Lower loan sales revenues and fewer originations helped to drive down the earnings posted by PNC Financial Services Group's residential mortgage banking segment from $435 million in 2009 to $275 million for 2010.
For the fourth quarter, earnings in this segment fell from $25 million in 2009 to just $3 million in 2010.
Also affecting earnings, said PNC, was higher foreclosure-related expenses and lower net hedging gains.
Refinancings drove an increase in fourth quarter 2010 volume to $3.5 billion from $2.7 billion in the third quarter 2010 and $2.3 billion in the fourth quarter 2009.
However for all of 2010, PNC did $10.5 billion, down from $19.1 billion the previous year.
PNC saw a decline in its mortgage servicing portfolio, from $145 billion on Dec. 31, 2009 to $131 billion on Sept. 30, 2010 and $125 billion as of Dec. 31, 2010, as loan payoffs continue to outpace new production.
But the fair value of the servicing rights portfolio increased from $0.8 billion at the end of the third quarter to $1.0 billion at the end of the fourth, as interest rates rose during that period.
An increase in the value of commercial MSRs led to an increase in linked-quarter earnings at PNC's corporate and institutional banking segment. In the third quarter this segment earned $427 million, but in the fourth, it earned $540 million.
The commercial servicing portfolio is at $266 billion at year-end 2010, up from $263 billion at the end of the third quarter but down from $287 billion at Dec. 31, 2009.
The year-over-year decrease was from run off exceeding new production because of limited market opportunities to purchase commercial MSR portfolios.
