SunTrust Banks Inc. swung to a fourth-quarter loss as credit quality continued to deteriorate and credit-related expenses again rose and the company slashed its dividend another 84% amid the uncertain economic climate.
Regional banks have suffered during the credit crunch on their considerable exposure to construction and commercial real-estate loans, as well as their longer exposure to the deteriorating housing market.
Last month, SunTrust boosted the amount of funds it requested through the federal Troubled Asset Relief Program to $4.9 billion, the maximum it could get, saying the economic situation had become "decidedly bleaker."
In October, the company cut its dividend by 30% to 54 cents, citing the prospect of continued weakness in 2009. The new rate is 10 cents.
The Atlanta regional bank, which has been hard-hit by the housing crisis, posted a fourth-quarter loss of $347.6 million, or $1.08 a share, compared with year-earlier net income of $11.1 million, or 1 cent a share.
Revenue excluding investment gains and losses rose 8.8% to $1.93 billion. On average, analysts polled by Thomson Reuters expected earnings of 7 cents a share and revenue of $2.16 billion.
Chief Executive James Wells said increased unemployment and continued drops in home values drove loan delinquencies "significantly higher," resulting in higher-than expected credit losses.
Loan-loss provisions surged 91% from the third quarter to $962.5 million and more than doubled from a year earlier.
Net charge-offs, loans the bank doesn't think are collectible, jumped to 1.72% of average loans from 1.24% and 0.55%, respectively. Nonperforming loans, those thought to be near default, jumped to 3.1% of total loans plus other real estate and other repossessed assets from 2.6% and 1.17%.
SunTrust's shares closed Wednesday at $15.21, and there was no premarket trading. The stock has fallen 49% this month amid another sharp slump for financial shares.