SunTrust Banks, Inc. (STI)

Decently run company that is feeling the heat to really notch up performance due to: stagnant earnings and the real threat of a buy-out in the next 18 months (see WSJ and other related articles re: this potential). As a result STI has sold 9% of its Coca-Cola stock to initiate a share buyback of approx $1 B (in addition to its already sizable 3.5% dividend rate). Moreover, the bank is cutting costs and investing in new growth areas, as they don't want to be bought out (at least according to STI public statements). As a result, I see a highly motivated management that either will turn the bank around and drive great success, or it will be bought out at a premium. Either way, this stock should benefit.

SunTrust Bank, headquartered in Atlanta, is one of the nation's largest banking organizations, serving a broad range of consumer, commercial, corporate and institutional clients. As of September 30, 2006, SunTrust had total assets of $183.1 billion and total deposits of $124.4 billion.

The recent announcement that James Wells would replace Phillip Humann as CEO comes as a surprise to many. The decision may be the result of the pressure arising out of poor performance of the bank compared to its peers. Moreover, Jim Wells, who is 60 years old and just five years away from the mandatory retirement age, doesn’t seem to be a long-term solution. However, the announcement has made it clear that the bank is not for sale as speculated.

The net interest margin decreased 21 basis points to 2.93% over the same during the previous quarter. This is attributed to decline in low cost deposits and overall shift in the deposit mix to higher cost certificates of deposit. After much struggle and reorganization, the bank has reached the set target tier I capital ratio of 7.5% for Basel compliance with the required core capital. Even after National Commerce acquisition, it is scouting for more instead of focusing on the existing franchise and increasing the operating performance. The operations of the bank are largely concentrated on the southeastern states, which are prone to flooding and hurricanes. Over the past 18 months, the bank has divested its factoring, stock transfer, trustee businesses and other non-profitable ventures. Apart from this, it has also done a security and loan portfolio restructuring selling $3 billion in mortgage and student loans.

This bank is likely going to end up being forced to merge like NCC as I believe they deeper problems that will be exposed.

Subprime exposure is not direct to Suntrust and is less than others in regional bank sector. New program to streamline operating costs liked by Fool. Long term (last 10 years) stock has doubled.

As I wrote in my post last summer, my analysis of STI balance sheet and notes to financial statements indicated that potential write offs from all classes of assets (including those not required by FASB) were about $30B. STI management had stated the number was $6B and the stock recovered to the mid 30's along with other banks. I have no doubt when the stress test list is announced STI will not be a stock any Fool wants to own.

STI may not have the biggest or best in any facet of the banking game. I have made a killing on this stock. Haters of this stock seem to pick a department and slam the whole because one part is weak or ailing, but my experience with this company is that another department will pick up the slack and then some. Hey, the South is still growing, while the north withers on the vine. Heck, all of their people have moved South, and their money is coming too. The bank has room to grow both inside and outside the southeast region. I look to either be bought out, or for STI to start making moves into other regions through acquisitions.

Phil Humann incapable of running a bank this size.

Good bank

President Bush signs historic financial rescue plan into law - October 3/2008

money.cnn.com/2008/10/03/news/economy/house_friday_bailout/index.htm?postversion=2008100309

rally picks

Simply continueing to load up on banks.

This one has a decent chance of collapsing, regardless of government bailout.

* $700,000,000,000 plus $100,000,000,000 rescue package

* Signed U.S. Law to rescue U.S. Banks

* U.S. Government or American Taxpayers own stakes(shares) of U.S. Banks ($250,000,000,000 of $800,000,000,000)

* Rules making it tougher for borrowers to file bankruptcy

* Increased insured bank deposits from $100,000 to $250,000

* Promise ease of credit lending to good small to medium businesses

* Promise to buy up mortgage loans

* Promise to keep American Banking System from collapsing

Profile

SunTrust Banks Inc.

303 Peachtree Street NE

Atlanta, GA 30308

United States - Map

Phone: 404-588-7711

Fax: 404-827-6173

Web Site: www.suntrust.com

DETAILS

Index Membership: S&P 500

S&P 1500 Super Comp

Sector: Financial

Industry: Money Center Banks

Full Time Employees: 31,602

BUSINESS SUMMARY

SunTrust Banks, Inc. operates as the holding company for SunTrust Bank, which provides various financial services to consumer and corporate customers in the United States. The company offers various deposit products, including NOW accounts, money market accounts, savings accounts, consumer time, brokered deposits, and foreign deposits; and loans, such as real estate 1-4 family loans, real estate construction loans, real estate commercial loans, and real estate home equity lines. It provides commercial lending; financial risk management; and treasury and payment solutions, including commercial card services for diversified commercial, commercial real estate, and government/not-for-profit entities. The company also offers investment banking products and services, including mergers and acquisitions services, capital raising in debt and equity markets, financial risk management, asset securitization, and market making in cash securities and derivative instruments for various sectors, such as consumer and retail; financial services; and technology, energy, healthcare, and industrials. In addition, it provides residential mortgage products through its retail, broker, and correspondent channels; wealth management products and professional services; professional investment management and trust services; discount/online and brokerage services; and office solutions to high net worth individuals and their families. Further, the company operates as an investment advisor; offers administration and custody services, endowment and foundation services, and corporate agency services; and provides investment securities portfolio, long-term debt, derivative instruments, short-term liquidity and funding activities, and balance sheet risk management, as well as credit-related insurance, securities brokerage, and capital market services. As of December 31, 2007, it operated 1,682 full-service banking offices. The company was founded in 1891 and is headquartered in Atlanta, Georgia.

***All above information from YAHOO FINANCE***

SunTrust Banks, Inc. (Nyse:STI)

I believe that America is over saturated with banks. If you look to the north, south if you reside in Alaska, or northeast from Hawaii. Canada has 5 major banks and here in the U.S. over 10 major banks plus many more regional banks. Canada has a good banking system because Bank of Canada regulates the operations of the banks.

I believe that the U.S. Government is in the right step in spending $250,000,000,000 in owning shares in U.S. Banks, that way they can partially regulate banks operations. They should also reduce the number of banks in the U.S. by merging, acquiring, or let the weaker banks to dissolve.

Mechanical Strategy: Every year (1) Take the 500 biggest stocks in the caps database (in terms of market cap) - (2) Pick those ten stocks with positive earnings whose price/book values are closest to 1.

The fundamentals are there, Good earnings record, with onservative reporting of nonperforming loans, moderate sales growth, well capitalized. A clear survivor(in this banking mess) with strong branding in its market.

Moderate sell recomendations by analyst create good mid to long term buying opportunities

the downside is that since company is largely owned by instutional holders and mutual funds that listen to clueless analyst could affect market price in a panic over banking crisis

I really wonder what these anaylst base theyre sell upon.

Clearly we need more of this kind of bank.

I use buy and hold style on my companies all these are in my real life portfolio and each is a dividend payer holding long term

should be one of the banks that pull through this crap.