It's tough for a small independent mortgage lender to survive anywhere in the country. In California, it's almost impossible.

Clement Ziroli, chairman and chief executive officer of First Mortgage Corp. in Diamond Bar, Calif., knows this firsthand. That's why the company is continuing its efforts to broaden its geographic base, he says.

First Mortgage announced earlier this year that it planned to open 10 retail offices in the next two years in California, the Pacific Northwest, and the Southwest.

Since then, the company has opened a wholesale office in Bellevue, Wash., and is in the process of opening a retail branch in Spokane, Wash. It has also opened wholesale and retail offices in Diamond Bar. Mr. Ziroli said that First Mortgage was looking to set up a branch in Las Vegas soon.

Bruce Norman, president and chief operating officer of First Mortgage, said the new retail office in Washington would enable the company to expand into Oregon. He added that the company also has its sights set on Arizona, Colorado, and Texas.

The strategy is being followed at a time when many smaller mortgage lenders have either sold themselves or gone out of business in the wake of larger players' entering California. Mr. Norman said the company would consider making acquisitions but that they weren't necessary to grow the business.

The company has come up with solid results recently after posting a loss in fiscal 1995. First Mortgage originated about $330 million in loans in fiscal 1996, ended March 31, an increase of 89% from fiscal 1995, and had a servicing portfolio worth $1.6 billion.

Mr. Ziroli said the company's goals are to "quickly" get to $1 billion in originations and to have a servicing portfolio of $7 billion to $8 billion in the next few years.

"Should interest rates remain the same or improve we have the ability to grow at a much faster rate than in the past," Mr. Ziroli said.

Mr. Norman attributes the growth to the fact the company has two distinct niches. He said First Mortgage, which traditionally specialized in originating FHA and VA loans, recently has found itself originating high- quality jumbo loans.

"We're not doing much business in the middle - conforming conventional loans - and maybe that's a good thing, since it's so hard to make money there." Mr. Norman said.

But Mr. Ziroli recognizes that mortgage lending is a cyclical industry. First Mortgage is not a huge mortgage bank and Mr. Ziroli cautioned that even a small change in rates could have a major impact on the company.

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.