Shearson Has Buyer for Mortgage Unit : Finance: A Trans-Arabian Investment Bank affiliate and a group of Hamilton Savings Bank owners have tentatively agreed to pay $238 million.


After months of negotiations with several prospective buyers, Shearson Lehman Bros. has reached a tentative agreement to sell its Irvine-based mortgage banking company to a group of Middle Eastern and American investors for about $238 million.

American Mortgage Servicing, the company formed to purchase Shearson Lehman Mortgage Corp., is made up of a Trans-Arabian Investment Bank affiliate and a group of Hamilton Savings Bank owners. Trans-Arabian is a merchant banker headquartered in Bahrain, and Hamilton Savings is based in San Francisco.

“We’re moving expeditiously toward a definitive agreement,” said Paul Siegel, president of Hamilton Savings and an investor in American Mortgage. “So far, we have only signed a letter of intent, but we believe that the financing is there.”

Although Siegel would not elaborate on the negotiations, he said Hamilton Savings is trying to build up its loan servicing business.


Shearson Lehman Mortgage “has a high-quality servicing portfolio that we would like to add to ours,” Siegel said. Hamilton Savings, with assets of $335 million, serviced about $2.3 billion in home mortgages this year, he said.

The nation’s 12th-largest servicer of home mortgages, Shearson Lehman Mortgage is the broker-dealer affiliate of American Express Co. It managed about $19 billion in mortgages and home equity loans in 1991, said Steven Faigen, a spokesman for Shearson Lehman Bros. in New York.

Faigen declined to comment on the tentative deal. “The firm has engaged in discussions with a number of parties interested in the possibility of acquiring our mortgage business,” he said. Sources have said that other companies interested in the Irvine unit included BankAmerica Corp., General Electric Capital Corp. and Sears, Roebuck & Co.

The company has about 400 employees, many of whom would be retained in a transfer of ownership, according to the letter of intent signed by the prospective buyers.


The New York parent company put the mortgage unit on the block last year as part of a plan to divest its real estate operations and focus on its core brokerage and investment banking businesses.

“Many financial institutes are attempting to reduce their exposure to real estate markets during this difficult period,” said Walter P. Fitzgerald, an analyst with Baird Patrick Co. in New York. The $238-million price tag for the mortgage company “sounds fair,” he said.

The letter of intent said Creditcorp Investments, an affiliate of Trans-Arabian, and the Burr Group, whose owners bought Hamilton Savings in 1984, would provide $60 million in equity for the deal and attempt to raise an additional $60 million. New York-based Citibank would seek to raise the remaining $120 million.

Shearson Lehman Mortgage was originally called Southern California Mortgage & Loan Corp. when it was founded in San Bernardino 45 years ago by Frank Whitelock.


Whitelocks’ grandson, Frank O’Bryan, renamed the company Western Pacific Financial Corp. in 1973 and moved it to Orange County a few years later. He sold the company to the Shearson Hayden Stone brokerage for $16 million in 1979, just before Shearson merged with American Express.

Walter P. Blass, chairman of Shearson Lehman Mortgage, could not be reached for comment.