By Dow Jones Business News, October 18, 2013, 06:52:00 AM EDT
By Ben Fox Rubin
SunTrust Banks Inc.'s ( STI ) third-quarter earnings fell 82% as the regional bank posted higher expenses resulting from
a recent settlement agreement.
SunTrust Banks this month said it is paying more than $1 billion to settle federal allegations of mortgage violations,
in the latest move by a bank to put behind it costly legal issues stemming from the financial crisis.
The Atlanta-based bank had said it will pay $468 million in cash and provide $500 million in relief to borrowers under
agreements with the Justice Department, Department of Housing and Urban Development and Federal Reserve. It is also
paying more than $200 million to resolve claims with Fannie Mae ( FNMA ) and Freddie Mac ( FMCC ).
For the quarter, the bank's net interest margin narrowed to 3.19% from 3.38% a year earlier and 3.25% in the second
The provision for credit losses was $95 million in the quarter, down from $450 million a year earlier and $146 million
in the prior quarter.
SunTrust reported a profit of $189 million, down from $1.08 billion a year ago. Per-share earnings, which reflect the
payment of preferred dividends, were 33 cents compared with $1.98 a year ago. The company last year posted a gain of
about $1.9 billion related to the sale of Coca-Cola Co. ( KO ) stock. Excluding the mortgage-settlement costs and stock-
sales gains from a year earlier, earnings were 66 cents, up from 58 cents.
Revenue, excluding securities gains, rose 0.9% from a year ago to $1.92 billion.
Analysts polled by Thomson Reuters recently expected earnings of 69 cents a share on $2.07 billion in revenue.
The company has been cutting costs to offset slow loan growth and low interest rates. However, noninterest expense was
up 1% from a year ago to $1.74 billion, due in part to a $323 million impact on noninterest expense coming from the
Shares closed Thursday at $34.03 and were inactive in recent premarket trading. The stock has risen 20% so far this
Write to Ben Fox Rubin at email@example.com
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