MReport September 2015 - Cool Under Pressure

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Th e M Rep o RT | 21 Feature so we didn't have the losses of some other lenders," Haymore said. "That left us with a strong capital position to get more aggres- sively into mortgages when we thought that we understood it. We wanted to leverage our brand and wanted to have strong risk management in place." So TD Bank started targeting the mort- gage market initially in late 2012, committing to hiring loan officers and other executives— including Haymore, who joined the bank in the middle of the year—with mortgage market expertise. "We have great attention to detail," Haymore added. "We focus on customer service. We go out of our way to make sure that the customer leaves happy. We survey our customers to make sure that we are providing the right services." Other critical factors in the lender's growth were a new front-end system for managing lead opportunities, better data collection technology for quicker approval decisions, and better management of the appraisal process, all of which have cut as much as a week off the typical loan cycle, according to Haymore. Other top East region-based lenders are Citibank, which, like JPMorgan Chase, ben- efits from a national footprint, and Citizens Financial. The West W ells Fargo dominates the mort- gage market both in the West and nationally, thanks to its earlier strong business and acquisitions of Wachovia and other struggling lenders during the mortgage downturn. Thirty-six percent of the bank's loan portfolio is in single- family mortgages. In the second quarter of 2015, Wells origi- nated $62 billion in mortgages, up $13 billion (26.5 percent) from the comparable quarter in 2014 and the lender's best performance in the last five quarters, Wells CFO John Shrewsberry said during the bank's second- quarter conference call. "California, New York, Southern Florida, and Denver are particular markets where we've seen a lot of strength," Shrewsberry added. "It was the strongest quarter in awhile. First-time homebuyers were a little bit stronger, at about 30 percent of the purchases. Business is good; there is plenty of credit available." The second-quarter performance followed a strong first quarter in which Wells origi- nated $49 billion in mortgages, up $5 billion (8.8 percent) from the year-earlier period. Fifty-four percent of the second quarter originations were for purchases, up from 45 percent during the first quarter. However, Wells cautioned during its second-quarter conference call that originations could drop in the third quarter and for the second half of the year as a result of an expected increase in interest rates. According to Shrewsberry, the bank's mortgage pipeline at the end of the second quarter was $38 billion, up $8 billion from the second quarter of 2014 but down $6 billion from the first quarter of 2014. Next in the West was First Republic Bank, which set a record for its loans in the first quarter—$4.2 billion, to be exact—by nearly $2 billion. Half of the quarter's single-family originations were for purchases. Loans out- standing, excluding loans held for sale, totaled $39.1 billion, up 3.1 percent for the quarter and up 12.5 percent compared to a year ago. The bank sold $574.7 million of primarily longer- term, fixed-rate home loans during the quarter and recorded a gain on sale of $1.8 million, compared to loan sales of $346.2 million and a gain on sale of $2.8 million a year ago. First Republic utilizes loan sales in the ordinary course of business to provide a full range of lending options for its clients, while also man- aging asset growth and interest rate risk. Schwab, perhaps better known for its stock trading than its mortgage business, originated $1.1 billion in mortgages during the second quarter, nearly an 82 percent jump from $605 million in the same period in 2014 and an increase of just over 22 per- cent from the $900 million reported in the first quarter of 2015. Washington Federal Inc. reported loan originations for the second quarter of $753 million, a $156 million (or 26.2 percent) increase over the same quarter of the prior year. For the fiscal year to date, loan origi- nations were a record $2 billion. Another top lender in the West region was (quite appropriately, we think) Bank of the West. Phil Britt started covering mortgages and other financial services matters for a suburban Chicago newspaper in the mid-1980s before joining Savings Institutions Magazine in 1992. When the publication moved his offices to Washington, D.C., in 1993, he started his own editorial services firm and continued to cover mortgages, other financial services subjects, and technology for a variety of websites and publications.

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