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It didn't take long for NationsBanc Mortgage Corp. to realize Upstate New York was not going to be the huge loan origination market it projected it to be. The loan giant has shuttered its Buffalo, Rochester and Albany origination offices.

The closings of the production offices, which employed a total of 15 people, do not affect the firm's massive mortgage servicing complex in Williamsville. That operation employs 650 and handles a portfolio of $59 billion.

Less than nine months after predicting $65 million in mortgage originations during the second half of 1997, and between $125 million and $150 million in originations for all of 1998, the mortgage banking arm of banking behemoth NationsBank is gone.

"We have fairly high standards for our loan production offices in terms of productivity and profitability and it became apparent these offices weren't going to meet or exceed those standards," said Ellison Clary, a NationsBanc Mortgage spokesperson.

Indeed, a quick look at recent loan production shows NationsBanc was way off any projection. During July and August combined, the firm originated just 20 loans totaling $1.23 million in Erie County, according to figures compiled from county records by Ticor Title Corp.

This compares to well established players such as Marine Midland Mortgage Corp., which, in August alone recorded 210 loans for $17.12 million.

The three upstate offices were supposed to be the first of six offices set for the Northeast. Three offices also were to open in New Jersey, but they never opened, and the company now does not look to establish a freestanding presence there anytime soon.

The closings by NationsBanc did not surprise George Yacik, a vice president with SMR Research, a Budd Lake, N.J., firm that follows the mortgage industry. "It's part of a trend in the industry; companies are pulling back into areas where they have a lot of name recognition," he said.

Yacik stated the obvious: It costs a great deal to maintain a free-standing office, particularly when it has little in the way of name recognition from a branch network.

"New York State is kind of out of the loop for NationsBank, although it's growing everywhere else," he said.

The Charlotte-based bank within the last 13 months has spent $9.3 billion for St. Louis-based Boatmen's Bancshares Inc. and $14.6 billion for Barnett Banks of Jacksonville, Fla.

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