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Click on individual bank names in the table below to access American Banker's coverage of each company's earnings report. Links to relevant coverage, filings, and releases can be found in the Related Links area of each article.
January 28
One of the few big banks that has yet to repay government bailout funds, SunTrust Banks Inc. said Friday that freeing itself from the Troubled Asset Relief Program is a priority.
To do so, it's likely the Atlanta bank will have to issue stock like its peer Fifth Third Financial Corp. did this week and others before it. However, given the bank's current Tier 1 common equity ratio just above 8%, SunTrust Chairman and Chief Executive James M. Wells III believes "a more modest capital raise" than that of its rivals would be required.
Fifth Third raised $1.7 billion in a stock offering Thursday to help it repurchase preferred shares it sold to the Treasury Department under Tarp.
"Our priorities are repaying Tarp, and in due time after that increasing the common dividend," Wells said Friday during a conference call discussing fourth-quarter results. "Our repayment strategy has been very deliberate, and it has had the best interest of our shareholders in mind. We believe our patience has been appropriate, as it has enabled us to deliver meaningful improvements in our performance, which among other things has resulted in an increased stock price."
SunTrust submitted a capital plan to the Federal Reserve earlier this month as part of the government's latest effort to review the health of the nation's largest banks. Once the process is complete, likely by the end of March, the bank "will be in a better position to reevaluate our repayment options and the appropriate timing," Wells said.
SunTrust said its credit quality greatly improved during the fourth quarter, which helped it turn a profit.
After paying preferred dividends, the bank reported net income of $114 million, or 23 cents per share, compared with a loss of $248 million, or 64 cents per share, a year earlier. Total revenue jumped 19% to $2.33 billion from $1.95 billion.
Net interest income increased 7% over the fourth quarter of 2009 to $1.29 billion, primarily due to lower funding costs as the bank gathered more low-cost deposits relative to higher-cost ones. Unlike some of its regional bank peers, SunTrust said its net interest margin expanded 17 basis points to 3.44% — the seventh straight quarterly increase.
Noninterest income rose 39% from the year-ago period to $1.03 billion, but was down slightly from the third quarter primarily a result of lower mortgage-related revenue, the bank said.
SunTrust's provision for credit losses dropped 47% from a year earlier and 17% from the third quarter, to $512 million. Net chargeoffs as a percentage of average loans fell to 2.14%, down 28 basis points from the third quarter and 69 basis points from the prior year period.
Despite improving credit metrics, the coast is far from clear, Wells said, as many regulatory hurdles await. Specifically, he expressed dismay over the Fed's proposal to cap debit interchange fees at 12 cents — which could potentially hurt revenue as much as 75%. Revenue from debit interchange totaled $332 million last year, the bank said.
"Like most in the industry, we are very concerned about any government efforts to impose price controls," he said. "We, of course, have been actively working to make our views known to the regulators, as well as to Congress. … And we are hopeful that any final regulation takes into account a less narrow interpretation of costs that would include at a minimum fraud losses, fraud prevention cost and servicing costs associated with operating a debit card business."
Though M&A has been a highlight on other bank conference calls this week, SunTrust said little on the topic. Bill Rogers, SunTrust's president and chief operating officer, said he expects the competitive landscape in the Southeast to remain tough.
"Competition isn't new to the Southeast," he said. "This has been a highly competitive market for a very, very long time, and continues to be a highly competitive market. We think we are extremely well-positioned in our markets, enjoying market shares of second and third position in most of our markets."
