Make no mistake, FirstLine has suffered a precipitous drop in broker market share, but it nonetheless remained in the top four lenders by funded volume in the last quarter – that despite news CIBC was preparing to sell and was actively fighting to convert clients.
Just how well FirstLine did in the four months ending April 30 has surprised some mortgage professionals given the lender attracted 7.8 per cent of overall broker market share by volume, according to a D+H quarterly report.
A sizable chunk of that business came after news in February CIBC was scouting for a buyer.
The performance, while nearly 10 percentage points off of FirstLine’s 2011 showing, was still enough to place it fourth in the rankings and just below Street Capital, which as MortgageBrokerNews.ca reported last week has enjoyed its own meteoric rise this year. Scotia and First National, kept first and second position, respectively, with TD rounding out the top five.
Still it’s the FirstLine position now garnering broker attention.
“I don’t use that lender,” said one Ontario broker, “but I can only think that FirstLine continues to offer a product that meets the needs of a specific type of client and that’s why brokers are using it, despite the fact that CIBC has suggested it is looking to convert FirstLine clients over to CIBC.
In the bank’s last quarter for fiscal 2011, CIBC confirmed that it actively began shifting its mortgage focus back to the branch and away from the broker channel, ahead of putting FirstLine on the auction block.
“We do not expect this process will be a lengthy one,” says David Williamson, CIBC’s senior executive VP of retail banking, speaking to the “potential sale” of the broker channel lender. “Once this process is complete, we plan to increase renewals into our CIBC brand from the FirstLine platform over time.
Benefits of this will include higher NIMs and deeper relationships as these clients enter into CIBC branded channels.”
Still there are several reasons why brokers remain loyal to FirstLine and hopeful about its future post-CIBC.
“We have been advised that they are looking for a purchaser, while there has not been any formal announcement about any success in that area,” said Kevin Power, president of Power Mortgages Inc., “it does make sense from a profitability area to continue to fund volumes of business with FirstLine because of the volume bonus we earn.
“Also, if a suitable purchaser is found, it would make some sense to have the relationship intact that I have built over the past two decades and also the volume status to carry forward to any new owner."
Still, FirstLine`s attractiveness will likely continue to wane, say brokers, even though, for now, at least, there remain a few dollars-and-cents reasons for sending deals its way.
"FirstLine has a huge number of existing clients involving the brokerage community," said Ron Butler, of Verico Butler Mortgage. "When those clients need a refinance or a port and blend for a new purchase the mathematics of penalties often brings us back to Firstline.
"They have a program called 'Brand to Brand' which allows CIBC, PC Financial and FirstLine clients to refinance with FirstLine with no requirement to prove income so that brings us back to FirstLine."
Even the continuation of a relatively minor product may have helped to protect the mono-line and to grow its book.
"They have a strong rural property program that other lenders do not offer," Butler told MortgageBrokerNews.ca. "That is a very small number of deals but everything adds up."