Despite a surge in refinance share, quarterly and annual mortgage originations at Wells Fargo & Co. were lower, and a further decline is likely. Earnings also deteriorated.
In its fourth-quarter earnings report Friday,
the San Francisco-based financial institution disclosed $4.6 billion in income before income tax expense.
Earnings were reduced from $6.8 billion
in the preceding quarter and were also worse than $7.6 billion in the final quarter of the preceding year.
At $0.928 billion, mortgage banking income was diminished compared to $1.046 billion in the third quarter and $1.417 billion in the fourth-quarter 2016.
The latest total included $0.262 billion in servicing income and $0.666 billion in net gains on mortgage loan originations and sales activities.
Single-family loan production totaled $53 billion during the final-three months of the year, retreating from $59 billion in the third quarter and plunging from $72 billion in the fourth-quarter 2016.
Full-year 2017 originations amounted to $212 billion, tumbling from $249 billion in 2016.
Retail activity made up $23 billion of fourth-quarter 2017 business, and correspondent acquisitions accounted for $30 billion.
Refinance share jumped to 36 percent from 28 percent the previous quarter.
Mortgage applications came to $63 billion in the fourth-quarter 2017, declining from $73 billion three months earlier — suggesting another drop is likely in the current quarter’s business. Further supporting the weakened outlook was the application pipeline, which fell to $23 billion from $29 billion.
As of Dec. 31, 2017, the managed residential servicing portfolio
was $1.551 trillion. Wells reduced the portfolio from $1.563 trillion at the end of the prior quarter and $1.552 trillion at the end of the prior year. The most-recent total included $1.209 trillion in mortgages serviced for others. The ratio of mortgage-servicing rights to the related loans was 0.88 percent.
In addition, the company sub-serviced $0.003 trillion for others.
The balance sheet contained $323.767 billion in single-family assets, more than $321.325 billion as of Sept. 30 and $321.816 billion as of year-end 2016. Last month’s total was made up of $284.054 billion in first mortgages and $39.713 billion in junior liens.
Wells serviced $622 billion in commercial mortgages at the close of 2017,
more than $608 billion the prior quarter and $$611 billion a year prior. Last month’s total included $495 billion in loans serviced for others.
An additional $9 billion in commercial mortgages was sub-serviced by Wells.
Commercial real estate assets concluded 2017 at $150.878 billion, less than $152.995 billion three months earlier and $156.407 billion one year earlier. The year-end 2017 balance was comprised of $126.599 billion in commercial mortgages and $24.279 billion in construction loans.
Headcount ended last year at 262,700 people,
down 5,300 employees from Sept. 30 and 6,400 fewer than at the end of 2016.
Branch count exceeded 8,300,
a hundred fewer than at the end of the third quarter.
