Another bank looks set to exit the mortgage space
BNC National Bank has struck a deal to sell its mortgage division to another institution as part of its strategic decision to exit the residential loan origination business.
BNC Bank said Wednesday that it entered into a definitive agreement to sell certain assets and liabilities of its Kansas-based consumer-direct mortgage unit to First Federal Bank.
As a result of the deal, First Federal will be able to expand its residential loan origination business in new markets, including Kansas, Illinois, North Dakota, and Arizona.
After the sale, expected to close in the second quarter of 2023, BNC Bank will continue to facilitate mortgage loans for its bank and wealth management customers as part of its full range of banking services, according to the company’s news release.
BNC chairman Michael Vekich said the decision to close the bank’s nationwide mortgage business was made after “extensive deliberations” and that the move is in the best long-term interests of the bank and its shareholders.
“In the last year, we have taken substantial steps to improve the profitability of our mortgage banking origination business in response to the persistent challenges facing the mortgage banking industry,” he said. “We are proud of the resiliency and dedication of our mortgage banking team, which has built a reputation for providing quality service. However, it is unclear when and to what extent mortgage industry conditions will improve.”
Vekich cited several factors behind the exit, including competitive, technological and regulatory changes and the volatility of the mortgage demand. He said these have made it “more difficult to run a mortgage company within a community bank.
“Simply put, since we expanded our mortgage banking operations in 2008, the landscape has changed,” Vekich added. “This transaction enables us to focus on our core banking activities to benefit our shareholders and the communities we serve.”
Even big players in the industry are selling off their originations channels. Last week, Homepoint confirmed that it will wind down its wholesale mortgage business and sell certain assets to The Loan Store. Wyndham Capital Mortgage also announced Monday that it had been acquired by SoFi Technologies.
John Medina, president and CEO of First Federal, commented: “Our mission is to provide solutions from a financially stable institution that is a great place to work and bank. This acquisition underscores our commitment to our customers and the residential mortgage sector. We look forward to serving the BNC mortgage customers with the same excellence they came to expect from the BNC team.”
In addition to expanding its footprint, the acquisition will allow First Federal to offer additional products and technology. The company said it expects to retain all BNC National Bank’s mortgage division team employees.
“We look forward to welcoming the new employees to our residential lending team,” said Paul Ottendorf, division president at First Federal.
“BNC National Bank’s mortgage division team will continue to excel at our core strengths while adding to our product offerings and joining an already amazing First Federal mortgage business,” said Doug Brendel, president of mortgage banking at BNC.
BNC is anticipated to transition to the First Federal brand within a few months of closing. Financial terms of the transaction were not disclosed.
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