With fewer soured loans and lower costs due in part to job cuts, SunTrust Banks’ profit rose 39 percent in the first three months of the year.
The largest Atlanta-headquartered bank reported a net profit of $340 million for the first quarter, up from $245 million a year earlier.
Nonperforming loans fell 45 percent from the same period last year, and 5 percent from end of 2012. On March 31, SunTrust had $1.5 billion in nonperforming loans due to a combination of loan write-offs and improving credit trends.
The improvements came from residential mortgages, commercial real estate and commercial construction, SunTrust said.
The value of real estate owned by the banking company decreased 46 percent from a year ago, and 16 percent from the end of last year, to $223 million.
Investors who want to buy mortgage-backed securities are re-entering the market, executives said in a conference call with investors, and the bank’s mortgage mix is beginning to add more home buyers. Mortgage production income more than doubled over the prior year, though it was down from the end of 2012 as margins shrank.
SunTrust reduced its number of full-time equivalent employees by 8 percent, and its efficiency ratio — a measure of how much money it spent to make a dollar — fell 7 percent, from 69.5 cents to 64.5 cents.
“Everyone recognizes the need to do more with less,” said Chris Marinac, managing principal and director of research for FIG Partners. “SunTrust is in, ‘We’re just going to get leaner and meaner’ mode.”
Revenue fell 5 percent, but non-interest expenses fell 12 percent, to the lowest level in three years.
Average deposits were down slightly from the end of 2012, but up 1 percent from a year ago, to $127.7 billion.
Average loan amount was down 1 percent from both the year-ago quarter and the prior quarter.