Kansas Lender Carves Out Military Niche

Steve Calk knows what it's like for military personnel to be preyed upon.

As a young Army lieutenant stationed in California, Calk was misled into taking out an inappropriate loan, he says. Now as the chairman and chief executive of the Federal Savings Bank in Overland Park, Kan., he seeks to ensure his military customers are better protected.

"I never forgot that," Calk says. "We have been committed to making sure that doesn't happen to our customers."

Banks have been criticized in the past for their treatment of members of the armed forces and veterans, who are afforded certain protections from high fees and foreclosures. Several large banks in recent years have settled claims of mistreatment of military customers.

A growing number of banks, including Regions Financial (RF) and Wells Fargo (WFC), have taken steps to cater to military personnel, such as hiring veterans or providing mentoring services.

Federal Savings, which has $238 million of assets, does its part by focusing on mortgages for veterans and first-time homebuyers, Calk says. Educating these borrowers is essential, he adds.

"We want them to be educated," he says. "We want them to go in with both eyes open."

Banks working with veterans should expect additional scrutiny from regulators, and Federal Savings actually welcomes that, Calk says. It's important to ensure these borrowers are not taken advantage of by banks and other financial services companies, like mortgage brokers, Calk says.

"We should be grateful to these individuals for serving this country," he adds.

Besides working to educate borrowers, the bank employs veterans from various military branches and it supports organizations that provide services to military personnel and their families.

It also recently donated a house that it owned - the previous owner had abandoned it after mailing the keys to the bank - to the Metropolitan Housing Development Corp., a nonprofit that provides housing to families in urban communities. Its current occupants are a veteran's widow and the daughter of a career veteran.

Calk and his brother, John, who services as vice chairman, have spent the last few years growing Federal Savings' mortgage business after buying Generations Bank as it was being foreclosed upon in 2011. The previous owners of Generations defaulted on a loan from a unit of Dickinson Financial. The brothers then recapitalized and renamed the bank.

Federal Savings recently opened five loan production offices across the country. It posted a return on assets of about 9.8% and a return on equity of 114% in 2012. Its noncurrent loans are almost nonexistent, according to Federal Deposit Insurance Corp. data.

The "secret sauce" to this success is being "incredibly disciplined in measuring, monitoring and controlling our risk," Calk says.

"We do that by knowing our customers and ensuring all of our loans are fully documented," Calk says. "We ensure the information that we have is both truthful and accurate, and we do that by hiring and training people of superior work ethic."