SunTrust Posts 5% Gain in Profits

ATLANTA - SunTrust Banks Inc. reported on Tuesday second-quarter earnings of $92.6 million, up 5% from $88.5 million a year ago and slightly above analysts' expectations.

"It was a good, solid quarter and demonstrates SunTrust's ability to manage its credit problems," said Kathryn H. Bissette, banking analyst with Interstate/Johnson Lane in Atlanta.

Increased Provisions

The improvement at Atlanta-based SunTrust, which has $33.1 billion in assets, came despite a 14% jump in its loan-loss provisions from the first-quarter level. It set aside $57.2 million in the latest period.

Loan-loss reserves now stand at $379.9 million, or 1.76% of total loans, up from $371.1 million, or 1.69% of loans, in the first quarter.

About half the new provisions were attributed to SunTrust's Nashville-based subsidiary, Third National Corp., whose nonperforming assets rose $19 million during the quarter to $281.7 million.

Florida Results Strong

Ms. Bissette pointed out than the increase in nonperformers at the Tennessee unit was partly offset by a $7 million decline in problem loans in Florida, to $300 million. SunTrust's Florida subsidiary, Orlando-based SunBanks Inc., is much larger than Third National and provides half the holding company's income.

"Overall, the credit-quality trends are good, especially since the biggest piece - Florida - is actually showing improvement," Ms. Bissette said. "Tennessee is still very manageable for SunTrust, given the vast resources of the overall company."

Nonperformers Climb 3%

For the consolidated company, nonperforming assets rose to $690.1 million, a 3% increase from the previous quarter. Net chargeoffs rose 20%, to $48.5 million, from $40.4 million.

While SunTrust is the first major southeastern bank to report earnings each quarter, it is not representative of the group.

Several large banks in the region are expected to report double-digit earnings declines from the year-ago period because of continuing credit-quality problems. They include C&S/Sovran Corp., Norfolk and Atlanta; Barnett Banks Inc., Jacksonville; Dominion Bankshares Inc., Roanoke; and First Union Corp., Charlotte, N.C.

Miami-based Southeast Banking Corp. is expected to report its seventh consecutive quarterly loss, but analysts are reluctant to predict its size.

Table : SunTrust Banks Inc. Atlanta - Dollar amounts in millions (except per share) -Second Quarter 2Q'91 2Q'90Net income $92.6 $88.5Per share 0.72 0.69

Net interest income (tax. equiv.) 717.7 730.4Spread 4.77% 4.88%ROA 1.13% 1.16%ROE 15.54% 16.44%Noninterest income 155 137.3Noninterest expense 304.9 285.3Loss provision 57.2 64.6Net chargeoffs 48.5 57.8First Half 1991 1990Net income $181.6 $176.4Per share 1.42 1.38

Net interest income (tax. equiv.) 1,450.2 1,453.1Spread 4.82% 4.90%ROA 1.12% 1.17%ROE 15.53% 16.66%Noninterest income 296.2 274.1Noninterest expense 608.4 575.2Balance Sheet 6/30/91 6/30/90Assets $33,108 $31,257Deposits 26,650 25,147Loans 21,540 21,413Shareholder equity 2,436 2,200Loss reserve 379.9 371.1Reserve/loans ratio 1.76% 1.67%Nonperf. loans 436.1 322.1Nonperf. loans/loans 2.02% 1.50%Primary capital ratio 8.41% 8.09%

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