SunTrust Banks stated Tuesday it has received preliminary approval for an additional $1.4 billion from the U.S. Treasury Department. SunTrust has already received $3.5 billion in the form of preferred shares under the program.

SunTrust Banks Inc. reported a 26 percent decline for its third-quarter. However, despite the large losses due to bad loans, the company's earnings of 88 cents per share easily beat analysts expectations of 60 cents per share.

SunTrust immediately cut its prime lending rate to 4.5 percent from 5 percent, following the Fed's move to cut the Federal Funds rate to 1.5 percent. The prime rate is a key benchmark for corporate and consumer credit loans.

Friday, First Priority Bank was closed by regulator Friday. This is the eighth American bank this year to fail. SunTrust has agreed to assume the insured deposits. Starting Monday the six First Priority Bank branches will open as branches of SunTrust bank. The small bank had $259 million in assets and $227 million in deposits.

Shares of SunTrust bank hit a new 52-week low Monday, after a Friedman, Billings, Ramesy & Co. analyst warned that the bank has significant exposure to residential construction loans.

SunTrust affirmed reports that the company is not planning to issue any additional shares and is not anticipating the need to cut its dividend. SunTrust reports second quarter earnings on July 22, 2008.

After large cuts in the federal funds rates, SunTrust is now able to raise its dividend signaling a possible turn around for the banking industry. SunTrust raised its dividend by 5% to 77 cents making its dividend yield roughly five percent.