Higher costs are forcing CFBank to stop reaching out to consumers directly

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CFBank is discontinuing direct mortgage lending to consumers, citing higher costs in a changing market, and will instead focus on traditional branch retail lending.

In particular, the bank is dealing with increased fees for early repayment of loans issued in this channel. In combination with less refinancingand related income, the Columbus, Ohio bank expects to post a $ 2.5 million after-tax loss in the second quarter for its direct-to-consumer business. These prepayment costs are expected to exceed $ 2 million by June 30th.

In addition, factors such as volatility in mortgage prices, fewer sources of refinancing, squeezing margins and increased competition have made consumer-oriented businesses less viable, the bank said.

Many mortgage lenders such as New residential, are engaged in direct consumers to attract existing customers, as well as sources of refinancing.

Until recently, direct access to consumers was a plus for CFBank; Since its inception in 2018, it has become a significant source of fee and commission income. This allowed the company to expand its presence and presence in other companies, as well as increase capital, ”said Timothy O’Dell, President and CEO, in a press release.

“The investments that we have been able to make over the past few years in people and cash management capabilities have resulted in a significant increase in interest-free deposits, along with associated fee income from cash management products and services, while investments in our People on commercial lending has driven our commercial loan portfolios to record highs, ”said O’Dell.

It brought in $ 2.2 billion for the full year of 2020, up from $ 734 million in 2019, “thanks to the expansion of our mortgage business based on leads and increased sales,” parent company CF Bankshares 10-K said in a statement. But the bank sells all of its products to the secondary service personnel market.

Without providing specific volume data, the first quarter report indicated that “although the baseline data was high enough during the quarter ended March 31, 2021, the margin has declined significantly since the fourth quarter of 2020.”

Its filings for the period indicated that CFBank received $ 6.36 million in net revenue from its mortgage operations in the first quarter, up from $ 2.84 million a year earlier.

Industry-wide lending revenue has been declining since mid-2020, according to research by the Mortgage Bankers Association.

The total net operating income for mortgage lenders was 124 basis points. in the first quartercompared to 137 bp. in the fourth quarter and 203 bp. in the third quarter.

The MBA results put retail and consumer together directly, and as a group, they had 132 basis points net operating income in the first quarter. This is below 138 basis points in the fourth quarter and 203 basis points in the third quarter.



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