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SunTrust Banks, Inc. Message Board

  • lar205567 lar205567 Jun 4, 2008 3:40 PM Flag


    My first post. To me, this stock's performance is serious. I own 3426 shares that last July was worth $308,340. Today those shares are worth $167,874. This stock makes up a large part of my retirement fund. If the dividend holds, im fine with the share price, but what reccommendations would someone offer me?

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    • ...they may not think they have to cut it right now -- but the fact that they haven't as of yet - is not an indicator that they won't -- of course - the longer they go thru the mortgage turmoil without cutting it - does lend some percentage bets that they might make it thru without cutting the dividend -- however, it is too early for that bet - in my opinion - not that it is worth anything - but it is just as valuable as anyone else's in here.

    • what I said was that STI does not think they are going to have to cut their dividend, and if they thought they did they would have taken the action as the other banks did. Obviously they are not going to cut their dividend if they don't have to.

      As far as taking action when other banks do, you can bet your lunch that it has everything to do with it. It happens all the time with pre-earnings release announcements. When one of the big guys comes out and says they they aren't going to make their quarterly forecast, you can bet plenty of other guys come out the same day with the same message. Good PR dictates you don't want to come out with bad news on your own, you want your bad news released at a time when your peers have it so you aren't singled out.

    • ...that is nonsense - the decision to cut the dividend has little to do with whether "other banks are doing it" as far as timing - as of now - STI (obviously) does not think they have to cut - they may have to in the future - whether or not Wachovia and others cut their dividends before - or whether Wachovia and others have to further cut their dividends again - if Wachovia has to cut their's again - and STI does not - then this is a feather in STI's cap and a distinguishing factor - the decision is NOT: "well Wachovia cut their dividend - we do not have to cut ours -- but let's cut ours anyway." Try making some sense.

    • if they thought they were going to need to cut the dividend, they would have wanted to do it at the same time other similar banks were doing it. No guarantee it won't happen, particularly if the construction loans turn out worse than expected. But my conclusion is that at this time, STI doesn't anticipate needing to cut the dividend, nor do they want to. They want to be able to say 5 years from now or 20 years from now that they've always had consistent dividend growth. Again, I don't think STI is fighting for its life, I think they are thinking long term.

    • I normally do not post, but I recently read some comments by Dr. Marc Faber, and this is what he had to say about the current financial crisis. . . .

      According to Cassidy, who created the Texas Ratio from his
      experience with Texas banks in the 1980s and Northeast banks in the
      1990s, “when the ratio exceeded 100% in the late 1980s - early 1990s, it
      was a solid indicator for potential bank failure.” His view can be
      summarized as follows:

      “We continue to believe the biggest issue confronting the banking
      industry over the next 12-18 months will be credit deterioration.
      Residential mortgage delinquencies are at record levels, home equity loan
      defaults are steadily rising and residential construction and land loan
      nonperforming assets are skyrocketing for lenders with excess exposure
      to the weakest housing markets in the US. The ‘Next Shoes to Drop’ for
      credit in conjunction with the slower economy will be in the commercial
      and industrial (C&I) and commercial real estate loan areas….The
      companies with ratios in excess of 100% combined with a [sic]
      nonperforming asset ratios greater 10% have a higher probability of
      failure….Today, the huge amount of capital raised by banks has enabled
      companies to keep their Texas Ratios lower than what normally has been
      the case in prior credit cycles…..We continue to believe that we are in the
      ‘3rd or 4th inning’ of this down leg in this credit cycle. Therefore,
      investors should expect to see higher Texas Ratios and more bank failures
      before we reach the final inning of the game. Currently, we are
      forecasting an estimated 150 bank failures over the next 2-3 years.
      Bank stock prices will likely suffer as the game plays out over the
      next 12 months and investors should remain underweight in bank
      stocks at this time”….. (emphasis added).

      Mr. Cassidy might have added that investors should remain
      “underweight financial stocks” altogether because it is not only banks,
      which are over-leveraged and suffering from bad loans, but also
      investment banks, consumer loan companies and insurance companies.

      Please note that at the end of May, American International Group made a
      new 9-year low! Also, according to Cassidy, the ten banks with the worst
      “Texas Ratio” are in order: National City Corp (NCC), First BanCorp
      (FBP), Citizens Republic Bancorp (CRBC), UCBH Holdings (UCBH),
      First Horizon National Corp (FHN), Popular, Inc (BPOP), Fifth Third
      Banc (FITB), Colonial BancGroup (CNB), SunTrust Banks (STI),
      Wachovia Corp (WB). And while some of these banks have recently
      totally collapsed (Citizen Republic Bancorp - see Figure 4) others like
      SunTrust (STI) have held up relatively well.

    • why do you think that just because it hasn't happened yet - that it isnt going to? At what point in time do they raise their hands and say "the dividend isn't helping?" - when the yield gets to 9%? Selling coke shares to maintain the dividend isn't a strategy - its just good fortune that they have the coke shares. Don't you think the market sees that selling coke shares is not core operating earnings?

    • already cut the dividend after others have is a good indicator that they don't think they are going to have to. Wachovia, Citi, etc. didn't have any choice, as they are fighting for their existence.

    • .....have you been on a different planet lately? Haven't you seen the bank dividend cuts recently? I am not saying that STI is going to cut - but many banks do cut dividends--it happens in every downturn--when capital gets thin.

    • re: Dividend

      One thing that we hope bodes well for the dividend is that STI is a bank. Utilities and to a lesser degree banks regard dividends somewhat differently from most other industries. Since they are viewed as "safe" places for "widows and orphans" BOD's are quite reluctant to cut dividends. If this were a stock in most industries the dividend would have already been cut.

      One other item: You have not told us about your career. I have assumed you do not work for the bank. If you do work at Sun I would assuredly sell at least a goodly chunk of the stock immediately. To have ones career and ones money both in one firm is more risk than one should prudently take.

    • Sell now and buy SIL and AEM

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