Fleet Financial Group is moving to stabilize its large mortgage unit after a long series of executive departures.
Fleet has named vice chairman H. Jay Sarles to the additional post of chairman of Fleet Mortgage Group, a spokesman confirmed. And Michael J. Torke, vice president for strategic planning at the unit, has been named president. The unit is expected to soon announce more appointments.
Mr. Sarles, an executive with a reputation for curing ailing businesses at Fleet, assumes oversight of the mortgage unit from Fleet vice chairman Michael R. Zucchini.
"Jay Sarles is Mr. Fix-It," said Sally Pope Davis, a Goldman Sachs analyst.
Fleet Mortgage, the nation's fourth-largest servicer of home loans, has lost nine top-level executives in the past few years, including three chief executive officers.
The turnover at the Columbia, S.C., unit has become something of an industry spectacle. "They're making bumper stickers that say 'Honk if you've headed Fleet Mortgage,'" quipped one analyst.
Though Fleet does not report the unit's earnings, analysts say the performance has fallen short of the parent's goals.
Gerard Cassidy, an analyst who covers Fleet for Tucker Anthony in Portland, Maine, said that Fleet's original goal in 1996 for the mortgage division was net income of $100 million. Executives later reduced the estimate to $60 million or $70 million.
Mr. Sarles, who has been with Fleet since 1968, spearheaded the successful integration of Bank of New England Corp. in 1991. Merging Fleet with Bank of New England quickly was crucial, observers said, to insuring the health of the bank.
He also has experience in mortgage banking, having helped Fleet to become a major player in servicing. Fleet now processes monthly payments on some $122 billion of mortgages.
"Mr. Sarles has developed good skills over the years in putting his Midas touch on divisions to improve their profitability," said Mr. Cassidy.
Mr. Zucchini, previously the technology guru at Fleet, was given responsibility for the mortgage division, and all consumer lending, in 1993. He will remain technology chief and focus on converting former Natwest operations to Fleet systems, a company spokesman said.
Mr. Torke's appointment as president of the mortgage unit follows Richard A. Mirro's defection to Dime Bancorp's revamped mortgage unit in Tampa last month.
But industry observers said that in Mr. Torke, Fleet may have finally found someone that would be committed to heading the mortgage business for the long haul. Unlike Mr. Mirro and his predecessor, Gerald L. Baker, who were brought in from outside, Mr. Torke is a 18-year veteran at Fleet Mortgage.
One of Mr. Torke's main tasks will be beefing up management. Nancy Boles, senior vice president for marketing at Fleet Mortgage, said the group would make an announcement soon regarding other appointments at Fleet Mortgage.
People who have worked with Mr. Torke said he has a reputation as a "numbers guy" with his eyes on the bottom line. "He'll do whatever he has to do to make the division profitable," said a former co-worker.
Kevin D. Race, formerly president and chief financial officer of Fleet Mortgage, said Mr. Torke is "a solid mortgage banker."
"He'll do very well for Fleet, and he deserves the appointment,"said Mr. Race, who is now chief financial officer of HomeSide Lending Inc., Jacksonville, Fla.
While analysts say that Fleet is casting a cold eye on underperforming units, the company says that Fleet Mortgage is not on the block. "Fleet Financial is fully committed to the mortgage unit, and we consider it a core business," a spokesman for the company said.
Fleet Mortgage is planning to build originations in the upcoming year by relying more on Fleet Financial's retail bank franchise in the Northeast, he added.
The company did announce last week that it would sell off its subprime home lender, Option One Mortgage, which operated independently from Fleet Mortgage. The move is striking because it comes as many banks seek to enter the highly profitable subprime sector.
Option One, which Fleet picked up during its purchase of Plaza Mortgage in early 1995, originated $1 billion of loans last year through 11 retail branches, and services almost $2 billion.
The sale represents Fleet's "back to basics" approach to mortgage lending, according to a source close to the company.
Some observers say Fleet is still leery of the nonconforming loan business after a string of lawsuits charging that Fleet Finance, a subprime division, gouged borrowers. The suits culminated in a "60 Minutes" expose that left Fleet's reputation tainted and spurred the bank to sell off all the Fleet Finance branches.
Option One is expected to fetch about $100 million, according to a former Plaza Mortgage executive.