Frost Bank returning to mortgage lending through tech partnership

Frost Bank is getting back into the mortgage business after about a two-decade hiatus, the San Antonio company announced Thursday.

The bank, a unit of the $46.7 billion-asset Cullen/Frost Bankers, has entered into a deal with technology consulting firm Infosys to build out a digital lending business that will include mortgages and other consumer loans. The bank is currently hiring additional workers for the effort with the aim of offering mortgages within the next year, a spokesman said in an email.

The build-out will also give Frost the ability to service mortgages, allowing the bank “to be involved in the entire process from start to finish,” Chairman and CEO Phil Green said in a press release announcing the collaboration.

“Offering mortgage loans along with our other consumer loan products is integral to meeting our customers’ evolving needs and bringing the Frost experience to more Texans,” Green said.

Cullen/Frost left the mortgage business in the early 2000s, sparing the company from much of the damage caused by the 2008 financial crisis and housing market collapse.

In a 2017 interview on CNBC, Green said getting out of the home loan market at the time was a “culturally based decision” because the business had become “commoditized” and relied less on relationships.

“Turned out to be right before the meltdown,” Green said in the interview. “We took some heat for getting out of that business, but it was right for our institution because it was right for our culture.”

Now, because of technology advances and a since-expanded branch network, the company is designing a process where it can control the origination and servicing process, the spokesman said in an email.

Getting back into the business will be a boost to its consumer line, which includes home equity, auto and personal loans. The consumer portfolio at Frost stood at roughly $1.8 billion as of July 31, about where it was at the end of last year, according to its latest quarterly earnings report.

Infosys has specialized in helping regional banks update their digital offerings. It struck a deal last year to help makeover the technology infrastructure at the $23.7 billion-asset Old National Bancorp in Evansville, Indiana.(Old National is in the process of merging with First Midwest Bancorp in Chicago.)

“Our collaboration with Frost Bank sets the stage for a new era of mortgage services, and we are excited to bring to this engagement, our collective expertise,” Infosys President Mohit Joshi said in the press release Thursday.