Bismarck, North Dakota-based BNCCORP Inc. (OTCQX: BNCC) announced it is exiting the residential mortgage origination space and selling the mortgage division of its wholly owned subsidiary, BNC National Bank, to First Federal Bank of Lake City, Florida.
BNC’s mortgage division is principally composed of its Overland Park, Kansas-based nationwide consumer direct mortgage platform. As a result of the transaction, First Federal will continue mortgage origination activities in the regions served by BNC, which include Overland Park and Bismarck plus Moline Illinois, and Glendale, Arizona.
The purchase is subject to customary conditions and is expected to close in the second quarter of 2023. Terms of the transaction were not disclosed.
After the sale, BNC will continue to arrange or facilitate residential mortgage loans for its bank and wealth management customers as part of its full range of banking services.
“The Board of Directors made the decision to exit our nationwide residential mortgage origination business after extensive deliberations and concluding that this change in strategy is in the best long-term interests of BNC Bank, BNCC’s shareholders, and the communities we serve,” said BNC Chairman Michael Vekich. “In the last year, we have taken substantial steps to improve the profitability of our mortgage banking origination business in response to the persistent challenges facing the mortgage banking industry. We are proud of the resiliency and dedication of our mortgage banking team which has built a reputation for providing quality service.”
“However,” Vekich added, “it is unclear when and to what extent mortgage industry conditions will improve. A number of factors, including competitive, technological and regulatory changes and the volatility of the demand for mortgages have made it more difficult to run a mortgage company within a community bank. Simply put, since we expanded our mortgage banking operations in 2008 the landscape has changed. This transaction enables us to focus on our core banking activities to the benefit of our shareholders and the communities that we serve.”
John Medina, president and CEO of First Federal, commented, “Our mission is to provide solutions from a financially stable institution that is a great place to work and bank. This acquisition underscores our commitment to our customers and the residential mortgage sector. We look forward to serving the BNC mortgage customers with the same excellence they came to expect from the BNC team.”
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