Tags: SunTrust | STI | BAC | banks

SunTrust Rises from Banking Crisis

By    |   Thursday, 29 Sep 2011 04:50 PM

Regional banking company SunTrust Banks (STI) is currently producing financial results well above where the company was one year ago and the forecasted future looks even brighter. However, the bank still could be hit by another round of financial problems, if the economy and housing markets continue to stagnate.

SunTrust is a regional banking company headquartered in Atlanta with a banking presence throughout the Southeast from Washington, D.C. to Florida. The company provides a full range of banking services at more than 1,600 branches. SunTrust has approximately $170 billion of assets.

For the second quarter of 2011, SunTrust reported net income of 33 cents per share, a significant improvement from the 11 cents loss a year earlier. The full year 2011 consensus earnings estimate is $1.12 per share compared to an 18 cents loss in 2010. For 2012, SunTrust is forecast to earn $2.18 per share, the current Wall Street consensus estimate.

During the first half of 2011, SunTrust repurchased its $4.5 billion of TARP-financed preferred shares, repaying the company's full TARP balance. With the recent stress test results, the company was able to increase the quarterly dividend to 5 cents from 1 cent per share. For comparison, before the financial crisis, the SunTrust dividend was 77 cents quarterly.

Outstanding issues

SunTrust Banks may not be out of the woods, as far as problem loans go. The International Strategy & Investment Group has rated SunTrust, along with Bank of America (BAC), at the most risk of suffering additional losses from home equity loans. Lending exposure to the problematic Florida housing market could lead to unexpected losses for SunTrust.

Recently, Deutsche Bank analyst Matt O'Connor reduced his earnings estimates for 15 banking companies, including STI. However, at the same time he upgraded SunTrust to buy from hold. The Deutsche Bank earnings estimates were well above the consensus average for banks, and the estimate reductions from O'Connor bring his expectations more in line with the consensus.

The company next reports on Oct. 21.


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Regional banking company SunTrust Banks (STI) is currently producing financial results well above where the company was one year ago and the forecasted future looks even brighter. However, the bank still could be hit by another round of financial problems, if the economy...
SunTrust,STI,BAC,banks
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2011-50-29
Thursday, 29 Sep 2011 04:50 PM
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