Texas-based Colonial Savings, F.A. has decided to exit the origination business amid one of the most challenging cycles in decades, provoked by the Federal Reserve‘s tightening monetary policy and a banking crisis. 

The company will focus on full-servicing banking and mortgage servicing businesses, it announced on Thursday. 

The origination activity will cease effective July 31, 2023, but all outstanding mortgage loans will continue to be serviced in accordance with the terms and conditions of the agreements. Customers can expect uninterrupted access to their accounts, the company said. 

Colonial Savings, a federally chartered thrift founded in 1952, originated $470 million in mortgage loans over the last 12 months, per the mortgage tech platform Modex. However, its monthly production declined by a third during this period when the market faced surging mortgage rates and low inventory levels. 

The company had 53 active loan officers and 30 branches, per the Modex data. According to its website, Colonial offered fixed-rate loans, Federal Housing Administration (FHA) loans, U.S. Department of Veteran Affairs (V.A.) loans, adjustable rates, and home equity, among others.

The firm, which operates a network of six consumer and commercial banks in North Central Texas, claims it has a $20 billion servicing portfolio. 

According to the company, the decision to exit the origination business was taken in light of changing market dynamics and a strategic evaluation of its operations. 

“We firmly believe it is the right course of action for the company’s future,” Dave Motley, president of Colonial Savings, F.A., said in a statement.