SunTrust Banks is reaping higher profits from steady economic growth in its Southeastern and Mid-Atlantic markets, the Atlanta bank’s chief financial officer said.
Empty strip malls and other signs of economic distress still linger in some areas such as the outer suburbs of Atlanta and parts of Florida, six years after the Great Recession ended.
“The country is not out of this yet. We’re not out of this yet,” SunTrust CFO Aleem Gillani said Friday.
But many of SunTrust’s core markets in Atlanta, Charlotte, Nashville, Orlando, Miami and other urban areas are doing well, based on the bank’s measures such as declining problem loans and higher corporate demand for the bank’s services, he said.
“In all those areas the market has turned around with rapidity, and dare I say, force,” said Gillani.
That improvement allowed the Atlanta financial giant to post its own steady profit growth in the second quarter. Friday, SunTrust reported second-quarter profit of $483 million, compared to $399 million in the year-earlier period.
The results beat analysts’ expectations, although revenue declined 6 percent from last year, to $2.1 billion.
Some of the profit improvement came from continued cost-cutting, said Gillani. The bank is still closing more branches than it is opening, he said, with the total shrinking 3 percent over the past year, to 1,430 branches at the end of June.
But more than in past quarters, the bank is also benefiting from smaller losses on problem loans and a shift to more profitable corporate loans, business services and customer fee revenues, he said.
Last quarter, SunTrust said it wrote off about $87 million in problem loans. That sounds like a lot, but it’s 23 percent lower than the year-ago quarter, and a fraction of the $770 million-a-quarter in loan write-offs the bank was averaging from 2008 to 2010.
“We had a difficult time,” said Gillani. “Coming out of that, the improvement in credit quality has been incredible.”
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