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Wells Fargo Posts Stable 4Q Mortgage Banking Income

JAN 14, 2014 11:35am ET
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Single-family originations by Wells Fargo fell 38% in the fourth quarter from the prior quarter but it still managed to post solid results from its mortgage banking operations.

The nations largest mortgage lender originated $50 billion in loans in 4Q, compared to $80 billion in the prior quarter and $125 billion in 4Q 2012. Purchase mortgage loans comprised 68% of 4Q originations.

Despite the lower loan volume, Wells Fargo still reported $1.6 billion in noninterest income from its mortgage servicing and lending business, down just $38 million from 3Q.

The results partially reflect higher servicing income and reductions in personnel expenses. WFC announced layoffs of 5,300 full-time employees in the third quarter and another 1,100 in the fourth quarter, according to chief financial officer Tim Sloan.

We have reduced our retail mortgage fulfillment FTEs by nearly 50% since our peak staffing levels in the first quarter of 2013, Sloan said during a conference call on WFCs fourth-quarter earnings.

Servicing income jumped to $709 million in 4Q from $504 million in the prior quarter as repayments slowed. Meanwhile, net gains on mortgage originations and sales fell to $861 million in 4Q from $1.1 billion in 3Q.

The CFO noted that gain-on-sale margins strengthen to 1.77% in 4Q from 1.42% in 3Q. Going forward, he expects continuing declines in single-family originations in the first quarter of this year.

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