SunTrust Fails Fed’s Stress Test

Press release from the issuing company

Tuesday, March 13th, 2012

SunTrust Banks, Inc. announced that the Federal Reserve completed its annual review of SunTrust's capital plan, submitted in January in connection with the Comprehensive Capital Analysis and Review (CCAR).

The Federal Reserve review showed that SunTrust's capital exceeded requirements throughout the Supervisory Stress Test time horizon without any capital actions.  As a result of this review, SunTrust will not be increasing its return of capital to shareholders at this time; however, SunTrust expects to:

  • Maintain its current quarterly common stock dividend of $0.05 per share.  
  • Redeem certain trust preferred securities at such time as their governing documents permit, including when these securities are no longer expected to qualify as Tier 1 capital.

"SunTrust has strong Tier 1 common capital of 9.2 percent and improved earnings momentum," said SunTrust Chairman and Chief Executive Officer William H. Rogers, Jr.  "Our client-centric strategy has resulted in high levels of client loyalty and strong market share growth.  In addition, the composition and risk profile of SunTrust's loan portfolio have improved significantly over the past several years, leading to markedly lower levels of loan losses."

Mr. Rogers also noted that the company has increased its Tier 1 common capital over multiple consecutive quarters.

Regarding the Federal Reserve's Supervisory Stress Test for SunTrust, Chief Financial Officer Aleem Gillanisaid, "The Federal Reserve noted that their estimates were for a 'hypothetical, severely adverse' scenario that employed 'conservative' and 'simplifying' assumptions.  Using our own modeling techniques -- which have shown to have a high level of predictability -- SunTrust's estimates for loan losses and pre-provision net revenue in the Supervisory Stress scenario are significantly more favorable than those made by the Federal Reserve."

Mr. Gillani added that SunTrust's improved earnings momentum has continued in the first quarter of 2012 and is expected to result in earnings per share that exceed the first quarter First Call mean estimate.

Important Cautionary Statement About Forward-Looking Statements

The foregoing statement is based on our interim financial results as of February 29, 2012, and the first quarter First Call mean earnings per share estimate at March 13, 2012. 

Our expectations for first quarter financial results relative to the first quarter First Call mean earnings per share estimate at March 13, 2012 is a forward-looking statement and is based upon the current beliefs and expectations of management and on information currently available to management. Our statement speaks as of the date hereof, and we do not assume any obligation to update this statement or to update the reasons why actual results could differ from those contained in such statement in light of new information or future events.