AmSouth Bancorporation Sells $6 Billion Mortgage Portfolio to GE Capital Mortgage Services

Strategic Insights -

Birmingham-based AmSouth Bancorporation has agreed to sell its $6 billion third-party mortgage servicing portfolio to GE Capital Mortgage Services, Inc. The portfolio comprises approximately 120,000 mortgage loans and is expected to generate a pre-tax gain of $20 million to $25 million for AmSouth in the second quarter. This sale is part of AmSouth's comprehensive productivity improvement and balance sheet restructuring project, which includes initiatives such as early retirement options, branch office consolidation, and cost reduction programs. The transaction is expected to have a minimal impact on mortgage holders, who will be contacted soon with additional information.

Key Takeaways:

  • AmSouth Bancorporation has sold its $6 billion third-party mortgage servicing portfolio to GE Capital Mortgage Services, Inc.
  • The portfolio comprises approximately 120,000 mortgage loans.
  • The sale is expected to generate a pre-tax gain of $20 million to $25 million for AmSouth in the second quarter.
  • This sale is part of AmSouth's comprehensive productivity improvement and balance sheet restructuring project.
  • Other project initiatives include early retirement options, branch office consolidation, and cost reduction programs.
  • GE Capital Mortgage has contracted AmSouth to continue servicing the loans until June 30.
  • AmSouth will continue making mortgage and home construction loans through its branch banking network in four states.
  • AmSouth's loan portfolio totals approximately $4 billion in mortgages.
  • AmSouth reported assets of $16.8 billion at year-end 1994 and operated 309 offices throughout the southeastern United States.
  • The transaction was handled by Salomon Brothers Inc. on behalf of AmSouth.
  • GE Capital Mortgage Corporation is a unit of GE Capital Corporation, a diversified financial services company and a wholly-owned subsidiary of General Electric.

Statistics:

  • $6 billion: Value of the mortgage servicing portfolio sold by AmSouth to GE Capital Mortgage Services, Inc.
  • 120,000: Number of mortgage loans in the portfolio.
  • $20 million - $25 million: Expected pre-tax gain from the sale for AmSouth in the second quarter.
  • 145: Number of AmSouth offices in Alabama.
  • 137: Number of AmSouth offices in Florida.
  • 22: Number of AmSouth offices in Tennessee.
  • 6: Number of AmSouth offices in northwest Georgia.
  • $16.8 billion: AmSouth assets reported at year-end 1994.

Sources:

  • PRNewswire - "AmSouth Bancorporation (NYSE: ASO) has entered into a contract to sell the $6 billion third party mortgage servicing portfolio...". (No date mentioned)
  • Company statements - Chairman and CEO John W. Woods, and GE Capital Mortgage Corporation.
  • AmSouth Bancorporation - Press release announcing the sale of the mortgage servicing portfolio.
  • Salomon Brothers Inc. - Handling details of the servicing sale for AmSouth.
  • GE Capital Mortgage Corporation - Based in Raleigh, N.C., and a unit of GE Capital Corporation.