One of the nation's largest thrifts is forging ahead with aggressive plans to expand its newly acquired wholesale mortgage operation despite the downturn in the markets.

Michigan's Standard Federal Bank plans to have its Interfirst division operating in all 50 states by the end of the year.

Standard Federal had not been involved in wholesaling. According to Thomas R. Ricketts, president and chief operating officer, the $10 billion-asset company saw a chance to boost efficiency and its customer base by cutting back on duplication.

Interfirst was a small operation with originations of only $250 million until it merged with Standard Federal.

According to Stanley H. Rhodes, a senior vice president at the Interfirst unit, the wholesaler approached the thrift about the merger.

Needed Capital Infusion

The pairing occurred without much fanfare last December. Interfirst, which had offices in 38 states, was in sore need of capital and basic resources such as marketing, support staff, and equipment, according to Mr. Rhodes.

"We had grown as far as our capital would permit," said Mr. Rhodes. "So we went out there to find someone to marry."

Aligning with Standard Federal allowed the wholesaler to expand its sales staff to 40 representatives in 43 states, according to Mr. Rhodes. Interfirst expects to be in all 48 contiguous states by the end of the year, but isn't stopping there.

"My guess is, we'll be in Alaska and Hawaii by then too," Mr. Rhodes said.

The timing of the merger could be questioned, with the refinancing boom over and a less-agreeable interest rate environment forcing originations way down.

But the company is unconcerned with the downturn in the markets and, despite the drop in loan volume, plans to go forward with its expansion.

'Should Be Right on Target'

"Our loan volume is down about 35% but with our expansion plans we should be right on target for the year," said Mr. Rhodes.

To compete more effectively, Interfirst has moved most of its operations to Standard Federal's headquarters in Troy, Mich. Only its sales staff will stay put.

The move was made to save money by not having to maintain full-service operations nationwide. According to Mr. Rhodes, this type of consolidation may become more common.

Along with changes to its operations, Standard Federal's loan production profile has also changed considerably.

In October of 1993, 36% of Standard Federal's loan portfolio consisted of 15-year, fixed-rate models. The figure dropped to 26% by Jan. 1.

Meanwhile, Interfirst's volume of adjustable-rate loans has shot up dramatically - from 12% of total originations at the end of the year to 30%.

While many lenders have been caught in a price squeeze spurred by interest rate increases, Mr. Rhodes said Inter-First would not be dragged into a bidding war. "We're not in the business of not making a profit."

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