SunTrust Banks Inc., generally a fairly quiet stock, has been unusually volatile in the past couple of weeks.

After falling 50 cents to $43 a share on Wednesday, the stock popped back up on Thursday in what was otherwise a mostly uneventful day for bank stocks.

Toward the close of trading Thursday on the New York Stock Exchange, SunTrust was up $1 to $44 a share.

The shares have had several days recently in which they have gained or lost at least $1. On Sept. 10, for example, the shares jumped $2.125 to $43.875.

|Kind of Sporadic'

"There's definitely something unusual in the trading, but it seems kind of sporadic," said Nancy Bush, a regional bank analyst at Brown Brothers Harriman & Co.

Right now, investors are focusing mainly on merger plays, and SunTrust is not part of that game.

At the same time, though, SunTrust is highly regarded, and the stock seems to get a lot of support whenever it slips back to the $43 level.

SunTrust has repurchased shares periodically under a stock buyback program, but the company was not in the market Thursday, officials said.

Sandra Flannigan at Merrill Lynch & Co., said investors could be zeroing in on Sun Trust's attractive valuation, relative to other regional bank stocks.

Historically, the Atlanta-based bank holding company has traded at a premium to its peer group, she said.

But as of Wednesday's close at $43, Ms. Flannigan said, the stock was trading at about 10.2 times her 1994 earnings estimate for the company, which is right in line with the composite price-earnings ratio of the regional bank group that she follows.

Clean Balance Sheet

Ms. Flannigan said she expects SunTrust to earn $4.20 a share in 1994. For this year, she expects the company to earn $3.75 a share, up from $3.28 a share last year.

Analysts praise SunTrust for its clean balance sheet and superior operating performance.

The company consistently posts a return on equity of more than 16%. And this year, SunTrust will achieve a return on assets of close to 1.3%, according to Dennis Shea of Morgan Stanley & Co., who is probably SunTrust's biggest booster on Wall Street.

Sitting on Coke Stock

Mr. Shea has an outright "buy" recommendation on the stock. Ms. Flannigan rates the stock a long-term buy, but for the short term, she is somewhat less bullish.

Apart from the strength of its operating performance, Mr. Shea and others said SunTrust is compelling for another reason.

The banking company is sitting on more than $1 billion of unrealized gains on its holding of stock in Coca-Cola Co., it's Atlanta neighbor.

Nearly a $5 Jump

SunTrust helped take Coke public in 1919 and collected management fees in the form of Coke stock. SunTrust never sold the stock and continues to carry the Coke shares on its books at their original value of $110,000.

As of mid-1993, SunTrust's holdings of Coke stock was worth $4.96 per SunTrust share, on an after-tax basis, according to Ms. Flannigan's calculation.

If SunTrust's book value of $22.40 a share were adjusted to reflect the after-tax value of the coke stock, it would rise to $27.36 a share.

Using that $27.36 figure, SunTrust's stock closed Wednesday at just 157% of the adjusted book value. The other regional bank stocks that Ms. Flannigan follows trade at about 180% of book value.

Applying the same multiple to SunTrust would produce a stock price of nearly $50 a share.

A 1994 Target of $60

Indeed, Ms. Flannigan's target price for SunTrust's stock is $60 by yearend 1994. Mr. Shea said the stock should break $50 within the next 12 months.

SunTrust, meanwhile, will mark its Coca-Cola shares to their market value at the end of this year, in order to comply with new mark-to-market accounting rules.

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