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» VISIT US ONLINE @ DSNEWS.COM 13 MORTGAGE INCOMES DOWN IN Q4 FOR U.S. BANK, PNC Both U.S. Bancorp and PNC Financial Services experienced slight declines in net income for the fourth quarter of 2015, and the results for mortgage banking revenues at both banks followed right along, according to Q 4 earnings statements for both banks just released. At U.S. Bancorp, average total loans grew year-over-year by $10.3 billion, about 4.2 percent, in Q 4 to reach $256.7 billion, with residential mortgages contributing 2.1 percent to this growth. Residential mortgage loans totaled $53.0 billion, up from $51.8 billion in the previous quarter and $51.9 from Q 4 2014. Despite the increase in loan volume, however, mortgage banking revenue for U.S. Bancorp totaled $211 million in Q 4, down over- the-quarter from $2.24 million and over-the- year from $235 million. e decline in mortgage banking revenue was primarily due to "an unfavorable change in the valuation of mort- gage 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," said Richard K. Davis, Chairman, president, and CEO of U.S. Bancorp. For PNC, residential mortgage bank- ing noninterest income decreased $12 million primarily as a result of lower loan sales revenue. 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 for 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 re- turned to shareholders in 2015. We're positioned to continue to drive long-term value through our execution in 2016 and beyond." Overall for U.S. Bancorp, the Q 4 2015 earnings statement showed that its net income for the fourth quarter of 2015 totaled $1.476 billion, or $0.80 per share, down slightly from $1.488 billion, or $0.79 per share reported in the fourth quarter of 2014. Factors in the slight decline were a higher provision for credit losses and lower noninterest income, according to the statement. Despite the overall decline in profits for U.S. Bancorp, Davis called the bank's perfor- mance "remarkable," stating that 2015 was "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 deci- sions on operating efficiencies with opportuni- ties for investing in future growth and address- ing 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." U.S. Bancorp started off 2016 on a positive note when earlier this week, HUD dismissed a complaint filed in 2012 by the nonprofit Na- tional Fair Housing Alliance accusing the bank of racial discrimination in maintaining REO properties. According to PNC's Q 4 earnings state- ment, the bank's 2015 total net income was $4.1 billion, or $7.39 per share, down slightly from 2014's profits of $4.2 billion, or $7.30 share. e bank's fourth quarter earnings also ticked down year-over-year from $1.1 billion ($1.90 per share) in Q 4 2014 down to $1.0 billion ($1.87 per share) in Q 4 2015. PNC stated that its fourth quarter results reflect "revenue growth over the third quarter in both net interest income and fee in- come, a continued focus on disciplined expense management, and higher loans and deposits." WILL RECENT CHANGES TURN AROUND JPMORGAN'S MORTGAGE BANKING FORTUNES? While JPMorgan Chase's earnings exceeded expectations for the fourth quarter of 2015, the bank's Mortgage Banking division had a relatively disappointing quarter—which Chase hopes to turn around with a recent shakeup in Mortgage Banking Leadership. According to Chase's Q 4 2015 earnings statement just released, the bank pulled in a net income of $5.4 billion during the final quarter of the year—down from the $6.8 billion net income reported in Q 3, but up from the $4.9 billion net income reported for the final quarter of 2014. Year-over-year in the fourth quarter of 2015, the bank's earnings totaled a record- breaking $23.7 billion, up from $23.5 billion in the fourth quarter of 2014. "We had a good quarter as 2015 came to a close," JPMorgan Chase CEO Jamie Dimon said. "e businesses generated strong loan growth and credit quality, except for some stress in energy. e consumer business continues to gather deposits, outpacing the industry. Markets were somewhat quieter, and we saw the impact reflected in the results of our trading and Asset Management businesses." e Mortgage Banking division of JPMorgan Chase experienced a disappointing fourth quarter, however, with net income totaling $266 million, down 21 percent year- over-year. Net revenue also fell 10 percent to $1.7 billion. On the bright side, higher loan balances pushed net interest income up 11 percent to $1.1 billion. e bank hopes that two recent changes in leadership can turn around the Mortgage Banking Division's fortunes in 2016: In December, Mike Weinbach changed roles at the bank, moving from head of Mortgage Servicing to become the CEO of Mortgage Banking. Earlier in January, the bank named Peter Muriungi as head of Mortgage Servicing to replace Weinbach. JPMorgan Chase started off 2016 on a positive note. On January 5, the Office of the Comptroller of the Currency announced it has released the bank from a mortgage-related consent order than had been in effect since June 2015 after finding Chase to be in full compliance with the order. At the same time, the OCC issued a $48 million civil penalty to the bank for previous violations of the consent order. e earnings statement also showed that JPMorgan's net revenue rose 1 percent to $23.7 billion, thanks to higher revenue in Corporate and Consumer & Community Banking, but largely offset by lower revenue in Corporate & Investment Banking and Asset Management. Meanwhile, noninterest expense was $14.3 billion in the fourth quarter of 2015, down 7 percent. "e Firm is getting safer and stronger each year," Dimon said. "We are continuing to adjust our strategy to the new world and to meeting all requirements. We see exciting opportunities to invest for the future and to continue to deliver better and faster for our clients and customers."

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