Third-quarter bank earnings will feel an unwelcome jolt as mortgage volume has fallen off a cliff. Banks large and small have been preparing investors for difficult revenue comparisons by preannouncing the bad news. JPMorgan Chase CFO Marianne Lake at a conference on Sept. 9 said the bank expected its mortgage origination business to post a net operating loss for the second half of 2013.
Cardinal Financial of McLean, Va., late on Thursday announced that its third-quarter mortgage loan originations had declined by roughly 40 percent from the second quarter, and that "the marketing gain percentage for mortgages sold has decreased during the third quarter due to increasing competitive pressure related to the changing market conditions."
Cardinal also said "Expense reduction and revenue enhancement measures have been and will continue to be implemented to offset the decrease in mortgage production and the decline in the marketing gain percentage," but that the bulk of the benefit of the cost declines wouldn't be realized until the fourth quarter. The bank was downgraded by several sell-side analysts on Thursday and Friday, and its shares dropped 5 percent Friday to close at $16.76 Read more >>