SunTrust Banks Inc. said Monday that it is engaged in discussions with regulators about its underwriting and sale of certain auction rate securities.

In a regulatory filing, the Atlanta banking company said it may have repurchase as much as $500 million of such securities.

The company said it expects to reserve for amounts related to resolving these matters in the third quarter.

SunTrust also said that it continues to expect chargeoffs for the third quarter to increase by 15% to 20% from the second quarter, the company disclosed Monday.

Based on credit trends during July and August, the company said it expects growth in charge-offs to be near the high end of the range for the quarter, according to a document filed with the Securities and Exchange Commission.

In addition, SunTrust reiterated that it believes its capital levels are sufficient based on its current view of the credit environment.

SunTrust said it currently has no plans to alter its dividend policy, but recognizes that the dividend represents an additional lever to build capital should circumstances change.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.