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U.S. Bank Business Tumbles from Record High

Mortgage News

After reaching an all-time high in the fourth quarter, residential originations at U.S. Bancorp plummeted. But the company has made progress in reducing residential late payments.

Home-loan fundings tumbled to $12.1 billion in the first quarter from the record $19.6 billion set three months earlier, according to earnings data released Tuesday. Production was better, though, than $9.0 billion funded in the first-quarter 2010.

Around $3 million in subprime mortgages were originated in the first three months of this year.

U.S. Bancorp’s third-party servicing portfolio climbed to $182.7 billion from the fourth quarter’s $173.9 billion. It has grown significantly from $156.5 billion as of March 31, 2010.

The Minneapolis-based company said its residential assets ended March at $32.3 billion, more than the previous period’s $30.7 billion and more than $26.5 billion in the first-quarter 2010. First-lien home-equity loans accounted for $6.7 billion of the latest total, up from $6.4 billion at the end of last year.

Residential delinquency of at least 30 days, including nonperforming loans, fell to 4.67 percent from 5.18 percent in the final quarter of last year and 6.29 percent in the first quarter of last year.

U.S. Bancorp additionally owned $18.6 billion in junior-lien HELs and second liens, less than $18.9 billion at the end of December and $19.3 billion 12 months earlier.

HEL defaults were 1.75 percent as of March 31, 2011, lower than 1.90 percent the prior quarter. But HEL delinquency has risen from 1.70 percent at the same point last year.

Commercial mortgage holdings inched up to $35.4 billion from the fourth quarter’s $34.7 billion. The balance was also higher than $34.2 billion during the same period last year.

Delinquency on commercial real estate loans slipped to 4.91 percent from just 4.93 percent in the fourth quarter and was better than 6.81 percent a year earlier.

The bank said that it had $90 million in repurchases last quarter, while repurchase expense was $32 million and repurchase reserves finished at $181 million.

Net income before taxes within mortgage banking operations was $114 million, 27 percent worse than the fourth quarter but 14 percent better than a year earlier.

The company as a whole earned $1.5 billion before taxes, better than $1.3 billion earned in the prior quarter and $0.9 billion earned in the same period last year. The year-over-year improvement reflected revenue growth and a reduction in the provision for credit losses.

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