In response to the federal government's stress test, SunTrust Banks Inc. released its full capital plan on Friday and will cut quarterly divided from 10 to 1 cent a share, in coincidence with its regional competitor BB&T who made a 68% dividend cut four days ago.

Atlanta-based SunTrust Banks Inc., the only Georgia bank in the testing process, is required to submit plans to federal regulators by June to show how they’ll go about raising $2.2 billion.

“This is a process of days and weeks, not months,” said Joe Estes, an Atlanta-based managing director of Raymond James Financial, who noted the banks have several avenues to quickly raise the cash they need to satisfy the results of the stress test, including selling stocks, securities, business units and TARP.

SunTrust is to submit a formal capital plan by June 8, 2009 and complete the anticipated actions by November 9, 2009.

While not finalized or formally approved, the main components of the Capital Plan include $1.25-billion common stock offering, $300-million common equity generating and over $3-billion of preferred and hybrid securities outstanding.

We are fortunate to have many ways to address the Common Buffer required under the government's More Adverse scenario, said James M. Wells III, SunTrust Chairman and Chief Executive Officer. We will be prudent and proactive in evaluating and executing aspects of the plan prior to the November 9th deadline. We also believe that these actions will enhance our ability to be in a position to repay TARP at the appropriate time and to actively pursue the opportunities that will come with a resumption of economic growth.

Besides its Capital Plan, SunTrust said it plans to reduce its quarterly dividend to $0.01 from $0.10 per share, effective as of September 2009. Within the last 18 months,SunTrust has reduced the dividend from a peak of 77 cents a share to 1 cent, through four cuts.

Investors, particularly individuals, have found bank stocks historically attractive because of their stability, and attractive dividends that made up for less-than-sexy stock price appreciation. commented Joe Rauch in his blog. But the announcement hasn't affected the bank's stock price so far today, hovering essentially flat at $15 per share.

BB&T, one of SunTrust's regional competitors, declared on May 11 its third quarter 2009 dividend of $0.15 per share, a 68% reduction compared with the same quarter a year earlier. The action to reduce the dividend preserves approximately $725 million in capital on an annualized basis. The funds is to repay the government investment.

SunTrust, however, released no details behind how it may repay its TARP funds, the roughly $5 billion preferred stock owned by the government.