Last Monday an $8.5bb settlement was announced. In it STI was mentioned. ALL the other banks either filed and SEC form or issued a corp PR (or both) as to their share down to the million, i.e., C = $305mm, JPM = $753mm, WFC = $766mm etc.
Given the total cash part of the settlement was $3.3bb and reducing this amount by known statements from other banks, STI's cash portion is $293mm. That's HUGE for a bank the size of STI.
Question...why do they feel a $293mm cash hit to Q4 earnings in NOT material? Why don't the rules matter to them? Is it ignorance, arrogance, or is something much bigger than the $293mm coming...i.e., a kitchen sink legal dump at the earnings call that involves much more than $293mm for which they want to keep control information as best as possible.
I don't think so. Any bank large enough to gobble up STI would most likely run into the 10% max deposit threshold. Moreover, STI has FAR TOO GREAT of legacy loan and MBS risk unresolved. That said, I could see STI being a suitor of small regional banks to expand its footprint. They better do something or they will eventually be swallowed up by the big guys but not by choice.
If they don't want to tell us we have to guess. I guess their cash settlement share is $500 million, or $1 / share hit to Q4 earnings.
Getting really sick of this bank. All this "cost cutting". Then they go out and raise $500mm in a preferred offering and put up another capital raise on Monday probably for another $500mm. This follows selling all the Coke stock and losing all that divi revenue.
Wonder how they will explain this expense...they said so many times how they were done with legacy mortgage expenses after the $375mm provision in Q3.
I have no idea why they need to raise all this capital but it can't be good.
the only reason I can think of that STI refuses to tell investors how much their portion of the $8.5bb settlement is -- in cash and in customer aid -- is because there is another bomb coming. It's Fed stress test and earnings time. They have to tread carefully. And announcing a $500mm CASH hit from this settlement and another $several hundred million hit from something else a few days apart would look terrible. I fully expect STI to make an impromptu conference call annuncement in which they pre-announce and tell us something bad.
This is all too wierd. Non-disclosure of material events is never a good thing.