Wells Fargo & Co made a record 33.9 percent of U.S. mortgage loans in the first quarter, as rivals such as Bank of America Corp continued to pull back in the home lending market.
Wells Fargo's loan volume more than tripled the 10.6 percent market share of its nearest rival, JPMorgan Chase & Co, as it increased its dominance in the industry, according to a report released on Thursday by industry publication Inside Mortgage Finance. U.S. Bancorp jumped to third from fifth.
The rankings show diverging strategies for some of the largest U.S. banks at a time of shrinking loan volume and increased regulatory scrutiny of the industry. Wells Fargo and US Bancorp made more loans in the first quarter, while J.P. Morgan, Bank of America and Citigroup all saw their volume shrink compared with the fourth quarter.
Total mortgage originations of $385 billion in the first quarter were down from $400 billion in the fourth quarter, but up from $335 billion a year ago. Mortgage banking income helped boost results at Wells Fargo and U.S. Bancorp when they reported earnings last month.
At an investor conference on Tuesday, Wells chief financial officer Tim Sloan said the bank's market share could continue to grow in the current environment.
"We like the business a lot," Sloan said.
Last month, U.S. Bancorp CEO Richard Davis said the Minneapolis-based regional bank had added mortgage offices, loan officers and new technology to become a bigger player in the business.
"We see a market share (opportunity) that you only get once in a lifetime," Davis said.
Meanwhile, Bank of America, which has faced huge losses and lawsuits from its 2008 Countrywide Financial acquisition, stopped buying mortgages last year from smaller lenders - a business known as correspondent lending - as it focused on making loans through its own branches. Remaining fourth in the rankings, its total volume fell by more than one-fourth to $16 billion from the fourth quarter. Bank of America's Countrywide purchase initially made it the largest U.S. mortgage lender.
Last month, CEO Brian Moynihan said Bank of America had purposely lost market share by shedding its correspondent lending business, but acknowledged the bank "underperformed" in making loans directly to consumers. The bank is adding loan officers to improve results, he said.
Citigroup Inc fell to fifth from fourth in the rankings. In February, the bank said it would stop originating home loans through mortgage brokers.
Wells Fargo, JPMorgan, Bank of America and Citigroup are among five servicers that reached a $25 billion settlement that was finalized in April with state and federal officials over foreclosure abuses. Ally Financial Inc, the fifth servicer, was the 10th largest originator of home loans in the first quarter, down from sixth in the fourth quarter after it also retreated in the correspondent lending business.
(This version of the story corrects the month when mortgage settlement was finalized to April, not March, paragraph 12)
(Reporting by Rick Rothacker in Charlotte, North Carolina; editing by Andre Grenon)