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Wells, U.S. Bancorp get big boost from mortgages
2009-10-21
NEW YORK (Reuters) - Wells Fargo & Co (WFC.N) and U.S. Bancorp (USB.N) posted earnings that trounced Wall Street expectations, helped by outsized revenue from underwriting mortgages, but it is not clear how long that bonanza will last. U.S. mortgage applications have fallen 15 percent so far this month, according to an industry trade group. Declining application volume usually translates to lower underwriting activity. Wells Fargo said it had $3.1 billion of mortgage banking income before taxes, of which $1.1 billion was linked to making home loans. About $1.5 billion of that income was due to gains on hedges and increases in the value of a type of home loan asset known as "mortgage servicing rights." The company reported net income for common shareholders of $2.6 billion, or 56 cents a share. That compares with analysts' average estimate of 37 cents a share, according to Thomson Reuters I/B/E/S. It earned $1.6 billion, or 49 cents, in the year-ago quarter. U.S. Bancorp posted $276 million of mortgage banking revenue, up 350 percent from a year earlier. The bank posted net income for common shareholders of $583 million, or 30 cents a share. That compares with $557 million, or 32 cents a share, in the year-ago quarter. Analysts had forecast 27 cents a share. (Reporting by Dan Wilchins; editing by John Wallace)
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