Citicorp is mounting a drive to regain its position as a leading force in residential lending after five years on the sidelines.
Burned by credit losses beginning in 1989, the company sharply reduced its lending. It fell from No. 1 among originators in 1990 to No. 23 last year despite its extensive retail network.
Now Citicorp has recruited an industry heavyweight, Richard Thornberry, as president of its mortgage unit. He is looking to revitalize a network of 420 offices into a potent mortgage machine and also plans to get back into the wholesale business in a big way.
Mr. Thornberry joined Citi in January from Residential Services Corporation of America, parent of Prudential Home Mortgage Co., where he was a managing director. Industry observers take his hiring as a sign of the company's new commitment. He fills a key spot the lender had chosen to keep vacant in recent years.
"I think by bringing on a guy like Rick Thornberry they're saying they want to get busy," said one mortgage banker.
Commenting on Citicorp's abrupt change in strategy, Gareth Plank, an analyst with UBS Securities, said, "They've looked out at the landscape and seen a $4 trillion mortgage market."
Mr. Thornberry, in London recently for a Citicorp strategy session on its consumer banking business, discussed his plans for expansion in a telephone interview with American Banker.
"Mortgage products are a key part of the bank's consumer strategy," he said. "We have reintegrated mortgage banking into Citibank consumer relationships."
He added that the Citicorp branch system was pivotal to efforts to rebuild business. The sites "provide an opportunity we want to focus on," Mr. Thornberry said.
As a key step, Citicorp has made expansion of mortgage business part of performance goals for its branch managers.
To be sure, Citicorp never completely vacated the business. But its $4.75 billion of originations in 1995 rank it with midsize and smaller banks, not its giant peers. It will be a long road back, with the top companies, Countrywide Credit Industries and Norwest Mortgage Co., each topping $30 billion in loan volume last year. Its big New York City rival, Chase Manhattan Corp., racked up a pro forma $27 billion.
In addition to its retail drive, Citicorp is looking to expand wholesale relationships with other lenders. "We see an opportunity to grow beyond bank distribution to more of a national distribution," Mr. Thornberry said.
Representatives of Citicorp's correspondent unit are now regular exhibitors at mortgage trade shows. The company also advertises its lending services in mortgage publications.
A St. Louis operations center serves as the hub of Citicorp's mortgage activity, with servicing and originations processing both handled at the site.
The unit, while already technologically sophisticated, will undergo improvements in the coming 12 months to wring out any inefficiencies and to handle the business Citicorp expects to do, Mr. Thornberry said.
Industry experts say they believe that Citicorp, despite years of dormancy, has the muscle to shake up the top ranks of the mortgage industry.
Mr. Thornberry's leadership capabilities can take the company far, a former colleague said. "Rick is one of the top, if not the top executive in the mortgage business," said Larry E. Swedroe, vice chairman of Residential Services Corporation of America, the Prudential Home Mortgage parent.
Other talented executives may follow Mr. Thornberry to Citicorp as Prudential Home Mortgage winds down independent operations and is absorbed into Norwest Mortgage, Mr. Swedroe said. "I wouldn't be surprised if you see a group of ex-Prudential Home Mortgage employees over there."
Citicorp certainly has firepower from a corporate standpoint, analysts said. "They have the balance sheets, sophisticated systems, and global reach" to be very successful, said Mr. Plank of UBS Securities. "They also have a lot of experience with what not to do."
Indeed, Citicorp has demonstrated both how and how not to run a mortgage company.
During the 1980s, Citicorp Mortgage consistently set industry records for originations and servicing, topping even the most aggressive thrifts.
Citicorp Mortgage was also considered an innovator, helping to pioneer automated underwriting and joint ventures that put lenders in realty offices.
But in the late 1980s, lax standards caught up with the mortgage company, whose loans soured and contributed to foundation-shaking trouble the parent company experienced.
"Their underwriting produced disastrous results," said Allen Hardester, a mortgage consultant based in Columbia, Md.
"They basically got out of the business," Mr. Hardester said. "They weren't anywhere near their old self."
Mr. Thornberry reports to Citicorp Mortgage chairman Carl Levinson, a Citicorp veteran who worked in credit cards and other areas before being transferred to the mortgage unit in 1992.
While mortgage lenders indicated they were not surprised that Citicorp was getting back into the mortgage business, they said they have seen few signs of the lender so far. "I haven't seen much evidence," said a mortgage banker with a national company.
But analysts say they believe that, given all of Citicorp's resources, it's just a matter of time before it makes its presence felt in the mortgage business.