Bank of America, which generated $2.5 billion in net income during the second quarter, is growing its retail residential mortgage originations and hiring loan officers even as it continues to cut back debt and expenses in other areas, the bank’s chief financial officer said during its earnings call.
CFO Bruce Thompson told listeners to the call that, including Home Affordable Refinance Program loans, B of A’s residential originations increased 18% from the first quarter to $18 billion and was about flat compared to the same quarter last year.
According to the company’s earnings presentation, this has allowed the company to “recapture some retail market share.” Its correspondent originations, which have been in runoff, are “virtually nonexistent,” Thompson said.
The bank’s overall second-quarter earnings compare to a net loss of $8.8 billion during the same period a year ago, when it had $18.2 billion in pretax charges for certain mortgage-related items and other selected adjustments, including provisions for representations and warranties and goodwill impairment.
Relative to a year ago, B of A said its results reflect higher mortgage banking income driven by lower rep-and-warranty provisions in the absence of a goodwill impairment charge and improved credit quality across most major portfolios.
Executives on the company said the company still has remaining mortgage-related legacy asset risk, including government-sponsored enterprise repurchases requests and private-label residential mortgage-backed securities litigation.
They also noted that the company late Tuesday settled a Countrywide PL RMBS-related lawsuit with monoline bond insurer Syncora for $375 million.
