In April 2022, First Merchants Corporation finalized its merger with Level One Bancorp, LLC, integrating the full scope of Level One Bank’s operations – including mortgage lending – into First Merchants Bank. Merging mortgage portfolios can be challenging enough on its own, but First Merchants also needed to migrate the separate instances of the loan origination system (LOS) and product and pricing engine (PPE) each bank was previously running into a third, combined instance. To add even more complexity to the situation, Level One had employed a mandatory execution strategy, while First Merchants operated on a best-efforts model.

After observing the success and superior service Level One enjoyed through its relationship with Vice Capital Markets, the team at First Merchants felt it, too, could benefit from engaging the firm to assist with its system migration, portfolio merger and transition to mandatory execution.

“We had considered hedging in the past, but it never felt like we had the internal support to garner enough pick-up and make it worthwhile. However, after the merger and with the rising rate environment, it made more sense for us to drive our gain on sale rather than putting stuff on our portfolio from an overall lending and balance sheet perspective,” explains Eric Brennan, Secondary Market Manager for First Merchants Bank. “Vice Capital’s track record with Level One and the comfort that already existed there definitely influenced our decision to engage Vice Capital.”

Working closely with Brennan and First Merchants, Vice Capital was able to seamlessly integrate the bank’s original LOS instance into the combined third instance, containing their defined fields and values to a format that could be combined with what was already in place for Level One – all with zero disruption to the bank’s current LOS or additional stress on existing staff. This combination allowed Vice Capital to create one working environment containing both pipelines that could now be utilized through all of Vice Capital’s various reporting models, as well as incorporating First Merchants’ data into Vice Capitals’s already established mandatory execution tools.

“Vice Capital’s internal tools and APIs easily facilitate the process of combining data from multiple LOS instances and/or platforms to help quell any concerns a client might have when considering changing to a different LOS or dealing with a merger,” Vice Capital’s CIO Shawn Ansley notes. “Because of the open line of communication with Eric and his knowledge of the LOS, we were able to quickly make the necessary changes to streamline the integration.”

According to Brennan, First Merchants began to realize the benefits of working with Vice Capital immediately.

“Day one, we sent reports, and Vice was right on top of it, making sure that we had everything we needed and understood what we were seeing – not to mention patiently explaining (sometimes more than once) when we had questions,” he says. “The pick-up was immediate, and I felt like somebody had my back every step along the way. If they saw something that didn’t look right or make sense, they were the first to point it out and offer corrections to ensure there wasn’t an unintentional impact to our bottom line.”

As First Merchants CEO Mark Hardwick stated in April 2022, one of the driving factors behind the Level One merger was to fulfill the company’s vision, “to enhance the financial wellness of the diverse communities we serve.” With the precipitous rise in interest rates in the months following the merger, Vice Capital’s assistance in helping First Merchants maximize the profitability of its secondary market strategy had a direct impact on optimizing the mortgage interest rates available to the bank’s customers.

“In 2022, mortgage rates had the highest increase that they’ve ever had on record, so it was imperative that we did whatever we could do to offer the best possible rates for our customers,” Brennan adds. “Vice helped us realize how much easier mandatory execution could be than a best-efforts model while also picking up a few basis points along the way and keeping rates as low as possible for our customers. It was a win-win all around. Moving to mandatory execution made it cheaper and easier for us to get a loan from start to finish, and from a back-end perspective, the pick-up has been amazing.”

When it comes to hedging, data is critical to establishing mark to market and providing real-time updates to a lender’s hedge position. Brennan notes that Vice Capital’s communication and attention to detail were invaluable to First Merchants during the transition to ensure data flowed correctly from the LOS into Vice Capital’s hedging platform.

“Vice was there for us every step of the way. If we had problems or questions, their team was only a phone call away. That couldn’t have been better for us as we shuttered the old LOS instances and migrated the combined pipelines to the new instance,” Brennan explains. “Vice was there to ensure that the right data was getting to them daily. If they had questions about the data, they were not hesitant to pick up the phone and confirm that things were populating correctly. They literally held our hands throughout the whole process, ensuring that the data was in the right spot and that they were seeing and picking up the data correctly. From start to finish, they could not have made it easier on us to go through such a hard process and helped me look like a rockstar.”

“From where I sit, Vice is the gold standard,” he adds. “The communication and the reporting are second to none, and they’re thinking three steps ahead of what I’m thinking about, which makes my job and my day that much easier.”