A two-year internal growth project fueled a 7% gain in first-quarter earnings at SunTrust Banks Inc., which reported profits Tuesday of $161.1 million.

SunTrust, with $53.7 billion in assets, beat analysts' consensus estimates by a penny, earning 74 cents on a per-share basis, compared to 66 cents in last year's period.

The Atlanta-based bank holding company credited its results to strong loan growth supported by a healthy southeastern economy, and to an increase in fee revenues.

"Strong earning asset growth and excellent growth in noninterest income characterized SunTrust's first-quarter results," said chairman and chief executive officer James B. Williams.

Annualized return on average assets dropped five percentage points to 1.33% in the quarter, while return on average realized common equity reached 20.23%, a gain of more than one percentage point from the 18.87% earned in the first quarter of 1996.

SunTrust has a history of double-digit earnings per share gains, but in the past analysts have characterized revenue growth as sluggish, and attributed earnings per share increases more to company buyback efforts than to robust internal fee generation.

The company repurchased about 4.7 million shares in the first quarter. But looking at core earnings growth, which combined a 14.6% jump in loans with double-digit increases in fees from trust, retail, corporate investment, credit cards, and mortgages, analysts said the company was starting to reap the rewards of its efforts.

"It was a solid quarter, particularly on the fee income front," said Darren R. Short of The Robinson-Humphrey Co. "The investments the company has made are starting to bear out in the numbers."

Mr. Short said that bodes well for the company going forward as expenses associated with SunTrust's growth project end. Mr. Short estimated those expenses at $17 million for the first quarter.

R. Harold Schroeder, an analyst with Keefe, Bruyette & Woods Inc., said the company has turned a corner in terms of producing noninterest income. "We're seeing true, honest revenue growth here," he said.

Fees from the trust business were particularly noteworthy, totaling $78.4 million in the quarter, up 11% from the first quarter of 1996.

As part of its growth initiative, SunTrust has started an incentive plan, which offers staffers compensation for referrals for trust and investment services.

In addition, the company launched an advertising campaign through all its franchises in January to promote its trust business.

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