Bad Loans Drag Down SunTrust’s Profit

SunTrust Banks Inc., the first of the 10 largest U.S. banks to report second-quarter earnings, said profit fell 1% after it set aside more money for loans that won’t be paid back.

Net income totaled $343.7 million, or $1.20 a share, down from $347.1 million, or $1.19, in the same period last year. Higher investment banking fees and a rise in deposits helped offset $111 million the Atlanta-based bank reserved for loan losses, almost triple the amount in the same quarter last year.

Chief Executive Phil Humann said a sluggish economy would prompt more loan losses. SunTrust wrote off $16.3 million to units of Enron Corp. in the second quarter and is owed $76 million by Adelphia Communications Corp., bank officials said.

SunTrust shares fell $1.13 to $64.37 on the NYSE.