Brothers Joe and Rob Nunziata knew they preferred the destiny of their company — FBC Mortgage LLC — to remain squarely in their hands, in Orlando.
That’s why just hours after St. Louis-based Stifel announced its $150 million acquisition of FBC’s parent company, Birmingham-based Sterne Agee Group Inc., last week, the brothers, a group of FBC executives and other investors made an announcement of their own: The buyback of the national mortgage lending company.
“Honestly, we didn’t anticipate buying back the company when we first were acquired by Sterne Agee,” said Joe Nunziata, co-CEO of FBC Mortgage. “But because Rob and I are both entrepreneurial, it became evident that we might want to reconsider our plans.”
The buyback now positions FBC on a fast growth trajectory in 2015. Rob Nunziata, co-CEO of the company, said FBC expects to fund more than $3 billion in mortgages this year, a billion more than in 2014. That would make FBC one of the largest privately owned independent mortgage bankers in the U.S.
In addition, FBC has grown its staff from 200 to 450, and will add more as opportunities arise and business continues to grow.
“We are quite happy to once again be in control of our own destiny,” said Joe Nunziata. “What we learned over the past few years are things that will only make us smarter in the future.”
Here, the Nunziatas talk about Sterne Agee, how the deal came together, what’s ahead for the 10-year-old company and a few lessons learned through it all:
Lesson 1: ‘Do your due diligence’
In reality, the Stifel deal was only the tip of the iceberg for the Nunziatas, who already had spent an interesting few years as part of Sterne Agee that included:
- A lawsuit filed in March 2013 by former Sterne Agee Chief Financial Officer Brian Barze that accused CEO James Holbrook Jr. of defamation, fraud and breach of contract, among other things. Barze’s employment was terminated by the company on Aug. 21, 2012.
- The ousting of Sterne Agee’s management team, including Holbrook
- A Department of Justice subpoena in October 2014 asking Sterne Agee’s former CFO to turn over documents related to the company for a federal grand jury
- A lawsuit filed in December 2014 by Sterne Agee against Holbrook, alleging that he improperly used corporate assets for personal benefit
“We quickly realized there were some issues,” said Joe Nunziata, who became president and CEO of Sterne Agee in May 2014 after some of the dust settled. “But the interesting thing for me was learning parts of the business I really hadn’t been directly connected to before — things that will make me smarter going forward, I hope.”
By the time Stifel (NYSE: SF) began sniffing out a deal this month to acquire Sterne Agee, the Nunziata brothers saw an opportunity to make their move.
“Stifel is publicly held, and we’ve always been privately held,” said Rob Nunziata, “Many times a public company will buy another firm and then look to consolidate overlapping functions. We couldn’t imagine having some of our company functions yanked out of Orlando or done away with altogether. Since we already were thinking about breaking away, it was the perfect timing.”
The lesson learned through all that?
“Make sure what you’re getting in exchange for your company,” said Joe Nunziata, who stepped down from the CEO position with Sterne Agee after the buyback deal, but still remains on the company’s board. “Do your due diligence, and then do it again.”
Lesson 2: Take advantage of good opportunities
FBC originally expected to benefit through Sterne Agee’s better name recognition and additional resources.
In fact, during its 21/2 years as part of Sterne Agee, FBC was able to top the $2 billion in loan volume mark, grow its staff and wholesale division with the addition of a Jacksonville team, and achieve more of a national presence.
Although Sterne Agee remained more of a hands-off owner, any decisions made by FBC now had to at least be discussed with the parent company — not quite like being out on your own.
“When it’s your own company, you and your management team meet, discuss options and make a decision,” said Rob Nunziata. “Now we had a few layers to go through.”
“So if you’re entrepreneurial and see a great opportunity you’d like to pull the trigger on, you can get a little frustrated,” added Joe Nunziata.
Ironically, that’s just what the brothers did when the Stifel deal looked like a certainty.
They formed Pine Court Holdings LLC — which currently only includes the Nunziata brothers — and bought back their company, for an undisclosed price. That deal is expected to close in March.
“It felt really good to be able to make a decision on our own again,” said Joe Nunziata. “We’ll wind up closing this deal with 10 to 15 investors.”
Lesson 3: Be your own success story
Perhaps the greatest lesson of all for the Nunziatas was learning to not get sidetracked by all the “noise” around them.
That’s why they continued to explore other business ventures. In July 2014, their Nunziata Holdings LLC closed on the purchase of Valencia College’s historic building in downtown Orlando, where the brothers plan to bring in new retail shops on the bottom floor and use the rest for office space.
Now with things “back to business as usual,” Rob Nunziata said he’s excited about tackling that project and is talking with a number of “interesting concepts” about leasing space there, although he declined to say who.
Plus, Joe Nunziata said FBC’s Jacksonville team opens the door for the company to grow faster in the Northeast, so don’t be surprised if FBC looks for additional opportunities to add more top talent to its staff, further expanding its footprint and giving it the ability to move well beyond the $3 billion in loan volume mark.
Meanwhile, local reaction to the FBC buyback was optimistic.
“Consolidation of FBC’s ownership here is great for the local community,” said Robert Gebaide, a partner in Baker Hostetler’s national real estate team. “What FBC has done is rare in growing from a family-owned, homegrown business to a national one. The FBC story is a Central Florida success story.”
Added Royal Oak Homes co-President Matt Orosz, “FBC has been a critical partner for Royal Oak Homes since we started in 2011. I’m confident the buyback will result in even more service and flexibility to help us grow our business.”
At the end of the day, Joe Nunziata called the past two years “a tremendous learning experience for both of us. We expect that 2015 will be the year we set new records and watch our third-party origination business grow. We’re happy to be back as just FBC.”
FBC Mortgage LLC
Top local executives: Brothers Joe and Rob Nunziata, co-CEOs
Type of business: National mortgage lender
Headquarters: 189 S. Orange Ave., Suite 970, Orlando 32801
2014 loan volume: $2.1 billion
Contact: (866) 413-2563
Then and now
1,244: Amount of home loans closed in all of 2006 for $206.33 million in volume
1,315: Amount of home loans closed in just February 2015 for $345 million in volume
2005: FBC Mortgage founded
October 2012: FBC Mortgage announces it will merge with Birmingham-based Sterne Agee Group Inc., one of the oldest and largest privately owned investment banking firms in the country.
Nov. 16, 2012: FBC Mortgage, Sterne Agee deal closes.
Feb. 18, 2013: FBC launches a new national home loan servicing division through its CloseQuick brand that will service home mortgages and buy residential loans originated nationwide mostly by community banks.
Sept. 2013: Nunziata Holdings LLC buys the historic National Building in downtown Orlando, owned by Valencia College Foundation Inc. Rob Nunziata said the plan is to use the bottom floor for retail, with office space in the additional square footage.
May 2014: FBC’s Joe Nunziata is named CEO of Sterne Agee Group after the dismissal of several executives in a major leadership overhaul.
July 2014: FBC acquires a Jacksonville firm’s wholesale team to help expand its footprint throughout the Northeast.
Sept. 2014: FBC lands the naming rights for downtown Orlando’s Chase Plaza North Tower.
Dec. 23, 2014: FBC hits record $2 billion in loans.
Feb. 23, 2015: St. Louis-based Stifel Financial announces plans to acquire Sterne Agee Group Inc.
Feb. 23, 2015: Nunziata brothers announce plans to buy back FBC Mortgage from Sterne Agee Group.