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Weak Quarter at U.S. Bancorp

Residential originations slowed at U.S. Bancorp, while delinquency crept higher and earnings diminished. But the servicing portfolio expanded.

Home loan originations came in at $19.082 billion during the second quarter, the Minneapolis-based company reported Wednesday.

Business slowed from the previous quarter, when production totaled $22.590 billion. Activity was also off from the same three-month period in 2012, when $22.647 billion was funded.

The latest activity brought year-to-date mortgage originations to $41.672 billion.

Mortgage production volume accounted for $17.796 billion of the latest total, down from $21.698 billion three months earlier and $21.667 billion 12 months earlier.

Home-equity and second-mortgage originations made up another $1.286 billion, growing from $0.892 billion in the previous period and $0.980 billion in the second-quarter 2012.

But things might improve in the third quarter based on mortgage application volume, which climbed to $23.9 billion from the first quarter’s $21.7 billion.

At the close of the second quarter, $223.904 billion in residential loans were serviced for others. The servicing portfolio increased from $220.321 billion three months earlier and $207.427 billion a year earlier.

U.S. Bancorp owned $47.753 billion in residential loans. The portfolio grew from $45.984 billion at the end of March and $39.920 billion on June 30, 2012.

Residential delinquency of at least 30 days was 2.74 percent, 3 basis points higher than the prior period. The rate was 3.31 percent in the same quarter during the prior year.

U.S. Bancorp also owned $15.816 billion in home-equity loans and second mortgages. HEL holdings fell from $16.131 billion at the end of the first quarter and $17.476 billion as of the same date in 2012.

On the HEL portfolio, the rate of late payments was unchanged from the first quarter at 2.22 percent but worse than 1.92 percent in the second quarter of last year.

Commercial real estate loans on the balance sheet increased to $38.298 billion from $37.400 billion and were $36.557 billion at the same point last year.

Delinquency on CRE loans, including nonperforming loans, was 1.37 percent. The past-due rate was better than 1.60 percent in the first quarter and 2.16 percent in the second-quarter 2012.

Mortgage repurchases and make-whole payments were reduced to $41 billion from $79 million in the first three months of 2013, bringing outstanding repurchase demands to $64 million.

Mortgage banking income before income taxes was $286 million in the latest quarter, sliding from $333 million in the previous period. Mortgage earnings were down 11 percent from the second quarter of last year.

U.S. Bancorp earned $507 million before taxes, a little less than the $516 million earned in the first quarter and in the same period during 2012.

As of the end of last month, 3,087 branches were in operations, seven more than at the end of March.

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