PNC Financial Services (PNC)

Total loan originations were $3.6 billion for the third quarter compared with $6.4 billion in the linked quarter, reflecting a significant drop in refinancing activity consistent with industry trends. Loans were primarily originated through direct channels under agency (FNMA, FHLMC, FHA/VA) guidelines.

Residential mortgage loans serviced for others totaled $158 billion at September 30, 2009 compared with $161 billion at June 30, 2009. Payoffs slightly exceeded new direct loan origination volume during the quarter.

Noninterest income was $209 million in the third quarter of 2009 compared with $245 million in the second quarter of 2009. The decline was due to lower loan sales revenue which decreased $68 million in the linked quarter comparison primarily driven by a reduction in the mortgage loan pipeline and compressed price margins. Net hedging gains on mortgage servicing rights increased slightly to $60 million in the third quarter. Loan servicing fees increased by $28 million over the previous quarter, benefitting from lower payoff volume.

Net interest income was $83 million in the third quarter of 2009 compared with $87 million in the second quarter.

Noninterest expense was $141 million for the third quarter of 2009, down $35 million or 20 percent compared with the linked quarter. Lower origination volumes contributed to a decline in personnel expense and foreclosure costs decreased from second quarter 2009.

The fair value of mortgage servicing rights was $1.3 billion at September 30, 2009 compared with $1.5 billion at June 30, 2009. The decrease was primarily attributable to a lower fair value of the asset resulting from higher prepayment expectations due to lower interest rates at the end of the third quarter of 2009.

Total loan originations were $6.4 billion for the second quarter compared with $6.9 billion in the linked quarter, reflecting strong refinancing activity consistent with industry trends. However, rising mortgage rates reduced incoming application pipeline volume. Loans were primarily originated through direct channels under agency (FNMA, FHLMC, FHA/VA) guidelines.

Residential mortgage loans serviced for others totaled $161 billion at June 30, 2009 compared with $168 billion at March 31, 2009 as payoffs exceeded new direct loan origination volume during the quarter.

Noninterest income was $245 million in the second quarter of 2009 compared with $438 million in the first quarter of 2009. Net hedging gains on mortgage servicing rights were $58 million for the second quarter, a decrease of $144 million compared with the prior quarter. Loan sales revenue declined by $23 million in the linked quarter comparison primarily due to a reduction in the mortgage loan pipeline.

Net interest income was $80 million in the second quarter of 2009 compared with $82 million in the first quarter.

Noninterest expense was $176 million for the second quarter of 2009 and relatively flat compared with $173 million in the linked quarter.

The carrying value of mortgage servicing rights was $1.5 billion at June 30, 2009 compared with $1.0 billion at March 31, 2009. The increase was primarily attributable to a higher fair value of the asset resulting from rising interest rates during the quarter and a steepening of the interest rate curve which increased the expected cash flows associated with this asset due to lower prepayment risk.

Total loan originations were $6.9 billion for the first quarter. The strong volume was consistent with industry trends and was primarily originated under agency (FNMA, FHLMC, FHA/VA) guidelines.

Residential mortgage loans serviced for others totaled $168 billion at March 31, 2009 compared to $173 billion at January 1, 2009. The decrease was due to payoffs exceeding new direct production during the quarter.

Noninterest income 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.

Net interest income was $87 million in the first quarter of 2009 resulting from higher pipeline residential mortgage loans held for sale, which benefited from the strong origination volumes during the quarter.

Noninterest expense of $173 million included the addition of personnel costs associated with strong origination volumes and increased focus on loan underwriting quality and servicing loss mitigation activities.