Business at one of the last big independent mortgage companies, North American Mortgage Co., Santa Rosa, Calif., is sluggish.

Loan originations in July were $708 million, only slightly higher than the previous July's $701 million. Applications were down slightly from those in July 1995.

But the dollar volume of originations for the first seven months of 1996 was up smartly, because of strength in the early months that has since dissipated.

While small and midsize lenders lately have been rushing to leave the mortgage business, North American's conservative accounting has helped it survive a competitive market and do well despite paper thin margins, observers said.

Gareth Plank, an equity analyst at UBS Securities, San Francisco, said that though North American's July production was $14 million less than he expected, the company collected $100 million more in loan applications than he had anticipated.

"If new-home purchase activity continues at a pretty good pace, they'll have a pretty good August," he said.

Despite the 30-year Treasury bond's weak performance so far this year and the relatively high interest rates that resulted, Mr. Plank said, he expects North American to originate about $9.5 billion of loans this year, up from $7.5 billion in 1995.

The recent rally in Treasuries has pushed rates back down, but that is unlikely to have much impact on volume before September because of the time required to process applications and close loans.

North American officials were unavailable to comment.

While the lender's production was up in the first seven months, its stock price bottomed out at $14.75 a share in mid-July.

North American does not retain a large servicing portfolio, as many others lenders do. Such portfolios usually cushion the impact of declining origination volume. Because the company's revenues are directly tied to originating mortgages, its stock tends to move with interest rate swings.

Despite the company's practice of selling loans and servicing rights almost immediately after origination, North American's servicing portfolio grew slightly, to $14.3 billion at the end of July, from $13.8 billion a year earlier.

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