Resource Bancshares Mortgage Group, Columbia, S.C., wants more business, and is building it while bucking the consolidation trend.
Rather than lick wounds suffered during the mortgage business bust, the small mortgage company is getting into new aspects of the business and expanding existing departments.
Resource is expanding its correspondent division to reach the West Coast and Southwest. Since September, it has opened its first six wholesale offices and plans to open another three by the end of June. In addition, four new regional offices in the correspondent division were opened.
During the recent mortgage drought, many lenders grew by buying companies, divisions, or portfolios. In the last 12 months, there have been more than two dozen acquisitions and consolidations in the industry.
One year after going public in June 1993, Resource hired Richard M. Duncan from Fleet Mortgage Group as executive vice president and head of production to expand into new geographical markets and new lending areas. Previously, the company's core business was correspondent lending with a $2 billion servicing portfolio and 400 employees. Most of its business came from eight Midwest and Southeast states.
Lee Shelton, vice chairman, said that the refinancing falloff provided a prime opportunity for Resource to expand while others clamored to cut back and get out of the business.
Resource has not ruled out the possibility of future acquisitions, Mr. Shelton said, but he said he has yet to see the right opportunity at the right price. In acquisitions he saw in the past two years, Mr. Shelton said, the buyer often paid too much to justify the purchase.
"We looked at a number of those companies, and we felt things had overheated and we would wait for the cycle to run its course," he said.
Once the refinancing wave cooled and loan production began to fall, he said, many companies that built up capacity to handle the surge during the refi boom then tried to change their position and cut back or get out. Resource did not have to reconfigure its staff because it handled the surge with its existing staff.
Mr. Shelton said Resource shuffled staff to short-handed departments and away from overstaffed areas. It did not have to lay off staff when the wave ended, as many lenders did.
Resource's strategy is to grow in areas outside the eight states in which its business was concentrated. There are many directions in which Resource can grow, Mr. Shelton said.
"The way to attack a shrinking market is to attack it and grow and expand," he said. "Our strategy is to do that on a prudent basis. For example, our executives answer their own phones. There are a lot of positive elements of our business we want to continue."
With the addition of Mr. Duncan, Resource prepared to attack and conquer wholesale and correspondent sides of the mortgage industry, particularly in the West where it was underrepresented.
"RBMG had done business exclusively with correspondents. As the business was changing with various size companies exiting the business, we saw the opportunity to expand geographically in the Northeast and Southwest market and West Coast market," Mr. Duncan said.
He said initially a move into the California market was his first order of business, but he decided that in light of current market conditions there, he would consider it later, and focus on increasing business in Colorado, Utah, and the Northwest.
In addition to staffing changes and increasing staff on the correspondent sales side, Resource Bancshares pursued a new aspect of the business: a wholesale broker operation.
"RBMG typically tried to seek out opportunities where other companies could not see them or take advantage of them, or chose not to take advantage of them," Mr. Duncan said. Since his arrival, Resource's servicing portfolio has more than doubled to $4.2 billion.
The wholesale lending business did not shrink, but companies got out of the business en masse, and those still in wholesale reduced staff, Mr. Duncan said. Brokers still got a fair share of business with fewer companies to buy their loans.
"We thought this would be an opportunity for us to get in and take advantage," Mr. Duncan said. They started their wholesale division on a small scale at first, after seeing many companies with an unproductive cost structure, he said.
"It gave us the opportunity to quickly break even," Mr. Duncan said. Currently, RBMG has wholesale operations in Greensboro, N.C., Atlanta, Orlando, Columbus, Ohio, Dallas, and Houston. It plans to open three more offices during the next three months, he said.
"Our long-term goal is to have wholesale support in 15 to 20 markets where business is good for brokers and there is a high concentration of brokers relative to retail," Mr. Duncan said.