The home mortgage industry may be one of the first fields to feel the reverberations of NationsBank's acquisition of Boatmen's Bancshares.
The megadeal would vault NationsBank into an exclusive club of six companies that each service more than $100 billion of mortgages. And by greatly strengthening NationsBank's presence in the Midwest, the deal positions the company for national leadership in mortgage originations.
The new heft - including a 25% jump in loans serviced - could well sharpen the company's competitive edge in an industry racing to achieve new economies of scale.
"I want to be the lowest-cost provider," declared Andrew D. Woodward, president of NationsBanc Mortgage Corp.
NationsBanc Mortgage, based in Charlotte, N.C., processes monthly payments on $81.4 billion of loans, and St. Louis-based Boatmen's handles $20.2 billion.
The other servicers with $100 billion or more are Norwest Mortgage Inc. in Des Moines; Countrywide Credit Industries in Pasadena, Calif.; GE Capital Mortgage Corp. in Raleigh, N.C.; Fleet Mortgage Group in Columbia, S.C.; and Chase Manhattan Mortgage Corp. in Edison, N.J.
Mr. Woodward, in his first interview since the deal was announced, said the deal would significantly boost his company's business in government- insured mortgages.
"We're typically more conventional-loan oriented, while they have a bit higher government concentration," Mr. Woodward said.
Mr. Woodward, as head of the larger organization, is widely expected to take the helm of the combined operation and bring along many of his lieutenants.
Mr. Woodward declined to discuss the future of Boatmen's personnel, including William K. Carson, chairman of Memphis-based Boatmen's National Mortgage.
"We're just meeting each other," Mr. Woodward said.
One executive with Boatmen's mortgage group said he believes there would be room for plenty of representation from both sides.
"I think it will be a good mesh," said E. Garland Faison, Boatmen's regional wholesale manager in the South.
Analysts also give a thumbs-up to the mortgage combination.
"You're looking for diversity, size, and economies of scale," said George Salem, banking analyst at Gerard Klauer Mattison in New York. "The mortgage company is getting all that."
NationsBanc Mortgage is no stranger to mergers. The unit has expanded rapidly in recent years as a result of bank acquisitions by its parent and some deals of its own.
In 1995, for example, the unit's portfolio nearly doubled through the acquisitions of a $25 billion portfolio from KeyCorp and a $10 billion package from Source One Mortgage Service Corp.
Analysts say Boatmen's has done well at merging the various purchases, including the February 1995 addition of National Mortgage, which quadrupled servicing to more than $16 billion.
Though the origination operations of NationsBank and Boatmen's generally do not overlap - NationsBank's mortgage offices are mostly concentrated on the East Coast, whereas Boatmen's are in the Midwest - there could be a complication in the servicing business: Each company brings two mortgage servicing centers to the table.
Analysts question whether all four are necessary. Mr. Woodward said servicing issues are under review, and he declined to predict how many, if any, centers might close.
Boatmen's handles most of its servicing in Memphis, and a smaller unit handles some volume in St. Louis. NationsBank has servicing centers in Louisville, Ky., and Buffalo.
The companies are already on the same path from a technology standpoint, as Boatmen's is in the process of converting to the same Alltel Inc. CPI interchange system that NationsBank uses, Mr. Woodward said.