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Bank of America (NYSE:BAC): Current price $11.55
According to the Wall Street Journal, Bank of America has cut back their mortgage business, but is still making a lot of money from it. In the fourth quarter of 2012, BofA made about $22 billion, about a third of what they produced in the first quarter of 2011. The bank’s gain-on-sale margin, or the revenue they booked, divided by the value of mortgages originated was 4.33%, compared with about 2.85% at JPMorgan Chase (NYSE:JPM), 2.56% at Wells Fargo (NYSE:WFC) and about 2.13% at U.S. Bancorp (NYSE:USB). The trouble is, BofA may be hard-pressed to sustain this performance, especially if interest rates on government bonds continue to rise. That will put more pressure on the bank to boost their share of the mortgage market so that they can maintain this revenue source.