Dime Savings Bank seems to have doubled its bets in the mortgage business.

Late last year it announced it had coaxed former Chase Mortgage chief executive Fred Koons out of retirement to head its mortgage operations, then he in turn brought Fleet Mortgage's chief on board.

Mr. Koons, 52, succeeded Jenne K. Britell, who left for a job with GE Capital Mortgage Corp. He departed the business in 1995 and spent a year of leisure on his boat and in the Bahamas. Now he is busy reassembling the old Chase team in Tampa, Fla. Among others, he has hired his former Chase deputy, Richard Mirro, who had been running the Fleet unit.

In a conversation at Dime's New York offices last week, Lawrence Toal, the thrift's urbane, newly promoted 59-year-old chief executive, boasted about hiring "two of the top five professionals in the mortgage business."

He and Mr. Koons explained why $19.7 billion-asset Dime, ranked 44th in originations as of mid-1996, can make money at the mortgage business when many midsize players are pulling back.

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Why are you raising the stakes in your mortgage business when many others are getting out?

TOAL: The mortgage bank is a very important line of business for us. We have created a sufficient mass to be a serious player.

While we grew very rapidly over the past several years, given the technological changes in the industry and the two 800-pound gorillas in Washington - Fannie and Freddie - we really needed to have a proven talent to take us to the next stage.

Rapid change often creates opportunities that you can seize on if you understand it well enough.

How do you plan to make money at the business?

KOONS: Many of the scale advantages don't require you to be $100 billion in servicing. I think there are a lot of opportunities or niches in which we can perform just as well as the large player.

We can have a lot of density in the markets that we choose to operate in. To the customers in that marketplace, we will look just as good or better than our competitors.

We can lever the sophistication in secondary marketing and our management team to go into new markets. We will expand using our bases (in New York, New Jersey, Connecticut, the mid-Atlantic states, and the Southeast) and we'll be looking to expand in the Midwest as well.

We've hired a market manager. He will reside in Chicago, and we will open branches of Dime Mortgage Inc. in other states in the Midwest and to some extent in the Northwest - Washington, Colorado, Minnesota, and Illinois.

We want to grow the balance sheet. Our distribution will also allow us to be a much bigger player in Fannie Mae's and Freddie Mac's traditional mortgage banking products.

How big do you want to be?

TOAL: We wrapped up (last) year a shade under $3 billion in originations. By 1998, I could see us doubling originations and maybe more.

What prompted you to come back to work, Mr. Koons?

KOONS: After going to the Bahamas and being on my boat for a year, I was really happy when Larry called me and casually mentioned that Jenne (Britell) had left, and asked if I knew anybody that would be interested.

It ended up that I was going to do some consulting. I got in and I got more interested, and I think it was part of his design all the time. I was failing to find him a CEO; as a result, we came up with this arrangement.

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