SunTrust Inc. reported its fiscal fourth-quarter and full-year 2008 results, but the more than $1 billion in write-downs and distresses dimmed the bank's luster behind the dark clouds of write-downs, loan loss provisions and the threat of nationalization otherwise known as TARP.
Driving 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 company recorded provision for loan losses of $962.5 million, shows in no uncertain terms with a company thinks its future direction lies, down. In 2008 neither making loans nor servicing loans was profitable, that's a double-edged sword that cut SunTrust in both directions.
"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."
By that he means he is using the overall conditions as an excuse because I want you to think so. In reality though the overall conditions brought about as they were by the banks lending to people they had no business lending to remains what this game is all about.
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.
Ya Think? And think about this, as the credit crunch deepens more and more and borrowers will fall behind on more loan payments. The worst is yet to come.
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