MB Financial to drop residential mortgage biz, cites highly competitive industry

by Francis Monfort16 Apr 2018

The fierce competition in the mortgage industry has driven out MB Financial from the residential mortgage origination space.

The Chicago-based bank announced the move in a filing with the SEC dated April 12. According to the filing, MB Financial reached its decision following an analysis of recent economic changes and mortgage industry dynamics, including recent very low origination margins. The company also took into account input from stockholders.

“The company had been pursuing a strategy of improving the profitability of its mortgage business by growing retail originations, which have historically been the most profitable and consistent part of the company’s mortgage originations,” according to the filing. “Based on an analysis of current and expected economic and market conditions for the foreseeable future, the company determined that it would be unable to successfully execute that strategy within a reasonable period of time.”

While MB Financial is exiting its national residential mortgage operations, it plans to continue originating residential mortgage loans in the greater Chicago area. The company is also considering retaining its mortgage servicing asset as well as its mortgage servicing operation in Wilmington, Ohio. MB Financial plans to continue holding residential mortgage loans on its balance sheet.

MB Financial expects to stop operating its mortgage business as a defined segment with separate mortgage-segment reporting prior to the fourth quarter. The fully phased-in quarterly impact of changes related to the exit in 2019 will be to increase pretax income by approximately $7.5 million per quarter from the fourth quarter of 2017, the company said.

One-time costs related to the move are expected to total approximately $37 million to $41 million during the remainder of 2018.


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