As quarterly loan originations increased, independent mortgage bankers cut their per-loan employee expenses and doubled the bottom line.
Total net production income at independent U.S. residential lenders averaged 73 basis points during the three months that ended on June 30.
Earnings more than doubled from the first quarter, when net income was 36 BPS, and was also up from 67 BPS in the second-quarter 2015.
Those were among some of the details outlined in the
Quarterly Mortgage Bankers Performance Report Q2 2016 from the Mortgage Bankers Association. A quarterly subscription for the report costs $675 for MBA members and $1,125 for non-members.
The trade group surveyed a total of 345 independent mortgage banking firms and mortgage subsidiaries of chartered banks for the report, though first- and second-quarter 2016 comparisons were only based on the 320 entities that participated in surveys for both periods.
“Production profits more than doubled in the second quarter of 2016, as production volume rose and expenses dropped to a level not seen since the third quarter of 2015,” MBA Vice President of Industry Analysis Marina Walsh said in an accompanying statement. “Mortgage lenders also benefited from higher loan balances that reached a series-high of $245,394 and drove production revenue to a series-high of $8,807 per loan.”
Net production income during the latest three-month period was highest at companies that originated more than $0.250 billion: 77 BPS. At firms with less than $0.050 billion in production, net income was less than 61 BPS.
At companies where wholesale lending accounted for at least three-quarters of originations, net production income was 57 BPS. But at retail originators, income soared to 80 BPS.
Included in second-quarter 2016 net income among all firms
was 4 BPS in interest income from warehousing and 299 BPS in secondary marketing income.
The quarter-over-quarter improvement in total net production income for all firms was driven by personnel expenses, which tumbled to 198 BPS from 227 BPS in the first quarter.
Lower personnel expenses came despite an increase in average full-time employees — to 350 in the second-quarter 2016 from 335 three months earlier.
Staffing jumped from 312 a year earlier.
Human resource expenses declined thanks to a surge in loan production, with an average of 2,829 loans originated per firm for $0.679 billion compared to the 2,096 loans originated for $0.486 billion in the first quarter of this year.
Average originations were 2,714 mortgages closed for $0.657 billion in the second quarter of last year.
The improved productivity is reflected in average closings per production employee, which increased to 2.6 loans per month from 2.0 loans in the last three-month period.
Average closings per sales employees jumped to 7.6 loans per month from 5.8 months but was barely changed from 7.5 loans per month in the year-prior period.
