Magazine article American Banker

Michigan National's Mortgage Unit for Sale

Magazine article American Banker

Michigan National's Mortgage Unit for Sale

Article excerpt

Michigan National Corp., under pressure from stockholders to improve its performance, has put its large mortgage banking unit on the auction block.

The company has retained Cohane Rafferty Securities, Harrison, N.Y., to advise it on selling Independence One Mortgage, which services $9 billion in loans across the country. Market sources said the unit could fetch well over $100 million.

Douglas E. Ebert, Michigan National's chief operating officer, confirmed rumors about the sale effort. He said it was part of a strategy to refocus the banking company on its home state.

The sale effort comes amid mounting speculation that the bank, with $10 billion of assets, will either be restructured or sold in its entirety. The company said last month that it had hired Keefe, Bruyette & Woods Inc. to advise it on "various financial matters."

Michigan National, based in Farmington Hills, Mich., returned just 0.23% on its assets last year, the worst performance among all U.S. banking companies with assets of $10 billion or more. As a result, shareholders have been demanding action.

In moving to shed Independence One, Michigan National is bucking a trend. Many commercial banks have been buying mortgage banks in attempts to boost fee income and forge closer ties with consumers. Among the buyers: Bank of America, Boatmen's Bancshares, and Chemical Banking Corp.

Mr. Ebert said the key issue was that Independence One needed additional investment to build production capability, but that the funds might be better spent on strengthening the bank's core Michigan business. …

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