I'm sure we all know somebody who was given a lot of advantages in life, yet didn't really make much of them. Such would seem to be the case with Atlanta's SunTrust Banks
Although SunTrust's targeted markets are above average, the bank's performance was more average. Revenue growth of 8% was respectable, but net income growth of 9% (after backing out merger-related expenses last year) was more pedestrian. Same goes for the company's return on assets and equity -- neither reached the level that I usually associate with top-notch banking performance.
Still, there was growth pretty much across the board. Net interest income was up about 4%, and non-interest income jumped 14%. This latter performance was achieved in the face of lower service charges, as the company saw more revenue from mortgage-related business and investment banking/commission operations.
The balance sheet also continues to grow -- at a price. Average loan balances rose 12%, with big jumps in real estate construction and mortgage lending (not a big surprise, given the ongoing housing boom in a lot of the Southeast). While total deposits rose more than 14%, consumer and commercial deposits were up just 4%, and low-cost deposits actually fell 5%. As a result, the company continues to turn to high-cost brokered deposits to fill the borrowing gap, and these balances rose 73% this quarter.
SunTrust is clearly not my favorite regional bank at this point, though I do think there's a lot of untapped potential here. And I'll freely admit to being somewhat biased; I own shares of BB&T
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Fool contributor Stephen Simpson owns shares of BB&T, but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). You can bank on the Fool's ironclad disclosure policy.