Citigroup Strengthens Core Consumer Business with Acquisition of Source One Mortgage Services Corp.

Strategic Insights -

Citigroup announced the acquisition of the principal operating assets and assumption of certain liabilities of Michigan-based Source One Mortgage Services Corp. and its wholly-owned subsidiary, Central Pacific Mortgage (CPM), marking the fourth consumer lending acquisition the company has announced or completed this month. This strategic move aims to further strengthen Citigroup's core consumer business, building on its recent merger with Travelers and creation of Citigroup.

The acquisition of Source One Mortgage and Central Pacific Mortgage will position Citibank Mortgage as the ninth largest mortgage originator and the 11th largest mortgage servicer in the United States, with a combined total of $27 billion in mortgage originations and $70 billion in mortgage servicing in 1998. The addition enhances Citibank Mortgage's offerings for low- to moderate-income home buyers, with a focus on FHA and VA loans.

Key Takeaways:

  • Citigroup's Citibank Mortgage unit has acquired the principal operating assets and assumed certain liabilities of Source One Mortgage Services Corp. and Central Pacific Mortgage (CPM) in a strategic move to strengthen its core consumer business.
  • The acquisition positions Citibank Mortgage as the ninth largest mortgage originator and the 11th largest mortgage servicer in the United States, with combined total mortgage originations and servicing totaling $27 billion and $70 billion, respectively, in 1998.
  • The acquisition enhances Citibank Mortgage's offerings for low- to moderate-income home buyers, focusing on FHA and VA loans, and expands its retail presence through Source One's existing network of 160 sales offices, 300 brokers, and 200 correspondents.
  • Citigroup views low- to moderate-income borrowers as an important customer segment and aims to broaden its product line, underscore its commitment to these communities, and dramatically expand its retail presence.
  • Citibank Mortgage is expected to unveil several service enhancements in 1999 and plans to continue growing its business at a significant rate while maintaining prudent credit thresholds.
  • The acquisition is part of Citigroup's overall corporate strategy to focus on businesses in which it is a clear leader and those that present the best opportunity for growth, refocusing its resources on high-quality, end-to-end financial services for consumers worldwide.

Statistics:

  • Citibank Mortgage's mortgage origination volume jumped 100% in 1998, from $8.2 billion in 1997 to $16.4 billion.
  • Citibank ranked No. 3 nationally among the top mortgage servicers in terms of maintaining a low customer delinquency ratio.
  • Citibank Mortgage's consumer assets earn 58% of Citigroup's core business income, generating $2.8 billion in 1998.
  • Citigroup serves over 100 million customers, including consumers, businesses, governments, and financial institutions, in 100 countries and territories.

Sources:

  • "Latest Citigroup Move Further Strengthens Core Consumer Business." Business Wire, March 25, 1999.
  • St. Louis-based Citibank Mortgage is part of Citigroup, the world's most global financial services organization.