First Federal Bank continues expansion of its nationwide mortgage lending operations with deal to acquire Watson Mortgage Corp. and investments in digital solutions.

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Florida-based thrift First Federal Bank continues to expand its nationwide mortgage lending operations through acquisitions and technology investments, announcing a deal Thursday to acquire the mortgage division of a large Jacksonville-based real estate brokerage, Watson Realty Corp.

While terms of the deal to acquire Watson Mortgage Corp. were not disclosed, First Federal Bank said it will “continue to serve Watson’s mortgage customers throughout the entire Watson Realty footprint.”

More than 1,100 licensed real estate agents work out of 45 Watson Realty Corp. offices serving Florida markets including Jacksonville, Orlando and Daytona Beach.

Bill Watson

“We are pleased to have come to an agreement that permits our talented and dedicated team to continue providing mortgage solutions to our customers and serve our teams with valuable mortgage expertise,” Watson Realty Corp. Chairman Bill Watson said in a statement.

Watson Realty’s strategic plan for 2024 “includes a strong focus on helping customers secure homes, in a challenging rate environment,” he said.

Founded in 1994, Jacksonville, Florida-based Watson Mortgage Corp. is also licensed in Georgia and sponsors 17 mortgage loan originators, according to records maintained by the Nationwide Mortgage Licensing System and Registry.

Lake City-based First Federal Bank said it anticipates keeping the “vast majority” of Watson Mortgage employees on the payroll and will transition the lender to the First Federal brand within a few months of closing.

Paul Ottendorf

“We look forward to welcoming the new employees and the Watson relationship to our residential lending team,” First Federal Bank executive Paul Ottendorf said in a statement.

Ottendorf, the president of First Federal’s residential lending division, said the deal will “enhance our retail lending capabilities and market share in the communities we serve.”

Last summer, First Federal Bank announced it had acquired the assets and employees of BNC National Bank’s mortgage division.

John Medina

“With the acquisition, First Federal gains a nationwide consumer direct mortgage platform and offers the benefits of community banking, customer service, and stability to the expanded customer base in new markets,” First Federal Bank President and CEO John Medina said in a statement at the time.

Although terms of the deal were not disclosed, BNC National Bank’s mortgage division posted a $4.25 million 2022 net loss and a $3.43 million 2023 net loss, according to the company’s most recent annual report to investors.

According to its most recent Community Reinvestment Act performance evaluation, First Federal Bank “significantly expanded” its mortgage lending capacity with the 2018 acquisition of Fernandina Beach, Florida-based CBC National Bank. First Federal Bank earned “high satisfactory” ratings on lending, investment and service tests in the June 2020 report.

Founded in 1962 as First Federal Savings and Loan Association of Live Oak, First Federal reorganized from a mutual savings and loan to a mutual bank in 2007 and had $3.86 billion in assets at the end of last year.

Today, First Federal Bank operates mortgage operations centers in Florida, Georgia, Kansas and Wisconsin, and partners with cloud-based banking platform Blend Labs Inc. to accept mortgage applications through its website.

“Since 2020, customers have increased their use of digital tools and First Federal continues to invest in providing cutting-edge digital solutions to customers, coupled with personal service,” the company said Thursday.

First Federal Bank originates mortgages nationwide, sponsoring 155 mortgage loan originators and also funding mortgages originated by mortgage brokers and correspondent lending partners, according to Nationwide Mortgage Licensing System and Registry records.

The bank acquired its wholesale lending division, QRL Financial Services, in 2011. In addition to funding loans originated by mortgage brokers, QRL Financial Services provides subservicing and appraisal compliance.

In its most recent annual report to investors, First Federal Bank reported that it originated $1.58 billion in mortgages in 2022 and funded an additional $1.7 billion in home loans through warehouse lines of credit provided to correspondent lending partners.

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