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Mixed Performance at Citi

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Earnings and employee count increased at Citigroup Inc. But residential operations turned in higher losses and lower production.

Home-loan originations fell again after sinking in the first quarter. Earnings data reported Friday indicated that mortgage closings fell to $11.0 billion in the second quarter from $14.1 billion three months earlier. A year earlier, Citi closed $11.2 billion in residential loans.

As of June 30, the third-party mortgage servicing portfolio at the consumer banking division stood at $196.5 billion. The servicing portfolio grew from $196.0 billion on March 31 and $190.8 billion at the same point in 2010.

The regional consumer banking unit had $27.2 billion in U.S. real estate loans on the balance sheet, higher than $25.8 billion in the prior period and $23.1 billion in the same period last year.

Excluding government-guaranteed and agency mortgages, delinquency of at least 30 days at the consumer banking operation was 1.25 percent, lower than the first quarter’s 1.33 percent and also lower than 1.61 percent in the second-quarter 2010.

The residential servicing portfolio at Citi Holdings closed out the latest period at $234.8 billion, lower than the first quarter’s $244.4 billion and $327.6 billion on June 30, 2010.

Citi Holdings continued to trim its residential loans owned, with $116.0 billion in loans on the books as of the end of the second quarter. The balance was $119.9 billion three months prior and $139.6 billion a year earlier.

The 30-day delinquency rate at Citi Holdings, excluding agency loans, fell to 8.76 percent from 9.05 percent at the end of the first quarter. A year prior, the rate was 11.81 percent.

The commercial mortgage portfolio at Citi Holdings tumbled to $1.3 billion at the end of the latest three-month period from $2.0 billion and was $9.9 billion at the same time last year.

Commercial real estate loans had a 30-day delinquency rate of 5.69 percent, worse than the prior quarter’s 4.30 percent. The default rate was 4.18 percent in the second quarter of last year.

Citi realized $171 million in repurchase losses during the three months ended June 30, more than the first quarter’s $151 million. The latest activity brought the repurchase reserve balance to $1.0 billion.

Real estate lending generated $1.6 billion in second-quarter losses, deteriorating from a $1.2 billion loss in the previous quarter but better than the $1.8 billion in losses a year earlier. CRE loan losses, however, were reduced to $84 million from the prior period’s $90 million and a $152 million loss in the second-quarter 2010.

Income before taxes at the New York-based parent climbed to $4.3 billion from the first quarter’s $4.2 billion. Earnings were also better than $3.5 billion a year prior.

Citigroup employed 263,000 people as of June 30, more than the 260,000 staff size in the prior quarter and headcount of 259,000 in the second-quarter 2010.

Citi operated 1,002 retail branches within its consumer banking operation at the end of last month, while Citi Holdings had another 1,816 branches.

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