Clouds Gather Over SunTrust
January 23, 2009 – 9:07 pmDriving much of the loss was a provision for loan losses of $962.5 million and $145 million in additional write-downs to the bank’s loan and securities portfolios. During the quarter, the bank issued $4.85 billion of preferred stock and warrants to the U.S. Treasury under the Capital Purchase Plan, it said, and issued another $3.0 billion of debt guaranteed by the FDIC under the Temporary Liquidity Guarantee Program.
“The fact that SunTrust is not alone in paying the price of a deteriorating economy on our business and our clients does not make today’s results any less painful to report,” said James M. Wells III, SunTrust Chairman and CEO. Mr. Wells noted that increased unemployment and continued declines in home values drove loan delinquencies significantly higher during the fourth quarter of 2008, resulting in higher than expected credit losses. “We are under no illusions as to the severity of this credit cycle,” he added. “Managing successfully through it remains our number one priority.”
The worsening economic conditions and resulting affect on asset values also continued to adversely impact the Company’s assets carried at fair market value. During the fourth quarter, market valuation losses on loans and securities carried at fair value were approximately $145 million, of which $44.3 million related to the Company’s public debt and related hedges carried at fair value.
