Quarterly mortgage banking activity burned brighter for SunTrust Banks Inc., with stronger home loan production and a bigger servicing portfolio than the prior period. Mortgage earnings, however, dulled, and production may have hit its upward peak.
Second-quarter earnings data revealed SunTrust originated $6.491 billion in new loans during the period.
Home loan fundings beat out the $5.109 originated in the first quarter and brought the first-half production total to $11.600 billion.
As well, recent lending activity fared much better than the $4.084 billion originated in the same time frame a year prior.
Home loan originations, however, could slow in the subsequent quarter due to applications reaching just $8.8, a $1 billion deficit from the previous quarter.
“Applications declined 10 percent sequentially, entirely driven by lower refinance activity given the increase in interest rates in the second quarter, partially offset by strong growth in repurchase applications,” the lender’s earnings announcement stated.
Second-quarter 2015 refinance share slipped to 47 percent from 60 percent in the prior three-month period.
Correspondent acquisitions accounted for 52 percent of the second-quarter production total, and the remaining 48 percent came from retail originators.
At the end of June, the loan servicing portfolio came to $145.491 billion. This amount included $118.394 billion in loans serviced for third-parties.
The total servicing portfolio fattened from $141.760 billion as of March 31 and $134.420 billion as of June 30 a year prior.
SunTrust attributed the growth to “continued portfolio acquisitions.”
The investment portfolio also grew, rising from to $38.335 billion from $38.028 billion three months prior and $39.353 billion at the same point in 2014.
Back to second-quarter 2015 end-cap, residential assets on the current balance sheet included $24.038 billion in non-guaranteed home loans, $13.672 billion in home-equity loans and $0.625 billion in government-guaranteed loans.
The 0.38 percent delinquency of between 30 and 89 days on non-guaranteed mortgage investment loans was a two basis points improvement over the prior reporting period. The year-over-year comparison revealed current rate bettered by eight BPS.
On home equity products, delinquency dropped four BPS to 0.56 percent. HEL delinquency also improved from the rate calculated as of June 30, 2014, by 16 BPS.
Altogether, residential construction assets came to $0.401 billion at the end of June.
The balance sheet also showed $7.588 billion in commercial real estate assets, which included commercial mortgages at $6.058 billion and construction loans at $1.530 billion.
The Richmond, Virginia-based financial institution reported its current CRE loan portfolio dipped from the $7.873 billion documented at the tail end of the prior quarter. The recent total, however, grew from the $7.201 billion documented at the endpoint of the second-quarter 2014.
At the end of June, delinquency on commercial mortgages was at 0.04 percent, a decrease from 0.05 percent as of three months earlier and 0.07 percent as of June 30 a year prior.
Surprisingly, the improvement in home loan originations, growth in residential servicing and reduction in delinquency failed to reflect in quarter-over-quarter mortgage business earnings. In total, SunTrust’s mortgage banking activities brought in $106 million, a $20 million sky fall from the first quarter. But earnings were $9 million more than income reported at the June-ended quarter in 2014.
Production earnings at $76 million and servicing income at $30 million comprised the latest mortgage income total.
SunTrust attributed lower-quarterly mortgage income to “a decline in interest rate lock volume and gain-on-sale margins,” reflected in production revenue and “higher servicing asset decay, resulting from increased prepayments, and lower net hedge gains,” reflected in servicing earnings.
Still, at the holding-company level, the bank’s income before provision for income taxes came to $687 million — a $65 million boost from the prior three months and a $111 million spike from the second quarter a year previous.
At the end of the second-quarter earnings period, SunTrust accounted for 24,237 full-time equivalent employees. Headcount backed down from the 24,466 reported at the end of March and the 25,841 totaled at the same point in June 2014.
Full-service banking offices numbered 1,430 locations, 14 fewer than counted at the March 31 inventory.
