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Originations Hold at Wells Fargo

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After tumbling in the first quarter, home-loan production at Wells Fargo & Co. managed a small gain. The firm also maintained its mortgage investment portfolio.

Residential loan originations were $112 billion during the second quarter, the San Francisco-based company reported Friday.

Business crept up from the $109 billion originated in the first three months of 2013. The first-half total at Wells Fargo was $221 billion.

But volume dropped from $131 billion in loan fundings during the same period last year.

Retail originations accounted for $62 billion of second-quarter business, and $50 billion came from the correspondent/wholesale channel.

Refinance share was 56 percent in the most recent period, falling from 69 percent in the first quarter. Refinance share was 62 percent a year prior.

Although the volume of applications grew to $146 billion in the second quarter from $140 billion three months earlier, the pipeline of loans in process fell to $63 billion from $74 billion. The disparity suggests that a big share of the new applications already closed in the second quarter.

The residential mortgage servicing portfolio was $1.851 trillion as of the end of the second quarter. Wells Fargo serviced $1.860 trillion as of March 31 and $1.863 trillion at the same point last year.

The June 30 servicing portfolio consisted of $1.487 trillion in loans serviced for others, $0.358 trillion in owned loans and $0.006 trillion in sub-servicing.

Wells Fargo noted that investments in nonconforming first mortgages contributed to a $5.2 billion increase in overall core loans.

First mortgage assets were mostly unchanged, inching up to $252.841 billion from $252.307 billion at the end of March. The investment portfolio was $230.263 billion as of June 30, 2012.

Junior lien mortgages on the books were cut to $70.059 billion from $72.543 billion as of March 31. The year-earlier number was $80.881 billion.

Wells Fargo’s $88.896 billion home-equity loan portfolio, which is reflected in both first mortgage and junior lien holdings, was reduced from $91.719 billion three months earlier and $100.952 billion a year earlier. Last month’s total included $4.173 billion for the HEL liquidating portfolio.

HEL 60-day delinquency improved to 3.10 percent on the core portfolio from 3.19 percent at the end of the first quarter. The rate was 3.93 percent at the same point last year.

The commercial mortgage servicing portfolio inched up to $525 billion from $524 billion and was unchanged from 12 months prior. The serviced-for-others portion of the latest number was $409 billion, while $105 billion of the loans were owned and $11 billion were sub-serviced.

Commercial real estate loans on the books were trimmed to $104.673 billion from $106.119 billion. At the same point last year, CRE holdings were $105.666 billion.

Another $16.442 billion in CRE construction assets were owned, off from $16.650 billion in the first quarter and $12.729 billion a year earlier.

Repurchase demands were outstanding on 8,080 loans for $1.80 billion, inching up from 7,840 loans for $1.79 billion in the first quarter.

Non-interest income from mortgage banking was $2.802 billion, more than $2.794 billion in the prior period but off from $2.893 billion in the same quarter during 2012.

The most recent period included $0.393 billion in net servicing income and $2.409 billion in net gains on mortgage origination and sales activity.

Wells Fargo earned $8.5 billion before income tax expense during the three months ended June 30. Earnings were up from $7.6 billion three months earlier and $7.1 billion a year earlier.

A record $5.5 billion was earned after taxes by the holding company in the second quarter.

Staffing across all businesses closed out the second quarter at 274,300, the same number as at the beginning of the period.

Wells Fargo said it operates 9,000 “stores.”

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