Shares of SunTrust (STI) of Atlanta closed at $23.91 Tuesday, returning 35% year-to-date, following a 40% decline during 2011.
The shares trade for nine times the consensus 2013 EPS estimate of $2.65.After the Federal Reserve rejected the Atlanta lender's plan to return capital to investors this year through a dividend increase and share buybacks, SunTrust said in a statement on March 13 that it would "not be increasing its return of capital to shareholders at this time," and that it would maintain its current quarterly dividend of five cents a share, and "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." The company is scheduled to announce its first-quarter results on April 23. The consensus first-quarter EPS estimate is 31 cents, following earnings of 28 cents a share the previous quarter and eight cents a share during the first quarter of 2011, when the company repaid bailout funds owed to the government for assistance received through the Troubled Assets Relief Program, or TARP. Operating earnings during the first quarter of 2011 were 22 cents a share. During the fourth quarter, SunTrust saw a 30% sequential decline in noninterest income to $723 million. The company reported mortgage production related losses of $62 million, compared to mortgage production income of $41 million in the third quarter. Mortgage servicing income also declined, to $22 million in the fourth quarter, from $68 million the previous quarter. These items reflected an increased "mortgage repurchase provision, as well as a mortgage servicing rights valuation adjustment arising from anticipated refinance activity from the HARP 2.0 program." The company's fourth-quarter earnings to common shareholders of $152 million reflected a $143 million reserve release. During the fourth quarter, SunTrust's loans held for investment increased 4% from the previous quarter and 6% from a year earlier, with strongest growth in commercial and student loans. Morgan Stanley analyst Betsy Graseck rates SunTrust "Equal Weight," with a price target of $25, and estimates the company will earn 33 cents a share during the first quarter, with a full-year estimate of $1.82, and a 2013 EPS estimate of $2.50. Interested in more on SunTrust? See TheStreet Ratings' report card for this stock. -- Written by Philip van Doorn in Jupiter, Fla. To contact the writer, click here: Philip van Doorn. To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn. To submit a news tip, send an email to: firstname.lastname@example.org.
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