SunTrust Banks (STI) officially cleared a huge balance-sheet hurdle Monday, but it is unclear whether that was its last.

The Atlanta company reported a profit of $1.07 million, or $1.98 a share, including a big gain from a series of onetime adjustments that SunTrust had flagged last month. Underneath those adjustments was some progress on lending.

Still, SunTrust missed the Bloomberg consensus earnings-per-share estimate by 4 cents, and its shares had fallen 3% in early-afternoon trading to $27.75. And there’s always the possibility that a Southeastern bank like SunTrust — which has plenty of real estate loans still on its books — could surprise investors with another special item, FIG Partners analyst Chris Marinac said.

“There could be more noise in the fourth quarter,” Marinac said.

The balance-sheet moves were the primary reason for SunTrust’s 181% increase in noninterest income in the quarter, to $2.54 billion. Higher mortgage production also helped boost noninterest income.

While margins declined, they fell within the expected range. Net interest margin fell to 3.38%, from 3.49% a year earlier and 3.39% in the second quarter. The margin will decline again in the fourth quarter by a figure in the “mid single-digit basis points,” because of reductions in asset yields, Chief Financial Officer Aleem Gillani said during a conference call with analysts.

Loan balances reached $121.8 billion, up 0.4% from a year earlier. Commercial and industrial loans — which rose 9.2%, to $52.4 billion, from a year earlier — led the way, Chief Executive Bill Rogers said during the call.

SunTrust is expecting another boost to its lending from residential mortgages, as consumer confidence rises, particularly in Florida, one of the bank’s largest markets.

“The biggest tie to housing value increase, and what it does to us, is increasing consumer confidence,” Rogers says.

The lending results are better than expected, Marinac says.

“It’s progress, it’s one foot in front of the other, putting up better numbers and returns,” Marinac says. “SunTrust has been clear that their loan pipelines are full.”

Still, many customers remain reluctant to pull the trigger on new loans, probably because of uncertainty surrounding the elections, Marinac says.

Rogers made a similar comment. “While we do have some fairly strong pipelines, it does feel like a lot of clients are being very cautious about adding new debt levels to their balance sheets and it’s a bit of a challenge out there.”

Some observers remain wary of more one-time items this quarter or early next year – perhaps the sale of nonperforming real estate loans to a hedge fund, Marinac said. Something like that would not please investors in the short term, but it would further remove problems from SunTrust’s balance sheet, Marinac said.

“Maybe they get an offer,” Marinac said. “If it’s a price that works for SunTrust, they may take it and take an incremental charge.”

The balance-sheet adjustments from September included a $1.9 billion pretax gain from the accelerated sale of 59 million shares of Coca-Cola (KO). Another 1 million Coke shares will be donated to SunTrust’s foundation, resulting in a $38 million expense. SunTrust also increased its provision in the quarter, by $371 million, for mortgage-repurchase losses on loans sold to Fannie Mae and Freddie Mac before 2009.

SunTrust had a net gain of $753 million from the special items. That padded SunTrust’s net income in the quarter by $1.40 per share.

The balance-sheet adjustments were designed to help the $173 billion-asset SunTrust improve its risk profile and get problem issues out of the way. “What they’re doing is fast-forwarding the losses,” Marinac said.

Third-quarter net interest income rose 0.6% to $1.29 billion, from a year earlier, on higher average loan balances and cheaper deposits costs. The provision for loan losses rose 30% to $450 million, on charge-offs related to the sale of nonperforming loans and a policy change on junior lien loans.

SunTrust booked $29 million in severance expenses related to its ongoing cost-cutting initiative. The $29 million rise in expenses had not been previously announced. SunTrust did not provide figures on how many jobs it cut in the quarter, related to the severance costs.

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