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U.S. Bancorp, PNC Profits and Mortgage Revenues Decline

piggybank-cashU.S. Bancorp and the PNC Financial Services Group Inc., reported Friday morning that net income at both banks is down from the previous year, and the results for mortgage banking revenues at both banks followed right along, according to Q4 earnings statements for both banks released on Friday.

U.S. Bancorp's 2015 fourth quarter earnings statement showed that its net income for the fourth quarter of 2015 totaled $1,476 million, or $0.80 per share, down 0.8 percent from $1,488 million, or $0.79 per share reported in the fourth quarter of 2014 and down 0.9 percent from $1.489 million in the third quarter of 2015.

The bank's said that their fourth quarter earnings decrease is credited to a "higher provision for credit losses, lower noninterest income, impacted by the 2014 Nuveen gain, partially offset by increases in payments-related revenue and trust and investment management fees and the gain on the sale of a Health Savings Account deposit portfolio, along with an increase in net interest income primarily driven by growth in earning assets."

U.S. Bancorp Chairman, President and CEO Richard K. Davis noted, “U.S. Bancorp delivered a remarkable performance in 2015; a year underscored by persistent and historically low interest rates, modest economic growth, and increasing regulatory requirements. More than any year in recent history, 2015 required strong management focus as we balanced decisions on operating efficiencies with opportunities for investing in future growth and addressing our customers’ needs. U.S. Bancorp rose to that challenge, delivering record net income and diluted EPS for the year and continuing with industry-leading performance metrics."

Average total loans grew 4.2 percent, or $10.3 billion year-over-year in the fourth quarter of 2015 to reach $256.7 billion, with residential mortgages contributing 2.1 percent to this growth, according to the statement. Residential mortgages totaled 53.0 billion, up from 51.8 billion in the previous quarter and 51.9 billion last year.

Despite the increase in loan volume, however, mortgage banking revenue for U.S. Bancorp totaled $211 million in Q4, down over-the-quarter from $2.24 million and over-the-year from $235 million. The decline in mortgage banking revenue was primarily due to “an unfavorable change in the valuation of mortgage servicing rights, net of hedging activities,” according to the statement. Overall noninterest income was down by $30 million over-the-year for U.S. Bancorp (from $2.370 billion down to $2.340 billion), though it did increase over-the-quarter by $14 million.

"As we look to 2016, we are well positioned to continue providing quality products and services to our customers and exceptional value to our shareholders from a position of strength and stability that our stakeholders have come to expect from U.S. Bancorp," Davis said.

1-15 U.S. Bancorp chart

U.S. Bancorp

PNC's 2015 net income total was $4.1 billion, or $7.39 per share, down from 2014's profits of $4.2 billion, or $7.30 share, according to the bank's 2015 fourth quarter earnings statement. In addition, 2015 fourth quarter earnings were $1.0 billion, or $1.87 per share, compared with $1.1 billion, or $1.90 per share, for the third quarter of 2015 and $1.1 billion, or $1.84 per share, for the fourth quarter of 2014.

The institution stated that its fourth quarter results reflect "revenue growth over the third quarter in both net interest income and fee income, a continued focus on disciplined expense management, and higher loans and deposits."

Residential mortgage banking noninterest income decreased $12 million primarily as a result of lower loan sales revenue, the statement showed. Residential mortgages totaled $113 million in the fourth quarter of 2015, down from last quarter's number of $125 million and last year's number of $135 million. Mortgage loans declined despite an increase in total loans PNC by $1.7 billion as of December 31, 2015 compared with September 30, 2015.

“PNC delivered consistent, quality results and advanced our strategic priorities in 2015,” said William S. Demchak, Chairman, President and CEO. "We increased fee income, reduced expenses and managed a strong balance sheet that will benefit from rising interest rates heading into 2016. Our strong capital position enabled us to increase the amount of capital returned to shareholders in 2015. We’re positioned to continue to drive long-term value through our execution in 2016 and beyond.”

1-15 PNC graph

PNC

Click here to view U.S. Bancorp's 2015 fourth quarter earnings statement.

Click here to view PNC's 2015 fourth quarter earnings statement.

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