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Roswell, N.M.'s loss of mortgage bank is Oklahoma City's gain

PrimeSource Mortgage Inc., wholly owned subsidiary of publicly traded PSM Holdings Inc., considered Dallas and its traffic but a year ago chose to relocate to Oklahoma City — and executives were surprised by the city's friendliness.
by Richard Mize Modified: July 20, 2013 at 6:00 pm •  Published: July 20, 2013

Growth lately has come by way of acquisitions fueled by banking reform since the Great Recession. Increased net worth requirements for mortgage originators — from $250,000 to $2.5 million — mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act is forcing out “mom-and-pop” lenders, Smith said.

PSM Holdings is acquiring mature mortgage operations, he said, and with nearly 3,000 non-depository lenders with average net worth of $1.6 million, the field remains ripe for more acquisitions.

PrimeSource now closes between $60 million and $70 million in loans per month, plans to double that over the next year and is positioned to triple it, Smith said.

Expansion funded

Earlier this year, PSM issued preferred stock in two rounds to venture capital investors to raise $5.7 million for expansion. Boca Raton, Fla.-based LB Merchant invested $3.7 million in 3,700 units of Series A Convertible Preferred Stock and a single institutional investor invested $2 million in 2,000 units of Series B Convertible Preferred Stock.

The two newest banking locations opened in June in Moab, Utah, and Montrose, Colo. Earlier this month, California approved PrimeSource as a residential mortgage licensee. Smith said expansion on the West Coast will bring “significant contributions.”

PSM also is banking on growth from its affiliation with Costco Mortgage Services. PSM acquired Tulsa-based United Community Mortgage Corp. — since absorbed into PrimeSource — in early 2011, just before it was approved as a preferred mortgage lender offering services to Costco's approximately 23 million members.

In May, PSM reported a $1.4 million net loss for its third quarter, which ended March 31, after also posting a net loss of $1.4 million for the same period a year ago. Revenue grew by $900,000 to $4.5 million for the quarter, a 28 percent increase over the year before.

“Traditionally, the third quarter is the slowest quarter of the year. Still, we were able to show solid growth in revenue and closed loans,” Smith said.