SunTrust, Synovus in red but improving

SunTrust and Synovus executives indicated they are monitoring the Gulf oil spill, but did not expect significant hits to their respective portfolios.

Adam Barkstrom of Sterne Agee & Leach said he still has questions about the spill's impact on the economy in Florida, where both banks have extensive operations.

“Relative to pre-oil spill, I can’t say I’m positive on the Florida economy,” Barkstrom said.

Nonperforming assets and nonaccrual loans improved in the second quarter for SunTrust. Net charge-offs dipped to $722 million, down $79 million from last year.

Restructured loans increased to $3.3 billion as more borrowers asked for aid in paying their loans. Chris Marinac, bank analyst with FIG Partners, said SunTrust might be better served by restructuring rather than foreclosing on loans.

Provision for credit losses, money set aside to backstop defaults, declined $300 million, or 31 percent from a year ago. Revenue was off 2 percent to $2.1 billion.

Synovus said the pace of new problems is slowing, down 36 percent from a quarter ago to $340 million. Total nonperforming assets were down 15 percent from the first quarter.

Synovus also said it is examining further reductions in staffing and other efficiencies.

After 1,000 job cuts since 2008, Synovus plans to cut 170 additional jobs through attrition. It has hired outside consultants to find efficiencies, targeting future cuts of up to $100 million annually.

The company said economic conditions might put pressure on hopes for it to return to the black by the fourth quarter. Synovus also said it wrote down the value of its Sea Island Co. loan to $117 million.