Key facts
- Bank of America's Q3 home loan production fell 12% to $9.8 billion.
- JPMorgan Chase originated $16 billion in Q3, down 7%; Wells Fargo originated $7.8 billion, down 13%.
- Bank of America faced over $1.96 billion in regulatory penalties for AML and sanctions violations.
- Excluding penalties, Bank of America's net income would have been $8.1 billion.
- Industry estimates projected an 8.5% drop in mortgage volumes, according to KBW analysts.
Bank of America's home loan production decreased by 12% in the third quarter to $9.8 billion, a trend attributed to rising mortgage rates and increased regulatory costs impacting large banks' lending businesses. JPMorgan Chase led the market with $16 billion in originations, despite a 7% decline, while Wells Fargo saw a 13% drop to $7.8 billion.
The bank's earnings were significantly affected by over $1.96 billion in penalties from the Department of the Treasury and the Office of the Comptroller of the Currency, stemming from violations of anti-money laundering and sanctions laws. Bank of America reported a net income of $6.9 billion, down from $8.3 billion in the same period last year, though excluding the settlement charges, net income would have been $8.1 billion.
Within the mortgage segment, first-lien originations at Bank of America were $6.8 billion, compared to $8.2 billion in the previous quarter. Home equity lending saw a slight increase to $2.9 billion. Analysts from Keefe, Bruyette & Woods noted that the decline in mortgage volumes at depositories was largely in line with industry estimates, which projected an 8.5% drop from the Mortgage Bankers Association and a 7% decline from Fannie Mae.