In a regulatory filing with the Securities and Exchange Commission (“SEC”), SunTrust Banks, Inc. (STI) stated that its fourth-quarter 2014 results will include an additional legal reserve pertaining to legacy mortgage matters. As a result, the company’s results will include a legal provision expense of $145 million, thereby lowering its earnings by 17 cents per share.
SunTrust is scheduled to announce fourth-quarter and full year 2014 results on Jan 16, before the market opens.
Following the disclosure of the above-mentioned additional legal charge, SunTrust’s share price fell roughly 3.6%, to close the day at $40.24 per share. Although the overall market sentiment was also negative, we believe that the fall in stock price was partly due to investors’ concerns about the company’s near-term prospects.
Notably, SunTrust’s third-quarter earnings had included a tax benefit of 25 cents per share, which significantly improved the company’s overall results. Net income available to common shareholders amounted to $563 million or $1.06 per share, up from $179 million or 33 cents per share in the prior-year quarter.
Apart from SunTrust, several other major banks including Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) have been facing additional legal costs related to legacy mortgage issues. This has been adversely impacting their financial performance.
Nonetheless, we believe that disciplined expense management, strong credit quality and a favorable deposit mix will continue to support SunTrust’s financials in the subsequent quarters. Also, the company’s enhanced capital deployment activities reflect its strong balance sheet position.
SunTrust currently carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment