSHARES MORTGAGE GROUP INC

RESOURCE BANCSHARES MORTGAGE GROUP INC

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Company Overview
Resource Bancshares Mortgage Group, Inc. is a diversified financial services company which operates through its wholly-owned subsidiaries. The company was organized to acquire and operate the residential mortgage banking business of Resource Bancshares Corporation, which commenced operations in May 1989. It has its registered head office located in Columbia, South Carolina in the United States.
The operations of the company include mortgage banking, through the purchase, sale and servicing of agency-eligible and subprime residential, single-family, first lien and second lien mortgage loans and the purchase and sale of servicing rights associated with agency-eligible loans. In addition, two of the company’s wholly owned subsidiaries originate, sell and service small-ticket commercial equipment leases and originate, sell, underwrite for investors and service commercial mortgage loans.
Business Summary
Resource Bancshares Mortgage Group, Inc. was organized to acquire and operate the residential mortgage banking business of Resource Bancshares Corporation, which commenced operations in May 1989. The Company is a diversified financial services company engaged, through wholly owned subsidiaries, primarily in the business of mortgage banking, through the purchase, sale and servicing of agency-eligible and subprime residential, single-family, first lien and second lien mortgage loans, as well as the purchase and sale of servicing rights associated with agency-eligible loans. In addition, two of the Company’s wholly owned subsidiaries originate, sell and service small-ticket commercial equipment leases and originate, sell, underwrite for investors and service commercial mortgage loans.
Description and history
Resource Bancshares Mortgage Group Inc. is a diversified financial services company primarily engaged, through wholly owned subsidiaries, in the business of mortgage banking. The Company participates in the purchase (via a nationwide network of correspondents and brokers), sale and servicing of agency-eligible and subprime residential, single-family, first lien and second lien mortgage loans, and the purchase and sale of servicing rights associated with agency-eligible loans. In addition, one of the Company’s wholly owned subsidiaries originates, sells and services small-ticket commercial equipment leases.

The Company operates through wholly owned subsidiaries that are engaged in the following lines of business: agency-eligible production; agency-eligible servicing; agency-eligible reinsurance; subprime residential production; and small-ticket equipment leasing. During 2000, the Company sold substantially all of the assets of Laureate Capital Corp. (Laureate), which conducted its commercial mortgage operations.

Residential Loan Production

The Company purchases closed agency-eligible mortgage loans through its network of approved correspondent lenders. Correspondents are primarily mortgage lenders, mortgage brokers, savings and loan associations and small commercial banks. At December 31, 2000, the Company had 924 correspondents originating mortgage loans in 48 states and the District of Columbia. Agency-eligible residential loan production by correspondents is widely dispersed, with the top 20 correspondents supplying the Company with 39% of its dollar volume of correspondent loans during 2000 compared to 34% in 1999.

The wholesale division receives loan applications through brokers, underwrites the loans, funds the loans at closing and prepares all closing documentation. The regional operating centers handle all shipping and follow-up procedures on loans. Typically, mortgage brokers are responsible for taking applications and accumulating the information precedent to the Company’s processing of the loans. All loan applications processed by the wholesale division are subject to underwriting and quality control comparable to the standards used in the Company’s correspondent lending program.

Subprime loan production decreased by 8% to $669.6 million for 2000 as compared to $728.4 million during 1999. Between 1999 and 2000 the Company increased the number of its subprime brokers by 453. During 2000, the Company phased out its branch facilities in favor of three regional operating centers where a critical mass of volume could be achieved for better operating efficiency.

The Company purchases and originates conventional and subprime mortgage loans and mortgage loans insured by the FHA or partially guaranteed by the VA. All mortgage loans purchased or originated by the Company are purchased or originated for resale. The majority of the Company’s loans are conforming loans, i.e., mortgage loans that qualify for inclusion in purchase and guarantee programs sponsored by Fannie Mae, Freddie Mac and Ginnie Mae.

