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Bank of America Mortgage Retreat Benefits These 6 Banks

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4. Wells Fargo (WFC - Get Report)

Wells Fargo captured a whopping 30.1% of the mortgage market in the fourth quarter--a 21% jump from 2010. The bank has been clear about its commitment to the correspondent mortgage business, as the head of that unit, Eric Stoddard, discussed in an interview last year.

During Wells Fargo's conference call following its release of fourth quarter earnings, CFO Timothy Sloan attributed the $627 million rise in noninterest income largely to the $531 million increase in mortgage banking revenues. That was 29% higher than the third quarter, and Sloan said it was driven by higher margins and strong originations. Originations increased $31 billion or 35% from the third quarter. The unclosed mortgage pipeline remained "very strong," according to Sloan, at $72 billion at quarter end.

FBR reiterated its "Outperform" rating and increased its price target to $33 from $33 following Wells Fargo's fourth-quarter earnings release. Miller cited "the company's relatively stable earnings stream, coupled with its strong capital position," in raising his target, arguing Wells should command a higher multiple.

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