PNC Bank Corp. has begun a major expansion of its mortgage operations even as other lenders are pulling back.

The Pittsburgh-based institution will blitz the country with new offices, especially in the West, in the first half of this year, according to Saiyid T. Naqvi, chief executive of PNC Mortgage Corp.

PNC is also takeover-minded. "We're looking at retail acquisitions in all parts of the country," he said in an interview with American Banker.

Industry observers say PNC may be in the vanguard of a new movement in mortgage banking as midsize lenders begin to take aggressive steps to build business and achieve economies of scale. With mortgage origination volume expected to slip this year, higher market share would be readily available only through acquisitions.

"There does appear to be some shuffling going on," said Brenda White, who follows the mortgage industry as a managing director at UBS Securities. "Some players will attempt to better leverage their infrastructures and spread their overhead over more units."

The trend would counter a dry spell for retail office openings and purchases that began in 1996. Already, there are some signs of change. For instance National City Corp., a midsize lender looking to build business nationwide, disclosed plans last week to buy 61 mortgage offices from Bank United of Texas.

PNC is hardly shy about making its intentions known. Right now, the lender makes the list of the top 20 servicers, with $39.8 billion in its portfolio. It had $5.6 billion of originations in 1996. Those numbers could change dramatically if Mr. Naqvi's aggressive plan succeeds.

Mr. Naqvi, who came on board with PNC's 1993 purchase of Sears Mortgage Corp., said there has never been a better time for PNC to act. The the field is rife with opportunities now that once-mighty players are pulling back instead of opting for expansion, he said. Indeed, a number of large lenders, such as Great Western Financial Corp. and KeyCorp, have dramatically scaled down operations over the past year.

"Usually when others exit, it's a good time to get marching," said Mr. Naqvi, a military history buff.

He said PNC was hitting the ground running with plans to open 30 offices by March and another 10 by June, bringing its total mortgage sites to 119. The company is maintaining a retail thrust after dropping outside brokers last year.

PNC Mortgage is prepared to buy businesses on the retail and servicing sides. "If (industry leader) Norwest Mortgage was to sell, well, that's too big," Mr. Naqvi said. "But if there was a retail operation with 250 salespeople, we may want to acquire them."

Along the way, PNC plans to attract top talent, Mr. Naqvi said. He cited as an example Robert Lee, a former division manager for Norwest Mortgage Inc. who was recently hired to head PNC's Western initiative.

The plans by the mortgage unit clearly signal that it has put its house in order, successfully melding the technologies of PNC and Sears Mortgage. The two were on different software systems at the time of the merger and finally decided to go with one supported by CPI, now part of Alltel Corp., after a drawn-out evaluation.

The mortgage unit's expansion strategy fits well with PNC Corp. chairman Thomas H. O'Brien's plans for the banking company.

"Our objectives for 1997 include continued focus on a number of growth initiatives," Mr. O'Brien said.

Mr. O'Brien is also driving to reduce customers' reliance on branches by switching them to electronic banking. But analysts do not see a conflict with the mortgage unit's brick-and-mortar growth plans.

"You want a face-to-face presence in certain cases, like mortgages, where there are cross-selling opportunities," said Frank J. Barkocy, a banking analyst with Josephthal Lyon & Ross, New York.

Indeed, "We are a vital part of the overall banking operation," Mr. Naqvi said. The parent company "has given us the green light to go out and find value."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.