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SunTrust and Comerica earned mixed reviews after reporting year-over-year profit declines in the third quarter, according to the banks' earnings statements released Friday.
Still, analysts expecting less from each lender reacted favorably to both reports.
Dallas-based Comerica reported net income of $136 million, or 74 cent a share, in the third quarter of 2015—a 12 percent drop from year ago earnings of $154 million, or 82 cents a share.
Still, Comerica managed to best analyst estimates of earnings in the 70 cent-per-share range.
While Comerica CEO and Chairman Ralph Babb celebrated growth in average loans, which rose by $1.8 billion, or 4 percent, Comerica felt the sting of higher technology and regulatory costs, as well as negative migration in loans related to energy.
Overall, Babb said credit quality remains strong, but Comerica did increase its allowances for loan losses from $592 million in the third-quarter of 2014 to $622 million in the most recent period.
Meanwhile, allowances for credit losses on lending-related transactions edged down from $50 million in the second quarter to $48 million in the most recent period—while still rising from $43 million a year earlier.
In addition, net charge-offs—an indication that a bank no longer expects to collect from a debtor – increased by $5 million to $23 million, or 0.19 percent of average loans in 3Q—compared to $18 million, or 0.15 percent in the second quarter.
SunTrust also delivered a few pleasant surprises Friday, reporting net income of $519 million, or $1 per share. Analysts expected a much lower profit of roughly 84 cents per share.
Still, SunTrust reported an 8 percent drop in earnings from the third-quarter of 2014, when the bank reported a profit of $563 million, or $1.06 per share.
“Our fundamentals are strong and, despite the challenging operating environment, I am confident in our ability to deliver further value to our clients and shareholders as we continue to execute against our key strategies.”
“SunTrust delivered solid earnings performance in the third quarter, driven by continued loan and deposit growth, improved efficiency, and strong asset quality trends,” said William H. Rogers, Jr., chairman and chief executive officer of SunTrust Banks, Inc. “Our fundamentals are strong and, despite the challenging operating environment, I am confident in our ability to deliver further value to our clients and shareholders as we continue to execute against our key strategies.”
SunTrust noted that average loan balances remain stable, and the firm reported growth in both the mortgage and consumer direct loan product lines. Those areas of growth were offset by pay downs in commercial loans and lower consumer indirect loans.
Overall loan quality also improved with nonperforming SunTrust loans declining 4% from the previous quarter and net charge-offs in the third-quarter declining to $71 million in the third quarter, down from $128 million a year earlier.
