Norwest Mortgage Co., which has just signed a deal to acquire most of Prudential Home Mortgage Corp., is coming off a big 1995.
The Des Moines-based unit of Norwest Corp. reported a record $33.9 billion of loan originations, compared with $24.9 billion in 1994. Earnings were $104.9 million, a 48% increase from $70.8 million the preceding year.
The earnings, a record, could actually have been $30 million higher than Norwest reported, one analyst said.
A jump in refinancings convinced the parent company to take a $15 million impairment reserve and a $15 million writedown, though the mortgage unit was adequately covered, said Ruchi Madan of Prudential Securities.
"Norwest is being extremely conservative and could have easily brought this $30 million to the bottom line," Mr. Madan said.
Norwest's solid results for 1995 contrast sharply with those of the mortgage companies as a group.
The industry had a "schizophrenic year," that started out badly and ended with some improvement, said David Lereah, chief economist at the Mortgage Bankers Association of America.
Buffeted by sluggish home sales and a lull in home construction early in 1995, originations fell 14%, to an estimated $654 billion from $769 billion in 1994, Mr. Lereah said.
The industry also posted "a little better than modest profits" last year, Mr. Lereah said.
Norwest Mortgage's president, Mark Oman, said all the company's channels - from brokers to builders - contributed to the strong performance.
The company, he said, spent last year making the application process quicker and easier for borrowers. The efforts paid off in increased originations, he said.
Originations in the fourth quarter more than doubled, to $10.9 billion, from $5 billion in the same period of 1994. For the year, Norwest Mortgage processed a record $48.5 billion of loan applications, an increase of 60%.
Amortization of capitalized mortgage servicing rights was $50.3 million for the fourth quarter compared with $19.8 million in the period last year.
Increased servicing revenue from growth and acquisitions also accounted for earnings growth, Mr. Oman said.
Norwest last April bought the $15 billion servicing portfolio and a mortgage servicing center from Barclays American Mortgage Corp. Norwest also, in 1994, bought originator Directors Home Mortgage.