Mortgage Business Weighs Down Bank 1Q Earnings

Retail single-family mortgage originations by banks and thrifts fell in the first quarter to the lowest point in six years while profits from their mortgage businesses dropped to 2011 levels.

Originations totaled $63.2 billion in the first quarter, down 27% from the prior quarter, according to Federal Deposit Insurance Corp. data released Wednesday.

During the refinancing boom, originations of one-to-four family first-mortgage liens peaked at $203 billion in the third quarter of 2012.

The FDIC also said the 1,088 institutions required to provide more data completed $147.6 billion in loan sales in the first quarter, a 32% drop from the fourth quarter of 2013 and a steep 69% decline from the same point a year earlier. (The FDIC requires more information from banks and thrifts with $1 billion or more in assets as well as smaller banks with more than $10 million in residential loans during the quarter.)

Non-interest income from the sale, securitization and servicing of one-to-four family loans dropped to $3.5 billion in the first quarter, down from $5.3 billion in the fourth quarter of last year. It was the lowest level of such income since 2011.

The FDIC's report also shows that mortgage buyback demands fell for the fourth consecutive quarter. Loan repurchases and indemnifications totaled $1 billion in the first quarter, down from $6.1 billion a year ago.

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