Three of the nation's top banking companies reported third-quarter profits Tuesday that were helped by substantial gains in lending.

Atlanta-based SunTrust Banks Inc. earned $321 million, up 16%. At BB&T Corp. in Winston-Salem, N.C., profits rose 4%, to $141 million.

Two large mergers dented net income at Firstar Corp. of Milwaukee, but the company still posted a nearly 7% jump in consumer loans compared with the second quarter.

"This is the quarter of the loan," said Lori Appelbaum, a bank analyst at Goldman Sachs & Co. "Companies had good loan growth, and credit quality remains excellent."

She and other analysts said earnings were starting to show the effects of higher interest rates. "All banks are seeing moderating trends in mortgage, trading, and trust income. At Firstar, the trends are weaker than at the others, because it's dragged down by (its acquisition of) Mercantile Bancorp.," Ms. Appelbaum said.

Earnings per share of $1.01 at the nation's ninth-largest banking company beat analysts' expectations by a penny.

Net interest income at $93 billion-asset SunTrust increased 10% to $805.4 million, as average loans rose 8% to $65.1 billion.

"I think a combination of low expenses and high credit quality enabled them to exceed the Street's expectations," said Katrina Blecher, a bank analyst at Brown Brothers Harriman & Co. Non-interest expenses fell 5.5% in the third quarter, to $692.3 million, as personnel costs dropped 3.7% to $409.1 million.

However, SunTrust's net interest margin narrowed to 3.87% from 3.89% in the third quarter last year.

"They were able to offset slight margin-compression with continued strong loan-growth," said Carla D'Arista, a bank analyst at Friedman, Billings, Ramsey in Arlington, Va. "It was a superb quarter."

Loan chargeoffs dipped 5.1% to $40.8 million in the third quarter. "Their improvement in credit quality was a surprise," said Ms. Blecher of Brown Brothers.

The one black spot for SunTrust was a 2.9% drop in non-interest income, to $446.6 million, with the mortgage and trading sectors leading the decline.

SunTrust shares closed at $67.625 Tuesday, down $2.1875.

Net interest income increased 12.3% to $387.1 million at the $42 billion-asset company.

Earnings per share of 50 cents met analysts' estimates.

"It was a solid quarter," said Jacqueline Reeves, a bank analyst at Putnam, Lovell, de Guardiola & Thornton Inc. "They have a wonderful sales culture."

Total loans and leases increased 9.8%, to $27.36 billion. "They had strong loan growth," Ms. Reeves said.

Non-interest income soared 29.8% to $187.5 million. "Their insurance revenue was particularly good," she added.

BB&T Insurance Services, the 12th-largest independent insurance agency in the country, purchased five agencies during the quarter.

The country's 22d-largest banking company also consummated three bank acquisitions in the period.

"Their merger integration is going quite well," said Ms. Appelbaum, the Goldman Sachs analyst. "And the company will continue to look for new merger opportunities within its existing southeastern footprint." BB&T has offices in the Carolinas, Georgia, Virginia, West Virginia, Kentucky, Maryland, and Washington.

BB&T shares slipped 50 cents to $32.75.

Firstar earned $28 million in the third quarter, down from $193 million in the same period last year.

Excluding the $292 million in after-tax merger charges -- related to its deals with Mercantile Bancorp. and Star Banc Corp. -- Firstar said it earned $320 million in the third quarter, which translated into 32 cents per share. That figure beat analysts' consensus estimates by one cent.

The company said $178 million of the merger charges were due to a restructuring of Mercantile's balance sheet. Firstar, which completed its merger with Mercantile on Sept. 20, said it sold off mortgage-backed, government, and other securities that did not fit with the newly enlarged banking company's investment strategies.

Analysts said the restructuring charges were a bit larger than expected, but they also said they were not surprised that Firstar took decisive steps to clean out the portfolio.

"They run a very lean balance sheet, while Mercantile was on the other side of the spectrum, with a bloated balance sheet," said Joseph Duwan, of Keefe, Bruyette & Woods. "This is totally in line with how they run their business."

However, the mergers are already starting to pay off, analysts added.

"It was a strong quarter for them," said Michael Ancell, an analyst with Edward Jones in St. Louis. "The core loan-growth in their retail segment was very good, and expense control was excellent."

Before merger-related charges, noninterest expense totaled $478 million, a 12% decline from the year-earlier quarter. Reductions in staff expenses contributed to the decline, Firstar said.

The $71 billion-asset banking company, the nation's 23d-largest, also said it expects to exceed the $169 million of expense savings expected from the Mercantile acquisition.

In addition, the company said it expects to see revenue enhancements stemming from the deal. None were predicted when the acquisition was announced in May.

Separately Tuesday, Firstar approved a repurchase program of 17 million shares to be completed over the next two years.

At the close of Tuesday's trading, Firstar shares were down 12.5 cents to $26.6875.

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