MNC to sell mortgage banking unit Deal could fetch at least $50 million

April 09, 1993|By David Conn | David Conn,Staff Writer

MNC Financial Inc. said yesterday that it plans to sell its mortgage banking subsidiary, the Maryland National Mortgage Corp., which employs 300 workers in Baltimore and 500 throughout the state.

MNC did not place a price on the unit yesterday, but several analysts who follow the industry estimated that the company could bring more than $50 million.

"The sale of the company in its entirety is in the best interests of the shareholders and provides what we believe is the best possible job security for MNMC employees," Frank P. Bramble, MNC's president and chief executive, said in a statement. The company declined to elaborate on the reasons for the sale.

The parent company is due to be acquired later this year by NationsBank Corp. of Charlotte, N.C., pending the approval of shareholders and regulators. NationsBank Investment Bank, a subsidiary, will act as MNMC's agent for the sale.

Maryland National Mortgage, which employs 800 people in seven states, has 21 offices in Maryland, New Jersey, Pennsylvania, Virginia, Delaware, Colorado and Tennessee. It has 300 employees at its headquarters and servicing center in the Candler Building downtown.

The company originated $3.3 billion in single-family mortgage loans last year, up 57 percent from 1991, according to MNC spokesman Daniel Finney. The company also holds a $4.1 billion mortgage servicing portfolio and generated $78.6 million in gross fees last year, a 45 percent increase over 1991.

Analysts estimated that MNMC could fetch from $50 million to nearly $200 million. The servicing portfolio is worth about 1 percent of its value, or $41 million, analysts said. The value of the origination business and its 21 offices would depend on how much of a mortgage operation the buyer already has.

A company like Countrywide Credit Industries Inc., of Pasadena, Calif., the nation's largest mortgage originator, probably would not be interested in paying for anything but the servicing portfolio, according to Jonathan E. Gray, of Sanford C. Bernstein in New York.

He mentioned Fleet Mortgage Group Inc., based in Columbia, S.C., and North American Mortgage Co., of Santa Rosa, Calif., as possible buyers. But both companies already have operations in the mid-Atlantic states, he noted.

More likely, according to Mr. Gray, a bank or thrift will make an offer for the MNC subsidiary, seeking to boost noninterest income.

"I think you're going to see a rash of acquisitions in the mortgage banking industry by banks and thrifts," he said.

After the sale, home buyers will still be able to apply for mortgage loans at the branches of MNC's subsidiary banks, Maryland National and American Security, based in Washington. But the sale of the mortgage company will likely come close to the sale of its parent to NationsBank.

At that point, borrowers would be able to use either NationsBank's branch system to apply for a loan, or one of the local offices of its Dallas-based NationsBanc Mortgage Corp.

Last year, the mortgage company originated $9.4 billion in loans and held a servicing portfolio valued at $25.5 billion, making it about the 13th-largest in the nation, a NationsBank spokesman said.

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