SunTrust Banks Q2 Profit Rises, Provision For Credit Losses Falls

(RTTNews) - SunTrust Banks Inc. (STI) Friday reported increased profit for the second quarter, even as revenues declined from the prior year. Provision for credit losses fell significantly, and the lender reported higher income from Investment banking and trading. The stock added 3 percent in pre-market trading.

Net income available to common shareholders increased to $467 million or $0.89 per share from $387 million or $0.72 per share in the comparable quarter last year. The latest results include a $0.03 per share favorable impact from a discrete income tax item in the current quarter.

The year-ago results were negatively impacted by $0.09 per share, related to the resolution of specific legacy mortgage-related matters, partially offset by a gain on sale of asset management subsidiary RidgeWorth.

Adjusted earnings per share were $0.89, while it totaled $0.81 in the prior year.

On average, 29 analysts polled by Thomson Reuters expected the company to report earnings of $0.81 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue declined to $2.08 billion from $2.20 billion in the year ago quarter. Wall Street analysts were looking for revenue of $2.02 billion for the quarter.

Excluding the gain on sale of RidgeWorth in the second quarter of 2014, revenue declined $19 million, driven largely by a decrease in net interest income and foregone RidgeWorth revenue, although partially offset by higher investment banking income.

Net interest was $1.203 billion, compared to $1.244 billion last year, driven by lower commercial loan-related swap income and lower earning asset yields. Provision for credit losses fell to $26 million from $73 million in the previous year.

Non-interest income fell to $874 million from $957 million, mainly due to the gain on sale of RidgeWorth in the second quarter of 2014 and the associated foregone revenue. Net interest margin was 2.86 percent, compared to 3.11 percent last year.

Investment banking income improved year-over-year, due to higher equity origination fees and debt capital markets activity.

Trading income also grew to $54 million from $47 million, due to an increase in mark-to-market valuation gains on the company's debt carried at fair value.

Mortgage production-related income increased to $76 million from $52 million, amid higher mortgage production volume and a decline in the provision for repurchases.

Average performing loans grew 2 percent to $132.2 billion, and average client deposits advanced to $142.9 billion from $130.5 billion in the second quarter of 2014.

The stock, which closed up 0.2 percent on Thursday, gained 3 percent in pre-market activity.