SunTrust Banks said profits improved in the third quarter as it set aside less money to cover soured loans.
But the bank’s new chief executive said SunTrust will likely close some branches as it streamlines its entire business through 2013, as part of a previously disclosed cost cutting intiative.
Atlanta-based SunTrust reported net profit of $211 million, up 151 percent from the third quarter a year ago. On a profit per share basis, SunTrust earned 39 cents, up from 17 cents last year. Analysts expected a profit of 35 cents per share, according to Bloomberg.
The bank announced in July it plans to cut expenses by $300 million annually by the end of 2013, and that those moves will include reductions in headcount.
SunTrust President and CEO William Rogers said in anticipation of “a tougher operating environment” the bank’s Playbook for Profitable Growth will examine the company's branch network and branch staffing, among other issues.
“This is not a widespread branch reduction exercise, though it will include some branch rationalization and core changes to our branch staffing model,” Rogers said. Certain “key opportunity branches” could be beefed up, he said, but overall the system will see a net reduction “to reflect reduced transaction volume.”
Clients are moving to mobile and other self-service banking platforms, Rogers said.
The bank did not spell out how many branches or employees could be affected.
SunTrust has 189 branches in metro Atlanta, according to Federal Deposit Insurance Corp. data. The company had 29,483 full-time equivalent employees at quarter end.
The expense cuts are separate, he said, from expected reductions in credit costs and charged-off loans as the bank's balance sheet improves.
SunTrust revenue fell 5 percent to $2.2 billion, with noninterest income, revenue from fees, off 14 percent because of lower mortgage and investment banking revenue.
SunTrust charged off $492 million in bad loans in the quarter, down slightly from second quarter and down 29 percent from a year ago.
Nonperforming loans were $3.24 billion, down 26 percent from a year ago. The allowance for loan and lease losses was $2.6 billion, down from $3.09 billion last year.
