Mortgage business mixed at the Big Four banks in 4Q

A roundup of how the TBTFs fared in the mortgage space

The Big Four banks have reported their fourth quarter and full year earnings, and here’s a look at what happened in their mortgage space.

Bank of America

Bank of America Corporation (BAC) reported revenue, net of interest expense, as $18.73 billion, compared to $21.7 billion in the fourth quarter of 2013.

Legacy Assets and Servicing, the business unit that is responsible for servicing residential mortgage and home equity loans, continued to make solid progress in its efforts to reduce expenses. Noninterest expense, excluding litigation, declined to $1.1 billion in the fourth quarter of 2014, compared to $1.3 billion in the prior quarter and $1.8 billion in the year-ago quarter as the number of 60+ days delinquent loans was reduced to 189,000 from 221,000 in the prior quarter and 325,000 in the year-ago quarter.

The company originated $11.6 billion in first-lien residential mortgage loans and $3.4 billion in home equity lines during the fourth quarter of 2014, compared to $11.7 billion and $3.2 billion in the prior quarter.

The number of 60+ days delinquent first mortgage loans serviced by Legacy Assets and Servicing declined by 136,000 loans, or 42%, from the fourth quarter of 2013 to 189,000 loans.

Noninterest expense in LAS, excluding litigation, declined to $1.1 billion in the fourth quarter of 2014 from $1.8 billion in the year-ago quarter.

Consumer Real Estate Services reported a net loss of $397 million for the fourth quarter of 2014, compared to a net loss of $1.0 billion for the same period in 2013, driven primarily by lower litigation expense.

Wells Fargo

Wells Fargo & Company (WFC) reported diluted earnings per common share of $4.10 for 2014, up 5% from $3.89 in 2013.

Full year net income was $23.1 billion, compared with $21.9 billion in 2013. For fourth quarter 2014, net income was $5.7 billion, or $1.02 per share, compared with $5.6 billion, or $1.00 per share, for fourth quarter 2013.

Mortgage banking in the fourth quarter saw originations of $44 billion, down from $48 billion in the third quarter, and applications of $66 billion, up from $64 billion in the third quarter.

The banking giant had a residential mortgage servicing portfolio of $1.8 trillion; ratio of MSRs to related loans serviced for others was 75 basis points, compared with 82 basis points in prior quarter.


Citigroup (C) reported a net income of $350 million, or $0.06 per diluted share, on revenues of $17.8 billion for the fourth quarter 2014.

This is significantly down from a net income of $2.5 billion, or $0.77 per diluted share, on revenues of $17.8 billion for the fourth quarter 2013.

Legal and related expenses and repositioning charges totaled $3.5 billion in the current quarter, compared to $1 billion in the prior year period, which severely dented earnings.

In addition, Citigroup's loans were $645 billion as of quarter end, down 3% from the prior year period. On a constant dollar basis, Citigroup's loans declined by 1%, as continued declines in Citi Holdings, driven primarily by reductions in the North America mortgage portfolio, offset by 3% growth in Citicorp.

JPMorgan Chase & Co.

Mortgage activity for JPMorgan Chase & Co (JPM) improved in the fourth quarter, but quarterly and annual revenues were down, while net revenue for the year hit a record $21.8 billion.

JPMorgan reported net income for the fourth quarter of 2014 of $4.9 billion, compared with net income of $5.3 billion in the fourth quarter of 2013. Earnings per share were $1.19, compared with $1.3 in the fourth quarter of 2013. The firm had legal fees of $990 million in the quarter.

Revenue for the quarter was $23.6 billion, down 2% compared with the prior year. The firm’s return on tangible common equity for the fourth quarter of 2014 was 11%, compared with 14% in the prior year. Core loans increased by 8% compared with the prior year.

Mortgage activity in the fourth quarter was mixed.

Mortgage originations were $23 billion, down 1% from the prior year and up 8% from the prior quarter.

Mortgage banking net income was $338 million, a decrease of $255 million from the prior year, driven by higher provision for credit losses and lower net revenue, largely offset by lower noninterest expense.

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