First Tennessee aiming for spot as top-20 originator and servicer.

First Tennessee Bank has set its sights on being a top-20 mortgage originator and servicer and won't rest until it gets there, a top executive said.

First Tennessee's announcement last week that it will acquire Sunbelt National Mortgage Co. for $67 million in stock brings the company within stone's throw of its goal.

After the acquisition of Sunbelt, Memphis-based First Tennessee will rank among the 25 largest mortgage originators and 30 largest mortgage servicers in the country, the banks says.

The Sunbelt acquisition follows on the heels of last summer's purchase of Maryland National Mortgage Corp. for $116 million.

On Lookout for Acquisitions

"We need to be a little bigger to be a major player .. . and if the price is right we will make more acquisitions," said Ken Glass, executive vice president of First Tennessee National Corp., the parent company.

First Tennessee and Sunbelt will have a combined production network that is expected to originate about $7.5 billion in mortgages next year and have a servicing portfolio of almost $13 billion.

Sunbelt is owned by a group of investors headed by Thomas Wageman and including Continental Illinois Venture Corp., the direct investment arm of Continental Bank.

Sunbelt will operate as a separate subsidiary of First Tennessee. Top management, including Mr. Wageman, will stay on for at least a year.

Eye on Generating Fees

One aspect of mortgage banking that First Tennessee finds attractive is that it will allow the company to increase its fee generating lines of business.

The company is already strong in check and credit card clearing services as well as having an active bond division.

Meanwhile, the bank's bond distribution unit "will provide us with unusual synergies," Mr. Glass said. Essentially, First Tennessee intends to act as its own securitizer for jumbo loans.

Sunbelt represented itself in the sale. First Tennessee was aided by Goldman, Sachs & Co, New York, and Charbonneau-Klein Inc, Dallas.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER