Sovereign Reports Mortgage Banking Loss

Sovereign Bancorp Inc., Philadelphia, has reported that its mortgage banking business incurred a loss of $107 million in the first quarter, in large measure due to a $120 million charge related to the sale of correspondent home equity loans.The charge included the establishment of a repurchase reserve. Mortgage banking lost $7.6 million in the fourth quarter of 2006, but had a gain of $13.0 million in the first quarter of that year, Sovereign reported. Also included in mortgage banking revenues was a gain of $6.1 million related to the sale of $1.3 billion of multifamily loans. The after-tax effect of the charge was $76.4 million ($0.15 per share). Sovereign reported first-quarter net income of $48.1 million ($0.09 per share), substantially down from $141 million ($0.36 per share) a year earlier.