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Fundings, Delinquency Deteriorate at US Bank

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U.S. Bancorp reported a 25 percent decline in quarterly residential originations, though annual activity improved. Tucked away in the latest activity was nearly $10 million in subprime mortgage production.

Fourth-quarter 2009 production was $11.1 billion, according to earnings data released today by the parent of U.S. Bank Home Mortgage. Volume fell from $14.8 billion three months earlier but improved from $8.1 billion one year earlier.

Full-year fundings were more than $55.6 billion, climbing from $34.1 billion in 2008..

U.S. Bancorp said its consumer finance division originated $6 million in subprime residential mortgages during the fourth quarter. The weighted-average FICO score on the loans was 617 and the weighted-average loan-to-value was 65 percent.

Subprime home-equity loans and second mortgages originated by the consumer finance division totaled $3 million with a weighted average FICO of 626 and a weighted-average LTV of 75 percent.

The portfolio of mortgages serviced for others rose to $150.8 billion from $145.0 on Sept. 30, 2009.

Residential mortgages on the balance sheet finished the fourth quarter at $26.1 billion, more than $24.9 billion at the end of the previous quarter. Included in the total was $5.5 billion in first-lien home-equity loans, up from $5.3 billion.

In addition, the firm owned $19.4 billion in second-mortgage HELs, rising marginally from the third quarter. HEL seconds stood at $19.2 billion on Dec. 31, 2008.

Residential delinquency of at least 90 days, including nonperforming loans, was 4.59 percent on Dec. 31, 2009, jumping from 3.86 percent the prior quarter and 2.44 percent the prior year.

U.S. Bancorp owned $34.1 billion in commercial mortgages, higher than $33.9 billion as of Sept. 30, 2009. The Dec. 31 total included $8.8 billion in construction and development financing.

Commercial mortgage delinquency was unchanged from the third quarter at 5.22 percent but higher than 3.34 percent a year prior.

Fourth-quarter income from the mortgage banking division was $19 million, down 13 percent from the third quarter. Mortgage banking revenues were $218 million in the latest quarter, down from the third quarter’s $276 million but soaring the fourth-quarter 2008’s $23 million.

Net income at the Minneapolis-based institution was $602 million, easing from $603 million in the third-quarter 2009 but nearly double the $330 million earned during the fourth-quarter 2008. Fee-based mortgage banking business contributed to the year-over-year increase.

“The company’s results were impacted by two significant items: $278 million of provision for credit losses in excess of net charge-offs and $158 million of net securities losses,” the bank explained.

Full-year earnings were $2.2 billion, lower than the $2.9 billion earned in 2008.

U.S. Bancorp finished last year with 60,000 employees, 4,000 more than at the end of 2008.

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