Bank holding company SunTrust Banks, Inc. (STI: Quote) reported Friday a profit for the fourth quarter that soared from last year, reflecting double-digit revenue growth amid improved mortgage-related revenue and investment banking income. Earnings per share came in above analysts' expectations, while quarterly revenues missed their estimates.
"Favorable performance trends continued, including strong noninterest income and lower expenses, marking another quarter of core earnings expansion. We concluded the year in an even stronger position, driving higher revenue and efficiency gains, while further improving our overall risk profile," Chairman and CEO William Rogers, Jr. said in a statement.
The Atlanta, Georgia-based company reported net income available to common shareholders of $350 million or $0.65 per share for the fourth quarter, sharply higher than $71 million or $0.13 per share in the prior-year quarter. The latest quarter results benefited from favorable discrete tax items.
On average, 33 analysts polled by Thomson Reuters expected the company to report earnings of $0.61 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue for the quarter increased 12 percent to $2.29 billion from last year. Excluding net securities gains/losses, revenue grew 13 percent to $2.29 billion from $2.03 billion in the same quarter last year, but missed eighteen Wall Street analysts' consensus estimate of $2.32 billion.
The company noted that the increase in revenues were attributable primarily to higher mortgage-related revenue and investment banking income.
Net interest income declined to $1.28 billion from $1.32 billion a year ago amid lower earning asset yields, and net interest margin contracted 10 basis points to 3.36 percent from 3.46 percent last year, primarily due to a 37 basis point decline in loan yields, and a decline of $40 million in commercial loan-related swap income.
Non-interest income grew to $1.02 billion from $723 million last year, primarily due to higher mortgage-related and investment banking revenue.
Provision for credit losses in the quarter were relatively flat at $328 million. Non-interest expense declined to $1.51 billion from $1.67 billion in the year-ago quarter, due to a decline in cyclically-high costs and last years expense related to the potential national mortgage servicing settlement.
Mortgage servicing income more than doubled to $45 million from last year's $22 million, and investment banking income was a record $112 million, up from $87 million in the year-ago quarter. Meanwhile, trading income declined to $65 million from $77 million last year.
For fiscal 2012, the company reported net income available to common shareholders of $1.93 billion or $3.59 per share, sharply higher than $495 million or $0.94 per share in the prior year.
Total revenue for the full year increased 23 percent to $10.60 billion from last year. Excluding net securities gains/losses, revenue grew 2 percent to $8.62 billion from $8.48 billion in the previous year.
Street was looking for full-year 2012 earnings of $3.55 per share on annual revenues of $10.58 billion.
STI closed Thursday's regular trading session at $29.57, up $0.13 on a volume of 6.59 million shares. In the past 52-week period, the stock has been trading in a range of $19.81 to $30.79.
by RTT Staff Writer
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