Main Line Bank is parlaying a home-court advantage into record profits for its mortgage unit.
By aggressively mining the Philadelphia-area market, Main Line is seizing opportunities that larger lenders miss, said Dennis S. Marlo, president of the Villanova, Pa., bank.
The moves by $1.9 billion-asset Main Line are typical of the back-to- basics approach that many smaller banks are taking to find profits in the volatile mortgage business. Instead of trying to build income by straying into untried areas, regional institutions are revisiting their home turf - and finding that lending prospects abound.
Earlier this year, Main Line marketers turned up pockets of demand for loans backed by the Department of Veterans Affairs. The bank was able to move in quickly by purchasing Hart Mortgage, a company that specializes in such loans, Mr. Marlo said.
"It's now a niche we're doing quite well in," he said.
The bank also bolstered local business by purchasing competitor Philadelphia Mortgage. The purchase expanded Main Line's retail network and also supplied a servicing portfolio of 13,000 local customers, who are now prospects for Main Line banking services.
"Community banks can look at their area and say, 'Everyone left this group out and I'm going to jump in,"' said Douglas Duncan, senior economist with the Mortgage Bankers Association of America.
The payoff is potentially significant. "If the lender provides high service, they will receive high profits," Mr. Duncan said.
Mr. Marlo declined to put an exact dollar amount on how well the mortgage unit is doing. But he did say home lending accounted for "a good part" of the $8.4 million in noninterest income Main Line earned in the first half of this year. The figure compares with $3.1 million a year earlier.
Main Line is further honing its mortgage operation by consolidating this year's acquisitions into its existing mortgage division. With the additions, the company now produces more than $500 million of mortgages annually, up from $470 million last year. Servicing has mushroomed from $2.3 billion to $4 billion.
To head the combined operation, the company tapped Philadelphia Mortgage chief Joseph Blaston, who over the past 15 years has headed independent and bank-owned mortgage operations.
"We're not looking to do anything totally revolutionary" at Main Line Mr. Blaston said. "We will work at getting the most we can from our network."
