A small mortgage company in South Florida is making a big splash on Wall Street, its share price rising 80% in its first week of trading.
CFI Mortgage came to market on May 30, at $5 share, raising $5 million by selling a 40% stake to public investors. The stock was trading at $9 Thursday afternoon after reaching a high of 9 13/16 Wednesday, when 822,000 of its one million shares traded.
The spurt followed an announcement that a seasoned mortgage executive would be taking CFI's helm. Don Lashbrook, a former manager with the mortgage units of Barnett Banks Inc. and Citizen's Financial Group, will serve as chief operating officer of CFI. Mr. Lashbrook, 44, will be responsible for all day-to-day activities.
CFI is small-it originated just $230 million of loans last year while many mortgage companies regularly top $1 billion of volume. But some analysts like the stock, saying the company operates in one of the nation's wealthiest and most economically stable areas-Florida's east coast, from the middle part of the state to Miami.
CFI has also caught Wall Street's eye with plans to shift its product mix from lower margin conventional loans to more lucrative subprime products. This year, CFI will produce about 75% of volume through conventional loans and 25% through subprime, or nonconforming products, Mr. Lashbrook said. Last year, conventional loans accounted for virtually 100% of volume.
To help foster growth, the company is assembling a contingent of top management. In addition to Mr. Lashbrook, CFI recently brought on wholesaling and underwriting chiefs. The company is still looking for a chief financial officer and a risk management head.
Before now, the executive jobs were handled mostly by two brothers- Christopher C. Castoro, 31, and Vincent J. Castoro, 29-who founded the company in 1989 and now plan to spend most of their time building sales.
CFI plans to change its name this summer, to Bankers Direct Mortgage Corp., to better describe its mission.
Also, proceeds from the public offering will go toward increasing CFI's warehouse line of credit to $50 million from $21 million. The company is also bringing on a group of lenders in Colorado to open three offices in that state. CFI will expand into other areas as it lines up staff, Mr. Lashbrook said.
Mr. Lashbrook comes to CFI after more than 20 years in the mortgage business. He was most recently senior vice president at Citizen's Mortgage, Atlanta, but left when that company left the mortgage servicing business.
Mr. Lashbrook said his switch from bank-run mortgage units to a stand- alone company has appeal. "I've always enjoyed being more of an entrepreneur," he said. "This operation provides a lot of flexibility, enabling us to respond quickly to customers."