NationsBank Unit Said to Be a Bidder For AmSouth Loans

As if buying $545 million of loan-servicing rights were not enough, NationsBanc Mortgage Corp. is now eyeing a third deal.

Early word is that the NationsBank unit is among the bidders for the $10 billion loan portfolio of AmSouth Bancorp., market sources said.

Last week, the NationsBank unit announced that it was purchasing a $10 billion servicing portfolio from Source One Mortgage Services Corp. for a reported $195 million. A day later, the unit broke the news that it was paying $350 million for Keycorp's $25 billion servicing portfolio and related assets.

NationsBanc officials were sighted at AmSouth earlier this week, according to one source. Initial bids for the portfolio were due Tuesday, making it unlikely that a deal would be announced within a week.

An AmSouth spokesman confirmed that the bank was evaluating bids, "We are pleased with the response..and hope to have an announcement within a few days."

Although other companies are said to be interested in the package, their identities could not be learned.

AmSouth put the portfolio on the market last month. At the time, John W. Woods, AmSouth's chief executive officer, attributed the move to a lack of desire to build the scale necessary to maximum efficiencies.

"There is a high cost and a volatile earnings stream associated with the mortgage business, and it is difficult to achieve the level of business necessary to benefit from the economies of scale that larger mortgage- servicing companies achieve," he said.

Along with the servicing portfolio, AmSouth is offering eight originations offices that are situated outside its trade area. But because of severe price competition, originations business has not been profitable recently and demand for production capacity is almost nonexistent.

Several other banks are offering sizable mortgage-servicing portfolios for sale. Wachovia Corp. is currently accepting bids on its $9 billion portfolio and Bank of New York has a $9 billion portfolio on the market as well.

Kenneth Cline in Atlanta contributed to this article.

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