Bank of America expects its $14 billion purchase this week of servicing rights from First Bank System to strengthen its name recognition among Midwest consumers, said Arthur Ringwald, who heads the California bank's mortgage division.
"Our name in Minnesota, for example, is not on the same level as FBS (First Bank System) or Norwest," said Mr. Ringwald, a group vice president. "To the extent I buy a lot of customers, and I'm suddenly servicing those customers, and I'm mailing solicitations to them for various products - credit cards and home equity lines - all of a sudden we're building awareness of Bank of America."
The mortgage division entered the Midwest through its 1994 purchase of United Mortgage Corp., Bloomington, Minn.
The newly acquired loans will be serviced at Bank of America's Richmond, Va., center, almost doubling the $18 billion in loans currently serviced there. Bank of America's total mortgage servicing portfolio is now almost $78 billion.
Mr. Ringwald said this week's purchase fits in with the bank's view of its place in a changing market. "We believe the industry is going to bifurcate into very large and relatively small players," he said. "There are clearly economies of scale and scope in the business."