The thrift industry is trying hard to redefine and revitalize itself. Some institutions are reemphasizing their traditional business as portfolio lenders while cutting costs. Some are selling much of their production in the secondary market.

Others are pushing more deeply into consumer finance, and still others want to expand in fee-based businesses that require relatively little capital or real estate. All seem to be emphasizing improvements in operating efficiencies.

In this setting, First Federal Savings and Loan of Rochester, N.Y., has the look of a testing laboratory for the rest of the industry - large enough to afford the necessary changes and small enough to change fairly quickly. And it is pursuing all of the above strategies rather than just one or two.

It acquired almost $3 billion of servicing rights last year, pushing it up to No. 43 nationally, from No. 62 a year earlier. The biggest piece came from acquiring Rochester's Sibley Mortgage Corp. and its $1.6 billion portfolio. Another $1.3 billion was bought directly from other servicers.

In originations, it placed No. 42, up from No. 55, and fell just short of making the top 10 among thrifts. All of Sibley's loan officers have stayed on, the thrift said.

In its annual report, issued recently, First Federal laid out four major goals: to build its mortgage banking business; expand in consumer finance; improve its product delivery systems; and reduce operating costs.

Within the mortgage business, it has additional goals. It has set a very conservative target of $2.2 billion in originations this year, up only slightly from the $2.15 billion it funded last year.

But after the first quarter, it was already a third of the way to its goal, funding $725 million in loans, against a target of $452 million.

Nicholas P. Camardello, senior vice president in charge of nationwide mortgage services, said the pipeline of mortgages being processed had grown significantly, indicating the strong showing would continue into the second quarter. "The refi boom that caught everybody by surprise provided us some marginal volume. Now we've settled down to a more normal pace."

First Federal also wants to reduce loan servicing costs by 5% this year, an accomplishment that would greatly enhance the company's profit margin. And it also wants to reduce the cost of processing loans by 12%, representing another potentially big improvement for the bottom line.

On the topic of delivery systems, Thomas N. Borshoff, president and chief executive, had this to say in the 1995 annual report: "When you talk about retail banking today, you have to talk demographics and delivery systems. We used to think that convenience meant having a branch on every corner. Yet, last year only 56% of routine banking transactions came through our teller windows."

He added that the company's telephone and mail banking services brought in as much in deposits as two branches, but without construction or operating expenses.

The phone service handled $110 million in mortgage applications for the year, or some 100 loans a month, during a pilot test in Syracuse last year, and First Federal plans to expand the testing to other markets in upstate New York this year.

Mr. Camardello said the telemarketing capability had helped the thrift hold onto mortgage customers. It identified borrowers most likely to refinance and solicited them before competitors had a chance, Mr. Camardello explained.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.