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SunTrust earnings drop from mortgage settlement, shares flat

  • SunTrust (STI) shares are little changed premarket after reporting a "messy" Q3, as expected, from previously announced mortgage-related items.
  • Earlier this month, STI said it would pay more than $1B to settle federal allegations of mortgage violations, as it seeks to put behind it costly legal issues stemming from the financial crisis.
  • Q3 earnings fell 82% Y/Y but STI last year posted a ~$1.9B gain related to the sale of Coca-Cola stock.
  • Non-interest expense rose 1% Y/Y to $1.74B, due in part to a $323M impact on non-interest expense coming from the mortgage settlement.
  • Net interest margin narrowed to 3.19% from 3.38% a year ago and 3.25% in Q2.
  • Provision for credit losses was $95M vs. $450M a year ago and $146M in Q2.
  • Average total loans fell 1% Y/Y but rose 1% Q/Q to $122.67B; average commercial and industrial loan balances rose 10% Y/Y but were flat Q/Q to $54.67B.
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