Leading off reports of fourth-quarter earnings from the nation's largest bank holding companies, Atlanta-based SunTrust Banks Inc. said Thursday its profits jumped 8.6%, to $172.2 million.
The company credited improved asset quality and substantial fee-income growth for its strong showing.
Analysts said SunTrust's results, which fell in line with expectations, should serve as a bellwether for reports from other big banks.
"It's a good harbinger for the industry," said Sally Pope Davis, an analyst with Goldman Sachs. "Good fee income and continued improvement in asset quality-that will be a theme we see in other banks."
Fee income grew 19.1%, to $247 million, while nonperforming assets declined 41%, to $150.6 million. Earnings per share were up 10 cents, to 82 cents.
For the year, SunTrust earned $667.3 million, up 8.2% from 1996. Earnings per share totaled $3.13, slightly beating consensus expectations of $3.12, and up 13.4% from $2.76 in 1996.
Noninterest expense increased about 8.7% from a year earlier.
The fee-income increases came from many areas, according to SunTrust spokesman James C. Armstrong. Trust income grew 19.5% in the fourth quarter and 14.5% for the year; corporate and institutional investment income grew 33% for the quarter and 72% for the year; and mortgage fees increased 56% in the quarter and 27.5% for the year.
Though the fourth-quarter mortgage gains were fueled by refinancings tied to lower interest rates, overall the jump resulted from SunTrust's two-year emphasis on boosting specific business lines as part of a franchisewide "growth project," said Mr. Armstrong.
SunTrust also had good loan growth. Loans grew 13.9% for the quarter, to $39.2 million, and 13.4% for the year, to $40.1 billion. But analysts said that rate of growth probably won't be matched by most bank companies. Two- thirds of the loan increase came from commercial and industrial loans.
SunTrust chairman James B. Williams called 1997 "a great year," noting, among other highlights, a 45% increase in the company's stock price.
The bank's assets at yearend increased 10.5%, to $58 billion.
Another southeast regional, Centura Banks Inc. of Rocky Mount, N.C., also turned in a solid quarter.
The $7.1 billion-asset company earned $23.5 million in the fourth quarter, up 26.8% from a year earlier. Earnings per share totaled 89 cents, up from 70 cents a year earlier and 3 cents higher than consensus estimates.
For the year, net income totaled $83.1 million, up 21.9% over 1996. The 1996 results included a one-time charge for a payment to the Savings Association Insurance Fund of about $4.2 million after-tax. Diluted earnings per share were $3.15, compared with $2.60 in 1996.
Like SunTrust, Centura enjoyed solid gains from its efforts to grow fee- income businesses.
The company saw noninterest income increase 25%, to $34.1 million for the quarter, led by growing revenue in insurance, securities, and leasing services, and mortgage originations and servicing. +++
Centura Banks Inc. Rocky Mount, N.C. Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $23.5 $18.5 Per share 0.89 0.70 Year to Date 1997 1996 Net income $83.1 $68.2 Per share 3.15 2.60 Balance Sheet 12/31/97 12/31/96 Assets $7,125.4 $6,294.0 Deposits 5,365.0 4,733.0 Loans 4,587.0 4,109.5
SunTrust Banks Inc. Atlanta Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $172.2 $158.5 Per share 0.82 0.72 ROA 1.28% 1.32% ROE 21.69% 18.91% Net interest margin 4.00% 4.29% Net interest income 491.1 472.2 Noninterest income 247.4 207.0 Noninterest expense 433.9 399.1 Loss provision 32.6 34.7 Net chargeoffs 27.9 33.6 Year to Date 1997 1996 Net income $667.3 $616.6 Per share 3.13 2.76 ROA 1.30% 1.35% ROE 21.13% 18.89% Net interest margin 4.11% 4.36% Net interest income 1,931.0 1,824.3 Noninterest income 934.2 818.0 Noninterest expense 1,685.6 1,583.1 Loss provision 117.0 115.9 Net chargeoffs 91.0 90.2 Balance Sheet 12/31/97 12/31/96 Assets $57,983.0 $52,468.0 Deposits 38,198.0 36,890.0 Loans 40,136.0 35,404.0 Reserve/nonp. loans 586.9% 342.0% Nonperf. loans/loans 0.32% 0.60% Nonperf. assets/assets 0.26% 0.49% Nonperf. assets/loans + OREO 0.38% 0.72% Leverage cap. ratio NA 6.40% Tier 1 cap. ratio NA 7.46% Tier 1+2 cap. ratio NA 10.87% ===
