Citicorp's top mortgage executive and one of his lieutenants have resigned amid signs that the company is paring back plans to expand in home lending.
Industry heavyweight Richard G. Thornberry, brought in two years ago to revitalize the mortgage program, told co-workers Friday that he was leaving his post as president of Citicorp Mortgage to look for other opportunities.
Also departing is capital markets chief Jerry Halbrook, who worked with Mr. Thornberry at Prudential Home Mortgage before both executives joined the St. Louis-based Citicorp unit.
The departures came after Citicorp chairman John S. Reed publicly played down reports that the bank's mortgage unit was negotiating to buy GE Capital Mortgage Services-and questioned the wisdom of building up a business that the General Electric Co. unit was shedding.
The purchase of that unit, GE Capital Mortgage Services, with $100 billion of servicing, would have leapfrogged Citicorp into the top five mortgage servicers and top 10 originators. Chase Manhattan Corp.'s big mortgage unit also was said to be vying the buy the unit.
Mr. Thornberry, who will leave next week, had recruited several other executives from Prudential Home Mortgage in his bid to return Citicorp Mortgage to a top mortgage ranking, so additional fallout appears likely, industry observers said.
"It's questionable" what Citicorp will do on the home lending front now, said Gareth Plank, banking analyst with UBS Securities. "Rick's the one who was pushing for expansion."
Citicorp denied that it plans to cut back drastically in the mortgage business. "Mortgages are an important piece" of a strategy that aims to serve customers during different stages of their life, a spokeswoman said.
But there is a growing sense, reinforced by Mr. Thornberry's departure, that "mortgages are not meant to be Citicorp's lead relationship builder," said David Berry, research chief at Keefe, Bruyette, & Woods Inc. Credit cards and retail accounts appear to be the company's consumer growth focus, Mr. Berry said.
Certainly Citicorp Mortgage has room to grow. Citicorp was 34th in originations in the first half of 1997, with $2 billion, and 16th in servicing, with a $41.4 billion portfolio as of June 30. It has been sliding down league tables in recent years.
In the second half of 1997, Citicorp bought a $32 billion jumbo loan portfolio from Prudential, but it sold off $19 billion of the rights to Bank United Corp. and Glendale Federal Bank.
Citicorp was among the largest originators and servicers of mortgages in the 1980s until it ran into credit quality problems and scaled back.
Mr. Thornberry was brought in to return some of the luster, coming to Citicorp after nearly 10 years in a variety of positions-including managing director and chief financial officer-at the parent company of mortgage titan Prudential Home Mortgage Co. He filled a key spot that Citicorp had kept vacant for years.
Mr. Thornberry did not return calls for comment, but colleagues said his aspirations for the company have not panned out. Citicorp's bureaucracy, politics, and tight reins vexed Mr. Thornberry, said several of his business associates.
Mr. Thornberry could pop up again soon, as a chief at either a mortgage lender or a consumer finance company, his colleagues said.
Carl Levinson, the head of Citicorp's consumer asset division for North America, will oversee the mortgage unit until a successor is found, a spokeswoman said.
Mr. Thornberry reported to Mr. Levinson, who also holds the title of chairman of Citicorp Mortgage.