N.Y. Combo Won't Create Monolith

The New York megamerger looks like a yawner for the mortgage banking world.

While Chemical is a big-time mortgage banker, Manufacturers Hanover Corp. is not. Hanover has recently shown increased interest in the field, but it generally has laid low since selling a large mortgage banking unit in 1986.

Thus, the new Chemical Banking Corp. would not be much bigger in mortgage banking than the old one.

In servicing, for example, the company would start off with a portfolio of about $18.5 billion, possibly becoming the nation's 10th-largest servicer. But the portfolio would be only 14% larger than Chemical's existing one (ranked No. 12), suggesting that economies of sale will be moderate at best.

Competitors Unfazed

While the new company would enjoy a vast branch network, many rivals see no immediate threat in originations. "It really doesn't make any difference if they operate as two companies or as one," says a mortgage executive at a competing New York bank.

In metropolitan New York, the new company apparently would rank No. 3, after Citicorp and Green Point Savings Bank, based on data from Mortgage Information Corp. of America. In the the first quarter of this year, Chemical was No. 4 and Hanover No. 7.

Nationwide, Chemical wrote $4 billion of mortgages last year, ranking No. 11, according to SMR Research. Hanover did not rank in the top 25.

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