First Horizon National Corp. managed to minimize falling fundings.
First quarter mortgage production was $6.3 billion, the Memphis, Tenn.-based company reported. Volume was just off the $6.4 billion closed in the prior quarter and $0.5 billion worse than a year earlier.
Alt-A originations accounted for 20 percent of the latest quarter's business, while jumbo mortgages represented 15 percent and government loan share was 7 percent. Fundings for the nonprime segment, which abandoned brokers recently, made up just 2 percent of the period's activity.
"We are working hard to return mortgage to historical levels of profitability through our strategy of building our prime, retail origination business
"We have made the decision to no longer underwrite, process and fund nonprime loans," CEO Jerry Baker said in the statement. "Our nonprime business ... has resulted in a reasonable level of repurchase activity for which we have adequate reserves to cover estimated remaining losses. However, reduced investor appetite for this product has diminished gain-on-sale margins drastically; therefore, we believe market risk no longer justifies the modest potential rewards and believe it is better to service retail customer needs through broker relationships."
Baker noted, however, Alt-A business -- with average FICO scores of over 715 -- has had little repurchase activity and remains viable.
First Horizon reported refinances represented 45 percent of first quarter loans, while adjustable rates were used on 14 percent of volume.
The servicing portfolio ended the period at $102.8 billion, up slightly from the previous quarter, the data indicated.
Earnings for the parent entity, which reported a sales force of 2,486, were $70.5 million during the quarter, off $6.0 million from the fourth quarter.