The residential mortgage banking segment at PNC Financial Services Group, Pittsburgh, earned $22 million in the third quarter, less than half of the $55 million it made in the second quarter and one-fourth of the $97 million profit of the third quarter 2010.
Loan origination volume was flat at $2.6 billion when compared with the second quarter and slightly down from the $2.7 billion originated one year ago.
Payoffs in mortgage servicing rights portfolio continue to outpace new loan production, as PNC serviced $121 billion at Sept. 30, down from $125 billion on June 30 and $131 billion on Sept. 30, 2010.
The biggest driver of the falloff in earnings for the segment was an increase in noninterest expense (which was related to foreclosure expenses) to $203 million, compared with $140 million in the second quarter and $119 million for the third quarter 2010.
PNC took a $15 million provision for credit losses in the third quarter, versus a benefit of $8 million in the second quarter.
PNC Financial Services Group reported net income of $184 million for the period, down from $912 million in the second quarter and $1.1 billion for the third quarter of 2010. But the third quarter 2010 earnings were inflated by a $328 million after-tax gain due to the sale of PNC Global Investment Servicing.
