Three Florida banks on Tuesday reported strong earnings in spite of a state economy that remains sluggish.
Leading the positive profit report was SunTrust Banks Inc., which had earnings of $104.1-million, up 11 percent from the third quarter a year ago.
SunTrust, with assets of $33.9-billion, is based in Atlanta. But more than half of its profits were generated by its Florida subsidiary, Sun Banks Inc.
Jacksonville-based Barnett Banks Inc., about the same size as SunTrust, reported net income of $58.5-million, up 58 percent from the third quarter a year earlier. Barnett has assets of $32.6-billion.
And Tampa-based First Florida Banks Inc., which is set to merge with Barnett later this year, showed a profit of $13.5-million on assets of $5.5-billion. The bank lost $30.2-million in the third quarter of 1991.
The latest report will probably be the last one announced by First Florida before it merges.
"We finished strong," said Paul Homan, First Florida's chief executive officer.
How can banks be making millions when the economy is so sluggish?
Homan said First Florida had found a small bright spot in the economy with a comeback in residential real estate.
Also, bank earnings have improved because the banks have cut back on bad loans and have controlled expenses. Banks also have reaped the benefit of the low cost of funds, i.e. the interest it pays on customer deposits. "It translates to the bottom line," said Homan.
Banks started adapting to hard times in 1990 and 1991 with the collapse of the real estate market, said Fred Meinke, a bank stock analyst with Raymond James & Associates in St. Petersburg.
"The banks went through a tough period," he said.
The question now is whether banks can sustain the profits even though they are not making many new loans.
George Koehn, president of SunBank of Tampa Bay, said loan growth "is slow." Homan said despite the boost from residential real estate, loan growth at First Florida "was flat, at best."
Barnett reported that because of the slow economy "deposit and loan balances were little changed from last year."
Meinke said he believed SunTrust, which has been showing steady gains, should see profits continue to increase. "They are well-positioned," he said.
Barnett was more of a question mark, Meinke said. The merger with First Florida could mean the loss of some customers.
"In a growth economy, you don't worry. But good customers today are harder to find," he said.
Charles E. Rice, Barnett's chairman and chief executive officer, said in a prepared statement that Barnett is on the right course.
"Fundamentally, we feel very good about the progress of the company. . . . Despite weak economic conditions and the devastation caused by Hurricane Andrew, our earnings improvement remains on track while problem credits continue to shrink."