Banks Report Positive Mortgage Results

The residential mortgage banking business at PNC Bank of Pittsburgh earned $226 million for the first quarter of 2009 driven by strong loan origination activity and favorable income from servicing rights. The company has started reporting this as a separate line of business in the wake of its acquisition of National City Corp. Total loan originations were $6.9 billion for the first quarter, primarily originated under agency guidelines. Residential mortgage loans serviced for others totaled $168 billion at March 31, 2009 compared to $173 billion at Jan. 1, 2009. The decrease was due to payoffs exceeding new direct production during the quarter. Noninterest income at PNC was $440 million in the first quarter of 2009 driven by mortgage servicing rights net hedging gains of $202 million and loan sale revenue of $175 million that resulted from strong loan origination refinance volume. Meanwhile at Cincinnati's Fifth Third Bancorp, mortgage banking net revenue was $134 million in the first quarter of 2009, an increase of $163 million from the fourth quarter 2008 and a $37 million increase from the first quarter of 2008. First quarter originations were $4.9 billion, up from $2.1 billion the previous quarter. Net servicing revenue, before mortgage servicing rights valuation adjustments, totaled $2 million in the first quarter, compared with $22 million last quarter and $8 million a year ago. MSR valuation adjustments represented a net gain of $1 million in the first quarter of 2009, compared with a net loss of $96 million last quarter and a net loss of $3 million a year ago. Including gains in MSR balance sheet hedges reported in securities gains and losses, total mortgage banking revenue increased by $83 million from the previous quarter.