Cost Increases Tame Profits at SunTrust

Mortgage

Quarterly profit fell at SunTrust Banks in Atlanta as costs and its loan-loss provision increased.

The $203 billion-asset company said in a press release Friday that its fourth-quarter earnings decreased by 4% from a year earlier to $465 million, or 90 cents a share. Revenue increased by 7% to $2.2 billion.

Net interest income rose by 8% to $1.3 billion. Total loans rose 5% to $143 billion, while the net interest margin expanded by 3 basis points to 2.93%.

Commercial-and-industrial loans, SunTrust’s largest segment, increased by 3% to $69.2 billion. SunTrust also posted higher lending in a number of consumer categories. Total commercial real estate loans fell by 20% to $5 billion.

The loan-loss provision nearly doubled to $101 million. The ratio of nonperforming loans to total loans increased to 0.59% from 0.49% a year earlier.

Noninterest income increased by 6.5% to $815 million. Investment banking income rose by 17% to $122 million. Mortgage production income increased 47% to $78 million, while mortgage-servicing income decreased by 55% to $25 million.

Noninterest expense rose by 8.4% to $1.4 billion. The company attributed the increase to ongoing strategic investments, higher compensation tied to improved business performance, investments in technology and higher regulatory and compliance costs.

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