Q1 Bank Earnings Down 7.6% on Lower Mortgage Revenue

First-quarter bank earnings dropped more than $3 billion compared to last year as mortgage-related income fell, FDIC reported Wednesday.

According to the agency's latest quarterly banking profile, commercial banks and savings institutions insured by FDIC earned an aggregate net income of $37.2 billion in Q1, down 7.6 percent from earnings of $40.3 billion posted the same time last year.

FDIC reported the decline was "mainly attributable to a $7.1 billion (10.7 percent) decline in noninterest income," about $4 billion of which came from decreased mortgage revenues as interest rates continued to rise.

"Since the increase in longer-term interest rates in the second quarter of 2013, mortgage income over the past three quarters has been about half of what it was over the previous six quarters," said FDIC Chairman Martin Gruenberg.

The rest of the difference in last quarter's noninterest income came from lower trading revenues as well as a one-time gain in income at one institution a year prior.

FDIC's data confirms what many of the nation's biggest banks have already reported. Wells Fargo, Bank of America, and JPMorgan Chase were among a number of banks whose mortgage banking outfits suffered as production volumes slowed.

Despite the drop in overall profits, FDIC reported the overall banking picture continues to look healthier as asset quality improves, loan balances trend up, and fewer firms report losses. According to FDIC, more than half of reporting banks saw profits grow over the year, and the number of banks posting quarterly losses was down to its lowest level since 2006.