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U.S. Bank Production Down a Third

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The quarterly origination of home loans at U.S. Bancorp was down by a third. But the servicing portfolio, mortgage investment portfolio and earnings inched higher as delinquency declined.

In its second-quarter earnings release, the Minneapolis-based company reported mortgage production of $8.1 billion. Business sank from the first quarter’s $12.1 billion and was also lower than $10.6 billion in the second-quarter 2010.

Residential subprime originations at the consumer finance division were $2 million, down from the first quarter’s $3 million.

U.S. Bancorp serviced $184.9 billion in mortgages for third parties. The portfolio was higher than $182.7 billion three months earlier and $163.2 billion a year earlier.

Residential loans on the balance sheet were $33.1 billion as of June 30, growing from $32.3 billion on March 31 and $27.3 billion at the same point last year. Included in the latest total were $6.8 billion in first-lien home-equity loans.

The bank additionally owned $18.6 billion in second-mortgage and HELs, about the same as the prior quarter but down from $19.3 billion a year earlier.

Including non-performing loans, the 30-day delinquency rate on residential loans was 4.27 percent, falling from 4.67 percent in the first quarter. The rate was 5.83 percent a year prior.

On HELs, the default rate fell to 1.65 percent from 1.75 percent and was also better than 1.73 percent in the second quarter of last year.

Commercial mortgage holdings finished last month at $35.5 billion, up slightly from $35.4 billion at the end of March and $33.9 billion on June 30, 2010. Construction-and-development loans accounted for $6.8 billion of the most-recent total.

The 30-day delinquency rate on commercial real estate loans came in at 4.30 percent. CRE delinquency was 4.91 percent in the previous period and 5.82 percent in the second-quarter 2010.

“There is continued stress in the commercial and residential mortgage portfolios, due to the overall duration of the economic slowdown,” the report said.

U.S. Bancorp repurchased or made whole $72 million in mortgages, though that was an improvement from $90 million in the first quarter. Repurchases totaled $27 million a year earlier.

After taking a $43 million charge for repurchases, the reserves for mortgage representations and warranties ended the second quarter at $173 million.

Net income before taxes at U.S. Bancorp came in at $525 million, rising from $504 million in the prior quarter and $471 million in the second-quarter 2010.

U.S. Bank, N.A., operated 3,086 branches as of June 30.

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