-
Susquehanna Bancshares is doing a sale-leaseback of 30 branches to improve its capital planning. But over the long term, and more importantly to the industry overall, it could also help the bank get out of branches that may one day become obsolete.
December 27 -
SunTrust Banks (STI) has agreed to sell RidgeWorth Capital Management, its asset management business, for $245 million.
December 11 -
SunTrust Banks has joined the lengthy list of major banks slashing jobs in their mortgage divisions.
October 17 -
SunTrust Banks (STI) has agreed to pay $1.5 billion to resolve claims of shoddy mortgage lending, servicing and foreclosure practices.
October 10 -
SunTrust Banks (STI) in Atlanta has committed $5 billion to funding commercial mortgages originated by MetLife (MET).
August 5
SunTrust Banks (STI) worked hard to get its affairs in order last year. Now it's up to Chairman and Chief Executive Bill Rogers to keep the Atlanta company on track to grow.
When the $172 billion-asset company reports fourth-quarter results Friday, it will close out a year where it paid billions to
Separately, management rid itself of a noncore business line, agreeing to sell
It's clear that Rogers and his team prioritized putting a number of lingering problems to rest. "The big sort of legacy issues I feel are more in the rearview mirror," Rogers told analysts at a Dec. 10 conference in New York hosted by Goldman Sachs.
A SunTrust spokesman declined to comment.
SunTrust's biggest move involved a $1.5 billion settlement tied to loans insured by the Federal Housing Administration. The company also paid $373 million to Fannie Mae, $160 million to the Federal Reserve Board and $65 million to Freddie Mac last year.
The elimination of distracting investigations, and unwanted assets should clear the deck for SunTrust to make progress on other goals this year, says Stephen Scinicariello, an analyst at UBS Securities. "It sets up for a much cleaner 2014," he says.
Despite the relatively clean slate, few analysts expect SunTrust to emerge an active acquirer, and fewer expect management to sell the company this year.
"I would say SunTrust is neither a seller nor a target, at least for a while," Scinicariello says. "The greatest opportunity they have is to improve their own internal efficiency, and I don't see them having to acquire things to make that happen."
Rather, SunTrust will likely focus on becoming more efficient, says Chris Marinac, an analyst at FIG Partners. He projects that SunTrust will report a fourth-quarter efficiency ratio below 65%, adding that it could drop to 63%, or lower, by the mid-2014.
That's down from 71% at the end of 2012. SunTrust wants to lower it further, to somewhere in the high 50% range, Aleem Gillani, the company's chief financial officer, told attendees at the Nov. 7 BancAnalysts Association of Boston Conference.
"It's going to be more challenging to get to 60%," Gillani said in response to an attendee's question. "You're right. We've gotten halfway from where we wanted to go to what our target is."
Some of the savings will come through job cuts,
Kevin Fitzsimmons, an analyst at Sandler O'Neill, estimates that a 20% staff reduction would generate quarterly savings of about $50 million, beginning in the second quarter.
SunTrust will also cut costs by renegotiating leases for office space, changes in how it runs ATMs and back-office operations, and reduced travel, among other areas, Gillani said. "When I saw the $362 room rate at this hotel we're not staying tonight," he said at the BancAnalysts conference, which was held at The Langham, a historic Boston hotel located in a former Fed building.
SunTrust is relying on an economic recovery, and some new initiatives, to jumpstart loan growth and fee income. In August, it announced a venture with MetLife (MET)
Last month, its SunTrust Equity Funding unit unveiled a
The decision to sell RidgeWorth epitomizes SunTrust's efforts to rid itself of distractions and focus on its core business, analysts say. RidgeWorth, also based in Atlanta, had been for sale for several years, Marinac says.
"At the end of the day, it comes back to management being much more focusd on their core strategic goals and where they are able to cross-sell," Scinicariello says. "RidgeWorth doesn't really fit with that kind of strategy."
