| Competitive Pricing Drove Principal’s Record Q3 Production
Earnings from mortgage segment plunge October 4, 2003 By MortgageDaily.com staff |
| Despite record third quarter mortgage production, Principal Financial Group reported that earnings from the mortgage operation plunged by more than half.
The financial services provider announced third quarter mortgage loan originations totaled a record $18.1 billion, up from $17.1 billion the prior quarter and from $11.1 billion in the third quarter last year. The Iowa-based company said its servicing portfolio of $117.8 billion, grew $2.4 billion from the second quarter and was up $15.8 billion compared to the third quarter 2002. Third quarter overall mortgage operating earnings, generated from loan production and servicing, plunged to $29.2 million, down from $45.1 million the prior quarter, and down more than half compared to a record $62.5 million the same period last year. Principal attributed the decline in production earnings “to decreased gains on the sale of mortgage loans, reflecting rising interest rates and greater pricing competition for new loan applications.” Servicing losses were reported at $11.1 million for the quarter. The company said the servicing loss reflects “a $20.3 million loss from model refinements impacting the mortgage servicing rights valuation; $6.3 million of earnings from servicing operations; and a $2.9 million gain from mortgage servicing rights valuation adjustment (net of hedges).” |
