SunTrust Banks: Financial Analysis
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SunTrust Banks Financial Analysis
Florida Atlantic University
ACG 6315
TABLE OF CONTENTS
Introduction 3
Description of the Company 3-4
Economic and Industry Analysis 4-5
Competition 5-6
Financial Ratio Analysis 6-9 Capital Adequacy 6-7 Asset Quality 7 Management 7-8 Earnings 8 Liquidity 8 Sensitivity to Market Risk 9
Assumptions 9
Results of Analysis 9
Conclusion 10
References 11
Appendix 12
Introduction The banking industry has undergone major upheaval in recent years, largely due to the lingering recessionary environment and increased regulatory environment. Many banks have failed in the face of such tough environmental conditions. These conditions emphasize the importance of gaining an accurate picture of a bank’s financial health through detailed financial analysis. This financial analysis report analyzes SunTrust Bank’s profitability, solvency and financial stability using financial ratios that point to the basic health of its activities. The report also analyzes the overall health of the industry while examining SunTrust’s relative position to its competitors in the market. Finally, the report provides a future perspective of the Bank and its growth prospects.
Description of the Company The earliest form of SunTrust Banks began in 1811 as the Farmer 's Bank of Alexandria, Virginia which led to the Trust Company of Georgia in 1891. The Bank was one of the original underwriters for Coca-Cola’s IPO in 1919, becoming one of their largest shareholders for many years. The IPO became a huge asset for SunTrust when the Coca-Cola stock was later revalued in 1993 from its historic value of $110,000 to almost $1.1 billion. The Bank, as it is today, is a result of the merger in 1985 of the Trust Company of Georgia and SunBanks, Inc., of Florida. The merger resulted in the adoption of the current SunTrust name in 1995 (Hoover’s, 2012). SunTrust Banks, Inc. (NYSE: STI) is
SunTrust Banks Financial Analysis
Florida Atlantic University
ACG 6315
TABLE OF CONTENTS
Introduction 3
Description of the Company 3-4
Economic and Industry Analysis 4-5
Competition 5-6
Financial Ratio Analysis 6-9 Capital Adequacy 6-7 Asset Quality 7 Management 7-8 Earnings 8 Liquidity 8 Sensitivity to Market Risk 9
Assumptions 9
Results of Analysis 9
Conclusion 10
References 11
Appendix 12
Introduction The banking industry has undergone major upheaval in recent years, largely due to the lingering recessionary environment and increased regulatory environment. Many banks have failed in the face of such tough environmental conditions. These conditions emphasize the importance of gaining an accurate picture of a bank’s financial health through detailed financial analysis. This financial analysis report analyzes SunTrust Bank’s profitability, solvency and financial stability using financial ratios that point to the basic health of its activities. The report also analyzes the overall health of the industry while examining SunTrust’s relative position to its competitors in the market. Finally, the report provides a future perspective of the Bank and its growth prospects.
Description of the Company The earliest form of SunTrust Banks began in 1811 as the Farmer 's Bank of Alexandria, Virginia which led to the Trust Company of Georgia in 1891. The Bank was one of the original underwriters for Coca-Cola’s IPO in 1919, becoming one of their largest shareholders for many years. The IPO became a huge asset for SunTrust when the Coca-Cola stock was later revalued in 1993 from its historic value of $110,000 to almost $1.1 billion. The Bank, as it is today, is a result of the merger in 1985 of the Trust Company of Georgia and SunBanks, Inc., of Florida. The merger resulted in the adoption of the current SunTrust name in 1995 (Hoover’s, 2012). SunTrust Banks, Inc. (NYSE: STI) is
References: Credit Opinion: SunTrust Banks, Inc.. (2012, March 28). Moody 's Investors Service, For U.S Global Bank Credit Rating Methodology. (2012, April). Morningstar, pp. 1-15. Quarterly Banking Profile: Fourth Quarter 2011. (2012). FDIC Quarterly, 6(1), 1-27. SunTrust Banks Inc. Ratings Unaffected by Fed Review. (2012, March 14). Standard & Poor 's. SunTrust Banks Inc.. (2012, March 13). Standard & Poor 's, pp. 1-11. SunTrust Banks Inc. (2012). Hoover 's. Retrieved July 4, 2012, from http://ezproxy.fau.edu/login?url=http://search.proquest.com/docview/230617193?accountid=10902 SunTrust Banks, Inc SunTrust Banks, Inc. (n.d.). Thompson Reuters. Retrieved June 29, 2012, from http://www.knowledge.reuters.com/Views/Company/Fundamentals SunTrust Profile SunTrust, Upgrade to OW on Strong 2H Mortgage Revenues. (2012, July 2). Morgan Stanley, pp. 1-29.