SunTrust First-Quarter Profit Up 39% to $250 Million
Press release from the issuing company
Monday, April 23rd, 2012
SunTrust Banks, Inc. today reported net income available to common shareholders of $245 million, or $0.46 per average common share, for the first quarter of 2012. Earnings per average common share increased by $0.33 from the fourth quarter of 2011 and by $0.38 from the first quarter of 2011.
"Our core performance this quarter drove a solid start to 2012 and marked a continuation of the improved momentum we built during 2011," said William H. Rogers, Jr. chairman and chief executive officer of SunTrust Banks, Inc. "Improved revenue, as well as continued favorable trends in loans, deposits, and credit metrics were hallmarks for the quarter." Mr. Rogers also noted that the Company's expense savings program continues to progress.
First Quarter 2012 Financial Highlights
Income Statement
- Continued improvement in core business fundamentals helped drive net income available to common shareholders of $245 million.
- Revenue grew 8% and 3% compared to the prior quarter and the first quarter of 2011, respectively.
- Net interest income grew 1% and 5% compared to the fourth and first quarters of 2011, respectively. Higher loan balances and favorable trends in the deposit mix and pricing were the primary drivers.
- Lower rates on liabilities, partially offset by a decline in loan yields, resulted in a three basis point increase in the net interest margin over the prior quarter to 3.49%.
- Strong mortgage refinancing activity drove a 21% increase in noninterest income from the prior quarter; noninterest income was relatively stable compared to the first quarter of 2011.
- Noninterest expense declined 8% from the prior quarter, largely due to the $120 million fourth quarter 2011 accrual for the potential mortgage servicing settlement. Compared to the first quarter of 2011, expenses increased 5%, driven by higher employee compensation and benefits expenses and higher operating losses.
Balance Sheet
- Average loans increased 3% compared to the prior quarter. Commercial & industrial, guaranteed student and guaranteed mortgage loans were the primary drivers of the growth, while certain real estate-related loan portfolios continued to decline.
- Average client deposits grew to another record level, increasing 1% compared to the prior quarter, while the favorable trend in the deposit mix toward lower-cost accounts continued.
Capital
- Estimated capital ratios continue to be well above current regulatory requirements, as well as the Basel III proposed guidance. The Tier 1 common ratio increased to 9.30%.
Asset Quality
- Credit quality continued to improve with net charge-offs, nonperforming loans and assets, and early stage delinquencies all declining.
- Net charge-offs declined 11% compared with the prior quarter; the annualized net charge-off ratio was 1.38%, lower by 19 basis points compared to the prior quarter.
- Nonperforming loans declined 9%, the eleventh consecutive quarterly decline.
- Early stage delinquencies declined 13 basis points sequentially as a result of improvements in the home equity, non-guaranteed mortgage, and consumer indirect portfolios.
- Provision for credit losses declined modestly. The allowance for loan losses was $2.3 billion, or 1.92% of total loans.
Revenue
Total revenue was $2.2 billion for the first quarter of 2012, an increase of $171 million from the prior quarter and $58 million higher than the first quarter of 2011. Net gains from the sales of securities were $18 million for the first quarter of 2012 compared to $19 million for the fourth quarter of 2011 and $64 million for the first quarter of 2011. Excluding net securities gains, total revenue increased 8% and 5%, respectively, compared to the fourth and first quarters of 2011. The increase in revenue was predominantly due to higher mortgage-related revenue and higher net interest income.