A Tennessee banking company, its eye on becoming the No. 1 lender in Seattle, has bought Seattle's Keystone Mortgage.

The purchase made Dallas-based FT Mortgage, a unit of First Tennessee National Corp. in Memphis, the fourth-largest originator in the Puget Sound area, trailing industry giants Washington Mutual, Bank of America, and Norwest Mortgage.

James Witherow, chief executive of FT Mortgage, wants it to eventually bump Wamu from the top spot. "The strategy is built on us looking and feeling like a local lender in the marketplace," Mr. Witherow said. "I still think this is a very local business."

By putting more funds into the business and taking over back-office functions from Keystone, FT Mortgage will remove "the hassles of running the business as opposed to doing the business," he said.

FT Mortgage became one of Seattle's top originators by acquiring the city's Emerald Mortgage in 1994. It also built local market share by acquiring MNC Mortgage, Baltimore, in 1993; Sunbelt National Mortgage, Dallas, in 1994; and Home Bank, Atlanta, in 1995. FT Mortgage is now Atlanta's top mortgage lender.

FT Mortgage gives its local subsidiaries relative autonomy. "They can bring a level of service and decision-making and quality of experience that the local lenders can," Mr. Witherow said. "We don't want to take away from that."

For now Keystone Mortgage will keep its name, though FT Mortgage is considering changing its own name as part of a plan to create a national brand identity, Mr. Witherow said. "Until we can bring value with a new brand, there's no reason to change the existing brand."

Mr. Witherow said his company is trying to bring back the kind of personalized customer service that has been missing since the shrinkage of the savings and loan industry.

Other mortgage banks, like Old Kent Mortgage and National City Mortgage, have acquired regional franchises, allowed them to operate under their original names, and taken over back-office and servicing tasks, noted Jeffrey Levine, director of investment banking at BayView Financial Trading Group.

And large retail banks like Chase Manhattan and Norwest, having established national brand names, have targeted major metropolitan areas they want to dominate.

"I'm not surprised that someone's making a move in the Northwest. It's an attractive region," Mr. Levine said, citing strong economic growth there in recent years.

FT Mortgage did not disclose the price it paid for Keystone. Michael Van Skaik, senior vice president at Emerald Mortgage, said the deal, which closed July 1, involved an exchange of shares.

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