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Mortgage Revenues Jump at US Bank

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Modest quarterly growth in mortgage originations and servicing was reported for U.S. Bancorp. But the increase in mortgage revenues was much more than modest.

Income before taxes was $2.1 billion during the three months ended Sept. 30.
Earnings were mostly unchanged compared to the prior quarter and year-prior period.

The results, in addition to other operational and financial metrics, were included in the Minneapolis-based company’s third-quarter earnings report issued Wednesday.

Mortgage banking revenue jumped to $314 million from $238 million in the prior period and $224 million in the same period last year.

U.S. Bank said the increased revenue was “driven by strong refinancing activities due to lower longer-term interest rates.”

Residential loan originations during the period that began on July 1, 2016, and ended on Sept. 30 were $21.167 billion.
Business picked up from the second quarter, when $20.191 billion in loans were closed. Activity also ascended from $19.809 billion in the third-quarter 2015.

Residential production amounted to $58.149 billion during all three quarters that have been reported this year.

Third-quarter 2016 home lending activity included $14.995 billion in mortgages, $4.401 billion in branch mortgage originations for the portfolio and $1.771 billion in branch-originated home-equity loans
for the portfolio.

Home lending activity is likely continuing at the same pace so far in the fourth quarter based on new applications, which were $19.5 billion in the third quarter versus $19.9 billion during the previous three-month period.

Last month ended with $232.120 billion in mortgages serviced for others. The servicing portfolio grew from $231.878 billion three months earlier and $229.294 billion one year earlier.

The financial institution closed out the third quarter with $72.696 billion in residential assets on its balance sheet. The total was $72.385 billion as of June 30, 2016, and $68.537 billion as of Sept. 30, 2015.

The Sept. 30, 2016, residential holdings included $42.846 billion in residential mortgages, $13.383 billion in first-lien home-equity loans and $16.467 billion in HELs and second mortgages.

Delinquency of at least 30 days, including non-performing loans, on the
senior-lien portion of the portfolio was trimmed to 1.63 percent from 1.67 percent as of mid-2016 and cut from 2.08 percent as of the same date last year.

HEL delinquency inched up 2 basis points, though, to 1.40
percent. But the HEL 30-day rate has been reduced from 1.52 percent as of the close of the third-quarter 2015.

U.S. Bank also owned $43.468 billion in commercial real estate loans as of the end of last month, more than $43.290 billion three months earlier
and $42.478 billion one year earlier.

The Sept. 30, 2016, CRE total consisted of $31.916 billion in commercial mortgages and $11.552 billion in construction-and-development loans.

CRE loan delinquency was reduced by 4 BPS to 0.34 percent as of the most-recent period and has tumbled from 0.54 percent as of one year previous.

Repurchases dipped to $6 million from $8 million in the second quarter.

Staffing stood at 67,000 in the most-recent report.

Last month ended with 3,114 U.S. Bank branches, eight fewer than at the end of June.

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