SunTrust Banks Q1 Profit Rises, Tops View

(RTTNews) - Regional bank SunTrust Banks, Inc. (STI) reported Monday a profit for the first quarter that grew five percent from last year, reflecting an increase in non-interest income and lower Non-interest expense. Earnings per share topped analysts' expectations, while quarterly revenues matched their estimates.

"Continued expense discipline and strong asset quality performance, coupled with growth in noninterest income, contributed to solid performance in the first quarter and helped to mitigate the impact of the persistent low rate environment," Chairman and CEO William Rogers, Jr. said in a statement.

The Atlanta, Georgia-based company reported net income available to common shareholders of $411 million or $0.78 per share for the first quarter, higher than $393 million or $0.73 per share in the prior-year quarter.

On average, 29 analysts polled by Thomson Reuters expected the company to report earnings of $0.72 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter decreased 2 percent to $1.99 billion from $2.03 billion in the same quarter last year, and matched nineteen Wall Street analysts' consensus estimate of $1.99 billion.

The company noted that the decline in revenue were attributable primarily to a decrease in net interest income and foregone RidgeWorth revenue, partially offset by higher mortgage production-related and capital markets-related income.

Net interest income declined to $1.18 billion from $1.24 billion a year ago, driven by lower commercial loan swap income, higher MBS premium amortization expense, and lower loan yields, partially offset by growth in average earning assets.

Net interest margin contracted 36 basis points to 2.83 percent from 3.19 percent last year, primarily due to a 32 and 53 basis point declines in loan and investment securities yields, respectively, as well as the impact of the prolonged low interest rate environment on asset yields.

Non-interest income grew 3 percent to $817 million from $791 million last year, primarily due to higher mortgage production-related income, as well as a gain realized upon the sale of legacy affordable housing properties, partially offset by foregone RidgeWorth revenue.

Provision for credit losses in the quarter nearly halved to $55 million from last year's $102 million, driven by the continued improvement in asset quality, combined with lower loan growth in the current quarter.

Non-interest expense declined to $1.28 billion from $1.36 billion in the year-ago quarter, due to declines in most expense categories and the sale of RidgeWorth Capital Management in the second quarter of 2014.

Mortgage servicing-related income more than decreased to $43 million from last year's $54 million, and investment banking income was $97 million, up from $88 million in the year-ago quarter.

Trading income increased $55 million from $49 million, while trust and investment management income decreased to $84 million from $130 million last year.

The company also said it intends to increase its quarterly common stock dividend by 20 percent to $0.24 per common share beginning in the second quarter of 2015 and maintain the current level of dividend payments on its preferred stock, subject to approval by its Board of Directors.

"As we look forward, we remain focused on deepening client relationships and executing our strategic priorities, particularly improving returns and efficiency, to further enhance shareholder value," Rogers, Jr. added.

STI closed Friday's regular trading session at $41.41, up $0.42 on a volume of 3.19 million shares. In the past 52-week period, the stock has been trading in a range of $33.97 to $43.23.