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As the stock market takes a ride on the ferris wheel, First Security kicks back to enjoy the ride.

The 4-year-old Chicago-based First Security Commercial Mortgage is anything but wet behind the ears. While most lenders are going on hiatus because of the performance of the stock market, i.e. market capital. First Security is stepping in to take up the slack. And with a team of origination, underwriting, and closing and legal staff, the lending firm is chanting "there's no stopping us."

"We market ourselves on a national level and a regional level to borrowers, and in certain instances, their brokers as a direct source of permanent financing," says Michael Connolly, senior vice president for First Security. "We do this via advertising, direct mail and those sorts of things. So we're out there in the trenches battling for borrower's business just like any other lender -- or for that matter broker shops."

With regional offices in Sacramento, Calif.; Los Angeles; Chicago; Phoenix; New York; and Boulder, Colo., First Security has a lot of ground covered to set up the trenches and win the war.

But it wasn't always that easy. Back in 1993, First Security was just setting up shop for a business that was trendy at the time. But little did competitors know that behind this lending firm were experts in the field of securitization.

Enters 38-year-old David Jackson, president and CEO of First Security Commercial Mortgage.

Starting out in the industry as an accounting guru with Arthur Andersen, Jackson knew he was destined to some how squeeze in his father's love of real estate with his love of financing. And that he did. After becoming involved with Continental Bank in Chicago and dealing with mortgage revenue bonds and finance, Jackson moved on to Security Pacific Bank with the role of audit senior and was promoted to partner. In a short span of time, Jackson won the company in excess of a million dollars in new accounts and became an expert in securitization. It wasn't long before the South African native set out to start his own business.

"I resigned from [Security Pacific Bank] and spun out my business units into the business called First Security Commercial Mortgage. I charted a commercial mortgage security course at the same time," says Jackson. "I selected self-storage as a mainline product because I figured that the market hadn't yet developed for commercial mortgage securitizations, and everybody was going to jump into multifamily. When the market would develop, and with the amount of capital I had, I wanted to be effective. I would take an off-beat product and see if I could get significant market share where there would be less competition."

Self-storage proved to be a great idea for First Security. They captured about 13% of the national market of financing for self-storage. And it moved on to build financing with other products, including manufactured housing communities or mobile home parks, hotels, and health care for senior living. And to that list it added its most recent venture -- carwashes.

Within First Security, the company sets out to handle the borrower from beginning to end to make sure they are most satisfied with the assistance they are receiving. The loan procedure entails processing the loan application and sending it to the home office with a deposit of funds, incurring the costs, getting appraisals, and environmental and engineering reports, titles and surveys.

Also, First Security completes underwriting, formulates memoranda and obtains approval of a committee, which includes the company and Conti Financial, a company that owns one-third of First Security and funds its loans. Once the committee approves, a loan commitment is issued and then sent back to the borrower, who in turn either rejects, accepts or negotiates it. It's then returned to First Security with a commitment fee, and a closing date is set up.

"[After closing], we have further due diligence to be done, document negotiations and those sorts of things during our closing process and, then once we are all set and all lined up, documents negotiated, titles and surveys are clean, [and] we know we have the right insurance in place, we close in our name," says Connolly, who just celebrated his two-year anniversary with First Security in August. "The loan is then warehoused with a line of credit provided to us by Conti Financial and, then ultimately, the loans are pulled together; and three or four times a year we, jointly with Conti, securitize these loans."

As Conti keeps recurring, Connolly explains that First Security has had a long history -- about 18 months worth -- with the company and have always brought their loans to them for funding. "Our relationship began as simply a strategic alliance," he explains. "And we've had a pretty monogamous relationship with them in that there are a lot of shops out there similar to ours that bring deals to various investors, and we bring all of our stuff to Conti and, in exchange, we get a pretty sweet deal from them with respect to sharing and the profits that we have or potentially losses on securitizing these loans."

Jackson agrees. "It's my view that Conti is in the business for the long term, and First Security is as well."

Jackson is proud of the success of First Security and explains that he had 40 investors to start up the company who believed that his success was inevitable. "We're still expanding. We've been on an almost 100% growth annually since existence," says Jackson, who took his company from a 25-employee operation to a now 120-employee operation. "We have moderate capitalization, and I set certain goals and certain objectives of total net income production over a five-year plan [when I started this company], and we met those goals about three years into the plan."

Jackson and Connolly both believe that First Security will also ride out the wave of the unstable stock market. "[The markets are unstable] and spreads have widened creating potential losses or potential for people exiting the market, whereas we are in a pretty good position and that's not going to happen to us," explains Jackson. "Conti's last deal that went out was about three or four weeks ago. It was kind of the beginning of all this spread crisis, [and] the capital markets' chaos that's been going on. So we feel happy that we didn't lose any money," adds Connolly. "It seems like a lot of people that came up subsequent to that, like WMF, lost millions of dollars; however, we made a decent bit of change, and if we thought that was our worst case scenario, that we would only make as much as we made this last time around, we could survive in this business indefinitely."

Connolly continues excitedly, "We structured our business, our marketing efforts, our process and everything else we do around the fact that we always felt the back end of this would get very, very skinny and very, very competitive. We always hoped and still hope that there are a lot of people who simply won't be involved in this business unless there's three or four or five points to be made on the back end of these transactions and securitizations." The DePaul University graduate continues, "I hate to sound devious, but we have kind of been sitting waiting for this day for this kind of shakeout. I feel kind of proud of our leadership, that we've had the foresight."

And with that said, competitors beware. "No one competes with us," Connolly says with resounding laughter. "You know it's kind of funny, I mean I can almost be cocky in that answer [of who our competitors are] because the capital markets are going through such craziness. A number of competitors have chosen just to take a short or long hiatus from being in business at all. I don't know if I would call them competitors, but I think companies like Bear Stearns, WMF Funding, Finova are certainly a competitor of ours and then I would list the Morgan Stanleys and assuming peoples hiatus are temporary, I would still list these folks as competitors."

First Security's loan volume this year up to the third quarter is $775 million with one quarter left to go, and Connolly says that next year they are aiming for $100 million a month.

This team of experts isn't struggling as they attract the average-sized $3 million loan in the middle segment of the market. "We've learned how to put a loan on the books, to put a safe and good well-underwritten loan on the books for the cheapiest price, and we will be able to continue to pass that through to the customers," says Connolly. "And we think there is a long future for First Security."