Slow spring home buying drags big bank mortgage results

This year's sluggish spring home buying season led to generally softer mortgage-related second quarter results at Wells Fargo, JPMorgan Chase, Citigroup and PNC Financial Services Group, but First Republic Bank bucked the trend.

Origination volumes by mortgage units improved over the first quarter of 2018, but mortgage earnings and servicing results were weaker.

Noninterest income generated by Wells Fargo's mortgage banking division was $770 million, down from the previous quarter's $934 million and lower than the $1.1 billion generated a year ago.

Wells' originations were $50 billion, up on a consecutive quarter basis, but down from $56 billion a year ago. Servicing income was $406 million, down from the first quarter's $468 million, but up slightly from $400 million in the second quarter of 2017.

At JPMorgan Chase, home lending revenue fell to $1.35 billion compared to the first quarter's $1.51 billion, and was also lower than almost $1.43 billion in the second quarter of 2017.

Originations at JPMorgan Chase rose to $21.8 billion from the previous quarter's $18.2 billion, but were down from $26.2 billion during the same period last year. Net mortgage servicing revenue was $231 million, down from the first quarter's $370 million and $249 million a year ago.

Citigroup's mortgage unit generated $140 million in revenue, which represented a 5% decline from the first quarter and a 25% drop from the second quarter of last year.

Originations at Citi rose by 13% to $2.6 billion from $2.3 billion in the first quarter but were down by 16% from $3.1 billion a year ago. Citi decided last year to sell off much of its servicing.

The gain on the sales of mortgages originated by First Republic Bank's mortgage unit was $4 million, a huge spike compared to the previous quarter's $689,000 and $841,000 one year ago.

Single-family originations were more than $3.1 billion, up from $2.3 billion last quarter and $3 billion a year ago. Net loan servicing fees were down by almost 1% from the previous quarter and a little over 1% lower than a year ago.

Noninterest income generated by PNC's residential mortgage division was $84 million, down from $97 million quarter-over-quarter and $104 million a year ago.

Residential mortgage originations were $2 billion, up from $1.7 billion in the first quarter, but down from $2.2 billion a year ago. PNC did not break out mortgage servicing revenue in its earnings release, but noted that a decline contributed to lower overall residential mortgage revenue.