Steve Ginder is savoring the acquisition of 10 mortgage production offices from Bank of New York Co. as he melds them into his National Pacific Mortgage Corp. in Anaheim, Calif.
In January, Bank of New York told employees of its California-based Arcs Mortgage Corp. that the offices would be closed. It advised them to find a new home. National Pacific, a midsize regional lender, bought all the assets of the offices on March 1, took over the leases, and hired the employees, beating out competition from "a number of very large banks," Mr. Ginder said.
The price was not disclosed, but industry sources said that it was probably nominal, and that the deal appeared to be an accommodation to the staff. The employees simply did not want a large bank determining their destiny. And, Mr. Ginder noted, "nobody wants to just acquire leases."
John Lucas, manager of the Arcs-turned-National Pacific branch in Van Nuys, Calif., agreed that part of the attraction of his new company was that it was independently owned. Another plus was that the corporate office would not be "halfway across the country" from where he is based.
But the final selling point was National's hands-on management. Mr. Lucas, a 22-year Arcs veteran who had been in the industry since 1965, knew many of National Pacific's employees had been with the company a long time. He was further impressed by the way Mr. Ginder, who is president of National, and his partner, executive vice president Charles Sales, spoke to each candidate individually, then invited a number of interested parties to Anaheim to meet the department heads and get a feel for the type of support the corporate office had to offer.
Among other things, Mr. Lucas learned he could utilize all the lending programs he had been working with at Arcs, plus others unavailable to him previously.
All six offices at the meeting ended up taking National Pacific's offer, and were soon joined by four others. This expanded the mortgage company's scope from the Golden State and Las Vegas into Oregon (four branches).
Mr. Lucas was impressed by how well National Pacific and Arcs worked together to make the transition transparent to employees and clients alike. "We were able to continue in our same offices with no real interruption in the handling of their loans," said Mr. Lucas, who noted a new eagerness among the staff.
This confidence and excitement translated into the former Arcs offices' pulling in 200 applications for the month of March, Mr. Ginder reported. In fact, high morale throughout National Pacific helped push companywide applications to over 1,000 for the month, a pace that he estimated, would generate monthly originations of $75 million to $80 million, or about $800 million in single-family home loans for the year as a whole.
Originations for March closed at $60 million, while efforts in the unusually rainy, typically slow months of January and February together yielded $64 million. In 1994, the company reported originations of $758 million, versus $995 million in 1993's heyday and $751 million in 1992.
Competitor Kevin Budde, president of Western Cities Mortgage Corp. of Tustin, Calif., believes that if the price was right, National Pacific's Arcs deal is "a heck of a feather in their cap."
Indications in the Mortgage Bankers Association's application index, he said, show the huge falloff from 1993 turning into a rebound in the last two months. "Most California companies have seen their funding levels double in March from where they were in January," said Mr. Budde. "National Pacific's timing is very good."
Meanwhile, National Pacific's Mr. Ginder reported that other acquisition candidates were getting in touch with him right and left. In the last two weeks alone, he has received calls from parties in Burbank, San Diego, Santa Rosa, and Phoenix.
"We don't have a desire to get to the point where we're originating $2 billion to $3 billion a year in business, because that would mean that we would have to completely change the face of our corporation," said Mr. Ginder. "What's important to us," he said, "is to originate enough loans to where our economies of scale make us very efficient. Right now, for National Pacific, it's about $800 million to $1.2 billion a year."
Ms. Berger is a writer based in California.