New South Federal Savings Bank - Wholesale, Warehouse Lending

In separate announcements sent to clients, New South Federal Savings Bank gave notice it was shuttering its Warehouse lending division effective 2009-01-16, and "temporarily" suspending its Wholesale operations. Conforming wholesale was discontinued entirely, and new loan submissions for their non-prime portfolio products may resume "within the next 24 to 48 hours" pending updates to their rates and product matrix according to the memo. The information we have coming in, however, indicates that wholesale is most likely done entirely.

One broker wrote: "They were one of the last subprime lenders around. (They would still do 12 months bank statements, 500 score borrowers, etc.)" A number of sources reported their AE's had told them wholesale was discontinued, including correspondent channels. Emails we continue to receive also indicate nearly all of the division's staff were laid off. By one account, three high level execs were let go while another tipster said New South Federal "fired all but a handful of underwriters." Yet another source confirms, "only 4 people left in Wholesale to "clean up" they are definitely shut down." All of the AE's are gone.

Headquartered in Birmingham, AL (their sole full-service depository location), New South Federal Savings Bank averaged more that $64.5 million in overall loan originations per month in 2007. A tipster told us the wholesale division had been doing $25 to $30 million per month a couple months ago. Specific information on the scope of their warehouse lending was not readily available. We're told the retail operations will remain intact, which appeared to be the bulk of their production in the past. From a 2003-10-01 article about former CEO Rob Couch:

"The residential production operation is sizable, and between 90 percent and 95 percent of it is done through a retail branch network. Couch says of the 655 total employees of the thrift, roughly 187 are in the mortgage branches. As of the summer of 2003, the company had about 40 retail production branches from Virginia to Las Vegas. Yet the strength of its mortgage retail network is in Alabama, where New South has roughly 10 branches."

A source familiar with New South Federal indicated the bank itself may be in trouble. "They have drastically cut back on their auto financing as well, which was a huge part of the banks business."

We are working to get details on the layoffs and confirm the status of their wholesale platform. If you can help fill in the blanks, please drop us an email.