Cleveland's National City Corp. took a step toward diversifying its mortgage-asset mix this week with a deal for nonagency lender First Franklin Financial Cos.

The San Jose, Calif., company, a unit of a private equity investment affiliate of Bank of America Corp., is said to be worth $80 million to $100 million.

First Franklin originates loans that do not meet the guidelines of secondary market agencies but do not fall into the subprime category. The company said it originated $1.8 billion of these loans in the first half, and it projects originations for the year of more than $4 billion.

Steven Skolnik, First Franklin's executive vice president of production, said finding a buyer has always been part of the company's strategy. He said the company sells all its loans, relying mostly on a half-dozen entities, including Merrill Lynch & Co., Equicredit, Bank One Corp., Lehman Brothers Inc., and Residential Funding Corp.

A spokesman for National City said the banking company has the option to hold some of the loans in portfolio.

After closing the transaction, First Franklin is to operate autonomously, and Mr. Skolnik said it plans to retain its management team and staff.

National City sees "a lot of crossover with the customers that we bring in and the business that they already have," Mr. Skolnik said. "With us bringing in 5,000 new borrowers a month there could be a lot of cross-sell to their credit card, home equity, auto loan businesses, etc."

Michael L. Mayo, an analyst at Credit Suisse First Boston, said the deal would increase National City's originations by about 15% but that that may not be as good as it sounds.

"When it comes to mortgage originations, the trend is not your friend," Mr. Mayo said. "Originations are likely to slow, and we are probably closer to the top of the cycle than the bottom."

Through June 30, National City said it had originated $9.4 billion of first mortgages.

The company has offices in Ohio, Pennsylvania, Michigan, Indiana, Kentucky, and Illinois. It has said it would like to expand its business on the West Coast, where it does not have a large presence, and this may have attracted it to First Franklin.

National City may have been "impressed by First Franklin's management team and feel that it's a good channel to have," said Chip Dickson, an analyst at Salomon Smith Barney. "And clearly, the geography helped too."

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