Pennsylvania Thrift's New Chief Bucks Conventional Wisdom on Mortgages

Count Jeane Coyle as one of the contrarians.

First Federal Savings & Loan Association of Bucks County in Bristol, Pa., where Coyle is the incoming president and chief executive, isn't abandoning residential real estate lending, like some other mutual thrifts. Instead, First Federal recently hired a new banker to focus on mortgage loans.

Nor is Coyle satisfied with crossing her fingers that First Federal will be ready when interest rates rise. First Federal has added derivatives to its securities portfolio to hedge rate risk.

"She's up to the job, and we're entering that period with a very strong balance sheet," says Bruce Iacobucci, who's stepping down as president and CEO in June.

Coyle is a relative newcomer to First Federal, having joined the $658 million-asset thrift in 2006. But she's a longtime presence in the Philadelphia area, having worked for several banks in the region, including Meridian Bank of Reading, Pa., which was acquired by Wells Fargo (WFC). She's well aware that the Philadelphia banking market is cutthroat.

"Margins are very compressed here, and pricing is highly competitive," she says. "We typically don't get customers searching for a commodity rate. We're typically searching for customers who want attention."

First Federal's treasurer, Dorothy Jaworski, also came from Meridian Bank, and she led the thrift to invest derivatives to hedge interest rate risk, Coyle says. At its recent regulatory examination, First Federal's initial exam with the Office of the Comptroller of the Currency, examiners commended the thrift for trying to hedge against rising rates.

"The program passed muster with [the OCC]," she says. "We're on the more sophisticated side of that for a bank of our size. We feel good about that."

As other thrifts have done, First Federal has expanded commercial lending. Total commercial loans grew to $127 million at the end of 2012, from $43 million a year earlier. But Coyle and Iacobucci decided that First Federal shouldn't give up on residential lending.

"We get inquiries all day long for residential mortgages," Coyle says. "That allows us to have a broader product menu."

Many mutual thrifts have converted to stock-owned banks in recent years. But it's highly unlikely that Coyle will preside over a stock conversion at First Federal, Iacobucci says.

"I would be shocked if she sees a conversion in her tenure," he says. "Our board was adamant about that with me. They said, 'You're not going to come to this mutual to flip it.'"