This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SunTrust's Earnings Fall From Mortgage Items, Refinance Drop

  • Third-quarter EPS of 33 cents, including 33 cents in mortgage settlement and putback items.
  • Excluding charges, operating EPS of 66 cents, missing consensus estimate of 68 cents.
  • Net interest margin narrows.
  • Average commercial and industrial loans grow slightly from Q2, up 10% from year earlier.

NEW YORK ( TheStreet) -- SunTrust (STI - Get Report) on Friday reported a "messy" third quarter, as expected, from previously announced mortgage-related items.

The Atlanta lender reported third-quarter net income available to common shareholders of $179 million, or 33 cents a share, compared to $365 million, or 68 cents a share, in the second quarter, and $1.066 billion, or $1.98 cents a share, in the third quarter of 2012, when the company reported a pre-tax gain of $1.9 billion from the sale of its long-term investment in The Coca-Cola Company (KO).

The third-quarter results were lowered by 33 cents a share, from the following items that were announced on Oct. 10:
  • 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
  • A $96 million charge related to the sale of servicing rights on roughly $1 billion in mortgage loans

The above items were partially offset by an after-tax benefit of $113 million, following a "taxable reorganization of certain subsidiaries during the third quarter."

Excluding all of the items, SunTrust said its operating earnings for the third quarter came in at 66 cents a share, below the consensus estimate of 68 cents, among analysts polled by Thomson Reuters.

Third-quarter net interest income was $1.208 billion, declining from $1.211 billion the previous quarter and $1.271 billion a year earlier. The net interest margin narrowed to 3.19% in the third quarter, from 3.25% in the second quarter and 3.38% in the third quarter of 2012.

Noninterest income declined to $680 million in the third quarter from $858 million in the second quarter and $2.542 billion in the third quarter of 2012, which included the proceeds of the sale of Coke shares. The results for the most recent quarter were skewed by the myriad special items. Mortgage production income for the third quarter was a negative $10 million, reflecting the special items, but also "lower mortgage production income," which was expected in light of the decline in refinance applications brought about by the increase in long-term interest rates.

Excluding the special items, SunTrust's credit costs continued to decline. The company's third-quarter provision for credit losses was $95 million, declining from $146 million the previous quarter and $450 million a year earlier.

The company saw growth in average total loans of 1% during the third quarter, to $122.672 billion. Average total loans were down 1% from a year earlier. Average commercial and industrial loan balances were flat quarter-over-quarter, but were up 10% from a year earlier, to $54.666 billion.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
STI $43.64 0.51%
AAPL $117.93 -0.31%
FB $106.25 1.90%
GOOG $762.66 2.70%
TSLA $235.09 2.10%


Chart of I:DJI
DOW 17,818.77 +98.85 0.56%
S&P 500 2,092.28 +11.87 0.57%
NASDAQ 5,133.4270 +24.7610 0.48%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs