Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

SunTrust Banks, Inc. (STI), State Street Corporation (STT): Two Banks To Buy, One To Hold

Will SunTrust (STI)'s Earnings Impress or Depress?SunTrust Banks, Inc. (NYSE:STI)State Street Corporation (NYSE:STT), and KeyCorp (NYSE:KEY) are among regional banks that have reported their first-quarter performances. This article will compare and review those performances.


SunTrust Banks, Inc. (NYSE:STI) reported a modest 1.6% EPS beat when it disclosed its first-quarter results. The reported EPS came in at $0.63, compared to the consensus mean expectation of $0.62 per share. The reported revenue remained 8% below the linked quarter’s figure.

The decline in revenue was attributed to the three basis points (bps) of sequential compression in the bank’s net interest margin. The margin compressed a significant 16 bps over the previous year. Similarly, the bank’s fee-based income was also hit by a decline in mortgage production activity. Mortgage production declined 33% over the linked quarter. The decline in revenue was partially offset by a decline in non-interest expenses, which fell 10% over the prior quarter. The bank also experienced improvement in its credit quality, as its non-performing-loans-to-total-loans ratio fell from 2.16% to 1.21%.

State Street

State Street Corporation (NYSE:STT) experienced a strong first quarter, thanks to better expense control and improved fee revenue. The bank reported earnings per share of $0.96, $0.02 ahead of the consensus mean expectation, while the reported revenue of $2.44 billion remained $0.04 billion behind.

During the quarter, the bank experienced weakness in its net interest income, which came in at $577 million, 4% below the prior quarter. The shortfall in net interest income was a result of a five bps contraction in net interest margin and the prevailing lower reinvestment rates. Operating expenses for the quarter came in at $1.81 billion, up 7% from the linked quarter. The surge in expenses was only seasonal. During the rest of 2013, you should expect the bank to save around $220 million in expenses related to the long-term program and the announced headcount reductions.

Further, the bank continues to show improvement in its capital base as its Basel I Tier 1 common ratio stood at 16.1%, while its Basel III Tier 1 common ratio improved 20 bps to 10.6%.


KeyCorp (NYSE:KEY) reported its first quarter EPS of $0.21, in line with the consensus mean expectation. However, due to the prevailing revenue-challenged environment, its revenue of $1.01 billion remained $0.02 billion behind what analysts were expecting KeyCorp to report.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.