Comerica Inc. announced it will close its mortgage banker finance business as part of a plan to enhance liquidity and improve its loan-to-deposit ratio and capital efficiency.
The bank, in a presentation at a Morgan Stanley conference, said the exit will help to blunt the effects of seasonality and cyclicality on its loan portfolio.
Comerica said its exit from warehouse-lending is expected to be “largely complete by year-end 2023,” and that the decision allows it to exit at full value as compared to a portfolio sale.
According to data provided with its presentation, Comerica’s average quarterly mortgage banker finance loan volume fell from $1.6 billion in the first quarter of 2022 to $1.1 billion in the first quarter of this year.
Comerica said the decision to “organically exit” its mortgage banker finance business is expected to enhance stability of its liquidity and improve loan-to-deposit ratio by about 150 bps at year-end.
Comerica saw a sharp decline in average deposits following the run on regional banks in California and New York, as scared customers began moving money out of smaller banks into “too-big-to-fail” institutions, which also led to a drop in share value.