|
SunTrust tops 2Q mark
|
 |
July 6, 2001: 3:54 p.m. ET
Atlanta-based bank sees profits rise above Wall Street expectations
|
NEW YORK (CNNfn) - SunTrust Bank Inc. posted improved second-quarter earnings Friday that beat Wall Street expectations and said it is still fighting to take over Southeastern bank Wachovia Corp.
The Atlanta-based bank holding company earned a net income of $347.1 million, or $1.19 a diluted share, up from $1.05 a share a year earlier. Analysts surveyed by earnings tracker First Call were looking for earnings of $1.16 a share.
SunTrust (STI: down $1.37 to $63.76, Research, Estimates) said the strength of its quarterly results bolstered its case for buying Wachovia (WB: down $1.45 to $69.15, Research, Estimates), and it defended its bid against attacks from First Union, which made a deal with Wachovia in April.
First Union (FTU: down $0.55 to $33.88, Research, Estimates) agreed to pay $14.1 billion for Wachovia, but SunTrust launched a rival $14.5 billion bid in May that Wachovia has spurned.
SunTrust executives told analysts they backed a full-year earnings estimate of $4.77 a share from Thomson Financial's I/B/E/S unit. First Call forecasts for the period range from $4.65 to $4.85, with a mean of $4.74, up from $4.39 in 2000.
"The headline numbers were a little better than expected but the company did benefit from higher trading revenues and strength in mortgage banking, and provisions for loan losses came in below our expectations," said analyst Thomas Theurkauf Jr. of Keefe, Bruyette & Woods. "The issue is reproduce-ability going forward."
The bank said its net interest income, the money it makes from lending, rose 7 percent to $834.1 million in the quarter, while its noninterest, or fee, income increased 18 percent to $521.8 million, helped by securities gains.
The Federal Reserve has lowered key short-term interest rates six times so far this year, helping lending profits at some U.S. banks by lowering their borrowing costs.
"During the second quarter, we experienced strong revenue growth of 9 percent with effective cost management, continued to build on our core earnings momentum and demonstrated superior credit quality," SunTrust Chairman L. Phillip Humann said in a statement.
The fight for Wachovia
In the increasingly acrimonious takeover fight, SunTrust also reiterated that its offer for Wachovia is worth more and less risky than First Union's proposal and would cut fewer jobs.
"When you look at the quarter's results in the context of our Wachovia proposal," Humann told analysts, "it confirms the point we've been making all along -- SunTrust's earnings record is a plus and speaks to the integrity of our proposal."
In Friday's edition of The New York Times, First Union ran a full-page ad headlined, "Six Things SunTrust Won't be Talking About Today." The ad said SunTrust's earnings momentum has hit the wall, and a Wachovia merger would raise regulatory capital concerns.
SunTrust countered each of the six points.
"We're honestly surprised First Union continues to bring up the capital issue since we have demonstrably better credit quality and a higher credit rating than does First Union," Humann told analysts.
SunTrust said it hoped the difference between its offer and First Union's would gradually increase to the 5 percent to 7 percent premium institutional investors would like to see. SunTrust's offer was worth about 17 percent more than First Union's when it was announced but that has dropped because of a rise in First Union's stock, executives said.
More than half of Wachovia's outstanding shares are held by retail stockholders, giving them clout, executives noted. 
from staff and wire reports
|
|
|
|
|
 |
|
