Companywide, Fifth Third Bancorp has reported second quarter 2011 net income of $337 million, compared with net income of $265 million in the first quarter of 2011 and net income of $192 million in the second quarter of 2010.
"Fifth Third's second quarter results were strong and reflected continued improvement in credit trends," said Kevin T. Kabat, president and chief executive officer of Fifth Third Bancorp. "Bottom-line results were the best Fifth Third has generated since 2007 and drove strong returns—a 1.2 percent return on assets, a 14 percent return on average tangible common equity, and four percent unannualized sequential growth in tangible book value per share."
Fifth Third's mortgage banking net revenue was $162 million in the second quarter of 2011, a 58 percent rise from the first quarter of 2011, and a 42 percent increase from the second quarter of 2010. Second quarter 2011 originations stood at $3.1 billion, a decrease from $3.9 billion in the previous quarter and $3.8 billion in the second quarter of 2010. Second quarter 2011 originations resulted in gains of $64 million on mortgages sold compared with gains of $62 million during the previous quarter and $89 million during the second quarter of 2010. Gain on sale margins increased sequentially from weak first quarter levels as interest rates were generally lower this quarter.
Mortgage servicing fees came in at $58 million, compared to an identical total of $58 million in the first quarter of 2011 and $54 million in the second quarter of 2010. Mortgage banking revenue was also impacted by net servicing asset value adjustments, which include mortgage servicing rights (MSR) amortization and MSR valuation adjustments (including mark-to-market adjustments on free-standing derivatives used to economically hedge the MSR portfolio). These net servicing asset valuation adjustments were positive $40 million in the second quarter of 2011 (reflecting MSR amortization of $25 million and MSR valuation adjustments of positive $65 million); negative $18 million in the first quarter of 2011 (MSR amortization of $28 million and MSR valuation adjustments of positive $10 million); and negative $29 million in the second quarter of 2010 (MSR amortization of $25 million and negative $4 million in MSR valuation adjustments). The mortgage-servicing asset, net of the valuation reserve, was $847 million at quarter end on a servicing portfolio of $56 billion.