SunTrust Banks, Georgia’s largest banking company, continues to improve its loan portfolio as the housing market picks up.
The Atlanta-based bank said its net charge-offs — bad loans it does not expect to be paid back — were down 49 percent to $179 million in the second quarter over last year. That’s the lowest they’ve been since the end of 2007.
At $1.3 billion, non-performing loans — loans that are no longer earning interest for the bank — were down 54 percent over last year.
Foreclosed real estate owned by the bank in the second quarter was 40 percent lower than a year ago. All three categories also fell from the first quarter to the second.
Rising home prices helped drive the changes.
“The improving housing markets certainly contributed as we’re benefiting from fewer delinquencies, lower loss severities and higher prices upon disposition of foreclosed assets,” SunTrust chief financial officer Aleem Gillani said in a conference call.
The bank is certainly showing signs of progress, said bank analyst Chris Marinac, managing principal at FIG Partners. Though the economy is still sluggish, SunTrust is well-positioned to continue improving, he said.
Loan growth at SunTrust is moderate, Gillani said. He also said consumer and business confidence is increasing, and the bank expects to see more commercial loan demand in the coming months.
Expenses increased at SunTrust, an uptick after decreases in the previous quarter. Profits available to common shareholders totaled $365 million in the quarter, a 35 percent increase over the $270 million SunTrust made in the second quarter of 2012.