The Bank Slate


CFBank in Ohio winding down DTC mortgage business

CF Bankshares in Columbus, Ohio, is winding down its direct-to-consumer mortgage business.

The $1.6 billion-asset parent of CFBank said in a press release Thursday that it had suspended the origination of new rate-lock commitments through the direct-to-consumer business, effective June 30. The bank will look to close out its existing loan pipeline and commitments in coming few months.

The company said its direct-to-consumer business will likely have a $2.5 million after-tax loss in the second quarter of 2021. 

CF Bankshares said the number of borrowers paying off loans in the first six months after origination has increased “significantly,” leading to a rise in early payoff fee expense. The company’s early payoff fee expense for 2021 will likely exceed $2 million as of June 30.

The company also pointed to price volatility, along with “diminished refinance volumes, margin compression and increased market competition,” for its decision to shutter the business.

CF Bankshares started making direct-to-consumer mortgages in 2018.

The business “has been a significant driver of fee income … over the past two years, and the fee income generated from this business has allowed CFBank to invest in expanding its footprint and presence, along with building capital,” Timothy O’Dell, the company’s president and CEO, said in the release.

“Going forward, CFBank’s focus will continue to be on growing and expanding our core commercial and retail bank, along with retail mortgage lending,” he added. 

The direct-to-consumer business contributed about two-thirds of the company’s revenue in 2020, Brendan Nosal, an analyst at Piper Sandler, wrote in a note to clients. 

“We suspect the ramifications will impact our EPS estimates, perhaps in a significant way,” Nosal added. “At the very least, we can say this marks an abrupt, unexpected about face in strategy.”

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