From its inception in 1980, Bankers Mutual has evolved into one of the apartment industry's most recognized full-service multifamily lending specialists. The Irvine, Calif.-based company, long respected as a premier lender in the western region, is now expanding its full-service approach to multifamily lending. Trent Brooks, president of Bankers Mutual, declares, "Our goal is to be the most highly respected national multifamily lender."

The firm's simple yet ambitious goal appears more obtainable given its experience and reputation in the market. Hardly a newcomer to the business of funding apartment ventures, Bankers Mutual has faced the challenges of the current lending environment before. Brooks says the firm's success rests on its focus and experience.

"We have been in the multifamily lending business for the last 20 years," he says. "We have seen it all, and have been through all of the cycles." Bankers Mutual's "exclusive focus on multifamily" has powered the company to a portfolio of $3 billion, self-originated multifamily loans. New originations during 1998 totaled $1 billion, and this year the company has locked in close to $500 million in new business.

Combating a shrinking borrower universe Holding on to market share in this sector of the industry, let alone growing loan portfolios, is becoming increasingly difficult. Competition in the multifamily lending industry is keen for a couple of reasons. Lenders of all stripes like the apartment industry. Even mortgage conduits have made their way back into the market following last year's capital market slap in the face.

Returns on multifamily investments continue to be strong, and both delinquency and default rates are low. Lenders are also attracted to the low volatility and perceived safety of apartment investors. The shrinking universe of borrowers is another factor expected to heighten competition. "Relative to the last 24 months, overall demand for financing has declined modestly," Brooks notes. "A tremendous amount of refinancing activity has already occurred, and we expect to see a more constricted universe of borrowers."

Bankers Mutual's approach to continued success consists of three main points: delivering quality service, providing a complete array of financing alternatives and completing an aggressive push into new regional markets.

The company's concentration on the borrower's needs, says Brooks, is demonstrated by its complete line of financing options. "We have a broad, full-service menu. Altogether, we provide 10 different subsets of multifamily lending products. Bankers Mutual offers conventional market-rate financing, fixed- and adjustable-rate financing, credit enhancements for tax-exempt bonds, large loans more than $20 million, as well as more opportunistic small sector loans. We also offer secured credit facilities, second mortgages and forward commitments."

According to Brooks, the best opportunities for Bankers Mutual exist in the small-loan and adjustable-rate-loan markets. Regarding the small loan market, he notes, "The origination costs and traditional lending process do not conform as well to the small loan market. We believe this market is currently underserved."

The response to this underserved niche is Bankers Mutual's mid-market division. Borrowers seeking multifamily financing for properties between $750,000 and $3.5 million can choose from seven- to 30-year fixed-rate loans. The program is extended to Class "A," "B" and "C" properties and aims for a quick turnaround and "no-nonsense underwriting."

Brooks also sees growth in the market for adjustable rate mortgages. "We believe that there is a sector of borrowers that may prefer fixed-rate terms, but don't want to lock in rates due to stiff prepayment penalties," he says. "Borrowers that really don't like the penalties associated with fixed-rate loans want a variable-rate loans more lenient penalty structure. Ramping up this business will give us an even wider universe of borrowers."

Bankers Mutual branches out Bankers Mutual is in the process of spreading its business culture and practices to new markets across the nation. The company first extended its reach in 1995 when it began lending to five other western states - Washington, Oregon, Nevada, Arizona and Colorado. In 1998, the company opened an office in Seattle. This year Bankers Mutual has opened regional headquarters in Chevy Chase, Md., and Southfield, Mich. Before the year is over, Brooks anticipates opening two other offices in the Southwest and Southeast.

Unlike many other firms that choose to go national, expansion has not been provoked so much by hot markets, but by the ability to provide the quality service. "Our growth is directly linked to our ability to attract high-quality personnel," Brooks explains. "This drives the direction of our growth even more than a specific market. Our team consists of long-term professionals - some of the best talent in the industry."

The Bankers Mutual East Coast headquarters in Chevy Chase is a good example. Its doors opened after it landed Jim Rowen who had managed Fannie Mae's national DUS program for seven years.

Technology's impact on business Apart from competition between lenders, capital-market trends and the real estate cycle, Brooks points to two other factors that will affect both Bankers Mutual and the competition in the future: new technology and maintaining disciplined lending. "Technology is certainly changing how our business is done," he says. "The introduction of the Internet to join borrowers with mortgage capital will clearly change the traditional ways we have done business for the better. The improved efficiency offered by this technology will ultimately benefit the borrower."

Bankers Mutual has already committed sizable funds to new technology. "Our entire process has been automated," Brooks says. "We designed our own front-end software that efficiently processes loan applications, and we are producing a Web-based borrower application to leverage the Internet."

With its culture and business design honed over the years and its expansion well underway, Bankers Mutual's evolution from a strong regional player to a highly respected national player continues - one borrower at a time.