Podcast: The Community Bank Mortgage Business Model

On the latest episode of the ABA Banking Journal Podcast, sponsored by Windstream Enterprise, community bank CEO Luanne Cundiff discusses the current state of the mortgage market and how recent regulations are affecting it. From the customer point of view, “you have to set the expectations up front during the application process; otherwise they’re not going to be satisfied,” she says. At her bank — First State Bank of St. Charles, located in the western suburbs of St. Louis — employees ask loan applicants if they have closed a loan since the TILA-RESPA integrated disclosures came into effect, and they clarify new expectations if not.

New regulations have also changed how First State Bank services single-family mortgages, Cundiff says, which account for about 63 percent of the $374 million-asset bank’s net loans and leases. At the end of 2017, she explains, the bank had to sell mortgage servicing rights for the first time “because we bumped up against that capital limit of 10 percent” — although the bank prefers to retain servicing whenever possible. “We’re well-capitalized, but the sheer dollar amount does not equip us for handling all those loans on our books,” she adds.

Cundiff also discusses the growing need for scale in the mortgage business, First State Bank’s celebration of its 150th anniversary last year and the value of serving on ABA’s Community Bankers Council.

This episode is sponsored by Windstream Enterprise:

If you can’t see the audio player above, click here to listen to this week’s episode.

In this episode:

Luanne Cundiff
President and CEO
First State Bank of
St. Charles, Missouri

Evan Sparks
Editor-in-Chief
ABA Banking Journal

Shaun Kern
Senior Counsel
ABA