Truist buys home improvement lender for $2B

Truist Financial has purchased a Florida-based home-improvement lender for $2 billion. The bank in Charlotte, North Carolina currently offers loans to buyers of power equipment, trailers, and other consumer products. “The acquisition of Service Finance expands our scale and capabilities as wholesale payments businesses, enabling Truist can deliver innovative financing solutions for Service Finance’s nationwide network, dealers, and serve homeowners across America,” Mike Maguire of Truist, head of national consumer finance and payments, stated in a Tuesday press release. Truist has already purchased approximately $2 billion in loans from Service Finance Company over the past three years. Truist now has a deal to purchase. This announcement comes two months after Regions Financial, a Birmingham, Alabama-based financial institution, announced it would pay $960 million to acquire EnerBank USA, a home improvement lender. Truist and Service Finance already have a relationship. Service Finance has sold approximately $2 billion in loans to the $522-billion-asset bank over three years. Service Finance provides a platform where its roughly 14,000 dealers and contractors can offer financing to homeowners. The Boca Raton firm’s loan originations will surpass $2.5 billion in 2018. Truist stated that the company’s loan growth has averaged 30% per year over the past three-years. His team and Truist’s point of sale business will be joined by Berch and his team, but they will remain based in Boca Raton. Truist was attracted to the company partly because of its technology. Truist stated that more than 80% of its loan applications were completed via its mobile app. Truist also said that Service Finance targets borrowers with high credit scores. Truist reports that the company’s borrowers have an average FICO score of over 760. Truist stated that it expects to earn a return of about 3% on Service Finance loans and to be able reduce its capital to protect against losses. Berch stated in a press release that “This market is dynamic and has tremendous potential. Joining Truist only enhances our outlook for growth.”