SunTrust Responds to U.S. Government's Stress Test Report

/PRNewswire / -- SunTrust Banks, Inc. (NYSE:STI) announced today that it has been advised by the Federal Reserve that, under the Supervisory Capital Assessment Program (SCAP) previously announced by the United States Treasury, SunTrust has Tier 1 capital well in excess of the amount required to be well-capitalized through the forecast period under both the baseline scenario and the more adverse-than-expected scenario prepared by the Treasury ("More Adverse").

While SunTrust is - and is projected to remain - well-capitalized, SunTrust said it has also been advised that based on the More Adverse future scenario it would need to adjust the composition of its Tier 1 capital resources to increase the common equity portion of Tier 1 capital by $2.2 billion. The additional common equity is necessary to maintain Tier 1 common capital at 4% of risk-weighted assets under the More Adverse scenario, as specified by a new regulatory standard that was introduced as part of the stress test process. SunTrust's Tier 1 common capital ratio was 5.8% at year-end, well in excess of the newly enacted 4% regulatory requirement.

James M. Wells III, Chairman and Chief Executive Officer of SunTrust, noted that, "We are not surprised that the stress test has confirmed that SunTrust is a well-capitalized institution and that we do not need to add to our total Tier 1 capital resources. This underscores our capacity to continue to execute our current strategies, including making sound loans to qualified borrowers, growing deposits, managing costs, and focusing on risk-mitigation in the current environment. Looking beyond the current recession, we are well positioned for the opportunities that will come with a resumption of economic growth."

As part of the process outlined by the Treasury, SunTrust will submit a formal capital plan. Alternatives include both internally and externally generated capital to increase the Tier 1 common capital level. The Company said it is confident that it can comply with the newly enacted regulatory requirement using internal and non-Governmental sources of capital. In addition, the Company said it intends to reduce government preferred equity, subject to regulatory approval.

"We believe we already have the capital resources we need to withstand expected, and even more severe, economic pressures. That said, we also have access to ample sources of additional capital to support our efforts to serve our clients and support our communities," Mr. Wells added. "We will evaluate multiple alternatives in working with our regulators to determine how best to realign our capital and comply with this new regulatory requirement."

SunTrust Banks, Inc., headquartered in Atlanta, is one of the nation's largest banking organizations, serving a broad range of consumer, commercial, corporate and institutional clients. As of March 31, 2009, SunTrust had total assets of $179.1 billion and total deposits of $119.0 billion. The Company operates an extensive branch and ATM network throughout the high-growth Southeast and Mid-Atlantic States and a full array of technology-based, 24-hour delivery channels. The Company also serves customers in selected markets nationally. Its primary businesses include deposit, credit, trust and investment services. Through various subsidiaries the Company provides mortgage banking, insurance, brokerage, investment management, equipment leasing and capital markets services. SunTrust's Internet address is suntrust.com.

Important Cautionary Statement About Forward-Looking Statements

This news release may contain forward-looking statements. Statements regarding the availability of capital in the future and our ability to comply with the Federal Reserve's new Tier 1 Common Equity requirement are forward-looking statements. Also, any statement that does not describe historical or current facts, including statements about beliefs and expectations, is a forward-looking statement. These statements often include the words "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "initiatives," "potentially," "probably," "projects," "outlook" or similar expressions or future conditional verbs such as "may," "will," "should," "would," and "could." Such statements are based upon the current beliefs and expectations of management and on information currently available to management. Such statements speak as of the date hereof, and we do not assume any obligation to update the statements made herein or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements include changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital or liquidity; our stock price can be volatile and current levels of market volatility are unprecedented, and these could impede our ability to increase our Tier 1 Common Equity; the fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our earnings; regulation by federal and state agencies could adversely affect our business, revenue, and profit margins; recently declining values of residential real estate, increases in unemployment, and the related effects on local economics may increase our credit losses, which would negatively affect our financial results; deteriorating credit quality, particularly in real estate loans, has adversely impacted us and may continue to adversely impact us; and any reduction in our credit rating could increase the cost of our funding from the capital markets. Additional factors can be found at Item 1A of our annual report on Form 10-K, at Part II Item 1A of our quarterly reports on Form 10-Q, and in our current reports on Form 8-K, each filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission's internet site (http://www.sec.gov/).

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NADA Statement on GMAC's Announcement to Expand Retail Auto Financing

/PRNewswire-USNewswire/ -- The National Automobile Dealers Association (NADA) says the actions of the federal government to support GMAC Financial Services will bring stability to consumer and dealer lending and help restore consumer confidence on Main Street.

"Credit is the lifeblood of the auto industry, both for consumers at the retail level and dealers at the wholesale level," says Annette Sykora, NADA chairman and owner of two domestic-brand dealerships near Lubbock, Texas. "Lowering minimum credit scores from 700 to 621 will expand credit availability to thousands of potential car buyers and further increase consumer confidence at this critical time in the auto industry."

GMAC's application to become a bank holding company was approved by the Federal Reserve Board of Governors on Dec. 24. The company received a $6 billion aid package from the U.S. Treasury Department as part of the Troubled Assets Relief Program.

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Federal Reserve Approves NADA-Backed Initiative Aimed at Increasing Inventory Financing

/PRNewswire-USNewswire/ -- Following President Bush's announcement Friday to provide $17.4 billion in bridge loans to General Motors and Chrysler, the Federal Reserve Board, in a related action, addressed a key request from the National Automobile Dealers Association by including floorplan securitizations in a new $200 billion credit facility the Federal Reserve is establishing.

The Federal Reserve on Friday clarified the eligibility requirements under the new Term Asset-Backed Securities Loan Facility (TALF) and, in doing so, for the first time included loans for dealer inventory financing as a qualifying asset class.

"This move meets a key need that NADA had identified for greater liquidity in the auto retailing marketplace," said Andy Koblenz, NADA vice president of legal and regulatory affairs.

The U.S. Department of the Treasury announced Nov. 25 that the Fed would be establishing the TALF credit facility, a $200 billion program designed to facilitate the issuance and sale of securitized auto loans. However, at the time the TALF was announced, it was unclear whether it would include loans for dealers at the wholesale level. That uncertainty has now been resolved.

In addition to confirming the eligibility of floorplans loans, the Federal Reserve also extended the term of TALF loans from one to three years and provided that TALF loans could have fixed or floating interest rates. These changes will make it easier for auto finance companies to use the TALF to issue floorplan securitizations.

"NADA's goal all along was to restore liquidity in the credit markets for all dealers and their customers," Koblenz added. "By working with the Federal Reserve and the Department of Treasury to ensure that floorplanning loans were included, NADA was able to give creditors confidence to once again make loans available to dealers to finance the inventory on their lots. This will, in turn, help ensure that dealers have at their dealerships the selection of vehicles that consumers want to buy."

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