Community banks have come out swinging in the tough game of mortgage lending. The biggest movers are showing that tenacity, long-range planning and experience can go a long way.

And despite predictions of record low origination levels for this year, community banks say they are building personalized service and their ties to the community to stay active and competitive.

"We got a reasonable amount of business from local builders and realtors," said John R. Lamb, executive vice president of Community First Bank in Jacksonville, Fla., whose slogan is "Small Bank. Big Service."

After only a year in the mortgage business, Crescent Bank and Trust Co. in Jasper, Ca., is going ahead full throttle, successfully pitting an experienced staff against much bigger opponents.

"This team of professionals has been competing against some of the biggest southeastern institutions for 25 years," said Michael Caton, president of Crescent.

Rating Based on Servicing

To stay competitive, Carolina First Corp., Greenville, S.C., acquired a mortgage company in the middle of the state to take advantage of the burgeoning real estate market around Columbia.

The American Banker ranking of the most active community banks in mortgages appears on page 12A. The ranking is based on total servicing - mortgages held and those serviced for others - at banks with assets of $1 billion of less.

The top institutions gained little over the previous year's figures with No. 1 Bank of North America Bancorp, Fort Lauderdale, Fla., actually dropping off 1.2% from 1992's showing.

Other banks - such as No. 2 Central Mortgage Bancshares, Warrensburg, Mo., and Lombard, Ill.-based West Suburban Bancorp - fared better last year with strong jumps in their servicing portfolios.

Community First placed fifth, with $550 million in total loans serviced.

The Florida bank showed an 80% gain over 1992 figures, a jump Mr. Lamb - who also heads up the mortgage division - attributed to a lot hustle on the part of its loan officers.

Community First, which also operates in the Tampa-St. Petersburg area, built its servicing portfolio from loans it originated.

Many of the bank's officers bring in business through their ties to civic and professional associations that have allowed them to network within the area.

The strongest improvement, however, came from banks further down the list.

Carolina First placed 10th overall with $459 million of total mortgages serviced.

The company went to all ends of South Carolina for business.

According to Joseph Reynolds, president of Carolina First Mortgage Co., the company increased its servicing by 179%, mainly by buying and selling between subsidiaries located in strategic cities throughout South Carolina.

Canvassing the State

"We want to have all the services we can offer and all the business we can get,"

The subsidiaries, a mortgage company, a thrift, and a commercial bank, canvass South Carolina from Greenville in the north, to Myrtle Beach on the coast, to Columbia in midstate.

The strategy works, according to Mr. Reynolds, whose unit has been fed a steady stream of adjustable-rate mortgages from the other subsidiaries ever since the market switched over.

Carolina First is pricing competitively, and this year the company is aggressively pursuing the Federal Housing Administrations and Veterans Administration loan markets"which up till now we didn't pay much attention to."

Despite this year's bad tidings for the industry Crescent Bank and Trust's Mr. Caton has no regrets about getting into the mortgage business.

"We made a conscious decision, after seeing banks lose market share, to go into areas of business we could carve a niche in," he said.

The Georgia bank wanted to increase fee income and chose to do so by building a wholesale banking enterprise. Starting its servicing operation from scratch, it built the portfolio to more than $246 million.

The secret, Mr. Caton said, is to follow the lead of the big boys.

"It's a level playing field," he said.

"Most of our major competition is playing the same game.

The bank decided not to play a pricing game but to completely hedge its pool of loans and bring in an experienced mortgage team.

"We've pretty much proven that we can do it," Mr. Caton said. "We're never going to be a major competitor, but we hold our own."

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