Texas Capital Bancshares Inc. is selling management rights for $ 14 billion in mortgages at “a modest premium” as it strives to strengthen its balance sheet and refocus on its core businesses.
The Dallas-based financial services company on Wednesday announced the deal with PHH Mortgage, a subsidiary of Ocwen Financial Corp. Texas Capital said that PHH intends to “extend employment opportunities to many” of its employees working in the loan correspondent.
The sale is expected to be finalized in the second quarter.
âWhile the business has been profitable and well run, it is not at the heart of our strategy at the moment,â CEO Rob Holmes told investors during a conference call to discuss the quarterly results of the business.
Holmes joined Texas Capital in January after a 31-year career with JPMorgan Chase. His arrival came after a $ 5.5 billion merger with McKinney-based Independent Bank broke last year, leading to the departure of longtime CEO Keith Cargill.
Holmes said Texas Capital is “increasing its commitment” to its mortgage financing, mortgage warehouse and specialty lending businesses, describing them as key areas that can generate “more predictable and profitable results.”
The agreement with PHH “represents another important step in optimizing our balance sheet, implementing stronger discipline and mitigating risk across Texas Capital Bank,” Holmes said in a statement.
Holmes, the company’s first non-founding CEO, took a series of steps during his short tenure at the helm, including raising $ 300 million in capital by selling preferred stock. He called it “the biggest capital increase” in the history of the bank.
He also hired several new executives.
“The bank as a whole was not organized properly, ordinary cases and routines were not practiced, expectations were not fully communicated and commitments to long-term strategies were not regularly met,” he said on the conference call. âBased on these findings, the new management team and I decided to focus on multiple fronts this quarter.â
For the three months ended March 30, Texas Capital reported a profit of $ 71.9 million – an increase of $ 88.6 million from a loss a year ago. Its revenues total $ 239 million.
Texas Capital operates in Austin, Dallas, Fort Worth, Houston and San Antonio. This is the state ninth largest bank with assets of $ 37.7 billion as of Dec. 31, according to the Texas Department of Banking.