PrimeLending, a Texas-based retail mortgage bank, aims to expand its market share by growing within its existing footprint in a margin-thinning environment.

The lender brought on 100 loan officers in June, bringing the total number of LOs to about 800. Licensed in 50 states across the country, PrimeLending has 245 branches including satellite and primary retail locations.

“We are dialing down data, metrics and information that allow us to target communities and markets where we again think we have a competitive advantage and we’re using that strategy across the country,” Gene Lugat, executive vice president of strategic support at PrimeLending, said in an interview.

“Companies may be struggling in one way or another. We’ll reach out to those loan officers in markets where we have existing retail branch locations. We’re certainly putting out in both the social media and through our local retail offices that we want the right loan officers,” Lugat added.

While mergers and acquisitions (M&A) is an option for PrimeLending, it’s a challenging market to execute such deals. Instead, tapping high-volume loan officers in targeted locations has worked for PrimeLending.

“We would prefer to be picking up the loan officers without the branches, without physical locations,” Lugat noted. “Because we’re trying to backfill into where we have existing retail opportunities and we have space.”

PrimeLending sees an opportunity to grow in the entire Southwest region and Texas in particular, where the lender is headquartered. The goal is to expand its overall market share to 1% this year from 0.6%.

PrimeLending, led by president and CEO Steve Thompson, ranked as the 34th largest mortgage lender in the first quarter of 2023, with an estimated origination volume of $1.73 billion, a 54% decline from $3.76 billion in Q1 2022 (which was roughly in line with industry peers). Production dropped about 15.2% from the fourth quarter of 2022’s $2.04 billion, according to data from Inside Mortgage Finance.

The target client base for PrimeLending is first-time homebuyers, as the entire industry is struggling to overcome the lock-in effect. Nearly 92% of U.S. homeowners with mortgages have an interest rate below 6%, according to Redfin. 

While the 30-year fixed-rate mortgages are the bread-and-butter products for PrimeLending (accounting for about 95% of origination volume), down payment assistance programs, renovation loans and temporary rate-buydowns have become popular options for buyers, Lugat noted.

Competition in the industry is even more fierce with the number of mortgage transactions expected to drop to 5 million in 2023 from 16 million in 2019, Lugat said, citing data from the Mortgage Bankers Association (MBA).

A combination of higher loan amounts, cash buyers and a radical drop of refi volume add to the difficulty of today’s environment. 

“This is a battle for a very finite amount of buyers that are entering into this space. (…) You have to be presenting your borrowers in the best possible light just to get their contracts accepted, pre-qualifying borrowers and trying to get them in an approved subject to appraisal and any other condition so they can be in a position to win,” Lugat said.