Loan growth should boost SunTrust - BMO

"We see several key catalysts for SunTrust Banks (STI) over the next 12 months: (1) an acceleration in loan growth after several years of contraction driven by better CRE growth and stronger consumer loan production; (2) additional expense leverage to offset revenue challenges, particularly with the right-sizing of its mortgage business (which should produce $50 million quarterly run-rate of cost savings by 2Q14) and a review of $1.5 billion of operational expenses; (3) the ability to become more asset sensitive with $16 billion in interest rate swaps rolling off; and (4) stronger capital returns to shareholders in the 2014 CCAR, with our estimate of total capital return increasing from 26% in 2013 to 47% in 2014 (including a dividend payout of close to 30%)."

Firm ups shares to Outperform from Market Perform, with a target of $42 up from $40. Shares closed Monday at $36.80.

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