Lender SunTrust says its mortgage production income tumbled by a third, reaching $159 million in the first quarter, down from $241 million a year earlier.
The bank said the significant decline was driven by a drop in margins. Higher origination fees helped balance out the drop with the company benefiting from an 11% increase in loan production volume compared to the previous quarter.
Additionally, the reserve for mortgage repurchases dropped $119 million to $513 million as resolution activity on outstanding repurchase requests increased during the current quarter, SunTrust (STI) said.
The bank posted a net income of $340 million, or 63 cents a share, slightly down from 65 cents a share in the fourth quarter of last year.
“First quarter 2013 earnings were notably higher than last year,” said William Rogers, chairman and chief executive officer of SunTrust Banks, Inc. “Our expenses declined meaningfully, not only related to the continued abatement of cyclically high costs, but also as a direct result of our concerted efforts to improve our efficiency.”
Meanwhile, the bank’s mortgage servicing income drastically fell to $38 million from $45 million in the fourth quarter of last year due to lower servicing fees, a result of a declining mortgage servicing portfolio.
The banks provision from credit losses was cut in half, dropping $116 million in the fourth quarter to $212 million.
Overall, SunTrust’s total revenue fell to $2.1 billion, a decrease of $177 million compared to the prior quarter. The declines in revenue are partly the result of lower mortgage-related income.
