Magazine article Mortgage Banking

Canadian D+H Expands Further into United States: Davis + Henderson Corporation (D+H) Started Printing Checks 138 Years Ago, Serving Canadian Lenders out of Its Toronto Base. Yet a String of Purchases over the Past Two Years Has Given D+H a Rapidly Growing Presence as a Technology Supplier for American Financial Services firms.[paragraph]Its Latest Acquisition Was the $1.2 Billion August 2013 Purchase of Harland Financial Solutions, Lake

Magazine article Mortgage Banking

Canadian D+H Expands Further into United States: Davis + Henderson Corporation (D+H) Started Printing Checks 138 Years Ago, Serving Canadian Lenders out of Its Toronto Base. Yet a String of Purchases over the Past Two Years Has Given D+H a Rapidly Growing Presence as a Technology Supplier for American Financial Services firms.[paragraph]Its Latest Acquisition Was the $1.2 Billion August 2013 Purchase of Harland Financial Solutions, Lake

Article excerpt

Mary, Florida. D+H's stock price jumped 10 percent when the planned acquisition was announced in July, and has climbed higher since then. Having Wall Street affirm its corporate strategy is icing on the cake for Bill Neville, who became president of D+H USA in October 2012.

Neville has served on the D+H board of directors since 2009, and played a large role in the firm's 2011 acquisition of Mequon, Wisconsin-based Mortgage-bot, a provider of mortgage point-of-sale (POS) technology for U.S. community banks and credit unions.

Since coming into the D+H family, Mortgagebot's client list has grown from 950 to 1,400 firms, adds Neville. Yet he still eyes plenty of growth potential from the 14,000 smaller financial institutions in America.

Mortgagebot's rapid post-acquisition growth shows that stand-alone technology firms are worth more when combined with complementary pieces. That's especially true when those software businesses are backed by a publicly traded firm that can provide the capital needed for growth and ongoing innovation. A solid corporate backing also helps reassure lending institutions that adequate resources are being applied to data security and compliance issues.

D+H expanded its mortgage technology offerings with the May 2012 acquisition of Avista Solutions Inc. of Charleston, South Carolina, for $40 million. Avista is a mortgage loan origination system (LOS) provider to community banks and credit unions. Both Avista and Mortgagebot are delivered via the Internet under software-as-a-service (SaaS) agreements.

Another step toward creating a suite of outsourced bank technology solutions came with D+H's January 2013 acquisition of Compushare Inc., Santa Ana, California. Compushare lets financial institutions keep much of their operations in a secure cloud-based environment.

No growing pains

D+H USA had increased its revenues by 58 percent year-over-year even before the Harland Financial Solutions purchase, according to the parent firm's second-quarter 2013 financial statements. U.S. operations--which are based in Lake Mary, Florida--also are more profitable than the Canadian segment's results, reports D+H's second-quarter financials.

Harland will dramatically boost the size of D+H USA, which last year accounted for 8 percent of the parent company's total revenue. D+H estimates Harland would've brought U.S. revenue to 36 percent of D+H's total 2012 results.

Construction of D+H USA hasn't been haphazard, notes Neville, because the acquired firms already were leading technology providers to smaller financial institutions. Avista was bought to be a front-end "product extension" for Mortgagebot, Neville adds, rather than to function as a separate company.

He notes that some competing home loan origination systems "are dead in the water," since the firms offering them haven't invested in upgrading their software for years. Over the past 12 months, Avista has brought on 200 new customers, says Neville.

Mortgagebot launched Enterprise-LOSTM shortly after the Avista purchase. EnterpriseLOS is an end-to-end platform that supports retail, wholesale and correspondent lending in a paperless processing environment.

EnterpriseLOS is capable of managing the mortgage process for lenders using retail loan officers to bring in business. But it also can handle the needs of Internet-only banks operating without branches. …

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