Resource Bancshares Mortgage Group and North American Mortgage Co., two of the largest mortgage banks, both reported declines in net income for the fourth quarter.
Earnings totaled $2.7 million at Columbia, S.C.-based Resource, after a nonrecurring $3.2 million charge related to a contractual employment obligation. Net income in the 1995 quarter had been $6.1 million.
Resource's net for the year, excluding the charge, was up more than 60% from 1995's $14.2 million. The company earned $1.25 a share, 36% more than in 1995.
Steven F. Herbert, Resource's chief financial officer, said the employment obligation charge should benefit the company's earnings in the future because it will lead to lower compensation expense.
Although Resource's servicing portfolio grew 20%, to $6.7 billion, the company is more of an originations powerhouse. It originated $10 billion of loans in 1996, a 40% increase. David W. Johnson Jr., vice chairman, said Resource is continuing its efforts to diversify loan production.
Mr. Johnson said retail production tripled in 1996, while wholesale production more than doubled. Retail accounted for 7% of Resource's total production; wholesale, for 14%, with the balance coming from correspondents. Mr. Johnson said Resource's goal is to have 70% of originations coming from correspondents, 20% from wholesale, and 10% from retail.
Resource also announced that vice chairman Lee E. Shelton had resigned to pursue other opportunities.
Mr. Shelton had been with Resource since 1991 and helped steer it through an initial public offering in 1993. Before his stint at Resource, Mr. Shelton had worked seven years at BarclaysAmerican Mortgage.
North American's fourth-quarter earnings were $7.9 million, down 37% from 1995, and for the year were $33 million, down 18.5%. Earnings per share totaled $2.30, down 17% from 1995.
John F. Farrell Jr., chairman and chief executive officer of Santa Rosa, Calif.-based North American, said the bottom line had been affected by investments in retail operations. The company added 15 branch offices and 29 satellite offices last year.
North American, which is also known more for its origination capability than its servicing, produced $9.5 billion of loans in 1996, an increase of 26% from 1995. Its servicing portfolio at Dec. 31 was $13.3 billion, down from $14.1 billion at the end of 1995.
Separately, North American reported that its loan fundings last month totaled $644 million, down 17% from the previous January. Loan applications totaled $1.1 billion last month, compared with $1.5 billion the year before.
And Countrywide Credit Industries Inc., the nation's second-largest mortgage originator, reported similar results. It originated $2.9 billion of mortgages in January, down 12% from the year before. Its pipeline at Jan. 31 totaled $4.4 billion, down about 8%.
