SunTrust Banks Inc. (STI, Financial) filed Quarterly Report for the period ended 2009-03-31.
SunTrust Banks Inc. is a commercial banking organization. The company provides a wide range of services to meet the financial needs of its growing customer base in Alabama Florida Georgia Maryland Tennessee Virginia and the District of Columbia. Its primary businesses include traditional deposit and credit services as well as trust and investment services. (Company Press Release) SunTrust Banks Inc. has a market cap of $6.63 billion; its shares were traded at around $18.52 with and P/S ratio of 0.8. The dividend yield of SunTrust Banks Inc. stocks is 2.1%. SunTrust Banks Inc. had an annual average earning growth of 2.3% over the past 10 years.
For the first quarter, average loans declined $2.3 billion, or 1.8%, compared to the fourth quarter with average residential real estate related loans declining $2.5 billion. We are committed to lending to qualified commercial and consumer borrowers. However, the current economic environment has caused a significant retraction in spending by borrowers who are deploying excess capital to de-leverage their balance sheets. Despite this retraction, new loan originations, commitments, and renewals of commercial and consumer loans were approximately $23 billion during the quarter, with first mortgage lending leading the way at approximately $13 billion.
During the first quarter, we have increased average consumer and commercial deposits by $5.3 billion, or 5.2%, and period end balances were up $7.2 billion, or 6.8%, compared to year end to a record level of $112.4 billion. Growth occurred in all products with the exception of savings. This record level of growth was driven by clients seeking the security of bank deposits, improved products and pricing, elevated focus on client service, and the Live Solid. Bank Solid. brand advertising that attracted new clients and expanded relationships. Further, through an intense focus on improved execution, we have been successful in improving client satisfaction, acquisition, and retention. Through the significant inflows of high quality deposits and longer term financing sources, we have substantial liquidity through cash, high quality government-backed securities, and Fed funds borrowing capacity. See additional discussion of our liquidity position in the Liquidity Risk section of this MD&A.
The allowance for loan losses increased $384.0 million from year end, increasing to 2.21% of total loans, up 35 basis points from year end. The majority of our credit losses relate to loans secured by residential real estate. However, we are seeing some signs of weakness in our commercial client base related to stress on their revenues and overall profitability, particularly those in cyclical industries that are more directly impacted by the current recessionary conditions. Our net charge-offs grew during the quarter to $610.1 million, or 1.97% annualized of average loans. However, the quarterly growth rate of net charge-offs grew at their slowest pace since the second quarter of 2008, and nonperforming loans, which were $4.6 billion as of March 31, 2009, also increased at their slowest rate since the second quarter of 2007. We have implemented numerous loss mitigation efforts and are working to effectively manage the elevated level of nonperforming loans. While total credit-related losses, including fraud-related borrower misrepresentation and claim denials, remain elevated, the total credit-related expenses declined approximately $200 million, or 14%, from the fourth quarter, and early stage delinquency levels either stabilized or improved modestly in most loan categories.
Despite the improvement in our balance sheet, earnings during the quarter were under significant pressure. We reported a net loss available to common shareholders for the three month period ended March 31, 2009 of $875.4 million, or $2.49 per average common diluted share, compared to net income available to common shareholders of $281.6 million, or $0.81 per average common diluted share, for the three month period ended March 31, 2008. The $714.8 million non-cash goodwill impairment charge available to common shareholders, after tax, contributed $2.03 to our reported loss per share. The goodwill impairment charge has no impact on tangible or regulatory capital. The impairment related to businesses with concentrations in residential real estate and is the direct result of continued deterioration in those market conditions. The decline in value of those mortgage and commercial real estate businesses reflects the current downturn, which resulted in depressed earnings in those businesses and the significant decline in our market capitalization during the first quarter. We remain committed to the clients, products, and services of the impacted businesses and believe that the long-term growth prospects of these businesses are strong.
Read the The complete ReportSTI is in the portfolios of Brian Rogers of T Rowe Price Equity Income Fund, David Dreman of Dreman Value Management, Brian Rogers of T Rowe Price Equity Income Fund, David Dreman of Dreman Value Management, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Warren Buffett of Berkshire Hathaway, Charles Brandes of Brandes Investment, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Chris Davis of Davis Selected Advisers, Kenneth Fisher of Fisher Asset Management, LLC.
SunTrust Banks Inc. is a commercial banking organization. The company provides a wide range of services to meet the financial needs of its growing customer base in Alabama Florida Georgia Maryland Tennessee Virginia and the District of Columbia. Its primary businesses include traditional deposit and credit services as well as trust and investment services. (Company Press Release) SunTrust Banks Inc. has a market cap of $6.63 billion; its shares were traded at around $18.52 with and P/S ratio of 0.8. The dividend yield of SunTrust Banks Inc. stocks is 2.1%. SunTrust Banks Inc. had an annual average earning growth of 2.3% over the past 10 years.
