Jay Fuller knows that some people think his contrarian ways are crazy. But he is convinced that now is the time for mortgage companies to buck the acquisition trend and begin "putting seeds in the ground."

Mr. Fuller is the new chief executive of Victoria Mortgage Co., an Irvine, Calif.-based shop that specializes in single-family home loans.

Victoria has a servicing portfolio of $2.1 billion. It originated $630 million in mortgages last year through 10 retail offices in California and Texas, and does a brisk wholesale business, with about 60% of its fundings originated by mortgage brokers.

"We believe the best opportunities to accomplish growth today are internal, through servicing the customer and adding good products," said Mr. Fuller, who came to Victoria in January from American Residential Mortgage Corp., where he was an executive vice president.

"Sometimes in a big organization it's easy to lose sight of the customer," he added. "We want to shorten the distance and time between us and the customer."

McCown DeLeeuw & Co., a San Francisco venture capital firm, owns 60% of Victoria.

It bought the company from the Resolution Trust Corp. in 1991 as part of the liquidation of Victoria Savings in San Antonio, Tex. A year later it bought Western Bank Mortgage Co. in Irvine; the servicing operations were merged in San Antonio, but corporate headquarters were shifted to Southern California.

Now, when many venture capitalists have cut and run from the mortgage business, McCown has decided to hang in and expand the franchise.

In 1994 the company looked carefully at the burgeoning acquisition market. It even had a tentative deal to merge with First Town Mortgage Corp., Secaucus, N.J., but the deal fell apart as a declining originations market made valuation difficult to arrive at.

"We concluded that we could create substantially more value by growing the company organically" than by selling, explains Brian Kerester, a McCown partner.

The reason: The consolidation itself made key people, including Mr. Fuller, available. "You can build tremendous value in the mortgage banking business by attracting key people," Mr. Kerester said, adding that strong relationships between originators and real estate agents are "very important."

Mr. Fuller has viewed the industry's merger mania from the front row. He took Victoria's helm on Jan. 31, after a successful stint at American Residential, a company that he helped found in 1983.

American Residential, with its $16 billion servicing portfolio, was bought by Chase Manhattan Corp. last year for $348 million, or $28.25 a share.

Mr. Fuller said his former company was bought at the top of the market, and that the time for growth through acquisition has passed.

Instead, Victoria intends to expand on its own. Plans call for the eventual opening of origination offices across the West, including Arizona, Washington, and Nevada, as well as expansions in Texas and California.

But Mr. Fuller is in no rush. No artificial growth targets have been set, because "this business needs to be built on good people," he said. "You don't just move into a new market to be there."

Mr. Kerester said that his venture capital firm plans to hold onto Victoria for another five years or so. "That's well down the road. Our strategy now is to build," he said.

Mr. Engen is a freelance writer based in Minneapolis.

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