FB Financial wraps up mortgage refresh with correspondent channel sale
FB Financial is selling its correspondent lending channel to Rushmore Loan Management Services, which will complete the bank holding company's restructuring of its mortgage business.
FB Financial's sale of its wholesale channel to Renasant Bank was completed on June 7.
The prices of the deals were not disclosed.
"We are pleased to have found new homes for each of our third-party origination channels in the second quarter. These sales allow us to focus more on our customer centered retail and consumer direct channels," Chris Holmes, FB Financial's president and CEO, said in a press release.
The sale of the correspondent unit is expected to close in the third quarter. "In addition to expanding the universe of loan servicing offerings that we are able to provide to our customers, we expect that it will also increase our visibility into the broader mortgage lending space — enabling us to gain valuable market insights that can be leveraged across many different facets of our business," Rushmore CEO Terry Smith said in the company's press release.
FB Financial, the parent of FirstBank, reiterated it will take restructuring charges of up to $1.5 million to cover transaction-related expenses, severance and other items, in addition to the $1.1 million it took in the first quarter.
The company first raised concerns about its mortgage business in May 2018.
FB Financial's mortgage business recorded a $1.6 million pretax loss in the first quarter, compared with a pretax profit of $1.1 million one year prior.
There were $1.36 billion of interest rate lock commitments in the first quarter, down from $2.13 billion for the same period in 2018, according to a Securities and Exchange Commission filing by FB Financial. The consumer direct channel had the largest amount for the most recent period at $521.6 million, followed by $380.9 million from correspondent, $291.8 million from retail and $170.5 million from the third-party business. In the first quarter last year, correspondent was the largest channel at $833.9 million, while consumer direct had $719 million of volume.
Outside of the transaction charges, FB Financial expects an increase in its mortgage operating results in the current quarter compared with the first quarter. Origination volume has been strong, but there are also elevated prepayments in its mortgage servicing rights portfolio.
"We are very excited to join the Rushmore platform, build this business to a larger scale, and take advantage of new opportunities such as having a strong appetite for government loans," Bill Scammell, FirstBank's director of correspondent lending, said in the press release from Rushmore. "These are highly complementary businesses, and we fully expect that joining Rushmore will enable us to accelerate the growth of both Rushmore's core servicing platform and the correspondent channel."