They are just looking at QM and saying enough is enough." "But I think some banks have bailed out too soon. "I can understand why banks that don't have much scale in this business and don't expect to gain much more would get out," Hall says. Gregory Bryant, the $489 million-asset bank's president and CEO, did not return a call seeking comment. Regulation reportedly prompted Bay Cities Bank, a Tampa, Fla., unit of Florida Business BancGroup, to announce plans to stop originating mortgages on Jan. We don't want to have a problem with an examiner." "There's a fear of we don't want to make a mistake. "We've gotten into a climate where regulators are being extremely thorough," Haynie says. Surveys in recent years show that about a tenth of bankers believe that compliance burdens outweigh the mortgage volume they generate, says Ron Haynie, senior vice president of mortgage finance policy at the Independent Community Bankers of America. Implementing the Consumer Financial Protection Bureau's qualified-mortgage rule has caused considerable anxiety among bankers. "Tom" Hall, president of Resurgent Performance. Increased regulation is likely the top reason banks give for considering exiting the mortgage business, says L. At the time of Pacific Mercantile's December announcement, about 100 of its 250 employees were focused on mortgages, he says. The highly cyclical mortgage business also requires a lot of employees, Sjogren says. The company, which left the wholesale mortgage business in 2012, does a routine "deep dive" into all operations to determine its strategic direction, Sjogren says. The $917 million-asset company decided that it was "primarily a commercial bank and the consumer mortgage business wasn't central to that strategy," says Robert Sjogren, Pacific Mercantile's general counsel. Pacific Mercantile Bancorp (PMBC) in Costa Mesa, Calif., said in December that its bank would stop making mortgages. Banks are focusing on whatever areas they have the expertise or pricing ability to acquire a strong market share." "We are seeing renewed across-the-board strategic planning. "Banks have so little room for error," Reider says. Executives must focus on their most-profitable businesses, which requires an evaluation of everything ranging from mortgage and indirect lending to wealth management and middle-market lending. You have to decide what kind of bank you want to be and who you want to serve."īanks exiting mortgages is a symptom of a broader trend, says Steven Reider, president of Bancography. "This is the most difficult time to be in banking," says David Powell, president of bank consulting firm Vitex.
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