""Wells Fargo"":https://www.wellsfargo.com/ pulled in a record net profit of $5.1 billion in the final quarter of 2012, up 24 percent from the same period in 2011, according to the bank's quarterly filings.[IMAGE]
Total profits for 2012 were $18.9 billion, up 19 percent from the year before. Revenue for the year increased 6 percent from 2011 to reach $86.1 billion. In the fourth quarter alone, revenue was $21.9 billion (up 7 percent year-over-year).
Mortgage banking noninterest income was $3.1 billion for Q4, up $261 million quarter-over-quarter. However, originations took a slight dive, dropping to $125 billion compared to $139 billion in the third quarter. The bank also revealed a dip in applications, which fell from $188 billion in Q3 to $152 billion in Q4. Refinances made up 72 percent of applications, unchanged from the third quarter.
The quarter ended with an application pipeline of about $81 billion, down from $97 billion at the end of the third quarter.[COLUMN_BREAK]
While originations and applications slipped, net mortgage servicing rights (MSRs) results were $220 million, up from $142 million in the prior quarter. In the filing, the bank attributes the increase ""primarily to MSRs valuation adjustments made in the third quarter for increased servicing and foreclosure costs."" The company's residential mortgage servicing portfolio is an estimated $1.9 trillion.
In addition, losses for mortgage loan repurchases dropped to $379 million from $462 million in Q3.
Wells Fargo held onto its one- to four-family conforming loans in the fourth quarter instead of selling them, forgoing about $340 million of fee revenue, according to the company's filing.
The bank also recorded a $644 million pre-tax charge to reserve for payment of a settlement with the Office of the Comptroller of the Currency and the Federal Reserve Board. Wells Fargo, ""along with nine other servicers"":http://dsnews.comarticles/ten-banks-reach-85m-deal-with-regulators-in-foreclosure-settlement-2013-01-07, entered into an $8.5 billion agreement with the agencies in early January in order to end the Independent Foreclosure Review and repay consumers.
Wells Fargo's portion of the cash settlement--in proportion with its share of serviced loans in the population set aside for review--is $766 million. The bank also committed an additional $1.2 billion to foreclosure prevention actions. With this settlement, Wells Fargo will no longer take any more costs associated with the foreclosure reviews, which had recently approximated $125 million per quarter, the bank said.
""In addition to the benefit to our customers, we are very pleased to have put this legacy issue behind us and to have removed the future costs associated with independent foreclosure reviews,"" said bank chairman and CEO John Stumpf.