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» VISIT US ONLINE @ DSNEWS.COM 19 HIGHER NET INTEREST RATE INCOME DRIVES REVENUE HIKE FOR SUNTRUST; COMERICA EARNINGS DOWN SunTrust Banks, Inc., reported a net income increase of 14 percent to $467 million available to common shareholders, according to the bank's Q2 2015 earnings statement released in mid- July. e bank credits its continued execution of core strategies to its solid earnings growth and improved returns. e Q2 2015 net income for SunTrust was $0.89 per average common diluted share compared to $0.78 per share earned in the last quarter, and includes a $0.03 favorable impact by a per share from a discreet income tax benefit. According to the report, earnings per share increased $0.17 over the second quarter of 2014, which was negatively impacted by $0.09 per share. For the first half of 2015, earnings per share were $1.67. "Our performance this quarter demonstrates solid execution of our key strategies— deepening client relationships, optimizing the balance sheet, and improving efficiency," said William H. Rogers, Jr., chairman and CEO of SunTrust. "is was evidenced by higher revenue, continued deposit growth, and improved returns. In addition, our asset quality performance continues to be strong. As we look forward, we are confident in our strategies and remain intensely focused on delivering further value to our clients and shareholders." Total revenue was $2.1 billion for the current quarter, an increase of $85 million compared to the previous quarter. SunTrust noted this increase is mostly due to higher net interest income and broad-based growth in fee income. SunTrust determined mortgage production- related income for the quarter was $76 million compared to $83 million for the prior quarter and $52 million for the second quarter of 2014. Mortgage production volume increased 27 percent compared to the prior quarter, and applications declined 10 percent sequentially, entirely driven by lower refinance activity given the increase in interest rates in the second quarter. "e sequential quarter decrease was due to a decline in interest rate lock volume and gain- on-sale margins," the report said. "e increase compared to the second quarter of 2014 was driven by higher mortgage production volume and a decline in the provision for repurchases, partially offset by a decline in gain-on-sale margins. Gain-on-sale margins in the current quarter were adversely impacted by higher mortgage interest rates and an increase in loan production from the correspondent channel." Mortgage servicing income was $30 million for the current quarter, compared to $43 million in the prior quarter. Comerica reported its Q2 2015 earnings reached $135 million, or $0.73 cents per share in its earnings statement also released in mid-July. Last quarter, the bank reported a net income of $134 million and $151 million for Q2 2014. "Our second quarter results reflect the advantages of our diverse geographic footprint and industry expertise," said Ralph W. Babb, Jr., chairman and CEO for Comerica. "Average loans were up $2.1 billion, or 5 percent, compared to a year ago and were up $682 million, or 1 percent, relative to the first quarter, with increases in most markets and business lines. Relative to the first quarter, average deposits increased $408 million, or 1 percent, with noninterest-bearing deposits up $668 million." Comerica's revenue increased 2 percent compared to Q1 2015 and returned $96 million to shareholders through equity buybacks and increased dividends. "Revenue was up 2 percent, with growth in both net interest income and fee income in the second quarter. Charge-offs, nonaccruals and criticized loans remained well below normal historical levels. e provision for credit losses increased, primarily as a result of an increase in reserves for energy exposure. Noninterest expenses decreased $23 million to $436 million, primarily due to a decrease in litigation-related expense. Our balance sheet is well positioned to benefit as rates rise. We remain focused on the long-term with a relationship banking strategy that continues to serve us well," Babb said. NATIONSTAR MORTGAGE REBOUNDS FROM Q1 NET LOSS Nationstar Mortgage Holdings rebounded from a $48 million net loss in the first quarter this year to post a net income of $75 million ($0.69 per share) for the second quarter in the company's Q2 2015 earnings statement released at the end of July. e Lewisville, Texas-based residential mortgage servicer posted adjusted earnings of $35 million ($0.32 per share) for Q2, which was an increase of 59 percent from Q1. Nationstar received $52 million ($0.47 per share) of after-tax benefits resulting from the net increase in the value of mortgage servicing rights and related liabilities accounted for at fair value. e company also had $10 million ($0.10 per share) in after-tax expense related to streamlining operations (including severance). With a larger servicing portfolio, Nationstar's servicing segment produced an increase of $16 million sequentially in Q2, primarily as a result of increased incentive fees, which were due to continued strong operational performance and higher servicing fees. A favorable rate environment and focused execution resulted in adjusted pretax income of $59 million for Nationstar in Q2. Xome, the company's end-to-end real estate platform, produced top-line growth of $14 million sequentially, largely as the result of an increase in property sales, according to Nationstar. "We remain resolute in our strategy of creating long-term sustainable growth by capitalizing on market opportunities, increasing the profitability of our servicing segment, building the first fully integrated digital platform for buying or selling a home through Xome and taking advantage of the recovering economy and rising rate environment, all of which we believe will create additional value for our shareholders," said Jay Bray, CEO of Nationstar. "Our servicing segment continues to operate as the top ranked servicer in its FNMA STAR peer group and had a significantly improved operational quarter, even with elevated levels of amortization." e share of 60-plus day delinquent mortgages in Nationstar's total portfolio declined to 7.4 percent in Q2, with the company having completed 16,831 workouts during the quarter as well as the boarding of lower delinquency portfolios. Nationstar's adjusted revenues climbed by $24 million sequentially, primarily because of $15 million in higher base servicing fees, which are due to a higher average unpaid principal balance as well as an increase in incentive fees of $5 million. e company's servicing portfolio ended Q2 with a UPB of $404 billion, which was in increase of 4 percent from the previous quarter and the first time in Nationstar's history UPB was greater than $400 billion at the end of a quarter. e hike in UPB was due to the successful closing of $29 billion worth of servicing acquisitions. e company's outstanding commitments as of the end of Q2 total $28 billion.

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