Bank of America's consolidated second-quarter mortgage banking income declined to $312 million from over $1 billion for the same period one year prior as the company continued to put more of its originations on its balance sheet, which reduced gain-on-sale revenue.
Specifically there were four items that affected this quarter's mortgage income, said Paul Donofrio, chief financial officer in response to a question during a conference call. "First, we sold an appraisal business last year, so there was revenue in last year's second quarter that isn't in this quarter. Second, we had some servicing sales in the second quarter of last year for a gain that we didn't have this quarter.
"Third and probably most significant from a revenue perspective is that we had the
"And then fourth, and probably strategically most important, is we are selling less mortgages, choosing instead to hold them on our balance sheet. And, obviously, this decreases mortgage banking income but increases net interest income over time," he said.
During the quarter, between its consumer banking and global wealth and investment management businesses, Bank of America originated $20.6 billion of mortgages, up from $19.2 billion one year prior.
The consumer banking unit reported $11.5 billion of first mortgage originations and $3.9 billion of home equity loan originations, compared with $11.3 billion and $2.9 billion, respectively, one year prior. Production income was $182 million, down from $272 million.
The unit's mortgage servicing rights portfolio took a fair market valuation adjustment hit of $223 million plus amortization of $165 million to end the quarter with a value of $1.8 billion, down from $2.2 billion at the start. Servicing fees slipped to $179 million from $208 million.
Bank of America's corporate earnings fell to $4.2 billion from $5.1 billion.