Sale of Residential Loans

The Company customarily sells all agency-eligible mortgage loans that it originates or purchases, retaining the mortgage servicing rights, which currently are sold separately. Under ongoing programs established with Fannie Mae and Freddie Mac, the Company aggregates its conforming conventional loans into pools that are assigned to Fannie Mae or Freddie Mac in exchange for mortgage-backed securities. The Company’s FHA mortgage loans and VA mortgage loans generally are pooled and sold in the form of Ginnie Mae mortgage-backed securities. The Company pays certain fees to Freddie Mac, Fannie Mae or Ginnie Mae, as applicable, in connection with these programs. The Company then sells Freddie Mac, Fannie Mae and Ginnie Mae securities to securities dealers. Substantially all of the Company’s agency-eligible mortgage loans qualify under the various Fannie Mae, Freddie Mac and Ginnie Mae program guidelines, which include specific property and credit standards, including a loan size limit. Subprime and non-conforming conventional residential mortgage loans are sold to private investors through whole loan sales. Prior to 2000, the Company securitized a portion of its subprime production. During 2000, the Company sold its subprime production on a whole loan basis for cash.

Mortgage Servicing

Agency-eligible mortgage servicing includes collecting and remitting mortgage loan payments, accounting for principal and interest, holding escrow funds for payment of mortgage-related expenses such as taxes and insurance, making advances to cover delinquent payments, making inspections of the mortgaged premises as required, contacting delinquent mortgagors, supervising foreclosures and property dispositions in the event of unremedied defaults, and generally administering agency-eligible mortgage loans.

In addition to servicing its agency-eligible mortgage servicing rights portfolios, the Company subservices agency-eligible mortgage servicing rights portfolios during the period of approximately 90 days between the date it sold the related servicing rights and the date such servicing rights are actually transferred to the purchaser. The Company receives fees for servicing residential mortgage loans, ranging generally from 0.25% to 0.44% per annum on the unpaid principal balances of the loans. The Company collects servicing fees from monthly mortgage loan payments. Other sources of loan servicing revenues include fees incidental to the services provided. As of December 31, 2000, the Company’s owned mortgage servicing rights portfolio had an underlying unpaid principal balance of $8 billion. The portfolio generally reflected characteristics representative of the then-current market conditions and had a weighted average note rate of 7.67%.

Available-For-Sale Portfolio

To help manage its risk related to prepayments of its servicing portfolio, the Company has purchased interest-rate floor contracts and callable pass-through certificates, which provide an interest rate differential on a fixed portion of the portfolio in the event interest rates fall below a certain level.

Leasing Operations

The Company’s wholly owned subsidiary, Republic Leasing Company, Inc. (Republic Leasing), originates and services small-ticket commercial equipment leases. Substantially all of Republic Leasing’s lease receivables are acquired from independent brokers who operate throughout the continental United States. At December 31, 2000 the leasing division had 181 brokers. Lease production was $103.3 million, or 1.6% of the Company’s total production volume, during 2000. At December 31, 2000, Republic Leasing managed a lease-servicing portfolio of $192.6 million. Of this managed lease portfolio, $188.9 million was owned and $3.7 million was serviced for investors. The weighted average net yield for the managed lease-servicing portfolio at December 31, 2000 was 10.8%. Delinquencies for the managed lease-servicing portfolio at December 31, 2000 were 2.4%.

Organized to acquire and operate the residential mortgage banking business of Resource Bancshares Corporation

Business Line
A diversified financial services company which operates through its wholly-owned subsidiaries
Subsidiary

Advisor
PRICEWATERHOUSECOOPERS LLP
IPO date
5/1993
US SIC Code
6162
Company Address
Suite 150
7909, Parklane Road
City province or state postal code
29223, COLUMBIA, SC
Phone: +1 803 741 3000
Fax: +1 803 741 3586
Country address: UNITED STATES OF AMERICA
Website url: www.rbmg.com