SunTrust Bank Inc.’s (STI) fourth quarter operating loss of 64 cents per share was lower than the Zacks Consensus Estimate of a loss of 75 cents. Last year, the company reported a loss of $1.07 per share. Net loss was $316.4 million versus $374.9 million last year.

Results continued to be affected by recessionary pressures as evidenced by soft revenue and weak loan demand from both consumer and commercial borrowers. SunTrust reported a full-year operating loss of $3.98 per share, compared to a gain of $2.12 last year.

Revenues increased 1.2% to $1.9 billion. Net interest income totaled $1.2 billion, largely unchanged year-over-year. Net interest margin (NIM) equaled 3.27%, up 13 basis points from that of last year. The increase in NIM reflects an improved deposit mix and a lower cost of funding.

Non-interest expense was $1.5 billion, a decrease of 8.4%, from the fourth quarter of 2008 as a result of credit-related expenses declining significantly and lower operating expenses.

SunTrust reported a 1.2% increase in provision for credit losses to $973.7 million. Non-performing loans increased to 4.75% of total loans from 3.10% last year. Net charge-offs increased to 2.83% of average loans from 1.72% in the prior year quarter.

Average earning assets declined primarily due to a fall in loan demand. SunTrust’s risk-based capital ratios remained strong, with Tier 1 capital ratio of 12.9%.

The quarter reflected continued weakness in the broader economic environment. Top-line trends at SunTrust have been relatively uninspiring over the last several quarters, and we expect a slow recovery in revenue in the near term. Also, net charge-offs are expected to improve only in the second quarter of 2010 depending on the strength and pace of the economic recovery.

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