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Mortgage Originations, Servicing Rise at SunTrust

While home lending accelerated and servicing expanded at SunTrust Banks Inc., mortgage earnings were lower. Staffing subsided, and commercial mortgage delinquency spiked.

In the three months ended mid-year 2018, SunTrust earned $895 million before the provision for income taxes, according to its second-quarter earnings report.

The Atlanta-based bank-holding company’s results improved from one year previous, when income was $752 million, and one quarter previous, when $792 million was earned.

Mortgage earnings came to $83 million and consisted of $43 million in production income and $40 million in servicing income. The total retreated from $100 million in the second-quarter 2017 and $90 million in the first quarter of this year.

Deterioration in mortgage earnings reflected “servicing asset decay.”

Second-quarter mortgage originations were $6.259 billion — including $2.295 billion in retail lending and $3.964 billion in correspondent acquisitions. Business improved from $5.145 billion three months earlier but receded from $6.425 billion one year earlier.

Full first-half 2018 production came to $11.404 billion.

Refinance share was slashed to 19 percent from 37 percent in the first quarter.

Third-quarter mortgage production is likely to
ascend from the second quarter based on new applications, which increased to $8.3 billion in the second quarter from $7.0 billion in the first quarter.

As of mid-2018, SunTrust serviced $170.486 billion in residential loans. The servicing portfolio grew from $164.683 billion at the end of the first quarter and $165.601 billion at the midpoint of last year.

Third-party servicing most recently accounted for $140.328 billion of the total. The ratio of net carrying value of mortgage-servicing rights to the corresponding loan balance was 1.396 percent.

SunTrust owned $37.999 billion in residential assets as of June 30 including $27.556 billion in non-guaranteed mortgages, $0.525 billion in guaranteed mortgages and $9.918 billion in home-equity assets. Residential holdings were trimmed from $38.017 billion the prior quarter and $38.268 billion a year prior.

Delinquency of between 30 and 89 days on non-guaranteed mortgages fell to 0.19 percent from 0.24 percent as of March 31 and 0.21 percent as of the same date in 2017.

delinquency improved to 0.60 percent from 0.65 percent the prior quarter and 0.66 percent a year prior.

Commercial real estate assets were $9.975 billion, lower than the upwardly revised $9.259 billion as of March 31 and the upwardly revised $9.633 billion as of mid-2017. The latest CRE total was comprised of $6.302 billion in commercial mortgages and $3.673 billion in construction loans.

Commercial mortgage delinquency soared to 0.23 percent from just 0.03 percent and was only at 0.04 percent at the same point in 2017.

At the conclusion of the first half there were 23,199 full-time equivalent employees on SunTrust’s payroll. Staffing subsided by nine people from the end of March and was down 1,079 employees from the same date last year.

Last month ended with 1,222 full-service banking offices, 14 fewer than the previous quarter.

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