Note 9 – Gains on residential mortgage banking activities, net of variable loan expenses

Gains on residential mortgage banking activities, net of variable loan expenses, reflects revenue and expense within our residential mortgage banking business directly related to loan origination and sale activity. This primarily consists of the realized gains on sales of residential loans held for sale and loan origination fee income, offset by direct costs, such as correspondent fee expenses and other direct expenses relating to these loans, which vary based on loan origination volumes. Gains on residential mortgage banking activities, net of direct variable loan expenses, also consists of unrealized gains and losses associated with the changes in fair value of the loans held for sale, the fair value of retained MSR additions, and the realized and unrealized gains and losses from derivative instruments.

The following table presents the components of gains on residential mortgage banking activities, net of variable loan expenses, recorded in the Company’s unaudited interim consolidated statements of income.


	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2018		2017		2018		2017
Realized and unrealized gains and losses of residential mortgage loans held for sale, at fair value	$	11,795	$	20,024	$	18,074	$	33,418
Creation of new mortgage servicing rights, net of payoffs		3,665		3,840		8,073		7,645
Loan origination fee income on residential mortgage loans		2,663		2,281		4,838		4,144
Correspondent fees and other direct loan expenses, including provision for loan indemnification		(7,493)		(14,895)		(9,782)		(21,871)
Unrealized gains (loss) on IRLCs and other derivatives		(868)		(265)		293		(1,841)
Total gains on residential mortgage banking activities, net of variable loan expenses	$	9,762	$	10,985	$	21,496	$	21,495