SunTrust Banks (STI) Tops Q3 EPS by 3c

SunTrust Banks (NYSE: STI) reported Q3 EPS of $0.91, $0.03 better than the analyst estimate of $0.88. Revenue for the quarter came in at $2.2 billion versus the consensus estimate of $2.15 billion.

ncome Statement

• Net income available to common shareholders was $457 million, or $0.91 per average common diluted share, compared to $0.94 for the prior quarter and $1.00 for the third quarter of 2015.
  • The prior quarter and prior year quarter were favorably impacted by discrete benefits of $0.05 and $0.11, respectively. Excluding these benefits, earnings per share grew 2% sequentially and year-over-year.
• Total revenue increased modestly compared to the prior quarter and 8% compared to the third quarter of 2015.
  • Sequential revenue growth was driven by a 1% increase in net interest income and strong capital markets-related income, offsetting net asset-related gains recognized in the prior quarter.
  • Compared to the third quarter of 2015, revenue growth was driven by an 8% increase in net interest income and 10% growth in noninterest income.
• Net interest margin was 2.96% in the current quarter, down 3 basis points sequentially and up 2 basis points compared to the prior year quarter.
• Provision for credit losses decreased $49 million sequentially due primarily to continued improvements in the asset quality of the residential loan portfolio, slower loan growth, and a lower energy-related provision. The $65 million increase compared to the third quarter of 2015 was primarily due to higher net charge-offs.
• Noninterest expense increased 5% sequentially and 11% compared to the prior year quarter. The sequential increase was driven by higher regulatory and compliance costs, increased costs associated with improved business performance, and higher net occupancy costs.
  • Compared to the prior year quarter, the increase was driven by the same factors impacting the sequential increase in addition to approximately $30 million of discrete recoveries related to previous mortgage matters and approximately $30 million of lower incentive and benefit costs in the third quarter of 2015.
• The efficiency and tangible efficiency ratios in the current quarter were 63.1% and 62.5%, respectively, and were 62.2% and 61.6%, respectively, on a year-to-date basis. The increase compared to the prior quarter and third quarter of 2015 was impacted by discrete benefits recognized in those quarters.
  • Year to date, compared to the same period a year ago, the efficiency ratio and tangible efficiency ratio improved by 103 and 119 basis points, respectively, driven by positive operating leverage.

For earnings history and earnings-related data on SunTrust Banks (STI) click here.

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