Maurice “Mac” McAlister, cofounder and dominant owner of Newport Beach-based savings and loan operator Downey Financial Corp., calls his 65-year career in lending and real estate one of impulse.
“I do more things on impulse than I do on planning,” McAlister said before an audience of about 300 people at a gala for the Paul Merage School of Business at the University of California, Irvine.
The 82-year-old McAlister was given a Lifetime Achievement Award at the event.
McAlister is chairman and 20% owner of Downey, a thrift with a recent market value of $1.5 billion. The Business Journal estimates his worth at about $350 million, including real estate and other investments.
A resident of Bullhead City in Arizona, McAlister comes to Orange County monthly for board meetings.
He started Downey in 1957 with the late Gerald H. McQuarrie. The thrift is marking its 50th anniversary this year.
Downey got its start lending to returning soldiers looking to buy homes after the war. Today, home loans still dominate its business.
The thrift has assets of $14.7 billion and 172 branches.
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Downey’s HQ: McAlister comes monthly for meetings |
Mortgage Downturn
Like other lenders, Downey is feeling the effects of the mortgage and housing downturn, which has hurt profits and seen some borrowers miss payments on loans.
Downey’s shares are off about 10% in the past year, though not nearly as bad as other lenders on Wall Street.
McAlister called the situation minor.
“We have a little bit of a problem, but not very much,” he said.
Lending has become too complicated, according to McAlister. He said he prefers the simplicity of the way business was done in his early days.
The quieter pace of Bullhead City, just across the state line, fits McAlister. He spends a good part of his time hunting and fishing.
McAlister is said to have shot one of the largest Bull Elks in Arizona hunting history.
Depression Era
Born in 1925 in Arkansas, McAlister said he remembers the Depression that drove his family to look for a better life.
At a time when it was “almost impossible to make a living,” McAlister’s father brought his family to Brownsville, Texas, on the Mexican border for a chance at a better life.
While his father worked an hourly wage for a farmer, McAlister said he picked cotton at age six to help support his family.
The family later moved from Texas to South Gate, where they lived with McAlister’s uncle.
Soon McAlister started working to rid homes of termites with his dad and uncle.
“You can learn everything you need to about houses doing termite work,” McAlister said.
Oddly enough, it was in a high school woodshop class that McAlister said he learned how to be a lender.
With classmates unable to afford wood for the class, McAlister lent them money in return for finished tables made for the class.
When his garage became full of tables, he loaded them into his Model A Ford and sold them through secondhand stores, he said.
Then, one day on a whim, a 17-year-old McAlister said he walked into a real estate office and asked to become a seller.
The hitch: he needed to be 18 to get a real estate license. McAlister joked that he couldn’t recall if the agent who filled out his application put down 17 or 18.
He soon started selling houses.
“I became addicted to real estate, and I still am,” McAlister said.
At 18, he said he bought his first house after talking his parents into co-signing with him on a loan because of his age.
While serving in the Army in World War II, McAlister said he became a lender to broke soldiers. While stationed in Manila Bay, he said he acted as a currency exchange for soldiers swapping Philippine pesos and dollars.
After the war, McAlister went back to selling houses. At that time, there were five buyers for every house, he said. With so much demand from returning soldiers, he said he found houses to sell by cold calling people from the phone book.
By age 22, McAlister was selling tract homes, apartments and commercial real estate.
Then he wanted to try his hand at building houses, McAlister said. Lenders told him he was too young and inexperienced.
‘Money Wanted’
So McAlister put an ad in the paper that read, “money wanted.” He said he got calls from curious investors.
He was able to convince one lady that he could build houses in six months that would be better than what other builders already were putting up.
She took him up on it. The two formed a long-term business relationship and friendship.
McAlister went on to work with other lenders, he said.
He decided to start a thrift to avoid the cost of using commercial lenders for his projects.
Regulators shot down his first attempt to charter a savings and loan in 1954, he said. Three years later, he met Downey Savings cofounder McQuarrie and started the thrift.
Loaned to Veterans
Downey made home loans to veterans and sold the mortgages to Freddie Mac, according to McAlister. The thrift became the first to issue federally insured Ginnie Mae mortgages, he said.
From there, Downey began lending for shopping centers and other commercial real estate buildings.
McAlister has been a regular investor in real estate in California and Arizona.
He recently bought 5,000 acres in Arizona between Kingman and Needles, where Wal-Mart later decided to build a store. Another good impulse buy.
