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NEW YORK (
SunTrust Banks(STI - Get Report) late on Thursday announced multiple mortgage settlements, penalties and accounting adjustments that totaled over $1 billion and promised to wipe out half the company's third-quarter earnings.
The Atlanta lender said the various settlements and other items would "have a negative after-tax impact of $179 million, or $0.33 per share, on the company's third-quarter earnings results." Before the announcement, the consensus among analysts polled by
Thomson Reuters was for SunTrust to report third-quarter net income of $372 million, or 68 cents a share.
KBW Bank Index(I:BKX) has risen 19% this year, following a 30% return during 2012.
SunTrust announced the following items on a pre-tax basis, not all of which will be reflected in the company's third-quarter results:
A settlement of mortgage repurchase claims with Freddie Mac(FNCC), resulting in a cash payment by SunTrust of $40 million.
A mortgage putback settlement with Fannie Mae(FNMA) for $373 million, which after adjusting for $145 million in credits to SunTrust for prior loan repurchases resulted in a cash payment by the bank of $228 million.
An agreement to settle claims on SunTrust loans insured by the Federal Housing Administration and also to settle civil claims against the bank under the national mortgage settlement, resulting in a commitment to $500 million in "consumer relief" and a $468 million cash payment.
A settlement with the Federal Reserve, also under the national mortgage settlement, resulting in a fine of $160 million.
SunTrust on Thursday announced two other major extraordinary items, including a $96 million charge related to the sale of servicing rights on roughly $1 billion in mortgage loans, and an after-tax benefit of $113 million, following a "taxable reorganization of certain subsidiaries during the third quarter."
Despite the total regulatory tab of $1.396 billion, SunTrust said its third-quarter pretax operating profits would be reduced by $323 million from all the above items together, and that "The Company does not expect the consumer relief efforts or implementation of certain servicing standards associated with the agreements to have a material impact on its future financial results."
SunTrust will announce its third-quarter results on Oct. 18.
The company's shares were down 0.7% in aftermarket trading, to $33.35.
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