SunTrust Bank's sale of its asset management firm RidgeWorth Capital Management hurt the second-quarter performance of the trust and investment management business, the parent of the Atlanta-based bank announced on Monday.
In the second quarter, revenue from trust and investment services plunged $14 million, or 11%, to $116 million from $130 million in the same period a year ago. Revenue was also down by the same amount from the previous quarter.
The sharp decline was "driven entirely by the loss of RidgeWorth's revenue stream during June," the company's chief financial officer Aleem Gillanisaid during the earning call on Monday. For the five months ended May 31, RigdeWorth contributed approximately $20 million to SunTrust's pre-tax income, he noted.
Revenue from trust and investment services totaled $247 million for the first six months of 2014, down $7 million, or 3%, from $254 million during the first half of 2013, according to the earnings release.
Retail brokerage services helped make up for the slack, raking in $76 million in second-quarter revenue, up 10% year-over-year and up 7% from the previous quarter. For the first half of the year, revenue from retail investment services surged 13%, or $17 million, to $147 million from $130 million during the first half of 2013.
"Retail investment services continued its positive trend resulting from our ongoing focus on meeting more clients' wealth and investment needs," Gillani said.
The company's consumer banking and private wealth management business segment, which includes both trust and retail investment services and other businesses, earned $152 million, up 7% year-over-year and sequentially from the previous quarter.
"The momentum in this business is improving in both non-interest income and from lending activity," William H. Rogers, Jr., the company's chairman and CEO, said of the consumer banking and private wealth management business.
In particular, Rogers was content with the performance of retail investment services. "I'm pleased with the growth in retail investment income as it's evidence of a partnership between our premier bankers, branch managers and financial advisors all centered around better serving the savings and investment needs of our branch-based clients," Rogers said during the call.
Rogers noted that the consumer banking and private wealth management segment continued to make progress. "Our investments in technology and people combined with earlier efficiency initiatives and continued credit improvement are tracking positively against the impact of a low-rate environment," Rogers said.
Overall, SunTrust Banks, the parent of SunTrust Bank, earned $387 million, or 72 cents per share, up from $365 million, or $0.68 per share, in the second quarter of 2013.
"In summary, this quarter's consolidated performance reflected solid momentum across each of our businesses," Rogers said.
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