Wells Posts Strong Mortgage Profits but Down from 4Q

Wells Fargo & Co. earned $2.5 billion from its residential mortgage business in the first quarter-a 26% decline from the prior period-due to lower originations and a reduction in hedging results. The nation's largest residential funder originated $76 billion in single-family loans, down 19% from the fourth quarter of 2009. Mortgage hedging results fell $983 million in the first quarter due to a change in the composition of hedge instruments to "maintain ongoing hedge effectiveness," the company said. Chief financial officer Howard Atkins said the performance of credit card, auto and commercial real estate has turned up, but it will take a "little longer" for residential real estate loans. The first quarter report shows the early delinquency rates on prime mortgages, home equity loans, and pick-a-pay loans crested in the first quarter. But one- to four-family loans in the non-accrual category-including charge-offs and foreclosures-increased significantly.