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SunTrust reports YOY increase in Q2 net income, NIM


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Street Talk – Episode 74: Investor sees legs in strong credit performance, US bank stock rally


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SunTrust reports YOY increase in Q2 net income, NIM

on July 22reported second-quarter net income available to common shareholders of $475million, or 94 cents per share, compared to $467 million, or , in the year-agoperiod.

TheS&P Capital IQ consensus estimate for normalized EPS was 88 cents for thelatest quarter.

Thecompany's second-quarter results included a net benefit of 5 cents per sharefrom the following discrete items: $44 million, pretax, in netasset-related gains, primarily related to a gain from the sale-leaseback of anoffice building; $21million, pretax, in discrete charges related to ongoing efficiency initiatives;and a $9 million discrete tax benefit.

On afully taxable equivalent basis, the company's net interest margin was 2.99%,compared to 3.04% for the linked quarter and 2.86% for the second quarter of2015.

Total nonperforming assets were $1.00 billion at June 30,compared to $1.04 billion at March 31 and $657 million at June 30, 2015. Thesequential reduction in nonperforming assets was primarily due to theresolution of certain energy-related loans, while the increase compared to June30, 2015, was mainly due to downgrades of energy-related loans, according to anews release.

Netcharge-offs were $137 million during the second quarter of 2016, compared to$85 million in the first quarter and $87 million during the second quarter of2015. The latest quarter included $70 million in energy-related net charge-offs.

The2016 second-quarter provision for credit losses was $146 million, compared to$101 million in the linked quarter and $26 million in the second quarter of2015. SunTrust attributed the sequential and year-over-year increase to higherenergy-related charge-offs, moderating asset quality improvements and loangrowth.

During the second quarter of 2016, SunTrust repurchased $175 million of its outstandingcommon stock, which completed its 2015 capital plan, according to the newsrelease. The company's 2016capital plan includes the purchase of up to $960 million of itsoutstanding common stock between the third quarter of 2016 and the secondquarter of 2017. It also includes an 8% increase in the quarterly common stockdividend from 24 cents per share to 26 cents per share, beginning in the thirdquarter, subject to approval by the company's board.