Holding the lid on expenses and managing capital to advantage boosted third-quarter earnings at two large regional banks: Atlanta-based SunTrust and First Bank System of Minneapolis.

SunTrust, with $43.4 billion in assets, reported net income Tuesday of $143.7 million, up nearly 9% from a year earlier. First Bank System, with $33 billion in assets, was up 22% to $145.7 million.

Two extraordinary items partially accounted for First Bank's showing: a $31 million gain from the sale of 64 branches, and a $10 million rebate from a cut in premiums by the Federal Deposit Insurance Corp.

Fee income was up at First Bank, which turned in an 8.9% improvement in noninterest income, excluding the gain from the branch sale.

"The good part of the story is the credit card business," said Sally Pope Davis, a banking analyst with Goldman Sachs & Co. "Card fees are up 27% year over year."

Both banks also benefited from share-repurchase programs. Thomas Brown of Donaldson, Lufkin & Jenrette said First Bank had an expense to revenue ratio, excluding non-recurring charges, of 51.3% compared with 62% for the industry. "Part of that came from the cut in FDIC premiums," he acknowledged, "but the rest is good expense management. They are doing more with less."

SunTrust also reaped the rewards of a cut in the FDIC premium, garnering a $17 million refund. But the real gains came from the bank's stock buyback. "They've bought back shares and kept a higher (loan loss) provision," said Dean Witter Reynolds analyst Anthony Davis. "Earnings per share is up 12%-14% because of the share repurchase," he said.

Credit quality remains very high at SunTrust, where nonperforming assets declined for the 16th consecutive quarter. However, loan growth was disappointing at both banks, analysts said. SunTrust's net interest margin was down 16 basis points from the year-ago period. First Bank's net interest income was down 1.8%.

Still, Mr. Brown said that it was unlikely other banks would make as strong a showing in the third quarter as First Bank and SunTrust. "I think they are atypical of what we're going to see over the next two weeks because other banks aren't as good at expense and capital management," he said. +++

SunTrust Banks Inc. Atlanta Dollar amounts in millions (except per share) Third Quarter 3Q95 3Q94 Net income $143.7 $131.9 Per share 1.26 1.11 ROA 1.38% 1.33% ROE 18.43% 17.49% Net interest margin 4.47% 4.63% Net interest income 430.1 421.7 Noninterest income 182.6 173.1 Noninterest expense 363.1 349.0 Loss provision 29.1 34.8 Net chargeoffs 13.9 10.8 Year to Date 1995 1994 Net income $420.6 $390.4 Per share 3.66 3.24 ROA 1.36% 1.33% ROE 18.48% 17.64% Net interest margin 4.50% 4.64% Net interest income 1,282.2 1,244.2 Noninterest income 533.7 530.9 Noninterest expense 1,070.9 1,046.4 Loss provision 80.8 102.6 Net chargeoffs 37.4 37.9 Balance Sheet 9/30/95 9/30/94 Assets $43,357 $41,627 Deposits 31,316 32,569 Loans 30,001 27,367 Reserve/nonp.loans 391% 299% Nonperf. loans/loans 0.59% 0.77% Nonperf. assets/assets 0.56% 0.77% Nonperf. assets/loans

+ OREO 0.81% 1.17% Leverage cap. ratio NA 6.87% Tier 1 cap. ratio NA 8.38% Tier 1+2 cap. ratio NA 10.52%

*** First Bank Minneapolis Dollar amounts in millions (except per share) Third Quarter 3Q95 3Q94 Net income $145.7 $112.5 Per share 1.06 0.79 ROA 1.76% 1.41% ROE 21.2% 17.7% Net interest margin 4.85% 4.74% Net interest income 360.5 367.0 Noninterest income 216.5 170.3 Noninterest expense 311.1 312.6 Loss provision 31.0 27.0 Net chargeoffs 30.0 30.7 Year to Date 1995 1994 Net income $417.4 $340.3 Per share 2.99 2.39 ROA 1.70% 1.39% ROE 20.9% 17.3% Net interest margin 4.94% 3.88% Net interest income 1,090.3 1,064.3 Noninterest income 585.8 497.5 Noninterest expense 918.6 913.7 Loss provision 84.0 79.6 Net chargeoffs 92.0 93.2 Balance Sheet 9/30/95 9/30/94 Assets $32,958.0 $34,364.0 Deposits 21,895.0 24,299.0 Loans 25,408.0 23,882.0 Reserve/nonp. loans NA NA Nonperf. loans/loans 400% 282% Nonperf. assets/assets 281% 195% Nonperf. assets/loans + OREO 0.64% 1.00% Leverage cap. ratio 6.7% 6.7% Tier 1 cap. ratio 7.4% 8.2% Tier 1+2 cap. ratio 12.3% 12.2% ===

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