Record Production, Worse Delinquency at US Bank

U.S. Bancorp reported today second-quarter mortgage production of $16.3 billion — a record. Business improved from $13.4 billion three months earlier and $9.1 billion a year earlier.

Tucked away in the company’s second-quarter originations were $8 million in mortgages to subprime borrowers at its consumer finance division. The weighted-average FICO score on those originations was 645 and the weighted average loan-to-value was just 61 percent.

Second-quarter loan applications were $21.6 billion, lower than the record $25.0 billion generated during the prior period.

Residential mortgage holdings were $24.0 billion on June 30, barely changed from the previous quarter. Home-equity and second mortgages on the balance sheet were $19.3 billion, edging up from $19.2 billion at the end of March.

The Minneapolis-based bank said it serviced $134.7 billion in loans for others, higher than $126.7 billion on March 31.

Including nonperforming loans, residential delinquency of at least 90 days was 3.46 percent on June 30, jumping from 3.02 percent three months earlier and 1.55 percent 12 months earlier.

The bank’s holdings of commercial mortgages edged up to $33.7 billion from $33.6 billion at the end of the first quarter.

Commercial mortgage delinquency surged to 5.05 percent from the first quarter’s 3.87 percent and the second-quarter 2008’s 1.57 percent.

Mortgage banking revenue was a record during the latest quarter, the report indicated.

Net income was $471 million, worse than $529 million in the prior quarter and $950 million a year previous. U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis touted the company’s core earning strength despite economic stress, market hurdles and regulatory challenges.

The institution said it had effectively concluded its participation in the U.S. Treasury’s Capital Purchase Program.