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Annual Mortgage Production Surges at SunTrust

Although quarter-over-quarter mortgage originations at SunTrust Banks Inc. were off, annual volume leapt nearly 40 percent. Earnings from mortgage production were much stronger thanks to repurchase activity, but servicing income was worse.

Residential loan production during the three months ended Dec. 31 amounted to $7.995 billion, according to fourth-quarter earnings data.

Business was lower than the prior three-month period, when originations added up to $8.132 billion. During the same quarter during the prior year, SunTrust originated $6.826 billion.

Full-year mortgage production totaled $32.050 billion, jumping from the $23.067 billion originated during 2011.

Refinances accounted for 77 percent of fourth-quarter 2012 fundings, a bigger share than the 69 percent in the previous period.

Retail share of fourth-quarter production was 54 percent, while the wholesale channel accounted for 16 percent and correspondent volume represented 30 percent.

Originations are likely to be lower in the first quarter of this year based on new loan applications, which declined to $12.638 billion from $14.127 billion in the third quarter.

The mortgage servicing portfolio closed last year at $144.878 billion, falling from $149.721 billion at the end of September. The year-earlier number was $157.800 billion. The total included $113.243 billion in loans serviced for others.

The Atlanta-based bank said it completed the sale of $450 million in Ginnie Mae held-for-sale loans, an incremental sale of $175 million in Ginnie loans and the sale of $160 million in nonperforming mortgage and commercial real estate loans.

Guaranteed residential loans in the investment portfolio were reduced to $4.252 billion from $4.823 billion as of Sept. 30 and $6.672 billion as of Dec. 31, 2011.

Home loans that weren’t guaranteed accounted for $23.389 billion of total assets, a little less than the $23.925 billion owned at the end of the third quarter. The total was $23.243 billion one year prior. Delinquency of between 30 and 89 days on this portion of the investment portfolio sank to 0.82 percent from 1.05 percent and was 1.39 percent a year earlier.

Home-equity assets fell to $14.805 billion from $15.019 billion. Home-equity products were $15.765 billion at the end of 2011. Home-equity delinquency rose to 1.00 percent from 0.95 percent but retreated from 1.29 percent at the end of the previous year.

Residential construction assets slipped to $0.753 billion from the prior quarter’s $0.805 billion and the prior year’s $0.980 billion. The rate of late payments was 2.03 percent, worse than the third quarter’s 1.54 percent. Delinquency was 2.24 percent at the end of 2011.

Commercial real estate loans owned by SunTrust were trimmed to $4.127 billion from $4.493 billion three months earlier and $5.094 billion a year earlier. Past-due payments accounted for 0.26 percent of the portfolio, falling from 0.44 percent as of Sept. 30. CRE delinquency was 0.17 percent one year prior.

In addition, the bank owned $0.713 billion in commercial construction loans, cutting its holdings from $0.808 billion at the end of the prior quarter and $1.240 billion at the end of the prior year. Delinquency on these loans was 0.07 percent, up from 0.04 percent three months prior and 0.60 percent a year prior.

There were $384 million in repurchase demands received in the latest period, less than the prior quarter’s $405 million. Pending demands fell to $655 million from $690 million. Repurchase provisions increased by $12 million during the fourth quarter, tumbling from $371 million.

Mortgage production income swung to a $241 million profit from a $64 million third-quarter loss and a $62 million loss in the fourth-quarter 2011.

Mortgage servicing income fell to $45 million from $64 million and was $22 million a year earlier. The year-over-year improvement was attributed to a HARP 2.0-related mortgage servicing rights write-down recognized in the prior year.

SunTrust earned $0.4 billion before taxes from all of its businesses, sinking from the prior quarter’s $1.6 billion. But earnings improved from less than $0.1 billion in the same period during 2011.

“The sequential quarter increase was primarily related to actions recognized in the prior quarter, which included a higher provision for mortgage repurchases and losses related to the transfer to held for sale of delinquent, government guaranteed student and mortgage loans,” the report said. “The increase over the fourth quarter of 2011 was primarily due to higher mortgage-related revenue and investment banking income.”

Staffing across all business finished last year at 26,778, down from 28,000 employees as of Sept. 30 and 29,182 at the close of 2011.

As of the end of last month, 1,616 full-service banking offices were in operation, fewer than the 1,633 branches three months earlier.

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