FirstMerit Prepares for First Chance at ABS Table


Thus far, bank holding company FirstMerit has stayed on the sidelines of the asset-backed market for one reason: market volatility. The benchwarming though, may soon be over.

Audie Mulhern, chief financial officer at the company, said that continued growth in volume following steep growth spurts recorded recently in FirstMerit's home-equity and manufactured-housing lending businesses would probably push the company to launch an ABS program; perhaps with quarterly deals.

"It would be a normalized type of routine, probably on a regular basis," Mulhern said.

He added that securitization was coming more under consideration at FirstMerit as the bank's portfolios grow, and as a decision must be made on how much collateral should be carried on the balance sheet.

"Volume will dictate what we put together," he said. "We want to get our hands around it and see what we can do."

FirstMerit's loans totaled $7.1 billion at the end of the second quarter, a 17% increase over the year-ago period. Home-equity lending increased 28%, and manufactured housing loan volume surged 219% over year-earlier levels. According to the company, the increases reflect management's decision to focus on higher-yielding lending sectors.

FirstMerit has never securitized before, though it did purchase Signal Bank in February. Mulhern said Signal performed securitizations of its manufactured-housing collateral from 1996 to 1998.