The CEO to CEO podcast is hosted by Kevin Campbell, CEO of Syniti.
On this week's podcast, we sit down with Josh Moffitt, founder and president of Silverton Mortgage. Founded in 1998, Silverton Mortgage has grown from a one-person shop to a top residential mortgage lender, and one of the nation's fastest growing financial institutions, operating in locations across the Southeast. But more than dots on the map, they count their success by what they give back to communities. In 2018, Josh oversaw the acquisition of Silverton Mortgage by Vanderbilt Mortgage and Finance Inc, a national home lender owned by Warren Buffet's Berkshire Hathaway Inc. Josh is also a member of the Mortgage Bankers Association's Mortgage Bankers Executive Council.
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Kevin Campbell (01:30):
On today's CEO to CEO Podcast, we've got Josh Moffitt, the CEO and Founder of Silverton Mortgage. Welcome Josh.
Josh Moffitt (01:40):
Hey Kevin. Thanks. Good to see you.
Kevin Campbell (01:43):
Good to see you, and how about you tell us, we start with a little bit of background on Silverton and a little bit about the history.
Josh Moffitt (01:53):
Yeah, certainly. I would love, Kevin, to tell you we had this great master plan and I started this company 20 plus years ago from a passion that I had to get into the mortgage business and I grew up wanting to do that. Reality was, I needed a job, and that's how we got started. I had graduated school, followed a brilliant, beautiful girl here to Atlanta, that was my girlfriend at the time and now wife, and got in the mortgage business just by luck. A friend of a friend was hiring. Took a job, 11 bucks an hour, making copies at a mortgage company. Within about a year and a half, started to hear our company was going to have challenges and some liquidity problems, so I needed a job at that point. I had some student loans to pay and some bills to pay, and somebody in the office said, "Why don't we go out and get our broker's license and start a little company?" That's how Silverton was formed.
Kevin Campbell (02:56):
Then, tell me a little bit about what Silverton has grown to today. Maybe a few numbers, how big you are.
Josh Moffitt (03:04):
Yeah, depending on how you're measuring, we have a little over 400 team members right now. We're licensed to do business in 46 States, and have roughly 40 locations, if you will, that are licensed to do business, spread out here in the Southeast, but a few farther out, as you go out through the US.
Kevin Campbell (03:30):
From an idea, and I need a job, to a thriving, growing company today. Pretty impressive story. How has COVID-19, that we're all dealing with right now, how has that affected the mortgage business today?
Josh Moffitt (03:47):
It was really interesting how it filtered into the mortgage business. Right when it happened, you also had the CARES Act that was announced fairly quickly, for obviously a lot of good reasons to support the American public, but it really challenged the mortgage business, having a forbearance offering to the public, that was really just released really fast. What happened was, it really challenged a lot of the foundational structures of the mortgage business and really caused some panic and potentially liquidity crisis within that first 30, 45 days of that being announced. The industry has settled down since then, figured its way through it, navigated it, a few sleepless nights in between for those of us on the front end.
Then it was really interesting from there, because most of the business said, "Oh, oh. Obviously this is a big deal, and are people going to be able to buy houses if they don't have jobs, and potentially not." We saw interest rates getting pushed down, which was great and needed. We really thought, going into it, we were going to be doing a lot of refinances this year, but that was potential yet. How was that going to affect our business in that refinances were always a small part of our business? We were a purchase-focused shop. We kind of took a pause and said, "Wow, this could really impact the business this year."
Then all of a sudden, this tsunami hit of both refinances, which we kind of expected, but the buying side, which was just an unbelievable event of consumers wanting to take advantage of low rates, maybe being cooped up in their houses for a while, with kids trying to work and going this place is just too small for us, we got to get out really created just this massive buying event as well this year, too. The mortgage business is like a seesaw. You usually have a refinances, busy purchases, not so much, and then flip-flops from there a lot of times. This year, we have a V-shape seesaw with both sides, just booming at this point. It's been really interesting.
Kevin Campbell (05:58):
That's great for business. How are you dealing with the surge in volume?
Josh Moffitt (06:05):
Our supply chain, if you will, is people, right? We're a financial services business. Our supply chain is people and it's really put a lot of pressure on our supply chain. With everybody being busy, we're all looking for good, qualified, talented folks. We tend to have skilled trade labor, if you will. These aren't typical jobs that you could just fill somebody from off the street. It takes a while to create some of these jobs. It's really put a lot of capacity challenges throughout the industry, Silverton as well because of that supply chain, and just needing more and more people that really can't be created overnight. It's been great for business, but tough on the people side of our business.
Kevin Campbell (06:54):
Yeah. You've grown from just a couple people to, you said over 400 people today. How did you go about that growth? Did you do any acquisitions or talent acquihires as they call it?
