Wells Fargo announced today that it expects to report record first quarter earnings of $3 billion thanks in part to the current mortgage bonanza.
“Business momentum in the quarter reflected strength in our traditional banking businesses, strong capital markets activities, and exceptionally strong mortgage banking results,” said Chief Financial Officer Howard Atkins, in a release.
“$100 billion in mortgage originations, with a 41 percent increase in the unclosed application pipeline to $100 billion at quarter end, an indication of strong second quarter mortgage originations.”
The San Francisco-based bank and mortgage lender said it realized roughly $175 billion in loan commitments, mortgage originations, and mortgage securities purchases during the quarter.
The company processed $190 billion in mortgage applications for more than 800,000 customers, a 64 percent increase from the fourth quarter, aided by a record $83 billion month in March.
I wonder what kind of mortgage market share Wells Fargo and Bank of America will end up with this year.
The bank also provided 150,000 “mortgage solutions,” such as loan modifications and repayment plans, to help homeowners stay put during the quarter.
Wachovia has also been a welcome addition to the bank, contributing about 40 percent of combined revenue.
“With the acquisition of Wachovia, we’re now serving almost one of every three U.S. households. Revenue synergies from cross-sell are a huge opportunity much like the Wells Fargo-Norwest merger ten years ago,” Atkins added.
But what about all those billions in option-arms? At some point they will be a big, big problem, whenever they decide to charge them off. Moratoriums don’t last forever.
Shares of Wells Fargo were up nearly three dollars, or about 20 percent, to $17.71 in midday trading on Wall Street.