MBHC Announces a Merger with Ostrander Burch & Company,Inc. to Assist in The Identification and Acquisition of Sub-Prime Auto Finance Companies
22 October 1997
Mortgage Bankers Holding Corp. Announces The Engagement of The Merchant & Investment Banking Firm Ostrander Burch & Company, Inc. to Assist in The Identification and Acquisition of Sub-Prime Auto Finance Companies
CARNEGIE, Penn., Oct. 22 -- Mortgage Bankers Holding Corp.
(OTC BULLETIN BOARD: MBHC) announced today that it has entered into a formal
contract with Ostrander Burch & Company, Inc. a Raleigh, North Carolina
Merchant & Investment Banking Firm to assist in the identification and
acquisition of sub-prime auto finance companies. Ostrander Burch & Company,
Inc. is affiliated with Carolina Securities, Inc. (Member NASD) and is
actively engaged in the identification of prospective merger/acquisition or
strategic partner candidates. Mortgage Bankers Holding Corp. will be assisted
by Ostrander Burch & Company, Inc. in presentations to qualified candidates as
well as in negotiations of the terms of the transaction.
Mortgage Bankers Holding Corp.'s Chairman, Raymond P. Sobieralski, stated
"the addition of a sub-prime auto finance subsidiary will allow Mortgage
Bankers Holding Corp. the ability to operate in yet another segment of the
consumer finance industry in addition to its current mortgage lending and
insurance and investment services. The decision to move into the sub-prime
auto finance market place was made by the Company upon management identifying
the demand shift from consumer A+ credit to consumer sub-prime credit. The
less-commoditized sub-prime market is experiencing robust growth (15% - 20%
secular growth) and the lure of lavish profit margins has attracted Wall
Street's attention over the past few years. The sub-prime market focuses
primarily on the financing of used cars for consumers exhibiting high credit
scores too risky for traditional commercial lending institutions. The typical
sub-prime borrower as in the sub-prime mortgage industry has very limited
discretionary income, less than perfect credit, and cash flow concerns which
create difficulty in obtaining traditional financing."
An analysis by Prudential Securities of the Auto Finance industry as of
May 1997 estimated that of the almost $400 billion auto finance market in
1996, approximately 75%, or some $300 billion, represented loans that one
would classify as prime or bank-grade credit. The remaining $100 billion
define a very divergent asset class, commonly referred to as sub-prime or non-
bank grade credit.
Mortgage Bankers Holding Corp. through its wholly-owned mortgage
subsidiary, Mortgage Bankers Service Corporation has identified the same
market of consumer in the sub-prime mortgage industry. The synergy between
the two sub-prime markets is the borrower's class of credit and high demand
for this product mix, thus allowing Mortgage Bankers Service Corporation to
eventually cross-sell with the clients of Mortgage Bankers Holding Corp.'s
auto finance company once identified and acquired.
Mortgage Bankers Holding Corp, is a diversified technology-based financial
services company, which, through its subsidiaries utilizes data transfer and
exchange to offer a full spectrum of financial and asset management services
and products.
SOURCE Mortgage Bankers Holding Corp.
