BayFirst National Bank withdraws from residential mortgage business

Florida bank attributes shutdown to uncertain outlook for residential mortgage lending and declining mortgage volume

Higher mortgage rates, lower volume and fiercer competition forced BayFirst National Bank to shut down its residential mortgage business and lay off staffers.

BayFirst Financial Corp., the parent company of BayFirst National Bank, announced last week that its board of directors started the process of closing the bank’s nationwide network of residential mortgage loan production offices. The bank will continue to originate mortgage loans in its local Florida offices, the firm said.

“Given the impact of declining mortgage volume on the company’s operating performance in recent quarters, together with the uncertain outlook for mortgage lending in the near to mid-term, we made the difficult decision to discontinue our nationwide network of residential mortgage loan production offices,” Anthony Leo, chief executive officer said in a prepared statement last week.

The Florida bank plans to focus on building a community banking franchise and capitalize on small business administration (SBA) lending, he said. SBA lending through the bank’s CreditBench division grew to record levels, according to Leo, and continues to add more employees.

BayFirst ranked eighth among the list of the nation’s most active SBA lenders, according to the U.S. Small Business Administration. It approved 906 SBA loans totaling $308.8 million as of September 22.

The bank opened its eighth banking center in West Bradenton, Florida in September and will prioritize expanding its bank offices throughout the Tampa Bay region, the executive added.

Prioritizing home equity solutions in a rising rate environment

The 2022 housing market has been underscored by interest rate spikes and refi decline and lenders are working hard to adjust to new borrower trends. HousingWire recently spoke with Barry Coffin, managing director of home equity title/close at ServiceLink, about the ways lenders can capitalize on these trends by revving up their home equity solutions.

The 30-year fixed-rate soared past the 6%-level, more than doubling from January and lenders have been reducing headcount to cut costs. Nearly every lender had multiple rounds of layoffs with some banks, such as Santander Bank shutting down its mortgage residential business. The Spanish bank announced the decision in February saying that it will focus its “efforts on products, services and digital capabilities that let us better meet evolving consumer needs.” Santander is still operating a commercial mortgage business.

BayFirst expects the after-tax expense associated with discontinuing residential mortgage business is estimated at around $3 and $4 million. The closure of the line of business is subject to any required regulatory notices and approvals and is expected to be completed Nov. 24, the bank said. 

Founded in 1999, the bank originated $1.6 billion in volume over the last 12 months, with a monthly average of $123 million, according to mortgage tech platform Modex. According to the Nationwide Multistate Licensing System (NMLS), the bank has 232 registered mortgage loan officers. 

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