Mortgage production was up for Bank of America in Q2 despite a drop in mortgage income during the quarter as well as a substantial overall drop in profits, according to Bank of America’s second quarter 2016 earnings statement.
Net income for Bank of America in Q2 was $4.2 billion ($0.36 per share), down from $5.1 billion ($0.43 per share) in the year-ago quarter. The mortgage production portion of the consumer banking segment grew by 8 percent up to $20.6 billion during the second quarter.
Mortgage production includes first mortgage and home equity originations; the amount represents unpaid principal balance in the case of loans and the principal amount of the total line of credit in the case of home equity originations.
The noninterest income portion of consumer banking dropped over-the-year from $2.71 billion down to $2.58 billion due to lower mortgage banking income, lower service charges, and the impact of certain divestiture, according to the report. The mortgage banking income in particular took a hit in Q2, falling over-the-year from $639 million in Q2 2015 all the way down to $44 million in Q2 2016 (it was $242 million in Q1 2016).
Bank of America’s Chief Financial Officer, Paul Donofrio, said there were four items that caused the year-over-year decline in net income for the bank as well as the drop in mortgage banking income.
“First, we sold an appraisal business last year, so there was revenue in last year's second quarter that isn't in this quarter,” Donofrio said. “Second, we had some servicing sales in the second quarter of last year for a gain that we didn't have this quarter.”
What will Bank of America's earnings hold for Q3? Find out on Monday, October 17th at 8:30 A.M. EST.
Thursday, October 20—Existing-Home Sales for September 2016, NAR
The National Association of Realtors (NAR) reported a decline in the pace of existing-home sales for the second consecutive month in August, down to an annual rate of 5.33 million. The industry will see how existing-home sales fared in September when the NAR publishes the September 2016 report on Thursday, October 20.
With affordability being a concern in some markets because of price appreciation outpacing wage growth and job gains, on the surface it seems like existing-home sales are down after hitting a post-crisis peak in June.
But when compared with historical averages, things don’t look so bad for existing-home sales, according to NAR’s August 2016 EHS Over Ten Years report. The report showed that the total number of homes sold nationwide in August 2016 was higher than the 10-year August average, as was the total number of homes in all four regions.
“Comparing August of 2006 to August of 2016 fewer homes were sold in 2016 in the US and all regions, the Northeast enduring the biggest decline of 51.4 percent,” said Michael Hyman of NAR. “The U.S. had a drop of 18.9 percent while the West had the smallest drop in sales at 8.3 percent over the 10-year period.”
This week’s schedule
Monday, October 17
Bank of America Q3 earnings report
Tuesday, October 18
Goldman Sachs Q3 earnings report
Comerica Q3 earnings report
Housing Market Index for October 2016, National Association of Homebuilders, 10 a.m. EST
Wednesday, October 19
Morgan Stanley Q3 earnings report
U.S. Bancorp Q3 earnings report
Housing Starts for September 2016, HUD/Census Bureau, 8:30 a.m. EST
Thursday, October 20
BNY Mellon Q3 earnings report
Existing-Home Sales for September 2016, National Association of Realtors, 10 a.m. EST
Friday, October 21
SunTrust Q3 earnings report