Summit Financial Group, a holding company with $1.2 billion in assets, plans to sell or close down its residential mortgage loan origination unit, Summit Mortgage, the company said today.
The decision to exit the mortgage-banking business was based on the poor operating results of Chesapeake, Va.-based Summit Mortgage, the company said. Summit Mortgage will cease operations by Jan. 31, 2007, if the company is not sold before then.
Summit Mortgage originates loans for the sole purpose of selling them — it does not service them. At $189.6 million, originations for the nine months ending Sept. 30 were down 20 percent compared to the same period last year, Summit Financial said in its third quarter report. The company attributed the decrease to a reduced response rates to Summit Mortgage’s direct-mail marketing programs.
Origination revenue declined to $4 million in third quarter of 2006, compared with $7.3 million during the same period last year, and the mortgage-banking unit experienced a loss of $410,000 for the first nine months of 2006, compared with $1.9 million in net earnings during the same period last year.