SunTrust Banks Inc.STI

Morningstar Rating

Stock Research and Analysis

by Jaime Peters, CFA, CPA

In the boom times, SunTrust's operations struggled to meet their full potential in the firm's once-enviable footprint. Now, the company is dealing with the severe downturn throughout the Southeast. The bank has shored up its capital position, which should allow it to make it through this recession. Read more

Bulls Say

SunTrust operates in the attractive southeastern U.S. Projected population growth for its markets is 10% from 2008 to 2013.

SunTrust will benefit from the successful completion of its cost-cutting plan--E-squared.

As one of the largest players in its hometown of Atlanta, SunTrust stands to gain market share from the numerous banks that are failing in that struggling market. Read more

Bears Say

In our opinion, SunTrust is likely to lose money in throughout 2009.

Like the rest of the industry, SunTrust's loan losses are climbing quickly in the currently troubled mortgage market. We expect losses will continue to climb and remain elevated in 2009 and 2010.

SunTrust's allowance for loan losses has not been built up as much as at its peers', suggesting this bank might be recognizing elevated provisions even after its peers' income statements show improvement. Read more

Strategy

SunTrust uses a hub-and-spoke expansion strategy. In new markets, it builds a traditional branch offering a complete product set. Then it builds a series of in-store branches with more limited offerings, allowing rapid and fairly inexpensive expansion through the new market. Read more

Management

James Wells, 60, became CEO of SunTrust in January 2007 upon the retirement of Phil Humann. Wells has been in the upper management of SunTrust since 1998, coming over as a part of the Crestar acquisition. He has been ingrained in the conservative culture and its current strategy. Read more

Profile

Headquartered in Atlanta, SunTrust is a large regional bank operating throughout the southeastern United States. The company offers a full range of commercial and retail banking products at its roughly 1,700 branches. Read more

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