Josh Moffitt (07:11):
Yeah. Our growth, and we're not unique in the mortgage retail side of the business, is really through acquisitions of sales teams and books of business, if you will. Early on, I don't know if there was much of a plan. It was just a lot of getting out there being in sales, meeting people, connecting right, and networking, and telling your story and hopefully finding good fits along the way. Then I think, as any company really grows and starts to mature from that toddler phase into the ganglia teenager, which I think we stayed in that phase for a long time, you try different things. You explore and you bring on somebody who maybe is just focused on that and expanding your footprint. You have some successes and you have some failures and you try to find what style of growth works best for you. But, during that 20-plus years, we haven't made an acquisition on the business side. We haven't gone out and bought a business. It's really been more on the sales team side of things.
Kevin Campbell (08:18):
How do you ... I know you well enough to know you have a strong culture at Silverton. How do you find people that are going to fit in that culture? Are there any little things that you keep in your mind when you're talking to sales teams to say, "Hey, these groups might be a fit and these ones won't be?"
Josh Moffitt (08:39):
Yeah. Fit is just, that's where the magic happens. Right? Probably the hardest part of it, not just unique to the mortgage business, but, the prospecting side has really changed through the years. You really had to used to get out there and know people and meet people. Now there's software that can tell me where strong-performing teams are really throughout the whole country and what their book of business looks like. That's become more of an open landscape than it used to be. You didn't know what type of loan somebody did or were they trending up or trending down. That's really now, through data, at all of our fingertips. That helps, but then you still have, as you mentioned, the cultural piece, and really, that's what it's all about when it's all said and done.
We've had a lot of successes and we've had certainly some failures and in looking back, chasing volume can get you in trouble. If you're just going after the top guy or a girl and really not asking the right questions and just seeing that number out there, what you end up with possibly, the high-performing terrorist. Right?
Kevin Campbell (09:44):
Josh Moffitt (09:45):
Do a lot of volume, but man, they leave a big wake behind them and that, for our culture, that doesn't fit really well. What we found is you got to speed up to slow down. You got to put them through a couple rounds of interviews by different people who are really cultural champions of your company, and can ask those style questions. It's okay to say "No." It's okay to pass on somebody who you don't, going to be a good fit. That's real hard to do when you're young and trying to grow your company. I think some of that just comes with age, maturity. We all made bad decisions and younger lives of businesses is no different, right?
Kevin Campbell (10:27):
One of my mentors said to me, one time, You'll be more known by the deals you don't do, than the ones you actually do do. Right?
Josh Moffitt (10:35):
Kevin Campbell (10:35):
I think that's hard for all of us to remember. Now, two and a half years ago, you were acquired. What was your thinking when you, when you went through that process?
Josh Moffitt (10:49):
For us, going into it, we weren't out there bidding ourselves out. We were the size company where people would inquire quite a bit. We were a good size to buy and fit into other corporations and that kind of thing. Our tires were getting kicked a lot, but I wasn't, this wasn't an exit strategy for me or anything like that. When our parent company approached us, I really thought it was going to be another one of those, you'll take the call and politely decline, and go about your day. I remember that first call, I actually took in the car and I was driving. I took the call and the way it was presented to me was, this is going to be different.
You should really talk to these folks. I remember, coming to a stoplight when the call was over and really just sitting there. I think I sat there when it was green for a few minutes and going, "Wow. YI didn't expect that. That was different. That on for a couple months, really. We were both taking our time in that process. I think that that went on for maybe four or five months actually, before we really got into the heavy due diligence, purchase agreement. I have a little hindsight at this point, two and a half years in, and I think you never really know the intent of a buyer until you're probably about two years in. I've told everybody this, It's everything they said they've lived up to, if not then some, and it's really just been a tremendous experience for us.
Kevin Campbell (12:33):
That's great to hear, because there are many stories out there that aren't that. Right?
Josh Moffitt (12:37):
Kevin Campbell (12:38):
What did they bring to you, as you went through the sales process? What did they do to help you scale and grow, relative to channels to market or financial strength?
Josh Moffitt (12:53):
Yeah, all of the above. I went into it with, once we got a little more serious, six, seven, eight, non-negotiables I like to call them. Those were what provided us the growth, in a lot of cases. I wanted to continue to run the business and stay on. Like I said, it wasn't an exit strategy. The culture had to fit. We talked a ton about culture, but I really wanted opportunities that were tangible, that could grow the business, and not just, "Here's a checkbook. You go do it." Our parent company really brought those to the table. We're part of the Berkshire Hathaway family of companies. Our parent company's Clayton homes. We're a licensed partner with Vanderbilt Mortgage, who's truly our parent, but folds all into that mix.
The myth of Berkshire is true, in that they really provide you opportunities, financial strength to grow your business, but they're not micromanaging it. We really got to see that, but it also in that model, you're talking to sister companies a lot of times, that you have opportunities, but you got to earn and win the business, just like if you were outside. That really attracted me to at all, was that there was going to be opportunities that if we performed and did a good job, we could grow and gain that business. They brought on four, really channels, for us to do so.
