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Special Reports
Wholesale Showcase: Watching
a Loan Channel
AmNet Buys Shares in Private Deal
By Ted Cornwell
SAN DIEGO -- AmNet Mortgage, the parent of American Mortgage Network, a wholesale
mortgage bank serving mortgage brokers nationwide, has purchased 500,000 shares of its own stock at $8.80 per share
through a privately negotiated transaction with a single entity.
The transaction has a value of $4.4 million and is not part of the company's recently
announced stock repurchase plan. On May 13, AmNet announced a stock buyback program, authorizing the repurchase
of up to 400,000 shares, or approximately 5% of the common shares outstanding at March 31, 2004.
John Robbins, chief executive officer of AmNet, said the negotiated transaction
represented a unique business opportunity that had the potential to increase stockholder value.
The timing for the transaction was good because AmNet could use a portion of the
proceeds from its recently completed mortgage portfolio sale, he said.
He said the negotiated transaction and the company's continuing share repurchase
program are especially compelling because the company's shares are trading at a substantial discount to book value.
Mr. Robbins said the company believes its shares are undervalued.
Mr. Robbins said the recent transaction was negotiated because of its size and
AmNet's small market capitalization. If the seller had tried to sell 500,000 shares on the open market, even over
a period of time, it might have driven down the share price. Likewise, if AmNet had tried to purchase that many
shares on the open market, it might have driven up the price. The negotiated price allowed the parties to conduct
a relatively large transaction without bumping the market up or down.
AmNet's average daily trading volume is about 17,000 shares, Mr. Robbins said.
"They maximized their price and we did not pay a premium for the shares,"
he told ON. "It's a very positive shareholder message that says we think the shares are undervalued at today's
price in the marketplace."
He said the company is expanding, but it had excess capital that is not needed
for ongoing operations, which allowed AmNet to make the share repurchase.
Mr. Robbins said that even as rising rates shrink the total loan origination market,
consolidation among big lenders creates opportunities for a company like AmNet to expand its presence in different
niches.
Market consolidation also allows AmNet to hire talented regional managers and
account executives, he said.
But declining loan origination could take a toll on the mortgage broker industry,
he said. At the peak of the refinancing boom, he estimates that the total population of mortgage brokers was approaching
50,000 people. With the MBA projecting that loan origination volume will decline from a high of $3.7 trillion last
year to $1.7 trillion next year, the industry probably won't be able to sustain that many positions.
"My guess is that number is going to go down to 35,000 or 30,000 probably
by December of 2005," Mr. Robbins said. The number of retail loan officers will also decline significantly,
he said.
Separately, AmNet announced it has opened a loan production office in Kansas City,
Kans. This location will serve the needs of mortgage brokers in Kansas and Missouri.
Brad Urezyk has been appointed branchmanager. Before joining AmNet, he was a wholesale
account executive with First Magnus Financial Corp. Mr. Urezyk also has worked at NovaStar Financial, Home Mortgage
Inc., and First Horizon Mortgage.
Cindy Winter is the operations manager. Like Mr. Urezyk, she comes over from First
Magnus where she was a regional operations manager.
Before that, Ms. Winter was a mortgage loan underwriter for Mortgage Guaranty
Insurance Co., and she also has worked at Countrywide Home Loans, McGuire Mortgage/FT Mortgage, Market Street Mortgage
and Delta Title & Escrow Co.
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