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Business Day: Wells Fargo posts higher profit, US Bancorp down
NEW YORK — A deluge of banks earnings on Tuesday took the pulse of the industry at a time growing mortgage and credit woes were forcing banks to charge off more loans or raise reserves against future defaults.Rising core deposits and loans boosted first-quarter income at Wells Fargo & Co. 11 percent, despite growing problems in its subprime mortgage portfolio. Washington Mutual Inc. reported a 20 percent drop in earnings and the second consecutive quarterly loss in its housing division on subprime mortgage write-downs. The earnings still beat analysts’ estimates, however.U.S. Bancorp’s first-quarter profit slid 2 percent as the difficult interest rate environment hindered its lending business.Earlier, Citigroup Inc., which is headquartered in New York, and Wachovia Corp., of Charlotte, N.C., reported they were increasing their provisions for loan losses in the first quarter./AP By the poundBritish pound breaks through $2 barrierThe pound reached a high of $2.0074 before dropping back to $2.0040 in afternoon European trading, up from $1.9900 late Monday in New York.
Fitch Affirms 38, Places 2 Classes on Rating Watch from 3 CSFB ...
The collateral of the above transactions consists of first and second lien, fixed-rate and adjustable-rate subprime mortgage loans. As of the March 2007 distribution date, the transactions are seasoned from a range of 11 months to 13 months, and the pool factors (current collateral balance as a percentage of original collateral balance) range from approximately 72% to 87%. All of the mortgage loans were purchased by an affiliate of the depositor from various sellers in secondary market transactions. The affirmations reflect adequate relationships of credit enhancement (CE) to future loss expectations and affect approximately $2.222 billion of outstanding certificates. Two classes in the 2006-1 and 2006-2 series, representing $10.4 million of outstanding certificates, were placed on Rating Watch Negative due to early trends in the relationship between serious delinquency and credit enhancement.
Wells Fargo's First-Quarter Profit Rises on Commercial Loans
April 17 (Bloomberg) -- Wells Fargo & Co., the biggest bank on the U.S. West Coast, said first-quarter profit rose 11 percent to a record as borrowing by companies helped it withstand higher loan losses and a drop in the value of its subprime mortgages. Net income increased to $2.24 billion, or 66 cents a share, from $2.02 billion, or 60 cents, a year earlier, the San Francisco-based bank said today in a statement. The average estimate of 20 analysts compiled by Bloomberg was 65 cents. Revenue advanced 10 percent to $9.44 billion. Chief Executive Officer Richard Kovacevich used business services such as electronic payroll and bill-paying to lure smaller companies to the bank, and then signed them up for loans. The tactic helped boost commercial lending 11 percent, filling a void left by the mortgage division after Wells Fargo tightened standards on new subprime loans and wrote down the value on existing holdings.
Subprime Lenders Made Record Exceptions to Guidelines, Analysts Say
Subprime mortgage lenders created a surge in delinquencies in the past year by repeatedly breaking their own underwriting guidelines to capture business, analysts said. So-called "exceptions" to loans were made as written standards did not change much, Michael Youngblood, a managing director and portfolio manager at FBR Investment Management, said on a panel of an Information Management Network asset-backed securities conference in Miami. "The amount of loan exceptions made in 2006 must be historically the highest," he said. Youngblood said lenders have not been providing information on how many times they strayed from their own underwriting standards, even when he asked. In any event, it is clear they represented the "wholesale" relaxation of underwriting practices that sent delinquencies to a business cycle high of about 11.4%, he said.
New Century files for Chapter 11 bankruptcy
NEW YORK New Century Financial Corp. Monday filed for Chapter 11 bankruptcy protection in the biggest collapse of a mortgage lender in the U.S. housing downturn. The largest independent U.S. subprime mortgage lender filed for protection from creditors after several lenders forced the company to repurchase billions of dollars in bad loans. New Century's largest creditors included Goldman Sachs Group Inc.'s Goldman Sachs Mortgage Co. .
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