Fifth Third Bank reports residential mortgage lending increase in Q2

But mortgage banking revenue falls from last year

Fifth Third Bank released its second quarter earnings report which showed while its residential mortgage lending is up from last year, it is less profitable.

The bank’s residential mortgages increased just 1% from last quarter’s $15.2 billion but a full 10% from last year’s $14.05 billion to $15.42 billion in the second quarter.

Fifth Third explained that this increase in residential mortgage lending combined with an increase in commercial construction loans partially offset the overall decrease in end loan balances, which slipped due to declines in other areas such as automobile loans and commercial and industrial loans.

However, this increase in end loan balances did not translate into higher mortgage banking net revenue, which plummeted 27% from last year’s $75 million to $55 million in the second quarter. This is still up 6% from last quarter’s $52 million.

Net mortgage servicing revenue dropped to $18 million, down from $23 million in the first quarter this year and $21 million in the second quarter of 2016.

And as its mortgage servicing revenue dropped, so did its provision for loan and lease losses. The bank decreased its provision a full 43% from last year’s $91 million and 30% from last quarter’s $74 million to just $52 million in the second quarter.

Overall, the bank reported an increase of 13% to $344 million in net income available to common shareholders, up from $305 million last year. This marks an increase of 19% from last quarter’s $290 million.

Diluted earnings per share also increased, hitting $0.45 in the second quarter. This is up 15% from last year’s $0.65 and up 18% from $0.38 last quarter.

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