SunTrust posts 3Q loss but sees some signs improve

posted: 33 DAYS 13 HOURS AGO

Text SizeAAA

ATLANTA -SunTrust Banks Inc. on Thursday posted a big third-quarter loss as it set aside more money to cover bad loans, but said the rate at which mortgages were slipping into delinquency slowed for the first time in a year.

The bank reported a loss of $377.1 million, or 76 cents per share, compared with a year-ago profit of $304.4 million, or 87 cents per share.

The latest quarter included charges of 16 cents per share related to the valuation of certain debt.

Analysts polled by Thomson Reuters, on average, forecast a loss of 65 cents per share. Analysts typically do not include one-time gains or charges in their estimates.

Net interest income, or money earned from traditional banking operations like deposits, slipped slightly to $1.17 billion from $1.18 billion. Total deposits reached $114.5 billion, up 14 percent from last year.

The bank more than doubled its provision for loan losses — money set aside to cover souring loans — to $1.13 billion, from $503.7 million in the 2008 quarter.

Loans considered past due, or non-performing loans, were $5.44 billion. That's up from $3.29 billion in the 2008 quarter, but down marginally from the prior quarter. SunTrust said the dip from the June period was the first decline since the credit crisis began in 2007, and the increase in residential mortgage loans slowed substantially from the rate seen in the past four quarters.

Restructured loans that were in good standing rose 31 percent to $1.34 billion. Early stage delinquencies, or loans that are 30 days past due, declined on both a sequential and year-over-year basis.

The bank wrote off more than $1 billion in loans as going unpaid, compared with $392 million last year. The total largely reflected reworked loans for residential construction and mortgages, along with additional charge-offs for corporate borrowers in cyclical industries, the banks said.

Noninterest income, or money earned from fees and charges, dropped nearly 40 percent to $775.1 million from $1.29 billion a year ago. The company said the decline was due to gains generated in last year's quarter when it contributed company-owned stock to the SunTrust charitable foundation, sold a subsidiary and recorded gains on certain debt and hedges, which swing to a loss this year. Trading accounts profit and commissions also fell.

Chairman and CEO James M. Wells III said the quarter's results "reflected the difficult operating environment for more traditional banks." The recession was reflected in lower fee income and weak loan demand as consumers and businesses work to pay off debt, he said. Some trends indicate that the economy is improving, but he said it will take time before that is reflected in the bank's results.

SunTrust shares slid 25 cents to $20.51 in morning trading. They ended Wednesday's session down 30 percent since the start of the year.

2009-10-22 10:04:51