SunTrust Banks, Inc. (STI): The Sun Is Shining on This Regional

SunTrust Banks, Inc. (NYSE:STI) has also been restructuring in an effort to strengthen its balance sheet. Non-performing loans were only 1.2% of total loans at the end of 1Q, down from approximately 2.2% a year ago. Net charge-offs are expected to be down to $900 million in 2013, from the $1.7 billion in 2012. This comes after SunTrust Banks, Inc. (NYSE:STI) made key steps to reduce non-performing assets.

Revenue was also up some $2 billion in 2012, with core fee income up 6.2% on stronger mortgage banking gains. The big news for SunTrust is that its Federal Reserve capital review from earlier this year went very well; the bank was allowed to raise its dividend and repurchase $200 million in shares. SunTrust is now paying out some 10% of earnings, giving the bank room to up its 1.3% dividend yield over the interim.

BB&T Corporation (NYSE:BBT) offers a diverse revenue stream, with services that include insurance brokerage services, life insurance and wealth management. First-quarter results were positive, with nonperforming loans at 1.1% of total loans, down from the 1.8% for the same period last year. Net charge-offs also fell from $367 million to $289 million year-over-year. The thing about BB&T is that its valuation appears a bit rich (more on this later).

Midwest

A couple of top Midwestern banks are Huntington Bancshares Incorporated (NASDAQ:HBAN) and Fifth Third Bancorp (NASDAQ:FITB), which should perform well on the back of their strong presence in the bustling areas for oil and gas development, the Utica Shale and the Marcellus Shale plays. For example, Ohio, a key area for both Huntington Bancshares Incorporated (NASDAQ:HBAN) and Fifth Third, has an unemployment rate that’s well below the national average. Huntington has some 700 banks in Ohio, Michigan, Pennsylvania, Indiana, West Virginia, Kentucky, and Florida. Fifth Third Bancorp (NASDAQ:FITB) operates 1,340 branches in 12 states, with a focus on Ohio, Michigan and Illinois.

Huntington Bancshares Incorporated (NASDAQ:HBAN) saw revenue up 7.6% in 2012, on the back of 4.6% loan growth. The bank has continued its strong performance and in 1Q saw its nonperforming loans fall to 0.9% of total loans from the 1.1% in the prior year quarter. The bank also managed to reduce net charge-offs to $51.7 million, from the $70 million in 4Q and $83 million in 1Q 2012.

I think SunTrust Banks, Inc. (NYSE:STI) is best positioned in key markets, including Florida and Georgia, and could be poised to move higher. Not to mention the fact that the bank pays a 1.3% dividend yield, with room to boost its payment.