Jay I. Kislak, chairman and chief executive of J.I. Kislak Mortgage Corp., Miami Lakes, Fla., servicer, confirmed this week that the company was close to a sale to SunTrust Banks Inc. of Atlanta.

"I can't comment on any of that issue right now," the 73-year-old CEO said, "but most of what's been reported in the papers is true."

SunTrust was reported in January to be the highest bidder for Kislak - an acquisition that would almost double its $10.6 billion servicing portfolio and help extend SunTrust's reach into Florida and adjacent areas.

A SunTrust executive said the two companies had "no merger agreement as of yet," but analysts who follow the company say that the acquisition would be in line with SunTrust's current growth strategy.

J.I. Kislak would be a good fit geographically for SunTrust. At the same time, Kislak's servicing portfolio - mainly fixed-rate mortgages - would make competing in the servicing market easier for SunTrust.

"It's in line with a lot of the bigger banks, who are opting to go for economies of scale" in their servicing portfolios, said Kathryn Bissette, an analyst with Sterne, Agee & Leach, Atlanta. She cited Barnett, NationsBank and First Union as banks in the Southeast with similar servicing acquisition strategies.

Kislak may have taken a few knocks last year because of the get-big-or- get-out culture of the servicing market. The company's portfolio fell about 10% between 1994 and 1995. "We were having difficulty rationalizing the price you have to pay for servicing and production" last year, Mr. Kislak said.

Although Mr. Kislak is almost certainly leaving the mortgage servicing business, he won't be catching any golf games, he said. He will continue to head the company's real estate brokerage, investments, and insurance branches.

The acquisition, while significant on the mortgage servicing side, is small compared with SunTrust Bank's total assets.

"SunTrust Banks is one of the more conservative acquirers out there," said Joel Gomberg, an analyst with Duff and Phelps. "They specialize in fill-in type acquisitions," he said.

Rather than choosing to dilute stock prices with a bank acquisition, SunTrust is opting for a focus on internal growth, many analysts say.

"Size is not the important factor," stressed the SunTrust Banks spokesman. "Whether or not it can contribute to the earnings stream is."

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