SunTrust Banks Inc. plans to sell up to $1.25 billion in shares, slash its quarterly dividend 90% to a nominal 1 cent a share and sell up as much as $300 million in securities and other assets as it looks to raise $2.2 billion after the results of the U.S. government's stress tests.
The company was one of the banks told by the government that it needed to bolster its reserves. The Atlanta-based lender has suffered along with other regional banks during the credit crunch thanks to its ties to construction and commercial real-estate loans, as well as longer exposure to the deteriorating housing market.
SunTrust also said it may pursue private or public transactions to exchange some of the $3.3 billion in preferred and hybrid securities it has outstanding for common stock.
Chairman and Chief Executive James M. Wells III said the company believed the actions would help it be able to repay the $4.9 billion SunTrust got through the Treasury Department's Troubled Asset Relief Plan "at the appropriate time." Wells said last month the company wanted to pay back the government as soon as was practical.
Many banks have said they intend to pay back the TARP funds as quickly as possible because of strict regulations — especially about executive pay — the government imposed on companies that took the money.
SunTrust's shares were recently up 1.3% at $15.23 in premarket trading. The stock has lost nearly three-quarters of its value in the last year.