SunTrust Bank Inc.’s (STI) fourth quarter operating loss of 64 cents per share was lower than the Zacks Consensus Estimate of a loss of 75 cents. Last year, the company reported a loss of $1.07 per share. Net loss was $316.4 million versus $374.9 million last year.
Results continued to be affected by recessionary pressures as evidenced by soft revenue and weak loan demand from both consumer and commercial borrowers. SunTrust reported a full-year operating loss of $3.98 per share, compared to a gain of $2.12 last year.
Revenues increased 1.2% to $1.9 billion. Net interest income totaled $1.2 billion, largely unchanged year-over-year. Net interest margin (NIM) equaled 3.27%, up 13 basis points from that of last year. The increase in NIM reflects an improved deposit mix and a lower cost of funding.
Non-interest expense was $1.5 billion, a decrease of 8.4%, from the fourth quarter of 2008 as a result of credit-related expenses declining significantly and lower operating expenses.
SunTrust reported a 1.2% increase in provision for credit losses to $973.7 million. Non-performing loans increased to 4.75% of total loans from 3.10% last year. Net charge-offs increased to 2.83% of average loans from 1.72% in the prior year quarter.
Average earning assets declined primarily due to a fall in loan demand. SunTrust’s risk-based capital ratios remained strong, with Tier 1 capital ratio of 12.9%.
The quarter reflected continued weakness in the broader economic environment. Top-line trends at SunTrust have been relatively uninspiring over the last several quarters, and we expect a slow recovery in revenue in the near term. Also, net charge-offs are expected to improve only in the second quarter of 2010 depending on the strength and pace of the economic recovery.
Read the full analyst report on “STI”
Zacks Investment Research
