Berkshire Hills Bancorp in Boston is exiting two consumer lending lines.
The $12.2 billion-asset company said in a press release Monday that it had stopped originating indirect auto loans and had classified its national mortgage platform, First Choice Loan Services, as a discontinued operation
Berkshire is looking to sell the mortgage business, which was unprofitable over the past three quarters, including a roughly $637,000 loss in the first quarter. Berkshire gained the business when it
The company joins a growing list of banks that have announced plans to sell or shutter their mortgage operations in recent months.
First Choice Loan Services will continue to operate while the sale is being pursued.
Berkshire said its exit from indirect auto should reduce its reliance on higher-cost, wholesale funds.
The company will also exit the aircraft lending business, which was acquired in the Commerce Bancshares deal. Jamie Moses, Berkshire's chief financial officer, said during the company's earnings call that the portfolio has about 1,000 loans with an average balance of $170,000.
Moses said the indirect auto and aircraft portfolios had limited relationship potential, adding that the company expects to save about $1.5 million in noninterest expense on a run-rate basis.
Berkshire has talked to “several” parties interested in buying the mortgage platform. Executives said they do not have a solid estimate on restructuring charges for exiting the business but they are not expecting a sizable charge nor do they expect to receive a sizable premium for the business.
The moves come five months after Michael Daly
Berkshire reported that its first-quarter profit fell by 6% from a year earlier to $23.6 million, or 51 cents a share.
