Charter One Financial Inc. is moving quickly to consolidate its gains from the purchase of Rochester Community Savings Bank in upstate New York last week.

The Cleveland thrift's chief lending officer, John D. Koch, will oversee Rochester's Richmond, Va.-based mortgage banking unit, American Home Funding.

Formerly headed by Paul Reid-an ex-president of the Mortgage Bankers Association-American Home is expected to lend about $1.5 billion to homebuyers this year, mainly in Sunbelt and Middle Atlantic states that are new markets for Charter One. Together, Charter One and American Home Funding expect to make $4 billion of home loans this year.

"This acquisition catapults us into a significantly bigger role in mortgage finance," Mr. Koch said. The $19 billion-asset thrift, run by Charles J. "Bud" Koch-older brother of John Koch-is the Midwest's largest. It is considered an astute player in the low-margin mortgage business.

Charter One also tapped Edward J. Pettinella, a former executive vice president at the Rochester bank, to head the new western New York operations.

Mr. Pettinella, 45, will run retail operations in the 38 Rochester Community Savings branches-21 in Rochester and 17 in Buffalo. He will also scout for acquisitions in upstate New York and in Charter One's original midwestern markets.

Charter One wants to capitalize on Rochester Community Savings' local roots by hanging on to the New York thrift's name. But the New York employees will have to adapt to Charter One's more aggressive sales practices, Mr. Pettinella said Tuesday.

"The biggest challenge I see right now is to convert the old RCSB culture into Charter One's style," he said.

Charter One sells a wider array of mortgages and home equity loans than Rochester did, Mr. Pettinella noted. The first order of business is introducing those products to Rochester Community Savings branches, he said.

With the acquisition, Charter One expects to become a dominant mortgage player in the western New York market. "Generally when Charter One enters a new division, they become a dominant player in the first couple of years," Mr. Pettinella noted.

Charter One has done that in southeastern Michigan, where it bought Detroit-based First Federal of Michigan in 1995. Mr. Pettinella said Charter One is busy beefing up the staff of loan officers in Rochester and Buffalo.

Rochester Community Savings will also introduce business loans and commercial mortgages into its branches, Mr. Pettinella said.

Meanwhile, Charter One wants to increase American Home Funding's market share in the mortgage bank's regional markets by giving loan officers there the chance to sell Charter One's portfolio loans-such as adjustable-rates and 85% loan-to-value mortgages without private mortgage insurance.

American Home Funding's facility with so-called flow sales to the secondary market-that is, the sale of loans as they're made-should also strengthen Charter One as a whole, Mr. Koch said.

"It gives us added flexibility," he said. "When the day is done, we'll be even a little more aggressive in our primary market."

Though considered a significant secondary market player, Charter One mostly sells bulk packages of loans to Fannie Mae and Freddie Mac. That is, it makes the loans, holds them for some time, and then sells them.

Charter One also will use American Home Funding's branch network to generate referrals for its fledgling subprime finance division, which has generated about $90 million of home equity loans since it started this year, Mr. Koch said.

With the Rochester Community Savings deal, Charter One also picked up an auto finance company. American Credit Services Inc. will lend about $1.2 billion this year to A and A-minus car buyers through East Coast auto dealers.

Rochester Community Savings branches will switch to Charter One's computer systems in early December. Of its 1,000 employees, Rochester will shed about 200-mostly in the thrift's accounting and treasury division.

American Home Funding will be renamed Charter One Mortgage Corp. next month.

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