In 2022, an investment group acquired Local Bank, a 100-year-old community bank, and launched its first-ever mortgage division in 2023. What started as a startup operation quickly scaled, growing from roughly 30 loans in 2023 to $88 million in originations in 2024.

As the mortgage division ramped up, Local Bank initially sold loans on a best-efforts basis. But as volume increased, best efforts became time-consuming and limited the team’s flexibility to manage their pipeline and capture the gains that come with a disciplined hedge strategy.

“When we first started, we operated entirely on a best-efforts basis, locking loans directly with multiple investors as the loan officers locked,” said Ryan Kurtz, Vice President of Finance and Secondary at Local Bank. “It was not efficient and limited our ability to make strategic pricing decisions or capture the unrealized gains that come with hedging.”

Local Bank’s leadership determined that transitioning to mandatory execution was the right next step to support the mortgage division’s growth trajectory and long-term secondary strategy. Because the operation was newly established, the bank also wanted to ensure investor confidence, board comfort and operational accuracy throughout the shift.

“It made sense to go with an advisory firm,” Kurtz said. “One, for requirements by our investors on experience levels, and two, to make our board feel comfortable with the transition to have somebody in our corner.”

As Local Bank prepared to transition to mandatory execution, leadership evaluated hedge advisory options and selected Vice Capital Markets for its hands-on approach and over 25 years of successful hedge management.  The other driving factor was the  direct access to their senior leadership team with decades of experience.

“Vice Capital was kind of stuck out because they offer a more personalized experience,” Kurtz said. “You have direct access to the decision makers, including the president of the company, and if I have a question or I’m thinking about strategy, I can pick up the phone and call them. There’s that personal relationship, which you lose with some of those larger companies.”

Working alongside Kurtz, Vice Capital helped Local Bank establish the data flow and reporting needed to hedge confidently. The primary focus was ensuring that loan-level fields from Local Bank’s loan origination system and product and pricing engine mapped cleanly into Vice Capital’s reporting and hedge platform, creating a single source of information for daily executive summaries and hedge reports.

“We signed our contract with Vice Capital in November 2024, and we were up and running by mid-December,” Kurtz said. “It was a really quick and easy transition because of the constant communication and commitment to detailed data flow. We made our first trade roughly three weeks after we started hedging loans.”

“Ryan really took ownership of the transition and led the effort from start to finish,” said Troy Baars, President of Vice Capital Markets. “He and our team worked side-by-side to get the reporting and workflows dialed in quickly, and that strong partnership helped Local Bank move to mandatory execution with confidence.”

Local Bank also adopted Vice Capital’s full-service hedge advisory model, relying on Vice to manage hedging strategy, trading and reporting while keeping internal oversight of capital markets. This enabled Local Bank to scale volume and improve secondary execution without adding headcount, a key advantage for a lean team.

“It’s soup to nuts. They do all of it while allowing my full input,” Kurtz said. “It allows me to operate in the role that I do as a one-man show.”

Following the transition to mandatory execution, Local Bank quickly realized operational efficiencies that reduced execution time and limited exposure to market volatility. By eliminating the need to individually lock loans with multiple investors, the bank could focus on managing its pipeline rather than reacting to intraday pricing changes.

“I’m no longer spending time locking loans one at a time, which helps limit our exposure to intraday market swings,” Kurtz said.

Mandatory execution also improved pricing and warehouse efficiency by allowing Local Bank to commit loans on shorter delivery timelines, accelerating execution and improving pull-through.

“Now we’re committing loans on short-term mandatory commitments, and we’re picking up the spread between a 30-day lock and the mandatory execution,” Kurtz said. “It also helps us turn our warehouse line quicker.”

These operational improvements quickly translated into measurable financial results. In 2025, Local Bank generated an additional $500,000 in secondary gain-on-sale on $200 million in production, representing approximately 25 basis points of overall production.

Just as importantly, Vice Capital’s full-service hedge advisory model allowed Local Bank to sustain those results as volumes increased. By managing hedging strategy, trading and reporting, Vice enabled the mortgage division to scale efficiently without adding internal headcount.

As the institution continues to grow, Local Bank also benefits from Vice Capital’s ongoing guidance and leadership, providing consistent support beyond the initial transition.

“Our relationship with Vice Capital has evolved into an integral part of our strategy for growth and enhanced execution”, Kurtz said. “I can spend my time focused on expanding our market share and running my department, as I am confident Vice will handle our day-to-day best interests related to execution.”