While some large banks are pulling back or even quitting the mortgage business, a rural West Virginia lender is going full steam ahead.

Wesbanco Inc. plans to acquire Universal Mortgage Co. to expand a mortgage effort that has so far has consisted of a limited menu of loans to branch customers.

The deal is being struck as banks like Wells Fargo & Co. and KeyCorp are sharply reducing their in-house mortgage operations. Wells Fargo last year retained Norwest Mortgage Inc. to handle originations, and KeyCorp sold off its servicing portfolio.

Wesbanco will exchange $800,000 in stock for the Bridgeport, W.Va., mortgage company, which has generated about $45 million of home loans annually since it was set up in 1992.

The Wheeling bank will rename the unit Wesbanco Mortgage Co. and operate it as a subsidiary that offers fixed- and variable-rate loans to bank customers and residents in West Virginia, said Wesbanco president Edward M. George.

"This acquisition will afford Wesbanco a more competitive position in the residential mortgage loan marketplace," Mr. George said.

The $1.4 billion-asset bank operates 32 branches in West Virginia and five in Ohio. It is also preparing to acquire a West Virginia lender, Bank of Weirton, which would bring $177,000 of assets and two more branches.

Once the Universal acquisition is complete, Wesbanco plans to expand the mortgage operation's geographic reach into other parts of West Virginia, and to Maryland and Pennsylvania, Mr. George said.

At the same time, the deal will give Wesbanco the ability to expand its servicing offerings, acting as a broker, acquirer, and servicer of loans.

The bank also wants to use the mortgage operation to cross-sell services like trust banking.

"We see the acquisition as a real fee generator for us," Mr. George said.

The bank will retain Universal's president, Ernest S. Fragale, to head the mortgage company. That should benefit both operations, Mr. Fragale said. "The strength and reputation of Wesbanco will be very beneficial as we expand our capabilities."

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