Bank of Boston Corp. has sold a large part of its commercial mortgage servicing portfolio and closed its public finance unit, saying it will divest businesses where it does not have expertise.
New England's second-largest bank company confirmed Wednesday that it had sold approximately half of the commercial mortgage servicing rights of BancBoston Mortgage Corp., its Jacksonville, Fla.-based servicing subsidiary, to a mortgage company owned by Legg Mason Inc., a Baltimore-based investment bank.
Legg Mason said Wednesday that the transaction closed on July 2.
Neither party disclosed the purchase price for the $830 million commercial servicing portfolio.
Constance Hubbell, a spokeswoman for Bank of Boston, the transaction "will not have a material impact on us."
Servicing commercial mortgages for institutional investors was a "break-even type of business," Ms. Hubbell said, adding, "It is part of our strategic planning process to exit businesses which we are not in for the long haul and where we are not experts."
Ms. Hubbell also said that Bank of Boston decided in mid-June to close its small public-finance unit, which included about five professionals.
"We will no longer pursue opportunities to serve as senior manager on tax-exempt bond issues," she said, citing increasing competition, declining fees, and "the dominant role played by large investment banking firms in public finance."
She said the bank will honor existing contractual relations, which are expected to run out within 13 months.
Bank of Boston, which has not been a major player in the municipal market for years, will continue to serve some local clients by underwriting general obligation bonds but will abstain from pursuing more lucrative revenue bond business, Ms. Hubbell said.
Most of the commercial mortgage servicing rights the bank is selling were inherited from Stockton Whatley & Davin, a commercial mortgage company Bank of Boston bought in 1983. Ms. Hubbell said the bank will continue to service commercial mortgages that it originates for its own customers. It currently has about $1 billion of such servicing rights on its books.
Servicing involves recordkeeping on mortgages and funneling payments from the borrower to the lender and to buyers of commercial mortgage-backed securities.
Legg Mason said that its Latimer & Buck subsidiary will consolidate the Banc Boston portfolio into its Florida operation, which, with the new purchase, services about $2.37 billion of commercial mortgages.
Small Group to Move
William G. Loving, a senior vice president and manager of BancBoston Mortgage's commercial unit, is moving to Latimer & Buck as an executive vice president in charge of the newly acquired regional mortgage banking office in Jacksonville. Five other Bank of Boston employees will join him.
Bank of Boston, which has $32 billion of assets, continues to be active in the residential mortgage market. It services $22 billion of home mortgages, ranking it as the 18th-largest service company in the nation, Ms. Hubbell said.