First Tennessee Bank Market President Keith Sanford poses for portraits and talks to the Times Free Press at the bank's downtown offices.

Chattanooga's biggest banks performed better than expected in the final lap of 2012, beating Wall Street estimates in spite of uncertainty related to the U.S. fiscal cliff and debt ceiling negotiations.

Keith Sanford, market president for First Tennessee, said the effect of the federal funding issues on the bank's finances has been "minimal."

"I'd say we still have some hesitancy with some businesses but not like it was, say, a year to two years ago," he said.

First Horizon, the bank holding company for First Tennessee, announced Friday that net income increased by 16 percent to $41 million in the fourth quarter to 17 cents per share. That's up from income of $25 million in 2011, according to a news release.

"Our banking business across the state was very solid," said BJ Losch, chief financial officer at Chattanooga's biggest bank. "I thought we had a pretty good quarter."

SunTrust reported net income of $350 million, or 65 cents per share in the fourth quarter of 2012, compared to 13 cents per share in the fourth quarter of 2011. The Atlanta-based holding company, the parent of Chattanooga's second-largest bank, handily beat Wall Street estimates by 4 cents per share.

Excluding some unusual conditions arising from the sale of about $2 billion in the bank's Coca-Cola stock, revenue increased by $262 million compared to the fourth quarter of 2011.

The bank said the increases were from gains in interest, mortgage and investment banking income, which was offset by a decline in card fees linked to new federal regulations.

For the year, SunTrust reported that revenue increased $141 million over 2011 to $8.6 billion, excluding the sale of the bank's stake in Coca-Cola.

In Chattanooga, deposits and loans continued to pile up for First Tennessee, said Sanford.

"We attribute it to A, great people here; B, it's easy to do business; and C, we have a much better economy in Chattanooga," Sanford said.

But while First Tennessee increased its net profitability, the bank continued to deal with the lingering effects of the real estate crisis. Total revenue fell 12 percent to $317 million, down from $360 million in the same quarter of the prior year. And for all of 2012, the bank lost $28 million, or 11 cents per share.

The loss stemmed from about $250 charge the bank took to increase its reserves for mortgage repurchases, as well as a dip in debit card income due to Dodd-Frank regulations, Losch said.

Revenue actually grew 3 percent during the year to $851 million in 2012, from $829 million for all of 2011, according to financial statements. The bank has charged off most of its bad assets and nonperforming loans, slowly decreasing the risk in its portfolio throughout the year.