First-quarter earnings season got off to a solid though messy start Tuesday as three of the nation's 20 largest banking companies reported earnings that met expectations despite being muddied by merger-related charges.

SunTrust Banks Inc. beat consensus estimates by a penny per share, while Firstar Corp. and BB&T Corp. reported results that matched what Wall Street had projected. All three reported strong loan demand, though SunTrust and Firstar said fee revenues were clipped by mortgage operations that got hit by rising interest rates.

Profits at $96 billion-asset SunTrust in Atlanta rose 13.4%, to $319.4 million - $1.04 per share - on strong loan demand and lower expense growth, the company said. The figures reflect an $8.9 million charge related to the purchase of Richmond, Va.-based Crestar Financial Corp. in late 1998. Without the charge, SunTrust's operating income was $1.07 per share.

SunTrust's loan portfolio totaled $67 billion at the end of the first quarter, up 3.2% from yearend and 9.6% from the end of March 1999.

Expenses dropped 4.9%, to $704 million.

But fee income faltered during the quarter, down 1.8% from the same period last year, to $436.8 million, primarily due to a 65.1% decline in income from mortgage banking, to $18.7 million.

Nonperforming assets rose 33% from year-earlier and 13% from the end of the fourth quarter, to $311.8 million. The company's allowance for loan losses fell to 1.27% of total loans, from 1.32% at yearend and 1.55% at the end of the first quarter of last year. Analysts said the decline reflects the sale of a $1.5 billion credit card portfolio, which held riskier credits than other loans in SunTrust's portfolio.

"I don't think there is a real credit-quality issue at SunTrust," said Peyton N. Green, an analyst with Sterne, Agee & Leach in Atlanta. "Historically, they have been conservative on their balance sheet."

SunTrust shares fell 6.25 cents, to close at $53.3125.

Firstar Corp.

Firstar's profits rose 7%, to $307.8 million, or 31 cents per share.

Two large mergers figured prominently in the Milwaukee banking company's results. Firstar took a charge of $25.9 million in the quarter relating to its September 1999 acquisition of St. Louis-based Mercantile Bancorp. and a $26 million charge related to the November 1998 merger of Firstar and Cincinnati-based Star Banc Corp.

Excluding the charges, Firstar's income was 35 cents a share.

Jerry A. Grundhofer, president and chief executive officer, said in a statement that the $73 billion-asset banking company kept building revenues even as it continued to integrate systems inherited from those mergers. "While our support staff is devoted to the systems mergers, our sales staff continues to meet their goals and produce significant growth in both loans and deposits," he said.

Noninterest income rose 6.4%, to $361.2 million. Credit card income rose 22.3%, to $29.7 million, as Firstar broadened its customer base and increased merchant activity. Mortgage banking income declined 8%, to $36.3 million, as higher interest rates translated in to reduced income from the sale of mortgages and from servicing activities.

Expenses fell 2.9%, to $505.8 million.

"Revenue growth was a little slower than I expected, but they had more cost reductions than I was projecting as well," said Bradley S. Vander Ploeg, an analyst with First Union Securities in Chicago. "It was a good quarter, but the market will be looking for higher, sustainable revenue growth in the future."

The company's provision for loan losses rose slightly, to $45.7 million from $43.7 million in the fourth quarter and $43.1 million in the first quarter last year. However net chargeoffs grew to $45.6 million, from $43.4 million in the fourth quarter and $37.2 million in the first. Firstar said it is focusing on making consumer loans become a higher percentage of its total loan portfolio, and that as a result it would expect chargeoffs to stay up for the rest of the year.

Firstar shares rose $1.625, to close at $25.125.

BB&T Corp.

At Winston-Salem, N.C.-based BB&T, profits rose 5.3%, to $162.2 million, or 46 cents a share.

BB&T's results include a $19.8 million charge related to its January acquisition of Atlanta-based Premier Bancshares. Excluding the charge, BB&T had income of 52 cents per share.

Fee income rose almost 17%, to $213.9 million, with investment banking and insurance agency insurance fees leading the way. Investment banking fees totaled $44.8 million, up 214.8% over the same period last year, and insurance agency income was $28.1 million, up 66.4%.

BB&T's loan portfolio grew 10.9%, to $31.5 million.

The company's credit quality improved, unlike that of other large banks that reported earnings Tuesday. Nonperforming assets were $139.7 million at the end of the quarter, equaling 0.30% of total assets. A year ago the company had $147.9 million in nonperformers, or 0.35% of loans.

Still, BB&T increased its allowance for loan losses by 7.8% over last year, to $417.2 million.

Expenses rose 18.3%, to $384.7 million.

BB&T shares fell 18.75 cents, to close at $28.

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