Success Story: WestAmerica

Last year, the company originated more than $1.5 billion and is on track to originate $1.8 billion this year, President David Hrobon said. Next year the outlook is in the range of $1.9 to $3 billion, depending on whether or not some of the expansion opportunities they have planned come to fruition, he said.

WestAmerica recently hired some America Home Mortgage employees and is currently in talks with a couple of retail groups in the Rocky Mountain and Great Lakes areas which could result in another 175 employee gain for the company, Hrobon told MortgageDaily.com in a phone interview.

Currently, the company has about 290 employees across the nation in four wholesale regional offices, 13 retail offices, 41 community bank branch facilities and their Correspondent Lending office, which is housed in their Oakbrook Terrace, Ill.-based corporate office, Hrobon said.

“There are eight to 10 other smaller groups we are talking to every week,” he said. “It’s a troubled world for a lot of people right now, many originators are twixed or between in this market — some finding their size is too small to deal with various warehouse lending restrictions, state restrictions, product curtailments, and those that are worried about what the lending world’s going to look like in the next six to 12 months. Government lending experience, the federal bank charter and our size that has enabled us to make changes quickly, have all contributed to our recent success.”

Given the current market state and compressed margins, Hrobon noted that the company has been forced to examine its own operations.

“Efficiencies, productivity and margin analysis are paramount right now — and your product mix,” he said. “It’s difficult to exclusively lend conforming conventional fixed rate loans and be able to find a way to make a profit today. You still have to find a way to originate a balance of some medium to higher margin products, and without subprime or Alt A, it leaves you with government loans and maybe some portfolio product.”

WestAmerica has never participated in subprime lending, he said. Historically, Alt-A comprised about 20 percent of the company’s volume but now that has dwindled down to about one percent, and currently about a third of originations are government loans.

Today’s success has been attained through a series of business moves the company has made throughout the last three decades. Starting out in retail, the company added a wholesale division and then about 10 years ago began correspondent lending. They now originate through all three channels, he said.

In May 2004, WestAmerica was acquired by Lake Forest, Ill.-based Wintrust Financial, which opened up multiple streams of revenue for the company — bringing captive business to the table with 40 full-service bank branch locations in Illinois and Wisconsin that they could provide mortgage loans to — currently resulting in an additional $240 million in originations, Hrobon said.

Despite Wintrust’s behemoth corporate status, WestAmerica remains a medium-sized company that has the advantages of corporate resources — and can still be nimble when necessary.

“It’s sometimes difficult for a medium size player to handle all the benefits expense for its employees,” he said. “It (the acquisition) was helpful to us in terms of economics as a company.”

And in terms of change, Hrobon said they have the best of both worlds when it comes to the company’s mid-size. For example, they have the resources but also the agility to take a new product and bring it fully to market in as little as 30 days.

“That is a kind of experience that is unheard of at a great big corporation,” he said. “It is very helpful to salespeople, being able to make those kind of changes.”

Wintrust also funds their warehouse line and gives them the ability to operate under a federal charter as a subsidiary of Barrington Bank and Trust, a Wintrust member company, he said.

“The charter has been a tremendous benefit to us for some obvious reasons; 50 state lending capabilities; being able to streamline your cost of licensing and state mandates for ever-changing individual lending laws by state we simply have to conform to OCC guidelines: and while they are extremely stringent and prudent, it gives you a bit more efficiency from that standpoint.”

The other advantage to being under the Wintrust umbrella is that it provides the company with a certain amount of required structure, he said.

“That was an incredibly important step for us as an organization because it’s exactly the medicine needed in this environment to better support not just your operations people but your salespeople,” Hrobon said. “In the environments of 2000 through 2004 your salespeople not only didn’t need detailed structure but they fought it, and in this market it is just the opposite, they are embracing it, they are looking for a certain amount of structured guidance, support and help.

“I think Wintrust has given us some resources and some insight on how to apply that structure to our salespeople in particular, it’s been very helpful.“