BANKING/FINANCE : Mortgage Firm Makes Colonial at Home With Housing Loans

With its recent acquisition of a mortgage banking company, Colonial Bank in Santa Ana joins the growing list of community banks offering home loans.

The bank bought AMC Financial in Newport Beach for an undisclosed price from Santa Barbara home builder A-M Homes and set it up as a subsidiary called Colonial Bancorp. All employees, about 45, were retained by the bank and will continue to fund home loans out of the unit’s four offices, in Newport Beach and Arcadia and in Northern California’s Los Gatos and Walnut Creek.

Most of Orange County’s community banks have picked up the slack in lending by the thrift industry and have been relying more on mortgage lending both as a way to reduce risk in their loan portfolios and to pick up fees.

AMC Financial had a monthly loan volume of about $30 million before the acquisition. While the lending volume dropped in the last month, Robert P. Zingg, Colonial Bank’s president, said he expects that the unit will soon resume funding loans at that pace.

The mortgage company should account for about one-third of the bank’s total lending, Zingg said. The small bank has been growing quickly, doubling its assets to $84 million from a year ago. The new unit is also expected to contribute significantly to the bottom line. The bank earned $97,000 for the first quarter this year.