In this month’s issue of National Mortgage Professional Magazine, we had a chance to speak with Charles Wagner, senior vice president of the lending division of CBC National Bank, a rising wholesale and retail lender based in suburban Atlanta, Ga. Trained as an underwriter, Charles brings a unique perspective to his leadership position. Recently, we spoke about his career and his thoughts on the industry today.
Tell me how you came to have a career in the mortgage industry?
I graduated from the University of Georgia in 1992, and my first job out of college was with Merrill Lynch. It was in mutual fund accounting in Jacksonville, Fla. Actually, it was pretty boring to me–reconciling trades and shares of mutual funds. After about a year, I was really kind of disenchanted.
Merrill Lynch Credit Corporation was right next door to that operation. I saw a posting for an underwriter, who they were willing to train. Frankly, probably the best thing that ever happened to me was getting into that field. The first thing they do with underwriters is put them through probably a four- or five-week training course. That first four or five weeks of underwriter training has stuck with me my whole career. It was the prudence by which we evaluated our business and the thought process behind it–when to make a business decision, when not to make a business decision.
How did your career develop?
It was when I got to HomeBanc that I really figured out that I wanted to be in this industry for the long-term. HomeBanc took care of its customers and employees rather well. I felt the camaraderie of the large group of people in that organization. I was probably at HomeBanc for four-plus years.
There was a gentleman out there that I had become very good friends with; and his wife was my first trainer at Merrill Lynch–a guy named Steve Rollins. We had talked for four, five, six, seven years about going out on our own, doing some partnership. When it was right for me, it wasn’t right for him. When it was right for him, it wasn’t right for me. Well in 2003, we both picked up the phone and called each other about the same time and said, “Are you ready to go do something?” So we parted with our company and did a joint venture partnership with a company out of New Jersey called American Mortgage Express Corporation, and from 2003-2007, we basically had our own business in Atlanta, a wholesale business focused on the southeast.
How did you come to CBC National Bank?
After the mortgage meltdown is when I realized I wanted to be a leader in this industry as well. We got in touch with the CEO here at CBC National Bank. Back then, it was known as First National Bank of Nassau County. This bank used to be in the mortgage banking business, but they got out of the business in 2004. The bank realized it needed non-interest income. The CEO sat down with us in 2007 in the credit meltdown and said, “I want to get back in the mortgage banking business.” I said, “You know, we’re in the middle of a credit crisis.” He said, “I know, but over my whole career, I was taught that when something’s on fire and everybody’s running away from the fire, if you walk into the fire carefully, you’ll have an opportunity to do good business and make good money. I like you, and I like Steve.”
So in late 2007, we started a small wholesale business with a business plan of maxing out at $25 million a month. Well, the success rate of that business and the service that we gave, really grew quickly to be a $40 to $50 million a month wholesale business, and then to be $100 million-plus a month, as more and more of our competitors got out of the business.
What are the key strengths that CBC National Bank has that allowed it to thrive during and after the credit crisis?
One is diversification. Too much of a good thing isn’t a good thing. I also learned that you have to surround yourself with good people that have the same character that you have. Don’t budge on character issues. If it’s in the gray area, it’s black and white for me. So going to the gray is not an option in our business.
We’re probably a little bit more conservative than average mortgage bankers. I want to have a little bit lower highs. So we want to focus on purchase business. We want to focus on things that are going to be here in the long-term. Therefore, we’ll have higher lows as this cycle moves in and out.
How has technology played a role in expanding your business?
Let’s look at it a couple different ways. The first is … how has it allowed us to grow our business outside of the state of Georgia? The fact is that we have the ability to market and use technology, make people feel like they’re part of the business, even when they’re not in the state of Georgia. It's really allowed us to do business all across the nation.
Next, you go to an operational impact. In 2010, we implemented a new system–the Avista Technology System, which we co-branded CBC Connex. It’s a Web-based system that allows us operationally to do business from anywhere and allows our branches to be connected without having to a have a database or server in their office (www.cbconnex.com).
What keeps you up at night when you think about the mortgage industry?
I am really worried about the consumer long-term. I hate to get into philosophical conversations. But it’s really the financial morality of America, which is our consumers are willing to give up easier and easier and not live up to the obligations to which they commit. It really makes me worry about long-term viability of banking and mortgage banking in our country.
The second is obviously the regulatory burden. It’s definitely adding to the cost of doing business. It is adding to the cost the consumer pays. I worry about where’s that line … where’s the balance? Has the pendulum finally swung too much? I think the audits and exams are great. My key staff learns from every one of them. But the fact is that each one of those represents one to two weeks of taking your eye off the ball.
Tell us about your relationship with the bank?
This bank was a construction and development lender pre-2007. For all intents and purposes, this bank probably should have failed at one point based on the non-performing assets it built up. But over the last five years, our earnings and taking a small amount of TARP has saved this bank. So that accomplishment of actually not just being just a mortgage banker, but buying into the bank as a partner and realizing it’s who we are, has really made a difference. We like to say there’s going to be a book written about CBC as one of the few banks that really should have failed, but made it. I think we’re still writing the story.
Who have some of your mentors been?
There are two people who have been my mentors over time. One is my dad. As I grew up, he instilled a hard work ethic and character. He was a banker, he instilled financial disciplines. And today, it’s the CEO of our bank, Mike Sanchez. He’s that banker who empowers you to make good business decisions and supports you after you make them. He has really done a lot of investment in teaching me about the bank–how to make sure our mortgage bank fits inside the bank and how to grow our business. Frankly, I’ve learned more in the past five years than I have the previous 10 years of my career. At the end of the day, I got a PhD in banking while I’ve been running the mortgage bank for CBC.
What are your thoughts on where the mortgage market is headed?
We are absolutely going to move to a purchase market. Over the last year or two, we’ve seen small strides toward that. More importantly, the question we have to answer is, “Where is the new talent coming in our industry?” We’ve gotten such a black eye over the last few years. Will there be new talent in our industry to handle this business?
Over the next five to 10 years, I think it’s going to be a purchase-minded business that’s going to need to be done more in local or regional businesses I think you’ve got to be able to manage your business better both from a risk management and from an execution standpoint. I think the big banks are going to turn off the consumer. The smaller more regional banks or mortgage banks are going to actually step in and fill that void. I think the customer is going to be willing to pay a slightly higher rate to get a much better level of service than they do today with the big banks. I continue to hear horror stories about how customers are treated. We think that that’s a big deal. If you move to a purchase transaction that has a deadline, I just don’t know how the big players are going to be able to adjust to that and make that happen.
What else would you like our readers to know?
We want to take care of the customer; we want to manage risk. We want to be very profitable. We don’t really think that doing business for the sake of doing business is optimal. So here at CBC, we’ve built a business plan that’s sustainable for the long run. We’re five-plus years into this business. I think back to when we capped it out at $25 million, and now we’re somewhere between $150 and $180 million.
David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail firstname.lastname@example.org.