Boatmen's to buy mortgage lender.

Boatmen's Bancshares, pushing aggressively into the home loans, is planning to buy Memphis-based National Mortgage Co. for about $155 million in stock.

The agreement, announced Friday, is the latest in a series of mortgage-related acquisitions by commercial banks. These banks have come to view mortgage lending as a cornerstone of their consumer-banking strategies

Boatmen's, based in St. Louis, plans to use National Mortgage to support increased lending at its 400 banks branches, which are spread over nine states.

"We have a large consumer banking franchise and it's been given a lot of strategic emphasis -- the mortgage piece was the missing area," said James W. Kienker, chief financial officer.

$13 billion of Loans

National Mortgage is a major mortgage servicer, processing monthly payments on some $13.1 billion of loans.

That operation should give Boatmen's economies of scale in servicing the loans its branches produce.

Indeed, the acquistition is expected to make the banking company one of the top 30 servicers nationwide. Right now, it doesn't even rank among the top 100.

Other Major Buyers

National Mortgage, a privately held company, is also an active loan originator. Last year, it wrote $1.7 billion of mortgages, eclipsing the $1.2 billion originated by Boatmen's.

"They have orginations technology and processes that we would like to import to some of our branches," Mr. Kienker said.

Boatmen's, which has assets of $27 billion, joins a growing list of banks that have been snapping up mortgage companies this year. Among the others: BankAmerica Corp., Barnett Banks, First Security Corp.

Banks like the fee income and cross-selling opportunities that come with mortgage banking.

Share Exchange Is Set

Meanwhile, a number od independent mortgage companies have put themselves on the auction block partly because of rocky market conditions.

Margareten Financial Corp., a New Jersey-based mortgage bank, has said it is talking with "several major financial insitutions" about a sale of the company.

To acquire National Mortgage Boatmen's plans to exchange five million shares of common stock -- trading at about $31 a share on Friday -- for all the stock of the mortgage company.

Andrew B. Craig, chairman of Boatmen's, said the deal would have "a minimal effect" on financial results this year and would improve earnings per share for 1995.

Boatmen's had been widely expected to turn its acquisitions focus to nonbank speciality companies, after several years of bank acquisitions.

New Focus Is Lauded

The company has been hard pressed to find bank deals that quickly add to earnings. Anthony Polini, and analyst at Mabon Securities, lauded the new focus on mortgages.

"Now they have the type of servicing portfolio that you would expect from a bank of that size," he said.

Boatsmen's stock was trading at $30.875 Friday afternoon, down 44 cents amid a rout in bank stocks.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER