Underscoring the increased interest in retail expansion by banks, National City Corp. would almost triple its mortgage lending network by purchasing 61 offices from Bank United of Texas.

The additions - representing nearly all of Bank United's non-Texas retail operations - would give National City 97 mortgage offices in 33 states.

"The beauty of this is there is virtually no overlap with our current offices," a spokesman for National City said.

Executives at Bank United and National City declined to disclose terms of the deal, which also includes four wholesale offices. Based on similar transactions, investment bankers estimated that the operation would fetch between $3 million and $6 million.

Houston-based Bank United, whose founding chairman is mortgage securities pioneer Louis Ranieri, will now emphasize broader banking operations in the Lone Star State. The proposed sale "allows us to invest our energy and capabilities in our core strategy of continuing to build a substantial community and commercial banking franchise," said Barry C. Burkholder, Bank United's current chairman.

The acquisition would better position National City for steady growth in large metropolitan areas it has been eager to mine, said Leo Knight, president of the Cleveland bank's mortgage company. These areas include major cities on the West Coast, from Washington to Arizona. Last year, National City Mortgage originated $3.6 billion of loans.

The proposed deal demonstrates that retail programs are making a comeback after years of taking second seat to wholesale efforts as the preferred way of growing out-of-state, analysts said.

"Building retail capacity is coming back in vogue," said Todd Vencil, an analyst with SNL Securities, Charlottesville, Va.

Indeed, after a dry spell last year, the market for retail sites picked up in November, when Accubanc Mortgage agreed to buy 24 loan offices from Signet Mortgage Corp. Lower interest rates and a desire to stanch portfolio runoff were key motivations for the purchase, analysts said.

Although the acquisition would practically triple National City's origination network, the mortgage company has the talent to manage the surge, analysts said. Indeed, National City executives are given high marks for handling last year's purchase of Integra Financial Corp., Pittsburgh.

National City "has a strong management team and has demonstrated its ability to acquire other mortgage operations," said Mary Bruce Batte, managing director of Mortgage Dynamics, McLean, Va.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.