First Internet Bank will exit its consumer mortgage business during the first quarter of 2023.

The company announced the plan in its 4Q22 earnings report. It cited the steep decline in mortgage volumes and the “negative outlook” for mortgage lending over the next several years.

The exit includes its nationwide digital direct-to-consumer mortgage platform that originates residential loans for sale in the secondary market. It also includes its local traditional consumer mortgage and construction-to-permanent business.

The company’s commercial construction and land development business will not be affected.

The bank said loan demand was strong throughout 2022. Its total loan portfolio balances increased 7.5% from the third quarter of 2022 and 21.2% from the fourth quarter of 2021, it says. However, it said “intense competition for deposits” drove interest expense higher. It also put pressure on the net interest margin. 

Still, the bank reported “healthy loan pipelines.” It will focus its 2023 origination efforts on its floating rate loan products. These notably include commercial construction and small business lending. They also include its higher-yielding fixed rate programs, such as franchise finance, according to the report.

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