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Chase buys $16B loan biz
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January 8, 2001: 10:11 a.m. ET
Deal for Advanta's mortgage servicing unit bolsters top-ranked lending operation
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NEW YORK (CNNfn) - Chase Manhattan Mortgage Corp. signed a definite agreement Monday to purchase Advanta Corp.'s $16 billion mortgage business, significantly bolstering a loan servicing business that already is one of the nation's largest.
In addition to Advanta's (ADVNB: Research, Estimates) $15.8 billion mortgage loan servicing and subservicing portfolio, the acquisition will provide Chase with an additional 200,000 customers and an added annual origination capability of more than $1 billion.
The deal also will once again transfer Chase's non-prime mortgage business back under the company's control. Advanta has been subservicing that business for Chase, the No. 1 U.S. residential mortgage lender and No. 2 servicer, in addition to its own non-prime business, which is ranked among the largest in the United States.
 The companies did not provide an acquisition price for the all-cash transaction, but in a prepared statement, Advanta Chairman and CEO Dennis Alter said he expected to "receive a price in excess of book value."
Alter said the transaction also would "enable Advanta to further concentrate on the small business market, primarily through its profitable credit card business, already one of the nation's largest issuers of Master Card business credit cards to small businesses."
The agreement completes a dramatic transformation at Advanta. Battered by defaults and delinquent payments, the Philadelphia-based company sold its massive credit card portfolio in 1998 to concentrate on the less-risky sub prime lending business. Monday's transaction leaves the company primarily as an operator of business credit card portfolios.
The transaction is the first major acquisition made by Chase's parent company, J.P. Morgan Chase & Co. (JPM: Research, Estimates), since the blockbuster merger of J.P. Morgan and Chase Manhattan Corp. earlier this year.
Advanta shares rose $1.25 to $9.13 shortly after the opening bell Monday while J.P. Morgan fell 6 cents to $48.44. 
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