First Internet Bank Decides To Close It’s Consumer Mortgage Business After Facing Steep Declines In Origination Volume
First Internet Bank is shutting down its consumer mortgage business. The Indiana based lender claims its due to a steep decline in mortgage volumes. The company also said the negative outlook for mortgage lending also contributed to the decision.
First Internet Bancorp is the parent company of First Internet Bank. They also announced that the exit will include its nationwide digital direct-to-consumer mortgage platform. The platform originates residential loans for sale in the secondary market. It will also include the company’s local traditional consumer mortgage.
First Internet Bank will end its direct-to-consumer operations in the first quarter of 2023. The company plans to shift its focus to origination efforts on its commercial construction and small business lending. They also want to focus on franchise financing.
The residential mortgage loan balance for First Internet was $383.9 million as of December 31, 2022. This is a 13.7% increase from the previous quarter. It is also a 51.4% jump from the same period in 2021.
The home equity loans balance was $24.7 million in the fourth quarter of 2022. This is a 11.7% uptick from the third quarter. It is a 40% increase from December 31, 2021.
First Internet Bancorp was founded in 1999. It is a bank holding company that operates First Internet Bank. The bank claims to be the first state-chartered FDIC insured institution to operate entirely online.
First Internet Bancorp is expecting to reduce total annual non-interest expenses by approximately $6.8 million. The company expects to increase annualized pre-tax income by approximately $2.7 million. Executives expect to see 80% of the benefit in 2023 and 100% thereafter.
The firm estimates that it will incur a total pre-tax expense of about $3.3 million in the first and second quarters of 2023. This is due to its exit from the consumer mortgage business.
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