After retreating from the wholesale lending business in recent years, First Union Corp. is staging a dramatic comeback.

First-quarter mortgage originations at the Charlotte, N.C., banking company jumped 64% from a year earlier, to $1.6 billion, even as many lenders reported slumps.

The gain was caused mainly by a sharp rise in wholesale production, to $780 million. That was approaching the company's wholesale production for each of the previous two years combined. And, the company says, the growth has only begun.

"We have a very aggressive goal: to triple production within the wholesale division over the next three to five years," said James A. Wilson, First Union Mortgage's senior vice president of national wholesale lending. He joined First Union in November when it acquired Center Financial, a Connecticut thrift.

First Union is on pace to originate nearly $6.5 billion in mortgages this year - a level that would put it among the top 20 originators. Last year it was No. 32.

The company had been reducing its wholesale business in the last few years because of profitability problems, said Debra Warren, a First Union Mortgage senior vice president and head of residential lending. Wholesale production includes loans originated through a network of mortgage brokers and correspondents.

But First Union hopes it has learned from its mistakes. And rather than start a new wholesale division, it jumped back into the business through its acquisition of Center Financial.

"Our long-term intention was always to get back into wholesale," Ms. Warren says. "Strategically there was a good opportunity when we merged with Center Financial."

With that acquisition, First Union inherited Center Financial's successful wholesale lending division, which was led by Mr. Wilson. First Union retained the staff in the division's Waterbury, Conn., office, plus 11 regional wholesale offices that conduct business with over 1,500 brokers.

"First Union has done a good job of integrating the wholesale unit and keeping it intact," said Thomas C. Brown, formerly the chief executive officer of Center Financial's Centerbank Mortgage unit. Mr. Brown is now the senior vice president for national accounts at the PMI Group, a San Francisco-based mortgage insurer.

Mr. Wilson said that having First Union as a parent has given his operation a larger stable of products to offer consumers. The wholesale division is producing more jumbo loans and adjustable-rate mortgages than it had as part of Centerbank, Mr. Wilson said.

Although mortgage companies are attracted to wholesale operations because of relatively low costs, it is a highly competitive business.

"It is difficult to operate profitably as a wholesale lender since it is so price-competitive; you could wind up cutting your own throat," said Rick Cossano, executive vice president of wholesale lending for Countrywide Credit Industries, the nation's largest wholesale lender.

Observers said First Union's addition of a major wholesale operation shows that the company wants to build its servicing portfolio. This could not be done by relying solely on production from retail branches, they said.

"You have to find continuous sources of originations, beyond the network of any one bank," said Edward Furash, chairman of Furash & Co., a Washington-based consulting firm.

First Union Corp. clearly has not been as active as other large banks in mortgage.

While its home loan division is by no means small - it originated $4.4 billion in loans last year and had a servicing portfolio over $50 billion - it pales in comparison to the massive mortgage banking operations that Norwest Corp., Chase Manhattan Corp., and Fleet Financial Group have built in the last few years.

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