Fifth Third Bancorp (FITB) on Thursday reported third quarter 2014 net income of $340 million versus net income of $439 million in the second quarter of 2014 and $421 million in the third quarter of 2013.

After preferred dividends, net income available to common shareholders was $328 million, or $0.39 per diluted share, in the third quarter of 2014, compared with $416 million, or $0.49 per diluted share, in the second quarter of 2014, and $421 million, or $0.47 per diluted share, in the third quarter of 2013.

Average loan and lease balances (excluding loans held-for-sale) increased $250 million sequentially and increased$3.5 billion, or 4%, from the third quarter of 2013. The sequential increase in average loans and leases was primarily driven by growth in commercial construction, residential mortgage, and commercial and industrial (C&I) loans. Sequential growth was partially offset by declines in commercial mortgage and home equity loans. Period end loans and leases (excluding loans held-for-sale) of $90.6 billion increased $140 million sequentially and $3.4 billion, or 4%, from a year ago.

Mortgage banking net revenue was $61 million in the third quarter of 2014, a 21% decrease from the second quarter of 2014 and a 49% decrease from the third quarter of 2013. Third quarter 2014 originations were$2.1 billion, compared with $2.0 billion in the previous quarter and $4.8 billion in the third quarter of 2013.

Third quarter 2014 originations resulted in gains of $34 million on mortgages sold, compared with gains of $42 million during the previous quarter and $74 million during the third quarter of 2013. The sequential decrease was driven by lower gain on sale margins as well as increased retention of certain mortgage production, which are generally shorter term or adjustable rate.

The decrease from the prior year reflected lower production, including Fifth Third’s exit from the broker channel, partially offset by higher gain on sale margins. Mortgage servicing fees were $61 million this quarter, $62 million in the second quarter of 2014, and $63 million in the third quarter of 2013. Mortgage banking net revenue is also affected by net servicing asset valuation adjustments, which include mortgage servicing rights (MSR) amortization and MSR valuation adjustments (including mark-to-market adjustments on free-standing derivatives used to economically hedge the MSR portfolio).

These net servicing asset valuation adjustments were negative $34 million in the third quarter of 2014 (reflecting MSR amortization of $33 million and MSR valuation adjustments of negative $1 million); negative $26 million in the second quarter of 2014 (MSR amortization of $32 million and MSR valuation adjustments of positive $6 million); and negative $16 million in the third quarter of 2013 (MSR amortization of $39 million and MSR valuation adjustments of positive $23 million). The mortgage servicing asset, net of the valuation reserve, was $933 million at quarter-end on a servicing portfolio of $67 billion.