Kevin Campbell (14:20):
That's excellent. You talked a little bit about when you were looking at books of business, you could look at the data on performance. When Berkshire was looking at you, they're known to be very detail-focused. How important was your data in that M&A process for you?
Josh Moffitt (14:43):
I think it was huge. We were a small company, still are, but we were even smaller than, and our parent company could really buy anyone in our industry, and there's roughly about a thousand of us out there. I think the data and our performance and our culture are really what got us to the table and outperformed, possibly our peers that they were talking to. We always ran our business like a bigger company when it came to the data side. I think we were always out kicking our coverage a bit and measuring a lot. You're even seeing it now in this work from home environment. A businessman of mine, one time said, "If you don't trust somebody to work from home, you just don't trust them."
You got to measure and know what they're doing We always took that to heart, and so data was huge. Our due diligence was really long, and they're very thorough, and you don't hear of a lot of Berkshire companies that get purchased and not work out well. Right? We certainly wanted to be in that category, and I think data had a lot to do with that.
Kevin Campbell (15:59):
When you go forward here and you think about acquisitions, what role do you think acquisitions, further acquisitions might play in Silverton's future?
Josh Moffitt (16:12):
I think they're certainly in the cards and in the mix. The nice thing about being, again, part of Clayton and Vanderbilt Berkshire, is there's not a directive of grow by X by number of years, which is sometimes the case in an M&A. We really get a look at a lens that I've never had before, that's five and 10 years out. M&A comes into all of that. However, just because you have a big checkbook, doesn't mean you go out and spend money. It's got to be the fit. It's got to be all the things that I appreciated about our acquisition, passed down to whatever we would do.
Kevin Campbell (16:52):
That's I think, good advice. What's your crystal ball say about what the next six months are going to be in the mortgage business?
Josh Moffitt (17:03):
The crystal ball these days, I'm not sure is crystal anymore, with all that's going on in the world. I think every dinner party and barbecue I've been at in the last 25 years, everybody wants to know what rates are going to do, right?
Kevin Campbell (17:15):
Josh Moffitt (17:15):
... and what it's going to be. The housing market tends to be a bit of canary in a coal mine, about a 12-month forward look. If you take just that, it looks strong, right? Housing has rebounded from that initial dip. We're still under supply, based on demand. The millennial buyer is really starting to enter the market in full, which has been a bit delayed. So, all the statistics and what it's showing us, lead us to believe that in next 12 months, the housing market's going to continue to be strong. With that said, there's an awful lot of variables right now, that are pretty hard to predict. How long does this continue with COVID? Are we going to see, really high unemployment last long, or is it more of short-term? But, as it stands today, it looks to be strong for the next 12 months with relatively low interest rates as well.
Kevin Campbell (18:18):
How much does the presidential election and who gets elected here in the US, how much does that play into mortgage rates and what's going to happen?
Speaker 2 (18:29):
I think short term, by the end of November, is it going to make a big impact one way or the other? No. Certainly long-term policies and things like that will come into play. I don't think we'll see a huge impact over these next six to 12, regardless. But, I think, depending on who gets elected, you have different policy opinions in how it can affect banking, longterm. That's a TBD. Right?
Kevin Campbell (19:00):
Yeah. Reflecting back on your successful career so far, and the growth that you've had, is there one piece of advice or two pieces of advice that stick out for you that says, "Hey, as the CEO, this is the best advice I've ever gotten from somebody along the way."
Speaker 2 (19:22):
Yeah. I never had that moment where somebody is sitting there and talking to me directly that I said, "That's the one I'm going to keep in my wallet." Right< but I was in aa, and Kevin you'll know the group I'm talking about, our Vistage Group. This was a couple years ago and I was fairly new into the group and learning. There was a lot of, just really impressive CEOs in there. A gentleman named Ray Bishop was one of the CEO's, and Ray was one of these cool guys that didn't say a whole lot, but when he spoke, you took out your notebook and ... He was like EF Hutton. When he speaks, people listen, and he was presenting on his company one day and he said, I forget how he phrased it.
But, he said, "You know what guys, I have hit every goal and milestone I've ever set for myself in business, but sometimes the dates were just wrong." I took that, and said, we get so wrapped up sometimes in quarters and months and days and all these kinds of things, and really what's important is to set the vision and set the goals, celebrate the successes along the way. You're going to take steps back and forward and all those kinds of naturally things. But, it's really our job to do that as CEOs. If you miss it by quarter, it shouldn't keep you from still getting to where you want to go. I just love that quote, and I've always used it in my planning and vision for where we want to take the company.
Kevin Campbell (20:54):
Josh Moffitt, Silverton Mortgage. Josh, thanks for joining us today and thanks for a lot of good advice for our audience.
Josh Moffitt (21:03):
Awesome. Thanks Kevin. Really appreciate you having me on.
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