Haven Bancorp, a small New York thrift, is close to announcing the purchase of Intercounty Mortgage, the retail lending subsidiary of Resource Bancshares Mortgage Group, sources familiar with the deal said.

A deal would end Resource's ill-fated venture into retail originations. Haven would gain the size to compete more effectively in the New York market.

"In order to be an effective player in this business you need scale," said James M. Ackor, an analyst with Tucker Anthony.

A spokesman for Haven Bancorp would not comment. Executives at Resource Bancshares could not be reached.

The sale of Intercounty, which is expected to fetch about $5 million, would leave Columbia, S.C.-based Resource exclusively a wholesale shop. The company originated $10.8 billion of mortgages last year. Nearly three quarters of that volume was bought from correspondents.

One analyst who asked not to be identified said Intercounty has been a "serious disappointment" for Resource. Resource started the retail unit in 1995 with several employees it hired from hometown rival Fleet Mortgage Group.

Intercounty did not produce as much volume as Resource was hoping for, the analyst said. In addition, a former Resource employee sued the company last year, alleging fraudulent activity at Intercounty.

Haven, the holding company for CFS Bank, originates loans through its bank branches, supermarket branches, and wholesale channels. The thrift has branches in New York City, on Long Island, and in Westchester and Rockland counties, as well as northern New Jersey.

The acquisition would nearly triple Haven's origination volume, putting it on track to originate more than $1 billion this year. Haven originated about $322 million of mortgages last year, while Intercounty originated $675.4 million. Investment bankers said originators are selling for about 0.75% of their annual origination volume.

Intercounty originates loans through six branches in New York, New Jersey, and Pennsylvania.

Thomas F. Theurkauf, an analyst at Keefe, Bruyette & Woods Inc., said it would make sense competitively for Haven to step up its mortgage lending operations outside of New York City.

Such a strategy would mirror steps by Dime Bancorp, GreenPoint Financial Corp., and Long Island Bancorp to increase their geographical reach through their mortgage companies, Mr. Theurkauf noted.

But Haven, with about $2 billion of assets, may find it more difficult to stay independent in New York's consolidating thrift market, Mr. Ackor said. North Fork Bancorp announced it was buying New York Bancorp last year, and rumors are currently centered on a merger between Astoria Financial Corp. and Long Island Bancorp.

In fact, Haven is no stranger to the merger activity in New York. The thrift rebuffed acquisitive overtures by North Fork in 1996.

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.