Magazine article American Banker

Realty Development Fuels MAF

Magazine article American Banker

Realty Development Fuels MAF

Article excerpt

Bucking a trend in which most thrifts have left the real estate development business, MAF Bancorp is laying the foundations for new neighborhoods in Naperville, Ill.

The $5.1 billion-asset parent of Mid-America Bank is completing its largest development ever -- a 1,000-unit subdivision on the outskirts of the Chicago suburb -- and said it expects to break ground on another 1,000-home project next spring. The company, which has developed nearly two-dozen residential projects in the last quarter century, said it has no plan to slow down.

"We are always on the lookout for new land," said Jerry Weberling, MAF's chief financial officer.

Development has been profitable for MAF; its five-person MAF Development subsidiary netted $7.8 million, or 8.4% of the thrift's pretax income, through the first nine months of 2000.

But the numbers understate its true importance. The subsidiary's steady revenue stream has allowed MAF to maintain a strong emphasis on mortgage lending, even as its net interest margin has shrunk to a slender 2.7%. Home loans comprise 89% of MAF's $4.3 billion portfolio.

Meanwhile, other thrifts faced with the same margin pressures have reconfigured their businesses to be more like commercial banks'.

"It's the only thrift I cover that is still actively involved in" development, said Jack Micenko, an analyst at Friedman Billings Ramsey & Co. in Arlington, Va.

Indeed, most thrifts shuttered their development offices in the late 1980s and early 1990s when the real estate market crashed. …

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