One of the nation's fastest-growing mortgage companies, citing competitive pressures, is retreating from the business.

Citizens Mortgage Corp., which jumped to 40th place from 56th among the nation's loan servicers in the first half of this year, plans to sell its $12 billion servicing portfolio, exit wholesale lending, close its Atlanta headquarters, and seek a partner for its retail lending.

The decision by the parent Citizens Financial Group to sell what has been a profitable business is the latest in a string of moves by financial institutions seeking survival strategies in a business increasingly dominated by giants.

One industry expert noted that the combined market share for the largest 25 servicers had more than doubled in recent years. "This is a commodity business. The benefits are migrating primarily to the low-cost producers," said Thomas J. Healy, director of the mortgage strategies group at CoreStates Capital Markets, Fort Lauderdale, Fla.

In recent months, Barnett Banks has announced that Household Credit Services would manage most of its struggling credit card portfolio and that it would merge its Jacksonville, Fla., mortgage banking subsidiary with BancBoston Mortgage.

And Weyerhaeuser Co., the forest products giant, announced two weeks ago that it was likely to spin off or sell its already scaled-down mortgage subsidiary.

Stephen Steinour, chairman and chief executive of Citizens Mortgage, said the unit's servicing portfolio was on track to set profit records, but that wasn't enough to justify holding onto it.

"We remain too small to compete effectively with large national mortgage servicers where critical mass is key," Mr. Steinour said.

Citizens has hired Goldman, Sachs & Co. to look for buyers.

The servicing portfolio was the nation's 40th-largest at midyear after 12 months of strong growth - 33%. Recent transactions suggest it could fetch $150 million.

But if a $12 billion servicing portfolio is "too small," then how big does a mortgage servicer have to become in order to survive?

Robert Husted, a principal of MIAC Risk Management Services, said that companies with servicing portfolios of $5 billion to $15 billion have to be willing to bulk up or else sell while the market for servicing portfolios is still hot.

"They're competing against $100 billion behemoths. They either can make the decision to become one of those behemoths or make the strategic decision to exit the business and capitalize on the high market values," he said.

Citizens apparently was not willing to go on an acquisition binge of its own. James Dorsey, senior vice president of Citizens Financial Group, said the Providence, R.I.-based subsidiary of the Royal Bank of Scotland is "first and foremost a community bank." He added that Citizens Financial could not be both a full-scale mortgage servicer and a traditional savings bank.

But Citizens Financial is not completely exiting the mortgage business. The company said it expected a sale to be completed within six months and that proceeds would be used primarily to bolster its retail lending in New England.

Mr. Steinour added that he expects the acquirer of the servicing to also be a "strategic partner" that will service New England loans that Citizens originates.

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