Retail Originations at Commercial Banks Hit Three-Year High

FDIC-insured institutions originated $204.8 billion of single-family loans in the third quarter, a 10% gain from 2Q, and the highest amount of retail fundings in three years.

The Federal Deposit Insurance Corp. said Tuesday that the 1,085 banks and thrifts required to report origination figures to the agency earned $8.8 billion of non-interest income from the sale, securitization and servicing of one-to-four family loans, a 14% improvement from the second quarter.

Overall, banks and thrifts reported total earnings of $37.6 billion in the third quarter, the highest in six years.

“This is the 13th quarter in a row that quarterly net income has posted year-over-year improvement,” FDIC chairman Martin Gruenberg said in a press briefing.

Insured depositories also purchased $309 billion of closed-end single-family loans through third-party production channels, compared to $285 billion in 2Q. The reporting institutions also sold $508 billion of home mortgages during 3Q.

The FDIC chairman noted that most of the improvement in third-quarter earnings came from loan sales.

Meanwhile, the new report also shows a decline in repurchase and indemnification demands from investors, such as Fannie Mae and Freddie Mac. Buyback demands totaled $2.9 billion, compared to $3.5 billion in the second quarter.

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