In its takeover of Crossland Mortgage Corp., First Security Corp. has found that even the shiniest apples aren't immune to bruising.

The Salt Lake City bank said Crossland, dragged down by industry conditions, would make a dent in its parent's earnings this year.

Spencer F. Eccles, the bank's chairman and chief executive officer, said in the company's third-quarter earnings report that home loan originations at Crossland are off 34% from a year ago. Mr. Eccles said that would probably hurt First Security's earnings, although he gave no estimate.

Crossland, along with First Security, had a $10.4 billion servicing portfolio, the 43d largest in the nation, as of June. The portfolio grew more than 50% in the first half of 1994, largely as a result of the purchase.

Mr. Eccles said market conditions were responsible for Crossland's slump.

He said this year's higher interest rates cut loan activity more than anticipated.

"But First Security remains committed to making Crossland profitable over the long term," he said.

Analysts downplayed the news. They said that difficult conditions in the home lending industry were dragging down Crossland and have impaired earnings and growth at First Security.

"It is not just First Security that is having pressure in the mortgage market," said Andy O. Brown, an analyst at Salomon Brothers.

First Security had high hopes for Crossland. At the time of purchase Mr. Eccles called Crossland "a successful, well-respected company."

"This acquisition is an important step forward for First Security," he said at the time.

"It enables us to substantially expand an already strong and profitable line of business and provides us with a significant source of additional fee income and earning assets."

It will not now. Mr. Brown said Crossland will cut down First Security's 1994 earnings per share by 5 to 7 cents.

First Security also took a $1.2 million pretax charge as a result of the Crossland takeover.

"But the fundamentals of the company remain attractive and intact," he said.

He cited, for example, strong loan and fee-income growth.

Steven R. Schroll, senior financial institutions analyst at Piper Jaffray Inc., said he and others are started to get the impression that perhaps First Security paid too much for Crossland.

It paid a group of investors led by Kohlberg & Co. $122 million.

First Security has been aggressively buying smaller banks for more than a year. It has purchased at least four in the Rocky Mountain States since this time last year.

But Mr. Schroll said First Security's first foray into mortgage banking was a prudent one.

"I don't think ... they were naive or were taken," he said. "They needed to be bigger.

"They got in simply at an inappropriate time."

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