Hibernia to sell $10B mortgage portfolio to CitiMortgage

Austin Business Journal
August 19, 2004

Hibernia will continue to service about $2 billion of its adjustable rate mortgages and to own a $650 million portfolio that's serviced by other companies. It also will continue to originate home loans.

"Fluctuating interest rates over the past two years have impacted the value of mortgage servicing rights and resulted in volatility in the mortgage servicing income stream for Hibernia and many other banks," says Paul Peters, mortgage banking president for Hibernia.

"Based on our ongoing analysis of the mortgage servicing asset and our desire to limit earnings volatility in this area, we decided to exit the third-party mortgage servicing business. We will now direct most of our mortgage banking efforts toward retail residential origination and release the servicing rights to others in the industry."

The deal is expected to be completed by Sept. 30.

About 80 people work in Hibernia's mortgage servicing operation in Baton Rouge, La. Some positions are expected to be eliminated, Hibernia says. However, the company plans to hire many of the affected employees. Workers who aren't kept will be given severance packages and outplacement assistance.

Hibernia has $21.3 billion in assets and 310 locations in Texas and Louisiana. Hibernia National Bank has two locations in Austin and one location in Giddings.

CitiMortgage is a subsidiary of New York-based financial services giant Citigroup Inc. (NYSE: C).

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