Not long after leaving Pinnacle Financial Partners early this year, Billy Winfree wasn’t exactly working in ideal conditions.
As he waited for F&M Bank to finish out his new Green Hills office, the veteran mortgage originator was juggling mountains of paperwork from home and wherever he could land for a breather. February was probably one of the better times to make such a move but that didn’t make it any more fun.
Times have changed quickly: Since late winter, Winfree’s small team — the first Davidson County foray for Clarksville-based F&M — has doubled in size, adding an underwriter, an assistant and a processor, and steadily picked up business from real estate agents.
F&M’s expansion into Middle Tennessee’s core was well timed given that the housing market is regaining a little spring in its step. Growth isn’t gung ho by any means — home sales are still well below the levels of 10 years ago — but it’s growth all the same.
And the little guys are getting more than their fair share.
The financial crisis shook up the national mortgage business as it did others: Former market leader Countrywide was acquired and then dismembered by Bank of America while JPMorgan Chase took over the formerly booming Washington Mutual. Regionally, First Tennessee scaled back its large home loan operations after incurring big losses as it expanded beyond its traditional footprint. A new world of mortgage finance has emerged since, led by Wells Fargo, which controlled a third of all U.S. mortgage loans made in the first half of 2012, according to industry publication Inside Mortgage Finance.
But among Tennessee-based banks, smaller institutions appear to be taking a disproportionately large share of the rebound in mortgage lending since the darkest days of the real estate bust. Since the end of 2007, lenders with assets of $100 million to $500 million have increased their share of the overall one- to four-family mortgages held on Tennessee banks’ books by more than 10 points to 28.5 percent. Banks with assets of $500 million to $1 billion have added 1.4 points in share over that time, while those with more than $1 billion have lost more than 11 points of share.
The recessionary reshuffle accounts for a big part of that shift, especially as it pertains to First Tennessee. But more consumers are adopting a back-to-basics and back-to-the-locals attitude when it comes to banking — witness the continued strong growth of Nashville’s young hometown banks. And regulators, still wary in the wake of the robo-signing scandal, are paying extra attention to big banks’ mortgage operations.
“The larger companies are playing with one hand behind their back,” Winfree said. F&M finished the first quarter with more than $250 millions in home loans on its books, up from $127 million in late 2007. Others have been ramping up just aggressively: Franklin Synergy Bank, which opened its doors in late 2007, had $110 million in home loans on its books as of June 30.
At the same time, some local lenders are pushing their boundaries a bit: Columbia-based First Farmers & Merchants Bank this spring opened a loan production office in Florence, Ala., a push Senior Executive for Mortgage Banking Bill White says is working out well so far.
“We’d like to think that’s a long-term move there,” White said.
Franklin Synergy President Richard Herrington (pictured) also is looking farther down the road. While he sees more lenders entering the market to take advantage of the rise in refinancings, he’s thinking about the days when those quick bucks disappear and the lending is focused much more on actual home purchases. That’s when he expects his team’s relationships with builders to pay off big time.
“If rates rise, you do worry a bit about volumes,” Herrington said. “But if rates go up, it’ll be because the economy is doing better. And if the economy’s doing better, people will build more.”