SunTrust, Business as Usual

SunTrust (STI) is a major Mid-Atlantic and Southeastern regional bank.  The company has $175 billion in assets with a large residential and commercial real estate involvement.  There are close to 1,700 retail branches throughout 9 states.  The bank has significant holdings in Coca Cola (KO), which along with SunTrust is based in Atlanta.
I deal frequently with SunTrust.  We have had accounts with them for several years.  The company prides itself on excellent customer service.  It is our experience that they do that very well.  Personnel are unfailingly helpful and courteous.
Like any well run business SunTrust has kept a positive and upbeat attitude in the current crisis.    In our community north of Tampa real estate has dropped up to 35% in value over the last year or so.   Since SunTrust is a major lender in the area and throughout Florida this has to have an effect.  So far, however, they project a “business as usual” image.  Our home equity credit limits have not been frozen or reduced.  We still get regular mailings from them about refinancing and other services.
Recently, branches have begun prominently displaying signs stressing how “solid” and “reliable” the bank is.  The  FDIC’s decision to increase deposit insurance from $100,000 to $250,000 is also mentioned.  Their website, www.suntrust.com, has similar messages.
Suntrust, of course, is not immune to the economic climate.  The stock is down some 60% from its 52 week high.  Write-downs are increasing.  Perhaps more ominously, they have twice tapped TARP funds, once in early November for $3.5 billion and then again in early December for $1.4 billion.  With the dividend yield over 7% you have to wonder how safe it is.
Last Tuesday night we went to the new Shops at Wiregrass mall north of Tampa for some Christmas shopping.  Large crowds, however, seemed mostly interested in watching the free Christmas tree light show.  The numerous specialty shops were largely empty with bored clerks hanging around large red 50% off signs.   With several mall owners like General Growth Properties (GGP) near bankruptcy, this does not bode well for banks heavily into commercial lending such as SunTrust.   TheStreet.com in their “Banks and Thrift Screener” gives SunTrust a C- (Fair) rating.  You won’t find any mention of that at the branches.