Magazine article American Banker

SunTrust Moves Steadily to Bolster Asset Quality

Magazine article American Banker

SunTrust Moves Steadily to Bolster Asset Quality

Article excerpt

SunTrust Moves Steadily To Bolster Asset Quality

Atlanta's careful and conservative SunTrust Banks Inc. seems further along the road to restoring asset quality than most of the nation's major banks.

Steady progress at shoring up the balance sheet helped SunTrust avoid the slide that affected most banks late in September, as investors nervously awaited third-quarter results, according to Wall Street analysts.

SunTrust's price per share on Aug. 30 was $34.50, while on Sept. 30 it was $36.875. That is a gain for the month of September of 6.87%, part of a 24% gain for the third quarter. On Wednesday, the stock traded at $35.25, off 25 cents, after a big gain of $1.375 during the previous day.

Nonperformers Up Only 3%

When SunTrust announced its latest results last week, analysts cheered on the news that nonperforming assets grew only $22 million, or 3%. Most of the increase stemmed from a single Chapter 11 filing by a big Florida developer, Koger Properties.

Meantime, SunTrust's Tennessee subsidiary, Third National Corp., reported an $11 million decline in nonperformers. This was the second successive fall in troubled loans for the unit.

The Nashville bank has been a drain almost since SunTrust bought it in 1987, near the peak of a real estate construction boom. But returns there are nearing 0.9% on assets and "may properly be deemed respectable," said Nancy A. Bush, an analyst at Brown Brothers Harriman & Co., New York.

One note of disquiet was sounded by Norman Jaffe of Fox-Pitt Kelton Inc. …

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