SunTrust profit up 2.7%

bank sets more aside for bad loans

3rd-quarter earnings trail forecasts by a cent a share

October 10, 2002|By BLOOMBERG NEWS

ATLANTA - SunTrust Banks Inc. said yesterday that its profit rose 2.7 percent, missing analysts' forecasts by a penny a share, as the first of the 10 largest U.S. banks to report third-quarter earnings set aside more for bad loans.

Net income climbed to $343 million, or $1.20 a share, from $334.1 million, or $1.15, in the corresponding quarter last year. Revenue rose 1.7 percent to $1.35 billion, about a third the growth rate of the second quarter.

Analysts expected SunTrust to earn $1.21 a share.

L. Phillip Humann, the company's chairman, president and chief executive officer, said the ninth-largest U.S. bank's nonperforming loans, which have surged as an economic recovery has slowed, are unlikely to subside.

U.S. banks are saddled with the most bad debt in a decade as telecommunications and cable companies struggle to pay, federal data show. Some investors said SunTrust's report raises concern that losses might grow.

SunTrust's profit was bolstered by growth in deposits as the Atlanta-based bank expanded its branch network in the Southeast by buying 141 outlets in Florida from Huntington Bancshares Inc. in February.

Total deposits rose 17 percent to $73.8 billion, as falling stock markets prompted clients to move more money into bank accounts. Service charges on deposits, totaling $157 million, were 22 percent higher than in the comparable period last year, helping increase fee income 6 percent to $580.9 million.

SunTrust set aside $98.7 million for loan losses, up from $80.2 million in the third quarter last year. Nonperforming assets, including loans to now-bankrupt cable company Adelphia Communications Corp. and other borrowers, rose to $594.7 million from $523.4 million in the year-earlier period and $518.5 million in the second quarter.

Regulators told the bank to add $86.8 million in loans to the at-risk category after completing their annual review of shared corporate bank credits in July, SunTrust Vice Chairman Ted Hoepner told analysts.

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