PBCO Financial withdraws from residential mortgages

Oregon-based PBCO Financial Corporation has announced its decision to withdraw from the residential mortgage lending sector, effective November 1.

The move comes as a strategic shift in response to the current economic and industry landscape. PBCO president and CEO Julia Beattie cited several factors influencing this decision.

“Industry trends and the current interest rate environment have made it challenging for this division to remain profitable in recent years,” Beattie said in a statement.

PBCO’s decision to exit the residential lending market follows a noticeable downturn in its mortgage revenue, which fell $23,000 in the third quarter, reflecting the broader trend of dwindling borrower demand due to higher interest rates. PBCO also recorded a decrease in non-interest income in its Q3 financial report – totaling $2.2 million, down by $118,000 from the second quarter.

Read more: Loan originators to exit market – but is it a bad thing?

Beattie noted that the rise of online mortgage options and the dominance of non-depository lenders, who provided over 70% of mortgages in 2022, have reshaped the market.

“The outlook for mortgage loan demand in 2024 and possibly into 2025 also factored into our decision. This departure also reflects the realignment of our strategic goals and focus for the future,” she added.

The company expects to incur one-time termination costs of roughly $350,000 in the fourth quarter. These expenses are primarily related to severance and contract termination fees.

Even the largest US banks have backed out of the cutthroat residential market. Wells Fargo, the country’s biggest mortgage provider, shrank its home lending business in January 2023, taking the lead from rivals like Bank of America and JPMorgan Chase.

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