Hot Banking stock to watch: SunTrust Banks, Inc. (NYSE: STI)

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SunTrust Banks, Inc. (NYSE: STI) stock rose 4.62% after the company beaten the earnings estimate for the fourth quarter of FY 18. Book value per common share was $49.57 and tangible book value per common share was $35.73, both up from September 30, 2018, driven primarily due to the growth in retained earnings and a decrease in accumulated other comprehensive loss. At December 31, 2018, the Company had total assets of $215.5 billion and total shareholders’ equity of $24.3 billion, which represents 11% of total assets.

STI in the fourth quarter of FY 18 has reported the adjusted earnings per share of $1.40, beating the analysts’ estimates for the adjusted earnings per share of $1.38. The company had reported the adjusted revenue growth of 4 percent to $2.38 billion in the fourth quarter of FY 18, which is in line with the analysts’ estimates for revenue of $2.38 billion. The sequential increase of 3% is due to both higher net interest income and noninterest income, while the year-over-year increase was driven by higher net interest income.

The Common Equity Tier 1 (“CET1”) ratio was estimated to be 9.2% as of December 31, 2018, which is lower than the prior quarter due to loan growth and increased share repurchases. During the fourth quarter, the company has repurchased $750 million of its outstanding common stock. The Company has $750 million remaining authorization per its 2018 Capital Plan. The Company has also issued $1.4 billion of long-term debt in the fourth quarter of 2018. The company has declared a common stock dividend of $0.50 per common share.

Additionally, overall asset quality performance remained strong. Nonperforming assets (“NPAs”) had totaled $589 million at December 31, 2018, which is down $165 million from the prior quarter and $152 million year-over-year. The ratio of NPLs to period-end LHFI was 0.35%, 0.47%, and 0.47% at December 31, 2018, September 30, 2018, and December 31, 2017, respectively. The decrease was due to primarily by payoffs and the resolution of certain non-accruing commercial loans. In addition, residential mortgage nonperforming loans declined due to loans transitioning from non-accruing (as a result of forbearance relief provided after hurricanes) back to accruing status.

Net charge-offs haad totaled $97 million during the current quarter, which is an increase of $9 million compared to the prior quarter and a decrease of $10 million compared to the fourth quarter of 2017. The provision for credit losses was $87 million in the fourth quarter, which is a sequential increase of $26 million and a year-over-year increase of $8 million.

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