First Internet Bank ends consumer-direct mortgage operations
Another lender is closing its consumer mortgage business due to a decline in applications. First Internet Bank, a digital bank, announced last week that it will close its direct-to consumers operations in the first quarter of this year. Its parent company released its fourth quarter earnings report. In an earnings conference call, CEO David Becker stated that the firm had spent 60 days cutting expenses, including marketing, sales, and payroll, but could not reach a breakeven point. “It fell off such a dramatically that it was impossible to make sense out of that it had that kind of loss for that long a time,” Becker said in an earnings conference call. The lender reported $$408.7million in residential mortgage balances for the fourth quarter. This represents an 11% increase over the previous period and a 6.5% rise from the same period in 2021. The bank reported that $24 million of the $408.7 million was in home equity loans. The bank reported that the depository is shifting its origination efforts towards floating rate loan products and commercial construction, with $24 million in home equity loans. This is despite the fact that activity has been slightly higher in recent weeks. Renasant Bank in Louisiana, Rocket Mortgage, and USAA are some of the other companies that have stopped mortgage business or cut payroll. Becker suggested that employees are leaving. He said, “And as you all know, the national market is just expanding.” “So there are not many great opportunities for them in the industry that they have been involved in for years. First Internet Bancorp’s annual non-interest expenses will be reduced by $6.8 million as a result of the mortgage exit. The move will also increase annualized pretax income by $2.7 million. 80% of the benefit will be realized this year. Pre-tax expenses of around $3.3 million are expected for the exit in the first and second quarters. First Internet Bancorp reported net income for the fourth quarter of $6.4 million. For the year, net income was $35.5 million. This was a decrease from $48.1 million in net revenue in 2021. First Internet Bancorp was established in 1999 by Becker. It claims to be the first state-chartered and FDIC-insured company to operate completely online. It is located in Fishers, Indiana 25 minutes north of Indianapolis and has 279 employees on LinkedIn.