Fourth quarter operating results opinions are available for Morgan Stanley and Suntrust for BoomBustBlog subscribers( STI 4Q09_Review MS 4Q09 results). I have extracted key tidbits from the Sun Trust document below.
Of particular note is the difference between some readers perception of the Sun Trust results and mine. If you take a close look at the results, you will see credit performance and asset quality is still deteriorating. The perception of a reprieve or moderation is potentially misleading due to the fact that Suntrust (like most other large banks) is actively shrinking their loan portfolio and transferring bad assets from one category to another.
To the credit of the CEO, he actually appears to tell it like it is and does not appear to be on a marketing binge to sugarcoat reality. This is an impressive, and increasingly rare trait among the C-suite crowd!
Some highlights from the Sun Trust Review:
- Nonperforming loans declined marginally to $5,403 mn (4.75% of total loans) at the end of 4Q09 from $5,444 mn (4.67% of total loans) at the end of 3Q09 but relatively remain high when compared with $3,940 mn (3.10% of total loans) at the end of 4Q08. This marginal decline in non-performing loans can largely be attributed to the transfer from non-accrual to foreclosed and other real estate owned category.
- With tangible equity declining further owing to losses recorded during the quarter, the Texas ratio inched higher to 59.8% in 4Q09 against 58.0% in 3Q08. Further, the Bank's interest earning assets are contracting as the loan portfolio shrunk 2.4% (q-o-q) as the Bank continues to reduce exposure to residential and commercial real estate.
- Non-interest income declined 4.2% (q-o-q) to $742 mn from $775 mn in 3Q09 largely owing to lower mortgage production income due to higher estimated losses related to the potential repurchase of mortgage loans (a recurring theme in nearly all of the TARP recipient bank's Q4 results, including JP Morgan and Wells Fargo - see WFC 4Q09_Review- subscriber edition or the less intense, free version as well as the JPM 4Q09 review - public edition).
Next up, a look at the "new" Goldman Sachs valuation and trading revenue scenarios, more on the China short thesis debate, the Central and Eastern European short thesis and the macro/fundamental prospects of the simultaneous withdrawal of stimulus in both China and the US: Fed Declares Recovery for First Time, Prepares Ground for End to Stimulus. As I prepare this, the European financial markets are in the process of melting down. I have performed a decent amount of due diligence on my European shorts and will be putting them out shortly to subscirbers.