The top executive of Georgia’s biggest bank said Friday that the housing market continues to show promising signs, as the institution posted higher profits and noted increases in home purchase loans and refinancing across its markets.
Housing is a critical part of the economy and a sector that contributed to the depths of the recession. It’s also been a factor in the disjointed recovery of prolonged high unemployment and deeper home value declines in Georgia than in many other states..
SunTrust Chairman and Chief Executive William Rogers Jr. told analysts that metro Atlanta and Georgia are improving after being laggards in the housing recovery.
“Pockets are better than others, but the rest of the state is okay,” Rogers said.
Mortgage, home equity and real estate development loans have been stumbling blocks for Atlanta-based SunTrust and many lenders since the economic collapse. But recent quarters have brought surges in mortgage activity across the industry.
SunTrust said mortgage production income in the final quarter of 2012 was $241 million, vs. a loss of $62 million a year ago.
SunTrust’s net income to common shareholders was $350 million, or 65 cents per share, compared to $71 million or 13 cents per share in fourth quarter 2011. Revenue rose 12 percent. Fee and other non-interest income gained 40 percent compared to fourth quarter 2011, thanks largely to the mortgage business and investment banking.
Consumers are taking advantage of low interest rates, FIG Partners bank analyst Chris Marinac said. But SunTrust still has work to do to improve its loan portfolio.
The bank’s participation in a settlement of federal complaints about allegedly abusive foreclosure practices from 2009 and 2010 barely put a dent in the company’s bottom line.
SunTrust recently was part of a group of 13 banks that settled federal complaints about abusive foreclosure practices. SunTrust said the total cash amount of its portion of the settlement is $63 million, plus about $100 million in commitments for loan relief to troubled borrowers.
About half of the cash amount was taken as a charge against fourth quarter earnings.
Non-performing assets, including loans no longer earning interest, were $1.9 billion at the end of 2012, down 45 percent from a year earlier.
For the full year, SunTrust said it earned $1.96 billion, or more than triple its 2011 income. Of that, $753 million came from a third quarter sale of Coca-Cola stock. Excluding securities gains, revenue was up 2 percent.
