New York, January 09, 2017 -- Moody's Investors Service has affirmed all of the ratings of SunTrust
Banks, Inc. (SunTrust) and those of its subsidiaries.
The parent company is rated Baa1 for senior and subordinated debt and
its bank subsidiary, SunTrust Bank, has deposit ratings of
A1/Prime-1 and a standalone baseline credit assessment (BCA) of
a3. The bank also has Baa1 senior and subordinated debt ratings
and its counterparty risk assessments are A2(cr)/Prime-1(cr).
SunTrust's rating outlook remains stable.
Issuer: National Commerce Capital Trust I
....BACKED Preferred Stock, at Baa2,
(hyb)
Issuer: SunTrust Bank
....Global Local Currency Debt Rating;
at Baa1, Stable
....LongTerm Global Local Currency Bank Note
Program; at (P)Baa1
....Global Local Currency MTN Program;
at (P)Baa1
....Long Term Deposit Rating, at A1,
Stable
....Long Term Issuer Rating, at Baa1,
Stable
....Adjusted Baseline Credit Assessment,
at a3
....Baseline Credit Assessment, at a3
....Subordinate Bank Note Program, at
(P)Baa1
....Global Local Currency Subordinate,
at Baa1
....Long Term Counterparty Risk Assessment,
at A2(cr)
....Short Term Counterparty Risk Assessment,
at P-1(cr)
....Short Term Global Local Currency Bank
Note Program; at (P)P-2
....Short Term Deposit Rating, at P-1
....Short Term MTN Program, at (P)P-2
....Outlook, Remains Stable
Issuer: SunTrust Banks, Inc.
....Global Local Currency Debt Rating;
at Baa1, Stable
....Global Local Currency MTN Program;
at (P)Baa1
....Long Term Issuer Rating, at Baa1,
Stable
....Global Local Currency Subordinate,
at Baa1
....Pref. Stock Non-cumulative,
at Baa3, (hyb)
....Preferred Shelf, at (P)Baa2
....Preferred Shelf Non-Cumulative,
at (P)Baa3
....Subordinate Shelf, at (P)Baa1
....Senior Unsecured Shelf, at (P)Baa1
....Short Term Commercial Paper, at
P-2
....Short Term MTN Program, at (P)P-2
....Outlook, Remains Stable
Issuer: SunTrust Capital I
....BACKED Preferred Stock, at Baa2,
(hyb)
Issuer: SunTrust Preferred Capital I
....BACKED Preferred Stock, at Baa3,
(hyb)
Issuer: SunTrust Real Estate Investment Corporation
....Preferred Shelf Non-Cumulative,
at Baa3, (hyb)
RATINGS RATIONALE
The affirmation acknowledges SunTrust's continued strong asset quality
and liquidity, as well as the efficiency improvements that have
recently supported its profitability. However, on a comparative
basis, SunTrust's capital profile lags that of most similarly-rated
peers, and management has not signaled any intention to increase
its capital ratios. In sum, Moody's considers SunTrust's
ratings to be appropriately positioned and the stable outlook anticipates
little change in its credit profile over the next year.
SunTrust operates a diverse core banking franchise in the US Southeast
that results in a large and low-cost deposit base. In a
higher rate environment, Moody's expects this deposit franchise
to generate more earnings. However, in the near-term,
the relative benefit of rising rates is uncertain because SunTrust has
actively used swaps to manage its interest rate risk and because of the
potential for near-term shifts in its asset mix. Any short-term
volatility, however, should not diminish the long-term
profitability benefit that derives from SunTrust's strong,
and low-cost, deposit franchise.
Although the prospect of incremental earnings would enhance SunTrust's
creditworthiness, that alone is insufficient for positive rating
pressure to emerge, in Moody's view. Rather,
stronger profitability and higher capital are both prerequisites for upward
rating movement.
With regard to asset risk, Moody's sees SunTrust as having
limited lending concentrations and a solid risk culture, which would
make it comparatively resilient in a more stressful environment.
Notably, SunTrust's residential real estate concentration
has receded in recent years. Nonetheless, it does have a
growing commercial and industrial loan (C&I) portfolio and its venture
into unsecured consumer lending has not fully matured. As an example
of the challenges associated with C&I lending, energy-related
provisions and charge-offs dented SunTrust's performance
early in 2016, which contributed to a modest decline in earnings
for the first nine months of the year.
What Could Change the Rating Up
For upward movement on SunTrust's standalone BCA to emerge, it will
need to improve profitability further, as well as raise its comparatively
low capital ratios.
What Could Change the Rating Down
Downward movement on SunTrust's standalone BCA would result from a significant
downturn in asset quality or from a material reversal of recent efficiency
gains, both of which we see as unlikely.
The principal methodology used in these ratings was Banks published in
January 2016. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Allen H. Tischler
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
