SunTrust Banks in Atlanta increased reserves for downgraded energy loans in the first quarter, but it was still able to produce solid revenue and earnings growth.
The provision nearly doubled to $101 million because of increased reserves for energy loans and loan growth.
Net income at the $194 billion-asset company rose 5% from a year earlier to $430 million. Total revenue rose 5% to $2.1 billion.
Net interest income after the loan-loss provision rose 9% to $1.2 billion, with SunTrust citing an increase in average earning asset balances. The net interest margin improved 7 basis points to 3.04%. Loans rose 6% to $140 billion.
Noninterest income fell 4% to $781 million. Lower income from mortgage production offset an increase in mortgage servicing income. SunTrust also attributed the decline to lower fees from wealth management, and an unfavorable comparison with last year's record of gains on asset dispositions.
Income from SunTrust Robinson Humphrey, the company's investment banking arm, rose 1% to $98 million.
Noninterest expense rose 3% to $1.3 billion. SunTrust increased spending on marketing and customer development by 63% to $44 million. The overall increase in expenses was also attributed to a poor comparison with last year, when SunTrust had a boost from the recovery of previously recorded mortgage-related losses. The efficiency ratio improved 142 basis points to 62.81%.