SAN JOSE, Calif. -- An investment affiliate of Donaldson Lufkin & Jenrette Inc. will buy a controlling stake in First Franklin Financial, a West Coast mortgage bank.

DLJ Merchant Banking Partners will invest $36 million in exchange for 73% of the stock of San Jose-based First Franklin.

The principals plan to merge First Franklin with Franklin Mortgage Capital Corp., Falls Church, Va., an unrelated mortgage banking firm also controlled by DLJ Merchant Banking.

After the combination, the mortgage bank will have a loan-servicing portfolio of about $8 billion and annual loan originations of $6 billion.

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