MReport June 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 43 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION ORIGINATION LOCAL EDITION positioned to benefit from a stron- ger economy, a stronger housing market and the pivot to a stronger purchase mortgage market." BNY Mellon, S&T Share Q1 Earnings BNY SEES MORTGAGE REVENUES DROP, WHILE S&T'S INCREASED. NEW YORK // Revenues from residential mortgage lending were down for BNY Mellon in the first quarter, dipping from $90 mil - lion in Q 4 2016 to $88 million in March. Revenues were up slightly in the bank's wealth management loans/mortgages category, increas - ing from $8 million to $10 million over the same period. BNY Mellon saw virtually no change in the fair value of its agency RMBS portfolio, while its non-agency portfolio dipped slightly. The bank reported a total revenue of $3.84 billion for the quarter—a 3-percent increase over March 2016. Other highlights of BNY Mellon's Q1 Earnings Report included: a year-over-year 14-percent increase in earnings per common share; a 4 percent in - crease in investment service fees; a 4 percent increase in investment management and performance fees; and a 3 percent increase in net interest revenue. According to Gerald L. Hassell, Chairman and CEO of BNY Mellon, the bank's efforts in digitization should propel the business forward even further as the year goes on. "The progress we are making in digitizing our firm and harness - ing emerging technologies should result in an increasingly distinctive client experience, new sources of value for our clients, and reduced structural costs for our company," Hassell said. "We see ourselves as being an investments platform company that integrates the best of what we and others have to offer for the benefit of our clients and the marketplace." While mortgage earnings may have waned for BNY Mellon, earnings on mortgage loans were up for S&T Bancorp in the first quarter. According to its recent earnings report, total noninterest income in the bank's mortgage lending sector jumped from $694,000 to $733,000 for the quar - ter. That's a more than $200,000 jump over Q1 2016. Total residential mortgage assets also increased over the year—from $650,000 to $700,000—though they dipped by about $1,000 over the quarter. Net interest on residential mortgage lending was up over both periods. S&T also saw a decrease in its share of nonperforming residential mortgage loans. They represented just 1.17 percent of all NPLs; last quarter they accounted for 1.4 per - cent, and last year, for 1.39 percent. Overall, the bank increased its total loan portfolio by 9.8 percent for the quarter and increased its net interest income by $1.4 mil - lion—or 2.7 percent. "We are pleased to announce another quarter of solid earnings driven by strong loan growth," said Todd Brice, President and CEO of S&T. "Our ability to grow organically combined with recent increases in short-term rates positively impacted our earnings with higher net interest income and expansion of our net interest margin." M&T Sees Jump in Mortgage Revenues THE BANK REPORTED A $3-MILLION INCREASE OVER LAST YEAR. NEW YORK // Buffalo-based M&T Bank Corporation's Q1 results reveal year-over-year increases in total revenue, as well as an increase in mortgage revenue. The bank also reported an increase in provision for credit losses, from $49 million in Q1 2016 to $55 million in Q1 2017. At the end of Q1 2017, M&T Bank reported a mortgage bank - ing revenue of $85 million, a $3 million increase from Q1 2016, but a decrease from Q 4 2016's $98 million. The bank's real estate and other foreclosed assets dropped from $188 million to $119 million year-over-year and $139 million for the quarter. Total nonperforming assets equaled $1.05 billion, down from Q1 2016's $1.07 billion and Q 4 2016's $1.06 billion. Noninterest expenses, includ - ing those from mortgage banking, totaled $788 million—up from last year's $776 million and Q 4 2016's $769 million. Total income from noninterest departments, such as mortgage banking, totaled $447 million—an increase from Q1 2016, but a drop from Q 4 2016. "M&T's financial performance for the first quarter was strong, led by a 26 basis point widening of the net interest margin that resulted in growth in taxable- equivalent net interest income of four percent as compared with the preceding quarter," said Darren J. King, EVP and CFO at M&T Bank. "Expenses continued to be well-controlled, recognizing the seasonally higher costs tradi - tionally seen in the first quarter for stock-based compensation and employee benefits, and credit quality factors remained stable. In accordance with our capital plan, M&T repurchased $532 million of its common stock and increased the common stock dividend from $0.70 to $0.75 during the quarter." M&T reported that the adop - tion of new accounting guidance for share-based transactions re- sulted in an $18 million reduction in income tax expense for Q1 2017. Then new guidance requires that all excess tax benefits and tax deficiencies associated with share-based compensation be rec - ognized as income tax expense or benefit in the income statement. Bank of America Posts Solid Q1 Gains EXPANDED LOANS AND GAINS IN NET INTEREST AND NONINTEREST INCOME DRIVE THE BANK TOWARD 40 PERCENT INCREASE. NORTH CAROLINA // Bank of America reported $4.9 billion in net income in Q1, a 40-percent increase in net revenue that was driven by expanded consumer loans and gains in both net in - terest and noninterest income. Earnings per share also increased by 46 percent, up to $.041. Net interest income increased 5 percent to $11.1 billion, "reflect- ing benefits from higher interest rates, as well as growth in loans and deposits," the report stated. Noninterest income increased nine percent to $11.2 billion, driven by higher sales and trading results and record Q1 investment bank - ing fees. Consumer banking was a major boost to the bank's Q1 earnings. Loans were up $18 bil - lion, while deposits were up $64 billion. Brokerage assets increased 21 percent, and total credit/debit card spending was up 5 percent. Q1 included $1.4 billion in annual retirement-eligible incentive costs and seasonally elevated payroll tax compared to $1.2 billion in Q1 of 2016. Average loan balances in busi - ness segments rose $44 billion (6 percent) to $819 billion. Total average deposit balances increased by five percent to $1.26 trillion. Nonperforming loans decreased $433 billion from Q 4, driven pri - marily by consumer NPL sales. One of the few decreases in Q1 compared to a year ago was in total mortgage production. The bank saw total mortgage produc - tion of $15.5 billion in Q1 down about $900 million compared to last year. Average loans and leases were down 20 percent overall. Residential mortgages comprised $69 billion in Q1, down from $87 billion a year ago. The bank reported record rev - enue of $5 billion in global bank- ing in the quarter. Global banking loans increased $11 billion. In global wealth management, total client balances increased $119 billion to nearly $2.6 trillion, and loans were up $9 billion. All in all, this helped Bank of America end the first quarter with a 7-percent revenue rise to $22.2 billion. At the same time, despite "higher revenue-related compensation expenses," total expense was flat at $14.8 billion, the report stated. Q1 included $1.4 billion in annual retirement-eligi - ble incentive costs and seasonally elevated payroll tax, compared to $1.2 billion a year ago. Provision for credit losses de - clined 16 percent to $835 million.

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