BofA's mortgage volume grows faster than its big bank peers'

Bank of America's fourth-quarter mortgage origination volume more than doubled on a year-over-year basis, a faster pace of growth than two of its national banking peers.

Total first-mortgage production for the quarter was $22.1 billion, with $14.6 billion coming from its consumer banking segment and $7.5 billion from the global wealth and investment management unit. In the third quarter, it produced $20.6 billion.

In the fourth quarter of 2018, BofA originated $9.4 billion, of which $6.2 billion was done by consumer banking.

The approximately 133% annual growth in loan production topped that of Wells Fargo at 58% and JPMorgan Chase at 94%. Only Citigroup, which had deemphasized its mortgage business, had a higher growth percentage, at 162%.

BofA's home equity lending had its best quarter of the year in the fourth quarter as well, at just under $3 billion. But that was down from $3.6 billion in the fourth quarter of 2018.

For the full year, BofA had total mortgage volume of $72.5 billion and home equity originations of $11.1 billion (consumer banking accounted for $49.2 billion and $9.8 billion, respectively). In 2018, it did $41.2 billion of first mortgages and $14.9 billion in home equity; of that total, $27.3 billion and $13.3 billion, respectively, were from consumer banking.

The company added that 45% of its consumer-banking mortgage applications came through the digital channel.

BofA does not break out mortgage income separately; it is part of consumer lending in the all other income line within noninterest income under consumer banking.

In the fourth quarter, consumer lending made up $64 million of noninterest income, down from $175 million one year prior. For 2019, there was $294 million of consumer lending income, down from $429 million in 2018.

Among regional banks with a large mortgage presence that reported results, PNC's residential mortgage noninterest income was $87 million in the fourth quarter, down 35% from $134 million in the third quarter but up 47% from $59 million in the fourth quarter of 2018.

The quarter-to-quarter decline was a result of the bank recording a lower benefit from residential mortgage servicing rights valuation (net of an economic hedge), lower loan sales revenue and lower servicing fees, a press release said.

But compared to one year prior, the MSR valuation was higher and there was higher loan sale revenue, although that was offset by lower servicing fees in the most recent period.

For the fourth quarter, PNC originated $3.5 billion, up slightly from $3.4 billion in the third quarter and more than double the $1.6 billion in the fourth quarter of 2018.

U.S. Bancorp's mortgage banking revenue increased 43% on a year-over-year basis, to $244 million from $171 million. The annual gain was attributed to higher mortgage production and increased gain on sale.

However, it was down 10% from the third quarter's $272 million on a seasonal decline in application volume and an unfavorable change in its MSR valuation (net of hedging).

For the fourth quarter, U.S. Bancorp had $17.5 billion in originations and $21.2 billion in applications. This compares with $15.8 billion and $23.6 billion respectively in the third quarter and $9.1 billion and $11.5 billion in the fourth quarter of 2018.