Fifth Third Bancorp (FITB) reported full year 2014 net income of $1.5 billion, down 19% from net income of $1.8 billion in 2013.

After preferred dividends, 2014 net income available to common shareholders was $1.4 billion, or $1.66 per diluted share, down 21% compared with 2013 net income available to common shareholders of $1.8 billion, or $2.02 per diluted share.

Fourth quarter 2014 net income was $385 million, an increase of 13% from net income of $340 million in the third quarter of 2014 and a decrease of 4% from net income of $402 million in the fourth quarter of 2013.

After preferred dividends, net income available to common shareholders was $362 million, or $0.43 per diluted share, in the fourth quarter 2014, compared with $328 million, or $0.39 per diluted share, in the third quarter 2014, and $383 million, or $0.43 per diluted share, in the fourth quarter of 2013.

“Fifth Third reported full year net income available to common shareholders of $1.4 billion and earnings per diluted share were $1.66. Full year 2014 earnings included solid performance across our business lines highlighted by growth in corporate banking, payments processing, and investment advisory revenue,” said Kevin T. Kabat, Vice Chairman and CEO of Fifth Third Bancorp. “Highlights for the year also included 7% growth in demand deposits and well-controlled expenses that were down 6%. Return on average assets was 1.1% and return on average tangible common equity was 12.2%.”

Results also included $23 million of provision expense related to the transfer of residential mortgage loans classified as troubled debt restructurings to held-for-sale. Additionally, results included an immaterial amount in mortgage repurchase provision.

Results also included the impact of $3 million in mortgage repurchase provision, and a benefit to the mortgage repurchase provision of $28 million primarily related to Fifth Third’s settlement with Freddie Mac and corresponding expectations for future repurchase requests and file claims.

“Full year net charge-offs were impacted by our decision to move $720 million of residential mortgage TDRs to held-for-sale, as we look to take advantage of market conditions to reduce our TDR portfolio,” Kabat said. “This decision increased our charge-offs by $87 million. The intended transaction is in line with our previous statements about our view of the current pricing for risk assets and is another indication of our strong focus to reduce the volatility of our future earnings. Otherwise in credit, nonperforming assets were down 24% from last year and remain at very low levels. Our credit metrics are moving in the right direction and provide further support to our positive credit outlook.”

Average consumer portfolio loan and lease balances increased $220 million, or 1%, sequentially and increased $292 million, or 1%, year-over-year.

Average residential mortgage loans increased 2% sequentially and 3% from a year ago. Average home equity loans declined 1% sequentially and 4% from the fourth quarter of 2013. Average credit card loans increased 1% sequentially and 6% from the fourth quarter of 2013.

Average loans held-for-sale balances of $540 million decreased $89 million sequentially and $430 million compared with the fourth quarter of 2013. Period end loans held-for-sale of $1.3 billion increased $620 million from the previous quarter and $317 million from the fourth quarter of 2013 primarily due to the transfer of certain residential mortgage loans classified as troubled debt restructurings to held-for-sale.

Mortgage banking net revenue was $61 million in the fourth quarter of 2014, flat from the third quarter of 2014 and a 51% decrease from the fourth quarter of 2013. Fourth quarter 2014 originations were $1.7 billion, compared with $2.1 billion in the previous quarter and $2.6 billion in the fourth quarter of 2013. Fourth quarter 2014 originations resulted in gains of $36 million on mortgages sold, compared with gains of $34 million during the previous quarter and $60 million during the fourth quarter of 2013. The sequential increase was driven by higher gain on sale margins, partially offset by lower production.

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 $60 million this quarter, $61 million in the third quarter of 2014, and $64 million in the fourth 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 fourth quarter of 2014 (reflecting MSR amortization of $32 million and MSR valuation adjustments of negative $2 million); negative $34 million in the third quarter of 2014 (MSR amortization of $33 million and MSR valuation adjustments of negative $1 million); and positive $3 million in the fourth quarter of 2013 (MSR amortization of $23 million and MSR valuation adjustments of positive $26 million). The mortgage servicing asset, net of the valuation reserve, was $856 million at quarter-end on a servicing portfolio of $65 billion.