Try saying PSDS without sounding like you're from Boston saying "pierced ears". And 3,100 miles away, in California, the latest report echoes what Realtors & lenders have known for quite some time: the California market is on fire. (No drought puns, please.)

How would you like to be a lender and actually have to pay borrowers money to have them borrow it from you? No, this isn't an alternative universe - it is happening in Europe.

Here in the U.S. we've had plenty of banks release their earnings, and with them mortgage results so let's see what the big boys are up to! In addition we have the usual spate of M&A of smaller institutions including mortgage banks...

But first, First Tennessee Bank, the regional bank for First Horizon National Corp, said it would pay $212.5 million to settle claims of mortgage lending violations related to the business the company sold in 2008.

U.S. Bancorp posted profit that matched analysts' estimates on gains in mortgage-banking revenue. First-quarter net income rose 2.4 percent to $1.43 billion, or 76 cents a share, from $1.4 billion, or 73 cents, a year earlier. Originations of $10.9B were up 4% from the $10.4B reported in 4Q, while applications were up 37% to $18.6B. Due to higher application volume (and presumably higher lock volume), USB reported a 38% sequential increase in gain on sale revenue and origination fees while gain on sale margins expanded 1 bps to 92 bps when measured on application volume. Despite the strong originations results, overall mortgage banking income of $240mm came in below expectations due to the company posting hedging losses related to its MSR during the quarter.

If you want to skip the interesting numbers, most viewed JPM and WFC's mortgage banking results as roughly in line with expectations. WFC reported an increase in its gain-on-sale (GOS) margin to 2.06% from 1.80%, while JPM's GOS margin was about flat at 0.83% from 0.84% Q/Q. Wells Fargo showed an 11.4% Q/Q increase in volume to $49.0 billion and a 40.9% Q/Q increase in applications, and JPM reported a 7.4% increase in volume but no longer breaks out applications. And Bank of America reported that mortgage originations increased 18% QOQ and 54% on a YOY basis. Between JPM, BAC, and WFC, it looks like the mortgage business is improving quite a bit. Certainly I have seen that numerous mortgage banks that I work with.

Wells Fargo reported net income of $5.8B (-2% YOY). YOY info included mortgage banking fees (+2%). Wells reported that originations increased to $49 billion in Q1 versus $44 billion in Q4. Margins expanded, with gain on sale margins increasing from 1.80% to 2.06%. Wells Fargo & Co., the most valuable U.S. bank, said low interest rates pushed first-quarter lending margins below 3 percent for the first time since the 1990s.

JPMorgan reported net income was $5.9B (+12% YOY). Noninterest revenue drivers that jumped the most included mortgage fees (+37%). J.P. Morgan reported first quarter originations were up 7% QOQ and up 45% YOY. MSR valuations got hit - its MSR book is valued at 2.53x versus 2.8x at the end of the year and 2.86x last year. Mortgage banking saw higher volume, margin flat. JPM reported mortgage banking revenue of $705mm, down 18% from 4Q. Originations of $24.7B were up 7.4% from 4Q and were up 45% from the year-ago quarter. JPM stopped reporting mortgage applications. The mix of retail originations remained at 33% from 4Q. JPM marked down the fair value of their MSR to 91 bps from 98 bps in 4Q and from 107 bps in 3Q.

At Wells mortgage banking revenue rose 2.5 percent from a year earlier to $1.55 billion on originations of $49 billion, the most since the fourth quarter of 2013. An additional $44 billion in mortgages were in the process of being completed when the quarter ended, according to the statement. On the commercial side CEO John Stumpf has taken action to add loans, including purchasing portfolios from competitors. Last week, the bank agreed to buy performing mortgages on commercial real estate valued at $9 billion in the U.S., U.K. and Canada from General Electric Co. as that firm decided to largely exit the business.

To keep things in context the industry originated $288 billion in home loans in the first quarter, 17 percent more than the first three months of 2014, according to a March 20 forecast from the Mortgage Bankers Association. Fifty-two percent of those replaced existing loans, the group estimates.

Kevin Barker with Compass Point reports that, "The first quarter is setting up to be one of the better quarters for mortgage production as originations, applications and gain on sale margins are expected to be higher from last quarter. Wells Fargo reported an 11% increase in origination volume, JPMorgan reported a 7% increase compared to industry expectations for a 6% increase. Application volume was also significantly higher at WFC, up 41% to $93B while JPM stopped disclosing application volume. JPM reported flat gain on sale margins QoQ while WFC reported a 14% increase, compared to our expectations for 10-15% increase across the industry. The large increases in volume and margin bode well for the rest of the industry with some minor offsets from MSR markdowns for those un-hedged servicers. Considering the pickup in volume and resilient margins we expect in the seasonally strong 2Q, we believe mortgage originators are well positioned to report strong results in the first half of 2015."

Mergers, acquisitions, and divestitures in the mortgage & banking channels continued, and will continue throughout the rest of the year... Yet SNL Financial reports whole bank and thrift M&A announcements declined nearly 28% in Q1 vs. Q4 (66 vs. 91) and that the average price paid compared to tangible book was 1.503x (a 6 year high).

"Roseville California based Pinnacle Capital Mortgage Corporation is pleased to confirm that it has entered into a definitive agreement, subject to customary regulatory approvals, to be acquired by Finance of America Holdings LLC, a Blackstone Company."

First Financial Bankshares, Inc. (NASDAQ: FFIN, $5.8 billion) announced that its wholly owned subsidiary, First Financial Bank, N.A., has entered into an asset purchase agreement with 4Trust Mortgage, Inc. for $1.9 million in cash. The acquisition is expected to be finalized by May 2015. 4Trust is a residential mortgage loan origination company that has been serving customers in the Dallas/Ft. Worth area for 15 years and last year originated approximately $175 million in residential mortgage loans.

