SunTrust reported first-quarter net income available to common shareholders of $340 million, or 63 cents a share, compared to $350 million, or 65 cents a share, in the fourth quarter, and $245 million, or 46 cents a share, in the first quarter of 2012. Please see TheStreet's earnings coverage for a detailed review of the company's financial results. A great deal of coverage for regional banks this earnings season has centered around the decline in mortgage revenue from elevated fourth-quarter levels, as refinancing volume has declined, and rising long-term market rates have led to a decline on lenders' gains on the sale of new mortgage loans, mainly to Fannie Mae ( FNMA) and Freddie Mac ( FMCC). SunTrust's mortgage production revenue in the first quarter was $159 million, declining from $241 million the previous quarter, but increasing from $63 million a year earlier. The most positive developments for SunTrust were a continued decline in credit costs, and further signs that the company has put its risk of losses on legacy mortgage repurchase demands in the rear view mirror. SunTrust's pretax income was directly boosted by a decline in the provision for credit losses to $212 million in the first quarter from $328 million in the fourth quarter and $317 million in the first quarter of 2012. The provision is the amount added to loan loss reserves each quarter, to cover anticipated losses.
Miller also sees SunTrust's relatively high percentage of revenue from fees as a long-term advantage for the bank. Fee income -- including service charges on deposit accounts, trust and investment management income, investment services, investment banking, mortgage banking and card fees -- made up 41% of first-quarter operating revenue, according to Miller. "Although fee income fell quarter over quarter in 1Q13, we expect it to rebound going forward as investment banking income rises and mortgage banking continues to provide a tailwind to earnings," he wrote.
Interested in more on SunTrust? See TheStreet Ratings' report card for this stock. -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn