Diversified financial services holding company SunTrust Banks, Inc. (STI) Monday reported a higher second-quarter profit, reflecting increased investment banking and mortgage servicing income. Provision for credit losses fell from last year. Adjusted earnings and revenues topped analysts' expectations.
For the second quarter, net income available to shareholders increased to $387 million or $0.72 per share from $365 million or $0.68 per share in the previous year.
The lender said its recent-quarter results were negatively impacted by $0.09 per share related to Form 8-K and other legacy mortgage-related items. Excluding items, adjusted earnings were $0.81 per share.
On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.77 per share for the quarter. Analysts' estimates typically exclude special items.
On a fully taxable-equivalent or FTE basis, total revenue grew to $2.20 billion from $2.10 billion a year earlier. Wall Street analysts estimated revenues of $2.07 billion for the quarter.
Total revenue, excluding sale of RidgeWorth, declined $4 million as higher investment banking and mortgage servicing income was offset by a decline in mortgage production income.
Net interest income on FTE basis remained unchanged from last year at $1.24 billion. Non-interest income was $957 million, up from $858 million in the same quarter last year.
Mortgage production income fell to $52 million from $133 million in the prior year, mainly due to a decline in refinance production volume and gain on sale margins. Meanwhile, Mortgage servicing income was $45 million, significantly up from $1 million a year ago.
Investment banking income grew to $119 million from $93 million last year mainly reflecting higher client activity across most origination and advisory product categories.
William Rogers, Jr., chairman and chief executive officer of the company said, "Favorable revenue trends, particularly growth in loans, deposits and fee income, coupled with continued expense discipline and further asset quality improvements led to solid core earnings growth this quarter."
Provision for credit losses fell to $73 million from $146 million in the preceding year.
Tier 1 capital ratio was 10.65 percent, compared to 11.24 percent a year earlier.
Earlier this month, SunTrust Mortgage, Inc., the home-lending arm of SunTrust Banks, agreed to a $320 million settlement with the U.S. Department of Justice to resolve a criminal probe into SunTrust's administration of the Home Affordable Modification Program or HAMP, that resulted in a $204 million pre-tax charge.
STI closed Friday's trading at $39.72 on the NYSE.
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