On the depository bank side in MA Adams Community Bank ($395mm) will acquire The Lenox National Bank ($66mm, MA) for $14.3mm in cash or about 1.71x tangible book. In the Land of Lincoln Community State Bank ($156mm, IL) will acquire Franklin Bank ($43mm, IL). In the Home of Country Music Pinnacle Bank ($6.0B, TN) will acquire CapitalMark Bank & Trust ($930mm, TN) for $187mm in cash and stock. Sneaking across the border, the Andover Bank ($347mm, OH) will acquire Community National Bank of Northwestern Pennsylvania ($77mm, PA) for $19mm in cash. In the cheese state AnchorBank, fsb ($2.1B, WI) will sell 1 WI branch to Premier Community Bank ($266mm, WI), and AnchorBank, fsb said it has offered voluntary buyouts to 19.4% of its employees and will close 6 branches as it moves to improve efficiency.

GE said it will sell or spin off $500B GE Capital (7th largest US bank) and exit the banking business over the next 2 years as it restructures to avoid high regulatory costs and burdens and investor worries (about stock price volatility due to the business). It also announced it has agreed to sell $26.5B in real estate to Blackstone and Wells Fargo. Finally, it also plans to do a $50B stock buyback and will take a $16B charge related to the divestiture.

We're having another quiet week in the bond market - helpful to those focused on closing loans rather than reacting to volatility. Yesterday we had some news, the most important arguably being the Fed's Beige Book  which observed there were layoffs in "multiple" regions of the U.S. resulting from lower energy prices, the economy expanded at a modest to moderate pace from mid-Feb through March, and there is modest upward pressure on wages and prices.

Of interest to lenders was that the National Association of Home Builders' confidence rose to a reading of "56" in April. A reading above 50 means most builders generally hold a favorable view of the market for newly built single-family homes. This uptick shows builders are feeling optimistic that the housing market will continue to strengthen throughout 2015. But Industrial Production fell 0.6% in March - the largest drop since August 2012 and was worse than economists' expectations. Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4%.

Today I head to Sacramento to speak to its CAMP organization, but not before news hit the proverbial tape. Initial Jobless Claims for the week ending 4/11 came in +12k to 294k. We had March Housing Starts and Building Permits, +2.0% and -5.7% respectively - less strong than expected. Later we will have the April Philadelphia Fed. In the early going the market is roughly the same as yesterday: the 10-year closed Wednesday at 1.90% at is at 1.88% with agency MBS prices unchanged.

I was puzzled when I received an e-mail from my dog Sweetie yesterday. But when I opened it, the intent became obvious.

Jobs and Announcements

Are you a retail mortgage branch or loan officer looking to join a successful bank with a strong product offering, with competitive pricing and significant income potential? Nationally chartered MB Financial Bank currently has opportunities in 45 states for Retail Branch Managers and Loan Officers. Contact Mark Mazzenga, Mortgage SVP and National Sales Manager, "to see how you could become a part of MB. The MB strategic advantage has always been our people. Our leadership team has extensive retail branch experience, and is dedicated to growing and nurturing MB's retail presence nationwide. MB Financial Inc. is the Chicago-based holding company for MB Financial Bank, N.A., which has approximately $16 billion in assets and a 110-year history of building deep and lasting relationships with middle-market companies and individuals. We are proud to be an Equal Employment Opportunity/Affirmative Action employee (Minority/Female/Disabled/Veterans). Equal Housing Lender and Member FDIC. NMLS#401467.

Recently voted and named a Best Place to Work, Guardian Mortgage Company welcomes new team members to its Correspondent Lending Division. Both having more than 25 years of experience in the mortgage industry, Audra Wagner and Janet Ryan have recently joined the Correspondent team as Account Executives, managing and maintaining client relationships as well as prospecting and obtaining client approvals for residential mortgage loan purchases. The Guardian Correspondent Lending Division supports mortgage bankers throughout the Southwest. With more than 22,000 current satisfied customers and over $2.5 billion in its servicing portfolio, Guardian offers a number of important advantages to mortgage bankers wanting a positive experience in every aspect of the home mortgage financing process. Guardian Mortgage is rapidly growing and looking for additional colleagues in multiple departments. If interested, contact Joe Collins for more information. (Guardian was nominated and voted as the 2014 Best Places to work in the medium size company category by the readers and subscribers of ADDISON - The Magazine of the North Dallas Corridor.)

Stonegate Mortgage is hosting a job fair at its Dallas, TX location on Wednesday, April 22nd from 3:30 - 7:00PM CST. Stonegate is actively seeking numerous positions for their new Direct to Consumer divisions in both sales and operations and TPO Operations. The job fair will provide two informational sessions throughout the event. Founded in 2005, Stonegate Mortgage is a leading, publicly-traded mortgage company that originates, finances and services agency and non-agency residential mortgages through its network of retail offices and approved third party originators. Why join the Stonegate Team? Associates enjoy flexible schedules, comprehensive benefits, paid training, paid licensure, great compensation plans, unique loan programs for today's market, supplied daily leads, and are provided marketing to drive repeat/referral business. Applicants are encouraged to learn more about current career offerings by clicking here.

Congrats to Carrington Capital Management, LLC (CCM), an alternative asset management firm focused on investing in the US real estate, mortgage and fixed income markets. It announced that it has been advised by the staff of the Securities and Exchange Commission (the "SEC") that the investigation by the SEC has been completed and, based on the information it has at this time, the staff does not intend to recommend any enforcement action by the SEC.

And congrats to SoFi which continues to expand its mortgage operation, announcing that it expanded its mobile mortgage offerings to Virginia, Washington, and Maryland.