By JOBY N. CUNNINGHAM
One of the nation's best-known banking companies has agreed to buy a local student-loan firm.
JPMorgan Chase Bank yesterday announced plans to purchase Collegiate Funding Services Inc., a student loan consolidation and servicing company headquartered in Spotsylvania County.
The company, which will be renamed, will keep its headquarters here. No local layoffs are planned, officials said.
Chase will pay $20 per share, for a total of about $663 million, according to a company statement.
The deal, which is subject to shareholder and regulatory approval, could close within 60 to 90 days.
The move is expected to extend the nationwide reach of the locally grown firm, said Clark McGhee, CFS executive vice president.
"Chase itself obviously is a large organization with an extremely well-known brand. We want to take advantage of that," he said yesterday.
J. Barry Morrow, president and chief executive of CFS, will serve as president of the combined business.
CFS, which started locally in 1998, gained industry attention by focusing on student loan consolidation.
It operated for several years off U.S. 17 in southern Stafford County. While there, CFS swelled to about 500 employees.
CFS was acquired by Lightyear Capital LLC, a New York-based private investment firm, in 2002.
In 2003, the firm acquired SunTech, a Mississippi student-loan servicer.
Today, CFS employs about 350 workers at its center in one of the former Capital One buildings off U.S. 1 in Spotsylvania County. It also operates offices in Boston, Tampa, Fla., and Jackson, Miss., bringing its total nationwide work force to about 775.
And while the firm has grown in number of employees, it also has expanded its areas of expertise.
To position itself for future growth, CFS began offering, financing and handling education loans.
That well-roundedness may have been what caught the attention of Chase officials.
"Collegiate Funding Services' marketing, origination and servicing capabilities will complement our sales and marketing expertise," Brad L. Conner, executive vice president of Chase, said in a statement. "Together, we will be a major provider of every type of student loan as we help students and their parents achieve their educational goals."
CFS became publicly traded in 2004 on the Nasdaq Composite Index under the ticker symbol CFSI.
The news yesterday sent shares soaring. The stock closed up 4.36, or 28.55 percent, to 19.63.
"The combination is a great opportunity for CFS and our customers, employees and shareholders," Morrow said in a statement.
Chase Education Finance originated $7.9 billion in student loans in 2004, according to a news release. CFS originated $4.4 billion in loans that same year.
JPMorgan Chase is a financial services firm with assets of $1.2 trillion. It has operations in more than 50 countries.
To reach JOBY N. CUNNINGHAM:
Email: jcunningham@freelancestar.com