Goldman Sachs Reiterates SunTrust Banks (STI) Buy Rating
March 02, 2010 9:12 AM
Goldman Sachs analysts Brian Foran, Richard Ramsden, Adriana Kalova and Quan Mai maintained their Buy rating for SunTrust Banks, Inc. (NYSE: STI) with a price target of $32.
The Goldman Sachs analysts remained positive about SunTrust Banks' prospects, noting that problem loans were on the decline.
The Goldman Sachs analysts wrote that, "over the past four quarters, each of SunTrust’s credit buckets has turned successively down – i.e. in 1Q09 early delinquencies fell, in 2Q late stage delinquency turned, in 3Q nonaccruals fell, and in 4Q charge-offs fell. A lot of investors viewed the 4Q decline in chargeoffs as a blip, but this analysis suggests the underlying trend is still lower.
If we put it all together problem loan inflows are declining (i.e. total growth in delinquency and NPA adjusted for charge-offs in the quarter). SunTrust has built a large troubled debt restructuring book but even if we add this back to problem loan formation the trend is the same. See the chart at the bottom of Exhibit 1."
They also mentioned that SunTrust Banks had reduced headcount, making the company more cost efficient.
