SunTrust Banks in Atlanta reported lower fourth-quarter profits as legal costs related to mortgages offset an increase in loans and deposits.

Net income at the $190 billion-asset company fell 8.5%, to $378 million, or 72 cents per share, from a year earlier. SunTrust recorded a $145 million legal provision in the quarter, for mortgage issues and to increase legal reserves for an unidentified matter, which lowered earnings by 17 cents per share.

SunTrust's financial performance worsened, or was little changed, in several major categories compared to a year earlier. Net interest income was essentially flat from a year earlier, rising 0.9%, to $1.2 billion, and fee income fell 2.3%, to $795 million.

Meanwhile, expenses rose 3.6%, to $1.4 billion. SunTrust's efficiency ratio worsened by 295 basis points, to 69%. The net interest margin fell 24 basis points, to 2.96%, from the fourth quarter of 2013.

Excluding the $145 million legal provision, SunTrust said its noninterest expenses declined 7% from a year ago as it paid out less in employee salaries, medical costs and incentive compensation.

Loans held for investment, after an allowance for loan and lease losses, rose 4%, to $131 billion. Deposits rose 8% to $141 billion.

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