SunTrust Banks Inc, the seventh-largest U.S. bank, on Tuesday said it may need to write down the value of some mortgage-related assets, reducing third-quarter earnings by 20 cents per share.
That would cut about 13 percent from analysts' forecast for earnings per share of $1.49, according to Reuters Estimates. Suntrust itself has not provided a forecast for the quarter.
The bank said it may need to write down loan warehouse and trading assets to reflect current market conditions.
Liquidity in secondary markets has deteriorated this quarter as investors worry how far credit problems will spread.
Many banks are expected to write down loans and other securities, including many kinds of mortgages once thought safe, because investors won't buy them.
We are clearly not immune to the changes in asset values that have occurred in the capital markets, Chief Financial Officer Mark Chancy said at a Lehman Brothers Inc financial services conference. Mortgage deterioration and the overall environment has caused spreads to widen in other asset classes.
Chancy said Atlanta-based SunTrust has yet to realize its so-called mark-to-market losses this quarter, and that the estimated write-down covers July and August. By the end of the quarter, it will be different, he said.
Analysts on average expected SunTrust to post a $1.49 per share profit in the quarter, according to Reuters Estimates. Warehouse lines of credit are used to fund mortgages.
SunTrust shares closed up 55 cents at $76.23 on the New York Stock Exchange. They have fallen 9.7 percent this year. (Reporting by Jonathan Stempel)