Residential mortgage banking revenue grew by $35 million in the third quarter at PNC Financial Services Group.
According to the third quarter earnings report, the revenue is driven by higher loan origination volume, which is partially offset by lower net hedging gains on mortgage servicing rights.
While the mortgage news is positive for PNC, it is not the area of largest revenue growth. PNC is successfully growing in other areas, such as retail banking, corporate financing and wealth management. Commercial lending, by way of comparison, grew $1.1 billion in the third quarter.
PNC reported net income of $925 million, or $1.64 per diluted common share, for the third quarter of 2012 compared with $834 million, or $1.55 per diluted common share, for the third quarter of 2011.
The book of nonperforming assets continues to decline. Commercial real estate nonperforming loans and REO also decreased at PNC.
Home equity lines of credit and residential mortgage nonperforming loans increased. However, this increase is put down to accounting changes where loans are place on non-accrual status when past due 90 days or more compared with 180 days under the prior policy.
Subsidiary PNC Mortgage also lowered provisions for mortgage repurchase obligations. But the lender notes the cost of doing business is getting higher despite stronger origination volume. In another area of costs, PNC reports lower foreclosure-related expenses.
Approximately 30% of originations were under the revised Home Affordable Refinance Program. The fair value of mortgage servicing rights is down to $600 million compared to the same quarter last year, where it was valued at $700 million.