Bank of America is hiring thousands of new employees to keep up with surging residential originations even though its mortgage business posted a $500 million loss for the first quarter due to deteriorating loan performance.
The giant bank originated $85.2 billion in single-family loans in the first quarter, up 91% from the previous quarter. Nearly one quarter of the funding involved home purchases, according to BoA chief financial officer Joe Price.
The mortgage business is "going full bore as evidence of the fact we have added or intend to add almost 5,000 new positions in addition to transferring another 700 associates from other parts of the bank to fulfill the increased volume," Price said during a conference call on the bank's earnings report.
The bank reported $5.2 billion in total revenues from its home loan and insurance business, up 60% from the fourth quarter. "However, earnings were negative due to a high level of provisions," the CFO said.
The first quarter loss provision was $3.4 billion, up $1.7 billion from the previous quarter. Net charge-offs on its $261.6 billion mortgage portfolio increased $319 million to $785 million in the first quarter.
"Nonperforming loans increased by $3.8 billion from the fourth quarter and now represents 4.13% of loans," BoA said.