Mortgage, Commercial Lending Boost SunTrust's Revenue in 3Q

Profit fell at SunTrust Banks in Atlanta during the third quarter because of higher costs for technology and deposit insurance premiums, as well as an unfavorable yearly comparison.

The $205 billion-asset company said Friday that net income fell 12% to $457 million from a year ago. Revenue rose 9% to $2.2 billion.

The yearly comparison was affected by SunTrust's recognition of discrete benefits in the prior-year quarter, which boosted results by 11 cents per share. Excluding that one-time gain, SunTrust's net income would have risen 2% on a yearly basis.

Net interest income after the loan-loss provision rose 3% to $1.2 billion. The provision rose threefold to $97 million on higher net chargeoffs.

Total loans held for investment rose 6% to $141.5 billion. Commercial and industrial loans, SunTrust's largest segment, rose 4% to $68 billion. SunTrust also posted higher lending for commercial construction, nonguaranteed residential mortgages, guaranteed student loans and credit cards.

Noninterest income rose 10% to $889 million. Investment banking income rose 28% to $147 million. Trading income doubled to $65 million.

SunTrust's mortgage operations also posted significant growth. Mortgage production income doubled to $118 million and mortgage servicing income rose 23% to $49 million.

Noninterest expense rose 11% to $1.4 billion on higher salaries and employee benefits, software costs and higher amortization. SunTrust's Federal Deposit Insurance Corp. premium rose 47% to $47 million. SunTrust also recorded about $30 million in discrete operating loss recoveries. The efficiency ratio worsened to 64.13% from 62.51%.

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