Greater Buffalo Savings Bank, the 9-year-old local institution, is ramping up its mortgage banking division, with plans to double its loan volume this year by expanding business beyond its branch market.
The bank has hired former HSBC Mortgage Corp. executive Larry Schiavi to lead the effort.
Schiavi said he is trying to develop business outside of the company's regular customer base, while also developing a network for selling the loans after origination instead of booking them on the bank's portfolio as Greater Buffalo historically has done.
That means growing the sales force, lining up investor relationships, and building or buying the technology and capability to do business in other states. Greater Buffalo had just a couple of full-time lending officers before Schiavi joined, but the staff is now up to 11, and he hopes to grow it this year to 15 or 20.
"It's the typical mortgage banking strategy of the 21st century," he said.
Already, the mortgage banking division is licensed in 13 states besides New York, even though all of Greater Buffalo's branches are in Western New York. Most of the activity so far is still in New York, with some in Florida.
He said the bank isn't seeking to develop a nationwide mortgage business, but "we do want to have the capability to follow our customers' second-home purchases and requests for mortgages outside the area."
That will also satisfy the needs of loan originators he's trying to recruit, who will want to bring with them their book of business and referral sources that are not necessarily local. For now, though, his primary plan is "to really become a part of the short list of major players in Western New York."
"If the opportunity presents itself for us to grow the business outside of Western New York, we certainly would be amenable to expanding," he said. "But it's not our first priority."
For 2006, Greater Buffalo's mortgage business generated about $50 million to $60 million in loans, or about $4 million to $5 million a month, Schiavi said. For 2007, plans call for doubling that volume to as much as $110 million, and growing the base from there in 2008. The bank might keep some loans for certain transactions or specific customers, but most will be sold on the capital markets in the traditional mortgage banking model.
Rivals aren't worried. "Competition is good for the business," said Chet Bridger, spokesman for M&T Bank Corp. "Other lenders are frequently jumping in and out of the Buffalo market, whereas M&T is consistently one of the leading mortgage lenders in Western New York."
Starting up a mortgage banking business isn't new to Schiavi, 43. The 21-year industry veteran spent 11 years at HSBC Mortgage in Depew and at a predecessor, eventually as senior vice president and national production manager. He was responsible for retail, wholesale and correspondent lending, managing more than 400 lenders who produced $32 billion in loans in 2004.
He left in April 2005 following changes in management and strategic direction at HSBC Mortgage, and joined New York City firm MortgageIT as senior vice president and national retail production manager for retail lending. His job was to set up a national retail headquarters in Buffalo.
He left in March 2006, and after Greater Buffalo merged with a publicly traded California firm -- in which Greater Buffalo was the survivor, flush with capital and a New York Stock Exchange listing -- Schiavi approached President and CEO Andrew W. Dorn Jr. with a proposal for mortgage banking.
"It wound up being a good fit for me personally and professionally," Schiavi said. "The bank certainly has an appetite to grow revenues and to grow fee income, and the mortgage banking business is one way to accomplish that."