Serial entrepreneur Jim Deitch has founded more than two dozen companies during his career. They include not one, but two mortgage lenders, and he’s currently founding a third.
In February, Deitch and longtime business partner Anna Ruth “A.R.” Smith announced the formation of TeraVerde Financial. While plans remain fluid, TeraVerde intends to partner with a bank and will offer some mix of mortgages and financial and technical consulting, Deitch said.
Trained as an accountant, Deitch said he was attracted to the mortgage business for two reasons: It offered the opportunity to apply his interest in innovative IT systems, and he relished the gratitude customers expressed when his company guided them through the time-consuming, often frustrating process of obtaining a mortgage.
“It just was really a very enjoyable experience to get a letter or a phone call saying ‘Thank you for your help’ or ‘Your loan officer did a great job,’ ” he said.
Deitch and Smith collaborated on Keystone Financial Mortgage Corp., founded in 1993. They reorganized it in 1997 as Keystone National Bank, which M&T Bank bought in 2000.
The next year, Deitch and Smith re-entered the mortgage business with American Home Bank.
It rapidly grew into a multibillion-dollar lender. But the 9/11 attacks almost derailed the company before it could get under way, Deitch said.
As Ground Zero smoldered and America reeled in shock, financial and real estate markets simply ground to a halt.
Deitch knew some of the victims in the Twin Towers and grieved for them and the country, but he also realized he had to focus on keeping his nascent bank in business, he said.
“We came out of the box thinking we were going to grow fairly quickly, (but) we literally had to stand still for what amounted to almost 120 days before both the economy and the real estate market got to the point that transactions were beginning to occur again,” Deitch said.
Deitch said a key to American Home Bank’s success was the company’s mission statement: “To help customers buy, afford and enjoy the home of their dreams.”
A mission that has clarity and integrity excites people and guides corporate policy in the right direction, he said. In American Home Bank’s case, the mission’s “enjoy” clause implied it should minimize customers’ risk of foreclosure, so the bank stayed away from subprime lending, a decision that proved foresighted, he said.
Deitch and his wife have been married more than 30 years and have two grown children. Though they have known each other since kindergarten, she turned him down for dates in junior high, high school and college, then broke up with him shortly after they finally began dating as young professionals.
That’s one of the experiences Deitch said taught him persistence in business and life.
“I think it’s a key value. Anything worth having is not usually easy to get and you really can’t give up,” he said.
First Chester Corp. of West Chester bought American Home Bank in 2008. Deitch and Smith stayed on but left when Tower Bancorp completed its purchase of First Chester last year.
Graystone shut down American Home Bank this spring, saying a large mortgage bank was inconsistent with its business model, though it folded some operations into Graystone Mortgage.
Deitch now is focused on launching TeraVerde, a process he called tremendously exciting.
The financial crisis and Dodd-Frank reform law have wrought huge changes in the mortgage industry. The government-sponsored enterprises Fannie Mae and Freddie Mac, though under federal conservatorship, guaranteed more than 90 percent of mortgages in 2010, due to the weakness and skittishness of private lenders, he said.
In preliminary meetings with potential TeraVerde partners, Deitch said, he’s constantly “expanding the funnel” of opportunities under consideration.
“It’s really delightful to be able to say, ‘There are so many things that we could do. How do we focus down on the two or three that we really want to do?’ I really enjoy that challenge.”