Bucking a downward trend, Sunflower Bank opens mortgage office in Dallas

Despite major residential lending headwinds in Texas and around the country, Sunflower Bank is  deepening its Dallas footprint with an emphasis on mortgages.

The $7.1 billion-asset Sunflower, the bank subsidiary of Denver-based FirstSun Capital, announced the opening of a new mortgage office in Dallas last week. Marcus McCue, director of mortgage operations and strategy for Sunflower’s Guardian Mortgage division, described the new office as small, but noted even a modest addition would contribute to building Sunflower’s brand. “This is a mortgage loan production office, not a full-service banking center [but] it’s important to have a presence to gain traction serving the community,” McCue said Friday.

“We have found that having a physical presence in this particular Dallas market can be important to best serve the needs of the local real estate members and homebuyers,” McCue added. 

Marcus McCue (left), director of mortgage operations and strategy for Sunflower’s Guardian Mortgage division; and Seth Allen, chief banking officer and regional president for Texas. “We keep expecting to see a slowdown in our pipeline. It really hasn’t happened,” Allen said.

Mortgage banking is central to Sunflower’s business model, which calls for “surrounding” small business and commercial banking clients with a full product suite, including business lending, wealth management and residential lending, Seth Allen, chief banking officer and regional president for Texas, said Friday. 

“Mortgage is a great lead product into the community to get to know people,” Allen said. 

Tough times for home lenders

Guardian, which Sunflower acquired in 2016 as part of its merger with El Paso, Texas-based Strategic Growth Bancorp, had a long-established presence in Dallas when Sunflower expanded its banking business there in 2019. 

“When we started the bank, I was on the ground floor in the mortgage office,” Allen said. “I was essentially renting space from Marcus to get started.”

Still, Guardian is opening its new office as bank mortgage operations around the country have come under significant stress.  Some institutions have announced cutbacks. Others have quit the business altogether.

Sunflower and Guardian, to be sure, have been impacted by the industrywide pressure. Parent company SunFirst reported mortgage banking revenue totaling $40 million through the first nine months of 2022 — down 41% from the same period in 2021.

“We are not unlike other lenders that are facing challenges coming from heightened rates, high prices, less affordability and smaller margins,” McCue said. “We’re dealing with the same situations. We are making necessary and strategic changes with our team to best serve our communities while facing these headwinds.”

Nationwide, the Mortgage Bankers Association is projecting full-year 2022 mortgage originations will be about half their 2021 level at $2.25 billion. The downturn, prompted by the spike in interest rates, has impacted even markets once thought largely insulated from wider conditions. In Washington, D.C.’s Northern Virginia suburbs, for instance, housing prices are forecast to rise less than 1% in 2023, according to the Northern Virginia Association of Realtors. 

Bigger prospects in Texas

The outlook is a little better in Dallas and in Texas generally, where home sales have received a boost “from a significant amount of relocation into the state,” McCue said. “We’re in some states that don’t benefit as much from inflow.”

Guardian does business in 43 states.

The National Association of Realtors included Dallas — along with San Antonio — on its list of ten U.S. “markets to watch” in a report released Thursday. 

Sunflower’s Dallas banking operation continues to see a robust level of activity, according to Allen. 

“We keep expecting to see a slowdown in our pipeline,” Allen said. “It really hasn’t happened. We’re still picking up new relationships. … Obviously, we’re going to be affected by macroeconomic trends, but I think we’ll outperform the rest of the country.”

FirstSun boosted its presence in the Lone Star State by buying Pioneer Bancshares in Austin for an undisclosed sum in April, merging its bank subsidiary, Pioneer Bank, into Sunflower. The merged company reported assets of $1.9 billion and deposits of $1.2 billion in Texas at midyear. Sunflower operates 24 branches statewide. 

“We’ve really built this out of the mortgage business,” Allen said. 

Guardian’s new Dallas office will focus on providing affordable housing solutions, offering low down payments and “more aggressive” pricing to “try and make [home ownership] achievable for individuals with low-to-moderate incomes,” McCue said.