FEB 26, 2013 12:20pm ET

Banks Enjoy Banner Origination Year as Loan Buybacks Slow

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FDIC-insured institutions originated $765.4 billion in single-family loans in 2012, up nearly 50% from the year prior, according to a Federal Deposit Insurance Corp. report.

In the fourth quarter, retail originations totaled $204.6 billion, nearly the same as the $204.8 billion in single-family first-lien loans originated in the quarter prior.

The quarterly FDIC report shows that the banks and thrifts sell most of their retail and wholesale originations.

Banks held $1.9 trillion in one-to-four family loans at yearend, up only 0.6% from the fourth quarter of 2011.

And the loan sales contributed to noninterest income.

Noninterest income from the sale, securitization and servicing of mortgages totaled $8.2 billion in fourth quarter, compared to $4.7 billion a year ago.

Noninterest income and lower provisions for loan losses bolstered earnings, FDIC chairman Martin Gruenberg said at a Tuesday press briefing.

The FDIC reported that over 7,000 federally insured banks and thrifts posted $34.7 billion in combined earnings for the last quarter of 2012, up 36% from a year ago.

The fourth-quarter report also shows a decline in repurchase and indemnification demands by Fannie Mae, Freddie Mac and other investors.

Loan buybacks totaled $2.9 billion in the fourth quarter, down 33% from a year ago.

Just 1,143 of the 7,083 FDIC-insured institutions reported mortgage origination in the fourth quarter.

The FDIC only requires insured depositories that originate more than $10 million of residential loans in the quarter or have $1 billion or more in assets to report mortgage origination data.

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