NEW YORK ( TheStreet) -- SunTrust Banks ( STI) was a standout performer among the surging financial stocks on Wednesday as speculation that the Atlanta-based bank could be a buyout target made the rounds. The stock jumped 6.3% to $24.04 in late afternoon trades. Volume of 7.5 million was closing in on the issue's trailing three-month daily average of 8 million.
At least two market observers attested to TheStreet about chatter that U.K. banking giant Barclays ( BCS) might be mulling a bid for SunTrust; although it wasn't clear whether Barclays might be interested in the whole bank or just a portion of its operations. Spokespeople for both banks declined to comment for this story. Investors were already cheering the banking sector on Wednesday because of State Street's (STT) positive earnings outlook. The Keefe Bruyette & Woods Bank Stock Index chugged 2.8% higher to 46.79. Shares of Barclays were making a strong move higher on Thursday as well, gaining 8% to $17.65. Todd Hagerman, an analyst at Credit Suisse, says it's hard to say whether there is any truth to the rumors and believes it is premature for any large bank deals to be happening just yet anyway. "All the folks we've talked to ... suggest that traditional M&A activity is still a ways away, particularly when you're talking about some larger regional bank," Hagerman says. Bank stocks "are still coming off the bottom," he adds. "Many have yet to show a return to sustainable profitability." SunTrust, in particular, has been hit heavily over the past few months. The stock is down 29% from a 52-week high of $32.02 reached on May 13. The $172 billion-asset Southeastern bank has yet to repay TARP funds to the government; its loan book is overflowing with problem loans related to residential real estate and residential construction. SunTrust has significant exposure foreclosures in Florida, one of the most troubled states during the housing downturn. SunTrust has not reported a profit in at least the past four quarters. Analysts on average expect the bank, which reports earnings on July 22, to post a quarterly loss of 34 cents a share, according to Thomson Reuters.