SunTrust Banks Inc. said its first-quarter profit increased 15%–beating market estimates–as the regional bank benefited from lower credit-loss provisions, offsetting a drop in revenue.
The Atlanta-based bank posted a profit of $405 million, up from $352 million a year earlier. Per-share earnings, which reflect the payment of preferred dividends, were 73 cents, up from 63 cents a year earlier.
Revenue declined 4% to $2.03 billion as mortgage production fell.
Analysts polled by Thomson Reuters expected earnings of 66 cents a share on $2.01 billion in revenue.
SunTrust, like other regional lenders, had benefited in recent years from a mortgage-refinancing boom prompted by low loan rates. But, as mortgage rates crept higher last year, refinancing demand died down, pressuring banks to trim costs to make up for weaker revenue.
For SunTrust, noninterest expense edged up slightly in the latest quarter to $1.36 billion because of higher salaries related to hiring in some businesses, the company said.
SunTrust, one of the largest lenders in the Southeast, has spent the past year trying to put to rest legal issues tied to mortgages made leading up to the financial crisis.
In October, the company said it would pay more than $1 billion under settlements with federal authorities over various home-loan practices. In February, it said in a regulatory filing that it was continuing to negotiate final terms for some of those agreements and noted it may not be able to reach a final agreement with the Federal Housing Administration over matters involving the agency.
Regional lenders have reported mixed results in recent days, as declining mortgage activity and low interest rates have constricted revenue growth. At the same time, some banks, including U.S. Bancorp, PNC Financial Services Group Inc. and BB&T Corp., have noted signs that demand for commercial loans is increasing, fueling optimism that loan growth could accelerate in the second half of the year.
SunTrust said its total loans increased 6.9% to $129.2 billion in the quarter, driven by growth in the company’s business and commercial real-estate loan portfolios. Provision for credit losses was $102 million, down from $212 million a year earlier.
SunTrust has been focused on expanding its corporate-banking services. In November, the company said its SunTrust Robinson Humphrey business was opening new offices in Dallas, San Francisco and Chicago to focus on midsize and large corporate clients in those markets.
Earlier this month, the company said it acquired Lantana Oil & Gas Partners, a firm that focuses on acquisitions and divestitures in the energy industry.
SunTrust’s shares were inactive premarket on Monday. The shares closed down 0.6% at $37.95 on Friday.
Ben Fox Rubin contributed to this article.
Corrections & Amplifications
The original version of this article misstated the provisions for credit losses in the prior year. The provision was $212 million, not $202 million.
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