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US Bank’s Mortgage Investments, Servicing Grow

As has typically been the case for home lending in the first quarter of this year, volume was lower at U.S. Bancorp. But its residential investments and servicing portfolio grew.

Before
taxes, income during the period that started on Jan. 1, 2017, and ended on March 31 came to more than $2.0 billion, modestly lower than $2.1 billion in the prior period.

Those details and more were revealed in the Minneapolis-based financial institution’s earnings report for the first quarter of this year.

Income was slightly better, however, than just under $2.0 billion a year prior.

Revenues from the mortgage banking business fell to $207 million from $240 million in the fourth-quarter 2016 but improved from $187 million in the first-quarter 2016. The year-over-year improvement was a result of the valuation of mortgage-servicing rights.

During the first-three months of this year, residential loan originations totaled $15.137 billion. Business dropped from $20.595 billion closed in the final-three months of last year and $16.791 billion funded in the first-three months of last year.

First-quarter 2017 production consisted of $9.984 billion in mortgages originated for sale, $3.505 billion in mortgages originated for the bank’s portfolio and $1.648 billion in home-equity loans originated for the portfolio.

Second-quarter production is not likely to be much different than in the first-three months of 2017, with loan application volume dipping to $13.3 billion in the first-quarter
from $14.2 billion the prior period.

As of the end of last month, U.S. Bank serviced $233.558 billion in mortgages for third parties. The servicing portfolio expanded from $232.597 billion three months earlier and $232.151 billion twelve months earlier.

The fair value of MSRs was 115 basis points of the servicing portfolio, the same as the previous quarter.

Residential assets amounted to $74.429 billion as of the end of last month. Residential investments expanded from $73.643 billion at the end of last year and $71.287 billion at the same point last year. The first-quarter 2017 total included $44.667 billion in mortgages, $13.599 billion in first-lien HELs and $16.163 billion in second-lien HELs.

On the mortgages, delinquency of at least 30 days concluded March 2017 at 1.44 percent. The past-due rate improved from 1.57 percent three months earlier and 1.78 percent one year earlier.

HEL delinquency dipped to 1.36 percent from 1.40 percent and was also better than 1.45 percent as of the end of the first-quarter 2016.

Commercial real estate loan holdings were trimmed to $42.832 billion from $43.098 billion but inched up from $42.743 billion as of March 31, 2016. The most-recent total was comprised of $31.046 billion in commercial mortgages and $11.786 billion in construction-and-development loans.

CRE delinquency crept up to 0.42 percent from 0.41 percent but was lower than 0.47 percent at the same point in 2016.

Repurchases fell to $7 million from $5 million in the fourth quarter.

U.S. Bank operated 3,091 branches as of March 31, 2017, fewer than 3,106 three months prior.

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