J.I. Kislak & Co., a major mortgage bank based in Miami Lakes, Fla., said Tuesday that it has agreed to merge with Farragut Mortgage Co., Mansfield, Mass.

The combined companies will have a mortgage-servicing portfolio of more than $12 billion and origination capability of $5 billion a year, the companies said.

Company Rankings

The new company, which will operate under a variation of the Kislak name, could be within striking distance of becoming one of the nation's 25 largest servicers.

According to the most recent ranking of mortgage companies by the American Banker, Kislak was the nation's 38th largest servicer as of June 1992, and Farragut ranked No. 164.

Shares of Farragut, traded on the American Stock Exchange, fell 25 cents Tuesday, to $5.875 a share, following the merger announcement. At that price, Farragut has a market value of about $25 million.

Last year, Farragut acquired Alta Mortgage Co., Martinez, Calif., for $10 million in a deal that nearly doubled its servicing portfolio.

Kislak, which has subsidiaries in the mortgage business, real estate brokerage, and insurance, is privately held. It has about 1,200 employees, while Farragut has about 150.

Shareholders of Farragut will own about 11% of Kislak after the deal. One Farragut director will be added to the present board of Kislak.

Approval of stockholders of both companies is still required. A group that holds about 40% of Farragut already has agreed to vote in favor of the deal, as has Jay I. Kislak, the principal stockholder of J.I. Kislak Inc.

Mr. Kislak will continue as chairman of the combined companies. William P. Soper 2d, Kislak's president, will also continue in that capacity.

The companies said the deal was expected to close by the fall.

Farragut operates origination offices in the Northeast, West, and Northwest. Kislak's mortgage business is mainly in Florida, New Jersey, Illinois, and California.

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