"The industry is a long way from declaring any sort of victory, especially regarding credit issues," Chief Executive Officer James Wells III said today in a speech to the Rotary Club of Atlanta. "This credit cycle has yet to play itself out. We do not expect things to improve for the banking industry in the very near future."
SunTrust, based in Atlanta, has reported three straight quarterly losses, mostly from soured loans in its $16.3 billion home-equity and $8.2 billion construction lending units. Regulators shut 18 banks this year in Georgia, where the jobless rate exceeds the U.S. average and the pace of home foreclosures was the sixth-highest in the nation in July.
"The industry has moved from a potentially cataclysmic scenario to one that is merely very difficult," Wells said. "The industry is back from the brink of a potential global financial-system meltdown."
Wells said concerns over falling values of commercial real estate are "not without merit. Even if the economy begins to improve modestly, commercial real estate conditions will probably deteriorate until 2010."
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