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Stellar Quarter at SunTrust

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Driven by impressive increases in correspondent acquisitions, retail originations and government-subsidized refinances, residential production at SunTrust Banks Inc. was up 12 percent. It appears that growth in home-loan fundings will continue based on new loan applications. Delinquency in most real estate categories was lower, and corporate earnings were substantially better.

The Atlanta-based company reported $7.673 billion in first-quarter production. Business was better than $6.826 billion in the prior quarter and $5.751 billion in the same quarter the prior year.

“Refinancing activity increased due to the HARP 2.0 program and the low mortgage interest rate environment,” according to the data.

Refinances accounted for 76 percent of the latest activity versus 73 percent in the prior period.

Retail share of first-quarter originations was 55 percent, the same as the prior period. Wholesale share fell to 17 percent from 21 percent, but correspondent share grew to 28 percent from 24 percent. Correspondent production increased to $2.165 billion from the prior quarter’s $1.635 billion.

The increasing trend is likely to carry into the current quarter based on loan applications, which surged to $16.7 billion from the prior period’s $13.0 billion.

Total mortgages serviced finished last month at $155.351 billion, shrinking from $157.800 billion. The portfolio was $164,463 as of the same point in 2011. The third-party portion of the servicing portfolio fell to $121.444 billion from $124.050 at the end of last year.

Residential mortgage assets were $30.100 billion, more than $29.915 billion at the end of last year and $27.959 billion at the same point last year. The latest numbers reflected $6.447 billion in guaranteed loans and $23.653 billion in loans that weren’t guaranteed. Delinquency of between 30 and 89 days on non-guaranteed loans improved to 1.28 percent from 1.39 percent and was 1.63 percent during the same period last year.

SunTrust also owned $15.472 billion in home-equity products, slipping from $15.765 billion the prior quarter and falling from $16.382 as of March 31, 2011. Home-equity delinquency fell 19 basis points from the fourth quarter to 1.10 percent and was 36 BPS better than a year earlier.

In addition, there were $0.924 billion in residential construction loans. The asset category was off from $0.980 billion as of the end of the fourth quarter and $1.208 billion a year prior. Construction delinquency worsened to 2.38 percent from 2.24 percent at the end of 2011 but improved from 2.94 percent a year prior.

There were $4.910 billion in commercial real estate loans on the books, retreating from $5.094 billion as of Dec. 31 and $6.043 a year prior. CRE delinquency was 0.27 percent, increasing 10 BPS but retreating from 0.33 percent in the same quarter during 2011.

Commercial construction loan holdings fell to $1.086 billion from $1.240 billion three months earlier and sank from $2.109 billion in the first-quarter 2011. Late payments in this category fell to 0.24 percent from 0.60 percent three months earlier and 0.47 percent a year earlier.

Repurchase expense eased to $113 million from the fourth quarter’s $177 million but was worse than $75 million a year earlier. There were $564 million in outstanding repurchase demands as of the first quarter, less than the $590 million outstanding at the end of last year. The balance has ballooned, however, from $363 million as of this point last year.

Mortgage banking operations had a $217 million loss before income taxes, not as bad as the $424 million fourth-quarter loss or the $270 million loss in the first quarter of last year.

A $153 million sequential-quarter increase in non-interest income “was driven by higher mortgage-related revenue, partially offset by lower revenue from investment banking, trading income, and service charges on deposits accounts,” SunTrust said.

The report indicated that company-wide net income shot up to $250 million from $74 million in the fourth quarter and was also better than $180 million in the first-quarter 2011.

Headcount finished March at 28,615 employees. The number of full-time equivalent employees fell from 29,182 at the end of last year and 29,052 as of March 31, 2011.

SunTrust operated 1,651 full-service bank offices, eight fewer than at the end of last year.

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