Early this year, when Dallas-based Capstead Mortgage Corp. set its sights on a $25 billion servicing portfolio by yearend, the goal seemed - well, ambitious.
After all, first-quarter 1995 earnings of $15.7 million were off more than $12 million from those in 1994's first quarter.
But the company ranked second in percentage growth among mortgage servicers for the first six months of 1995. Capstead's 43% increase in dollar sales, from $14 billion to $20.6 billion, meant that only its much smaller hometown rival Accubanc Mortgage grew faster.
And after super-successful second and third quarters, the company can now afford to look far ahead.
"We came from 'little guy' two years ago, and now we're working on our first $100 billion," said Andrew Jacobs, senior vice president and treasurer. "When that happens, we'll all get little plaques for our desks."
The company plans to persist with its 1994 strategy of abandoning high- cost, low-yield loan production for the more stable returns available from adjustable-rate servicing.
Mr. Jacobs said the very low weighted average coupon rate of the loans in Capstead's portfolio has contributed to its success. "We got into the (servicing) industry when the rates were the lowest," he said. Capstead's last reported coupon rate, from June, was 7.3%.
And when supplies of low-rate loans do run out? "You can always hedge," said Mr. Jacobs. "If you have to get the higher coupon, you can still make those portfolios profitable."
Another key factor to Capstead's success has been its "staggeringly low" employee-to-loan ratio, Mr. Jacobs said. Eighty-eight servicing employees run its highly automated account maintenance operations.
Capstead has no plans to enter the government-backed FHA/VA loan business, but does plan to restart its idle conduit business when pricing becomes "more favorable," Mr. Jacobs said.