KEY KeyCorp

SunTrust Banks Inc. said its profit fell in its latest quarter because of a tax benefit that lifted the comparable quarter's earnings. On an adjusted basis, the regional lender reported 23% profit growth and topped expectations.

The bank reported a profit of $537 million, down from $576 million a year earlier. On a per-share basis, earnings fell to $1 from $1.06. Excluding one-time items, including a tax benefit, per-share profit rose to $1 from 81 cents.

Revenue edged 1.3% higher to $2.06 billion. Analysts projected 84 cents in earnings per share on $2.04 billion in revenue, according to Thomson Reuters.

The Atlanta-based bank, which focuses on consumers and small businesses in the U.S. southeast and mid-Atlantic, said lending and deposits grew during the quarter. Average loans rose 1.6% from a year earlier, boosted by SunTrust's corporate business. Fellow regional bank KeyCorp also cited strength in its corporate-focused businesses for its third-quarter profit increase. Deposits increased about 10%.

A lower loan-loss provision, slashed by 66% from a year earlier to $32 million, aided the bottom line. SunTrust cited continued improvement in asset quality.

Fee revenue rose 4% during the period to $811 million, thanks to higher investment banking and mortgage income, in addition to higher gains on the sale of investment securities. SunTrust, like other regional lenders pinched by low interest rates, has tried to boost noninterest income in an effort to support profit. At the same time, the bank's net interest margin, tied largely to interest rates, bounced from the second quarter. The metric rose to 2.94% from 2.86%, though it remained below 3.03% a year earlier.

SunTrust, which has had a more bearish outlook and has assumed no Federal Reserve rate increases this year, has meanwhile moved to slash costs. In the third quarter, noninterest expenses rose slightly from a year earlier, but came down about 5% from the second quarter.

The lender managed to bring its efficiency ratio, a measure of expenses against revenue where a lower figure is better, to 61.4% from 62% in last year's quarter. Executives have said they are trying to bring the metric below 63% for the full year of 2015, but have cautioned that the task is proving difficult as rates remain low. For the nine months ended in September, the metric stood at 63.2%.

Shares in the bank, down about 14% this year, were inactive premarket.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

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(END) Dow Jones Newswires

October 16, 2015 07:35 ET (11:35 GMT)

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