As consolidation becomes more rampant in the mortgage banking business, larger companies are buying up smaller ones to maintain a stronghold in a growing and increasingly competitive marketplace. Collateral Mortgage Capital is one example of this type of consolidation. Formed through the merger of two old-line banking firms, Birmingham, Alabama-based Collateral Mortgage, Ltd. and Charter American Mortgage Company of Kansas City, Collateral Mortgage Capital, LLC, is a new privately owned commercial mortgage banking firm with a servicing portfolio totaling over $3 billion and a commitment to personal service.

"Collateral Mortgage Capital is the product of the dynamic blending of two well-respected and successful commercial mortgage banking firms. Both bring long histories of reliability, flexibility and quality customer service to the table and both highly value their long-standing borrower and investor relationships," says Collateral Mortgage Capital' president and CEO, David Roberts, previously president of Collateral Mortgage, Ltd.

While Collateral Mortgage has been successfully growing its business on the income property side for the past 10 years, the company took heed of the consolidation trend and felt it was time to look at other options to help expand the business. "We were looking for other commercial mortgage banking firms with outstanding reputations that would complement what we do from a product line, as well as from a geographic basis, and that could join us in building a full-service commercial mortgage banking operation that would do business on a national basis," says Roberts. "We1ve known the folks at Charter American for some time and thought very highly of them. Both companies have a common vision for the future and are interested in continuing to run the business without selling out to some large institutional investor."

"The companies chose one another," says Thomas Turner, chairman of Collateral Mortgage Capital and former president of Charter American Mortgage Company. "I think we were both looking to expand our investor relationships, and that set the stage for us to talk to one another."

Collateral Mortgage Capital plans to continue to grow, focusing on customer service -- both to borrowers as well as investor customers. "Our new company will continue to emphasize integrity and responsiveness -- the type of in-depth, personal service on which our investors and borrowers have come to depend," says Roberts. "Our goal is to build on the historical strengths of Collateral Mortgage and Charter American to create a unique commercial mortgage banking firm whose number one goal is to create superior value for its borrowers and investors through a level of customer service that is unmatched in the industry."

How will they do this? By having professionals on staff who are actively involved in administering portfolios and maintaining relationships with both borrowers and investors. According to Roberts, as many commercial mortgage banking companies become larger, they are consolidating on the servicing side of the business through large master services. "We1ve heard a lot of complaints from our borrowers in terms of the level of customer service they get, and that the people they' dealing with post-closing are folks who have no personal relationship with them," says Roberts. So Collateral Mortgage Capital has consolidated its payment processing, cash management and other services to improve customer relations. Customers will continue sending their payments to Birmingham for processing, and Collateral Mortgage will retain a servicing person in its customer' and investor' respective cities to serve as the primary contact.

The company also finds it important to maintain a private ownership structure that allows senior management and other senior producers to have an equity stake in the company. "Our ideal mortgage banking company is one in which the management and/or principal contributors to the company, who are causing it to be profitable, can be stockholders and participate in the fruits of their efforts," says Turner. "We think that Collateral Mortgage Capital represents a company that will attract the very best mortgage banking professionals out there because they have the opportunity to become stockholders in the company directly."

Headquartered in Birmingham, Collateral Mortgage Capital was formed on April 1, 2001, and is now one of the largest, privately owned, full-service mortgage banking and commercial real estate firms in the nation. Collateral' multi-billion dollar loan portfolio includes income producing properties of all types and sizes, ranging from apartments and manufactured home communities to retail developments, office complexes, industrial parks, hotels and health care facilities. Collateral originates loans on a national basis with a minimum loan of $750,000 and offers some of the most competitive rates and terms in the industry. Collateral is a Freddie Mac Program Plusä seller/servicer, a Fannie Mae DUS Lender and an active lender through FHA-insured loan programs. Collateral also represents such leading investors as Lehman Brothers, Bridger Commercial Funding and J.P. Morgan Investment Management, Inc. In addition, it is the exclusive correspondent for New South Federal Savings Bank, an affiliate of Collateral Mortgage Capital, LLC.

With offices in Atlanta, Birmingham, Columbus, Houston, Kansas City, Nashville and Orlando, Collateral Mortgage Capital hopes to open an additional five to seven production offices and to become one of the top 25 commercial mortgage banking firms in the country.

In fact, in the first two and a half months of operation, the new company has closed almost a quarter of a billion dollars in new production and will most likely reach $300 million in loans in its first quarter.

Both Roberts and Turner note that the company is not looking to expand for expansion' sake. "Our goal is to attempt to align ourselves with two or three existing mortgage companies like Charter American, who would like to become part of a slightly larger mortgage banking operation and whose philosophy and goals are similar to ours," says Turner. And by becoming a bit larger, Roberts feels there are some economies of scale that can occur from a servicing standpoint. "We think that continuing to build a strong production operation and footprint is important in being able to offer a wider product line to our borrowers and to deliver more valuable business services to our investors -- which obviously will make us a more important customer in the investor relationships we already have."


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