BankAmerica Folds Arbor into New Division

BankAmerica Corp., San Francisco, has completed the acquisition of Arbor National Holdings Inc., Uniondale, N.Y.

At the same time, it formed a new division, BankAmerica Mortgage, as a unit of Bank of America FSB. Also included in the division will be the former United Mortgage Corp., Bloomington, Minn., acquired in July; the servicing center in Richmond, Va., acquired from Margaretten & Co.; and the bank's existing mortgage operations in Florida.

The division will report to Arthur D. Ringwald, executive vice president and head of Bank of America's residential lending group.

A Bank of America spokesman said Ivan Kaufman, president and chief executive of Arbor, would remain with the new division for at least six months. A group headed by Mr. Kaufman bought Arbor's commercial mortgage operation before the sale to Bank of America.

The acquisition appears to fit well with the bank's plan to become a nationwide lender. "The addition of Arbor . . . gives BankAmerica a substantial presence in the mortgage origination business in the Northeast and Middle Atlantic," said Mr. Ringwald.

The merger is a particularly good fit because there is virtually no overlap between the Arbor and Bank of America service areas, the company had said previously.

Mr. Kaufman, who founded Arbor, said, "The BankAmerica-Arbor combination will enable us to expand the franchise Arbor has developed over the past decade," he said in the bank's announcement.

A Bank of America spokesman said there were no immediate plans to change any Arbor operations. For now, he said, Arbor's servicing center, with 65 employees, would continue to function. But the Richmond servicing plant is said to have excess capacity, and the long-term outlook is unclear.

Bank of America said the exchange ratio would be about 0.41 share of B of A stock for each share of Arbor. That would put the value of the deal at about $130 million, or about 10% more than the $118 million originally announced.

An Arbor spokesman said the increase was attributable to appreciation of about 10% in BankAmerica stock since the deal was sealed. The shares were selling for about $40 each on Wednesday.

BankAmerica originated $9.8 billion in home loans in 1994 and had a servicing portfolio of $51.7 billion. Arbor recorded $2.3 billion in originations last year, with a servicing portfolio of $5.4 billion.

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