Highlight of Business Operations:
This extremely difficult economic backdrop significantly hampered our financial performance this quarter, as evidenced by a net loss of $815.2 million, which includes a $723.9 million, after tax, non-cash goodwill impairment charge. We are not pleased by these results; however, excluding the goodwill impairment charge, earnings improved relative to the fourth quarter, and the remaining loss is less than the first quarter increase in the allowance for loan losses. Despite the challenging economic environment, certain areas of our organization performed reasonably well. Looking beyond the bottom line and considering the impact of the recessionary environment, we continue to be a strong, solid financial institution. We remain committed to running a successful organization serving clients, making sound credit decisions, generating loans and deposits, and operating as efficiently as possible. To that end, management remains committed to guiding the organization through this environment and continuing to focus their efforts on growing client relationships, prudent lending practices, credit loss mitigation, and operating expense management. These factors remain paramount to successfully navigating the organization through this challenging environment and positioning it well for the growth opportunities that will exist when the current economic cycle turns.For the first quarter, average loans declined $2.3 billion, or 1.8%, compared to the fourth quarter with average residential real estate related loans declining $2.5 billion. We are committed to lending to qualified commercial and consumer borrowers. However, the current economic environment has caused a significant retraction in spending by borrowers who are deploying excess capital to de-leverage their balance sheets. Despite this retraction, new loan originations, commitments, and renewals of commercial and consumer loans were approximately $23 billion during the quarter, with first mortgage lending leading the way at approximately $13 billion.
During the first quarter, we have increased average consumer and commercial deposits by $5.3 billion, or 5.2%, and period end balances were up $7.2 billion, or 6.8%, compared to year end to a record level of $112.4 billion. Growth occurred in all products with the exception of savings. This record level of growth was driven by clients seeking the security of bank deposits, improved products and pricing, elevated focus on client service, and the Live Solid. Bank Solid. brand advertising that attracted new clients and expanded relationships. Further, through an intense focus on improved execution, we have been successful in improving client satisfaction, acquisition, and retention. Through the significant inflows of high quality deposits and longer term financing sources, we have substantial liquidity through cash, high quality government-backed securities, and Fed funds borrowing capacity. See additional discussion of our liquidity position in the Liquidity Risk section of this MD&A.
The allowance for loan losses increased $384.0 million from year end, increasing to 2.21% of total loans, up 35 basis points from year end. The majority of our credit losses relate to loans secured by residential real estate. However, we are seeing some signs of weakness in our commercial client base related to stress on their revenues and overall profitability, particularly those in cyclical industries that are more directly impacted by the current recessionary conditions. Our net charge-offs grew during the quarter to $610.1 million, or 1.97% annualized of average loans. However, the quarterly growth rate of net charge-offs grew at their slowest pace since the second quarter of 2008, and nonperforming loans, which were $4.6 billion as of March 31, 2009, also increased at their slowest rate since the second quarter of 2007. We have implemented numerous loss mitigation efforts and are working to effectively manage the elevated level of nonperforming loans. While total credit-related losses, including fraud-related borrower misrepresentation and claim denials, remain elevated, the total credit-related expenses declined approximately $200 million, or 14%, from the fourth quarter, and early stage delinquency levels either stabilized or improved modestly in most loan categories.
Despite the improvement in our balance sheet, earnings during the quarter were under significant pressure. We reported a net loss available to common shareholders for the three month period ended March 31, 2009 of $875.4 million, or $2.49 per average common diluted share, compared to net income available to common shareholders of $281.6 million, or $0.81 per average common diluted share, for the three month period ended March 31, 2008. The $714.8 million non-cash goodwill impairment charge available to common shareholders, after tax, contributed $2.03 to our reported loss per share. The goodwill impairment charge has no impact on tangible or regulatory capital. The impairment related to businesses with concentrations in residential real estate and is the direct result of continued deterioration in those market conditions. The decline in value of those mortgage and commercial real estate businesses reflects the current downturn, which resulted in depressed earnings in those businesses and the significant decline in our market capitalization during the first quarter. We remain committed to the clients, products, and services of the impacted businesses and believe that the long-term growth prospects of these businesses are strong.
Read the The complete ReportSTI is in the portfolios of Brian Rogers of T Rowe Price Equity Income Fund, David Dreman of Dreman Value Management, Brian Rogers of T Rowe Price Equity Income Fund, David Dreman of Dreman Value Management, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Warren Buffett of Berkshire Hathaway, Charles Brandes of Brandes Investment, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Chris Davis of Davis Selected Advisers, Kenneth Fisher of Fisher Asset Management, LLC.
