MNC near deal to sell mortgage unit to Tenn. bank

July 31, 1993|By David Conn | David Conn,Staff Writer

MNC Financial Inc., which announced in April that it planned to sell its $4 billion mortgage subsidiary, is close to an agreement with a banking company in Memphis, Tenn.

Though the sale isn't expected to close until late September, First Tennessee Corp., a $9 billion bank holding company with more than 190 branches, is negotiating to buy Maryland National Mortgage Corp. (MNMC), according to executives familiar with the deal.

MNMC, based in Baltimore, has a $4.1 billion portfolio of mortgages it services for other companies and a branch network that originated $3.3 billion in mortgages last year. The company employs about 800 people in 21 offices in seven states.

The subsidiary employs about 300 people at its headquarters and servicing center in the Candler Building downtown. It has one office in Nashville, Tenn., though an MNMC executive said the company plans to sell that office.

MNC spokesman Daniel Finney reiterated yesterday that "one of the priorities for us is to keep the employees in place in the local marketplace." But he declined to identify a final bidder, stressing that no final agreement had been signed.

"While we've narrowed the field down significantly, it's by no means a certainty that any particular buyer at this point will buy it," he said.

None of the parties involved would comment on a potential price, but banking executives said MNC hoped to receive at least $150 million for the mortgage subsidiary.

NationsBank Investment Bank, a subsidiary of the Charlotte, N.C., company that is in the process of buying MNC, is acting as MNC's agent for the sale. A NationsBank spokesman declined to comment, as did an official with First Tennessee.

First Tennessee's interest in Maryland National Mortgage Corp. was first reported yesterday in the Baltimore Business Journal.

NationsBank has a substantial mortgage operation of its own. Its Dallas-based NationsBanc Mortgage Corp. originated $9.4 billion in loans last year and held a $25.5 billion servicing portfolio.

The mid-Atlantic offices of that operation, bolstered by NationsBank's purchase of C&S/Sovran Corp. in 1991, would have overlapped with some of Maryland National Mortgage Corp.'s territory.

First Tennessee, parent of First Tennessee Bank, doesn't have a separate mortgage subsidiary. But its mortgage servicing portfolio is in excess of $2 billion, according to Peter Tuz, a banking analyst with Morgan Keegan & Co. in Memphis.

"First Tennessee's been one of the best banks of the 30 I follow in developing fee businesses," Mr. Tuz said. For instance, most banks derive about 20 percent to 30 percent of their revenues from fees, with the rest coming from income derived from interest on loans. First Tennessee's fee income amounts to 40 percent of revenues, said Mr. Tuz.

"They've developed a very large investment banking operation, a very large check clearing operation [and] a decent credit card business for a regional bank," he added. "They have a modest mortgage servicing business, so it doesn't surprise me that they're interested in Maryland National's mortgage operation."

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