SunTrust Banks Inc. reported record fourth quarter net income on the strength of accelerating loan growth, stable margins, a lower loan-loss provision, and a continuing share repurchase program.
SunTrust, which has $43 billion of assets, earned $132.3 million in the quarter, 11% above the $119.2 million gain recorded in the year-ago quarter. Earnings of $1.13 a share came in one cent above Wall Street consensus estimates.
"The reported number really belied the underlying strength of the performance," said Robinson-Humphrey Co. analyst John W. Coffey, who noted that SunTrust was able to accrue $9.4 million in expenses during the quarter to pay for some upcoming marketing projects.
The only negative for the Atlanta-based bank was its fourth consecutive quarterly decline in noninterest income, which fell to $169 million from $173.1 million in the third quarter.
"It was not our most exciting line item, by any means," said investor relations spokesman Jim Armstrong.
SunTrust continues to have problems with its corporate trust operation, which is losing clients to other money managers. Mutual funds commissions were also down. But the main culprit was a $4.7 million securities loss, which the company took in order to sell low-yielding bonds and reinvest the proceeds.
SunTrust did benefit from improved loan growth, particularly in Georgia and Florida. Loans grew 11.8% from the third to the fourth quarter and gained 14% on an annualized basis. Mr. Armstrong said commercial loans and adjustable-rate residential mortgages led the surge.
SunTrust also held its margin stable at 4.65%, up 2 basis points from 4.63% in the third quarter.
During the period, SunTrust bought back 2.7 million shares, bringing to 10.1 million the number of shares repurchased since late last year when the company announced a 12 million-share buyback program that boosts per-share earnings by spreading income over a smaller base.
Mr. Armstrong estimated that the buyback contributed between one and two cents in earnings for each share in the fourth quarter.
For the full year 1994, SunTrust said it had earned $522.7 million, or $4.37 a share, compared with net income of $473.7 million, or $3.77 a share, in 1993. +++ SunTrust Banks Inc. Atlanta Dollar amounts in millions (except per share) Fourth Quarter 4Q94 4Q93 Net income $132.3 $119.2 Per share 1.13 0.97 ROA 1.31% 1.22% ROE 17.71% 16.22% Net interest margin 4.65% 4.60% Net interest income 431.4 406.2 Noninterest income 169.0 182.1 Noninterest expense 353.6 353.9 Loss provision 35.2 47.0 Net chargeoffs 22.4 33.7 Full Year 1994 1993 Net income $522.7 $473.7 Per share 4.37 3.77 ROA 1.32% 1.26% ROE 17.66% 16.48% Net interest margin 4.64% 4.80% Net interest income 1,675.6 1,634.4 Noninterest income 699.9 726.5 Noninterest expense 1,400.0 1,408.4 Loss provision 137.8 189.1 Net chargeoffs 60.3 110.1 Balance Sheet 12/94 12/93 Assets $42,709 $40,728 Deposits 32,218 30,486 Loans 28,549 25,292 Reserve/nonp. loans 345% 214% Nonperf. loans/loans 0.66% 1.03% Nonperf. assets/assets 0.64% 1.01% Leverage cap. ratio NA 6.82% Tier 1 cap. ratio NA 8.88% Tier 1+2 cap. ratio NA 10.55% ===