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Mortgage Originations Fall at U.S. Bank

Quarterly home lending activity retreated from the previous period at U.S. Bancorp. In addition, new applications taken point to a further slowdown this quarter.

From Oct. 1, 2016, through year-end 2016, the bank-holding company earned $2.1 billion prior to taxes, not much different than what it earned the prior quarter.

The Minneapolis-based financial institution disclosed the data, along with other operational and financial metrics, in its fourth-quarter 2016 earnings report.

Earnings were also very similar to the final three-month period of 2015.

“U.S. Bancorp delivered an outstanding performance in 2016 with record net income, EPS and revenue,” U.S. Bancorp Chairman and Chief Executive Officer Richard K. Davis said in the report.

Mortgage banking revenue during the final-three months of 2016 came to $240 million. The total retreated from $314 million earned in the third quarter but was better than $211 million earned in the year-prior period.

Mortgage production volume was $13.978 billion in the fourth-quarter 2016. Business decelerated from $14.995 billion in the previous quarter but was up from $11.426 billion in the last quarter of 2015.

The latest quarterly data excluded branch-originated residential loans and HELs for the investment portfolio. In the third quarter,
branch mortgage originations were $4.401 billion, and branch HEL originations were $1.771 billion.

Full-year mortgage originations, excluding branch production, totaled
$53.486 billion, more than the $49.693 billion closed in all of 2015.

First-quarter 2017 mortgage originations are likely down from the fourth quarter based on mortgage application volume, which fell to $14.2 billion in the final-three months of 2016 from $19.5 billion in the third quarter.

The third-party mortgage servicing portfolio concluded last year at $232.597 billion, expanding from $232.120 billion as of Sept. 30, 2016. The portfolio was also larger than $231.771 billion at the conclusion of 2015.

Residential assets were grew to $73.463 billion from $72.696 billion at the end of the third-quarter 2016 and $69.880 billion as of Dec. 31, 2015.

The fourth-quarter 2016 residential total consisted of $43.632 billion in mortgages, $13.642 billion in first-lien home-equity loans and $16.369 billion in HELs and second mortgages.

Delinquency of at least 30 days on mortgages was 1.57 percent as of the most-recent date, improving from 1.63 percent the previous period and 1.98 percent at the end of 2015.

HEL delinquency was unchanged at 1.40 percent but retreated 4 basis points from a year earlier.

There were $7 million in outstanding repurchase and make-whole requests as of Dec. 31, 2016, the same as three months earlier.

Commercial real estate assets finished last year at $43.098 billion. The CRE investment portfolio dipped from $46.438 billion the prior quarter but was up from $42.137 billion a year prior.

CRE assets as of year-end 2016 were comprised of $31.592 billion in commercial mortgages and $11.506 billion in construction-and-development loans.

CRE delinquency climbed to 0.41 percent from 0.34 percent but was still lower than 0.54 percent as of year-end 2015.

U.S. Bancorp finished 2016 with a staff of 70,000 employees.
Headcount grew from 67,000 at the end of the third quarter and at the close of 2015.

There were 3,106 branches in operation as of year-end 2016. Branch
count was reduced by eight versus three months prior.

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