SunTrust Banks Inc. has reported net income of $726 million, or $1.56 per average common diluted share. The results include $0.14 per share the result of tax reform as well as the consolidation of SunTrust Mortgage into SunTrust Bank, which was completed in the third quarter.

Diluted earnings per share increased 5%, sequentially, and 47% year-over-year.  For the nine months ended September 30, 2018, earnings per share was $4.34, up 45% on a year-over-year basis.

" Our focus on efficiency continues to drive good results, with the year-to-date tangible efficiency ratio improving by 150 basis points.  Additionally, our commitment to investing in growth to meet more client needs is driving good loan growth which helped offset lower noninterest income," said William H. Rogers,Jr., chairman and CEO of SunTrust Banks, Inc.  "We have revenue momentum going into the fourth quarter of the year, and 2018 is on track to be the seventh consecutive year of growth in earnings per share, improved efficiency, and higher capital returns."

Some highlights from the quarter are as follows:

Mortgage Sector: Mortgage servicing income was $43 million for the current quarter, relatively stable compared to $40 million in the prior quarter, and $46 million in the third quarter of 2017. At September 30, 2018, the servicing portfolio totaled $170.5 billion, relatively stable compared to the prior quarter and a 3% increase compared to the prior year due to MSRs purchased in the first quarter of 2018 which transferred in the second quarter of 2018.

Mortgage production income for the current quarter was $40 million, compared to $43 million for the prior quarter and $61 million for the third quarter of 2017. The $21 million year-over-year decrease was due largely to lower gain on sale margins. Mortgage application volume decreased 9% sequentially and 1% compared to the third quarter of 2017. Closed loan volume decreased 2% sequentially and remained stable year-over-year.

Commercial real estate related income was $24 million for the current quarter, compared to $18 million for the prior quarter and $17 million for the third quarter of 2017. The increase compared to the prior quarter and prior year was driven primarily by higher transaction volume with the Company's agency lending business and higher tax-credit-related income within the Company's affordable housing business.

Loan Performance: Average performing loans held for investment was $145.2 billion for the current quarter, up 1% compared to the prior quarter and prior year driven primarily by increases in commercial real estate, residential mortgages, and consumer direct loans. The sequential increase was also driven by growth in the C&I portfolio. Compared to the prior year, average C&I balances declined by $645 million, driven by the sale of Premium Assignment Corporation on Dec. 1, 2017, which included $1.3 billion of C&I loan balances.

Regulations: Regulatory assessments expense was $39 million in the current quarter, stable relative to the prior quarter and down $8 million compared to the third quarter of 2017. The year-over-year decrease was driven by a reduced FDIC assessment rate resulting primarily from our improved earnings profile and higher levels of unsecured debt.

Income Statement

• Total revenue was down 1% sequentially and stable year-over-year. The sequential decrease was driven by lower noninterest income, which was partially offset by higher net interest income as a result of growth in earning assets.
• Provision for credit losses increased $29 million sequentially and decreased $59 million year-over-year. The sequential increase was driven primarily by a lesser decline in the allowance for loan and lease losses and higher net charge-offs on commercial loans, while the year-over-year decrease was driven by elevated hurricane-related reserves in the third quarter of 2017.

Balance Sheet: Average performing loans held for investment was up 1% compared to the prior quarter, driven by growth in C&I, commercial real estate, residential mortgages, and consumer direct loans.

Asset Quality: Nonperforming loans decreased $60 million from the prior quarter and represented 0.47% of period-end LHFI at September 30, 2018. The decrease was driven primarily by the return to accrual status of certain commercial credits as well as charge-offs of certain commercial loans.