Attached files
| file | filename |
|---|---|
| 8-K - 8-K - SUNTRUST BANKS INC | a33117form8-kerxcoverpage.htm |
| EX-99.1 - EXHIBIT 99.1 - SUNTRUST BANKS INC | a33117earningsrelease-exhi.htm |
1Q 17 EARNINGS
PRESENTATION
April 21, 2017
© 2017 SunTrust Banks, Inc. SunTrust is a federally registered trademark of SunTrust Banks, Inc.
2
This presentation should be read in conjunction with the financial statements, notes and other information contained in the Company’s forthcoming Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
Non-GAAP Financial Measures
This presentation includes non-GAAP financial measures to describe SunTrust’s performance. The reconciliations of those measures to GAAP measures are provided within or in the appendix of this presentation beginning on slide 24.
In this presentation, consistent with Securities and Exchange Commission Industry Guide 3, the Company presents total revenue, net interest income, net interest margin, and efficiency ratios on a fully taxable equivalent (“FTE”) and
annualized basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments using a federal tax rate of 35% and state income taxes where applicable to increase tax-exempt interest income
to a taxable-equivalent basis. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. Total
revenue-FTE equals net interest income-FTE plus noninterest income.
The Company presents the following additional non-GAAP measures because many investors find them useful. Specifically:
• The Company presents certain capital information on a tangible basis, including tangible common equity, the ratio of tangible common equity to tangible assets, and tangible book value per share. These measures exclude the
after-tax impact of purchase accounting intangible assets. The Company believes these measures are useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity
(the level of which may vary from company to company), it allows investors to more easily compare the Company’s capital adequacy to other companies in the industry. These measures are used by management to analyze
capital adequacy of the Company.
• Similarly, the Company presents an efficiency ratio-FTE and a tangible efficiency ratio-FTE. The efficiency ratio is computed by dividing noninterest expense by total revenue. Efficiency ratio-FTE is computed by dividing
noninterest expense by total revenue-FTE. The tangible efficiency ratio-FTE excludes the amortization related to intangible assets and certain tax credits. The Company believes this measure is useful to investors because, by
removing the impact of amortization (the level of which may vary from company to company), it allows investors to more easily compare the Company’s efficiency to other companies in the industry. This measure is also
utilized by management to assess the efficiency of the Company and its lines of business.
• The Company presents the Basel III Common Equity Tier 1 (CET1) ratio on a fully-phased in basis. The fully phased-in ratio consider a 250% risk-weighting for MSRs and deduction from capital of certain carryforward DTAs, the
overfunded pension asset, and other intangible assets. The Company believes this measure may be useful to investors who wish to understand the Company's current compliance with future regulatory requirements. This
measure is used by management to analyze capital adequacy of the Company.
Important Cautionary Statement about Forward-Looking Statements
This presentation contains forward-looking statements. Statements regarding future levels of the net interest margin, deposit betas, noninterest expense, efficiency ratio, branches, net charge-offs, loan loss provision expense, ALLL
ratio, and capital return are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,”
“anticipates,” “estimates,” “intends,” “plans,” “targets,” “initiatives,” “opportunity,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and
“could"; such statements are based upon the current beliefs and expectations of management and on information currently available to management. Such statements speak as of the date hereof, and we do not assume any obligation to
update the statements made herein or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.
Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors
that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, Item 1A., “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in other periodic
reports that we file with the SEC. Those factors include: current and future legislation and regulation could require us to change our business practices, reduce revenue, impose additional costs, or otherwise adversely affect business operations or
competitiveness; we are subject to stringent capital adequacy and liquidity requirements and our failure to meet these would adversely affect our financial condition; the monetary and fiscal policies of the federal government and its agencies could have a
material adverse effect on our earnings; our financial results have been, and may continue to be, materially affected by general economic conditions, and a deterioration of economic conditions or of the financial markets may materially adversely affect
our lending and other businesses and our financial results and condition; changes in market interest rates or capital markets could adversely affect our revenue and expenses, the value of assets and obligations, and the availability and cost of capital and
liquidity; our earnings may be affected by volatility in mortgage production and servicing revenues, and by changes in carrying values of our servicing assets and mortgages held for sale due to changes in interest rates; disruptions in our ability to access
global capital markets may adversely affect our capital resources and liquidity; we are subject to credit risk; we may have more credit risk and higher credit losses to the extent that our loans are concentrated by loan type, industry segment, borrower
type, or location of the borrower or collateral; we rely on the mortgage secondary market and GSEs for some of our liquidity; loss of customer deposits could increase our funding costs; any reduction in our credit rating could increase the cost of our funding
from the capital markets, we are subject to litigation, and our expenses related to this litigation may adversely affect our results; we may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or
unintentional violations; we are subject to certain risks related to originating and selling mortgages, and may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, or
borrower fraud, and this could harm our liquidity, results of operations, and financial condition; we face risks as a servicer of loans; we are subject to risks related to delays in the foreclosure process; consumers and small businesses may decide not to use
banks to complete their financial transactions, which could affect net income; we have businesses other than banking which subject us to a variety of risks; negative public opinion could damage our reputation and adversely impact business and revenues;
we may face more intense scrutiny of our sales training, and incentive compensation practices; we rely on other companies to provide key components of our business infrastructure; competition in the financial services industry is intense and we could lose
business or suffer margin declines as a result; we continually encounter technological change and must effectively develop and implement new technology; maintaining or increasing market share depends on market acceptance and regulatory approval of
new products and services; any reduction in our credit rating could increase the cost of our funding from the capital markets; we have in the past and may in the future pursue acquisitions, which could affect costs and from which we may not be able to
realize anticipated benefits; we depend on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, operations may suffer; we may not be able to hire or retain additional qualified personnel and
recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact our ability to implement our business strategies; our framework for managing risks may not be
effective in mitigating risk and loss to us; our controls and procedures may not prevent or detect all errors or acts of fraud; we are at risk of increased losses from fraud; a failure in or breach of our operational or security systems or infrastructure, or those
of our third party vendors and other service providers, including as a result of cyber-attacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause
losses; the soundness of other financial institutions could adversely affect us; we depend on the accuracy and completeness of information about clients and counterparties; our accounting policies and processes are critical to how we report our financial
condition and results of operation, and they require management to make estimates about matters that are uncertain; depressed market values for our stock and adverse economic conditions sustained over a period of time may require us to write down
some portion of our goodwill; our financial instruments measured at fair value expose us to certain market risks; our stock price can be volatile; our ability to receive dividends from our subsidiaries or other investments could affect our liquidity and ability
to pay dividends; we might not pay dividends on our stock; and certain banking laws and certain provisions of our articles of incorporation may have an anti-takeover effect.
IMPORTANT CAUTIONARY STATEMENT
3
1. 1Q 17 included $0.04 related to discrete benefits; excluding these benefits, EPS was $0.87
2. Basel III CET1 ratio (transitional) is 9.7%. Please refer to slide 24 of the appendix for Basel III CET1 (transitional) to Basel III CET1 (fully phased-In) reconciliation
1Q 17 EARNINGS OVERVIEW
Prior Quarter Variance
• EPS increased $0.01
→ 1Q 17 included $0.04 of tax benefits; excluding this, EPS
decreased $0.031, given typical seasonal patterns
→ 3% revenue growth offset by seasonally higher expenses
Prior Year Variance
• EPS increased $0.07
→ When adjusting for the $0.04 of tax benefits in 1Q 17, EPS
increased 4%1
→ Driven by strong revenue momentum as a result of ongoing
investments in growth and diverse business model
EPS Trends
Profitability
• Revenue up 3%
→ $23 million increase in net interest
income driven by NIM expansion
and 1% average earning asset
growth
→ $45 million increase in investment
banking income (record quarter)
→ $8 million increase in mortgage-
related income
Balance
Sheet
• Net interest margin improved by 9 bps
• Average performing loans up 1%
• Average client deposits up 1%
Credit &
Capital
• Asset quality remains strong
→ NCO ratio declined 6 bps to 0.32%
→ NPL ratio declined 4 bps to 0.55%
→ ALLL ratio stable
• 9.5% Basel III CET1 ratio (fully phased-
in)1
→ Repurchased $414 million of
common stock in 1Q 17
Key Highlights
All changes reflect sequential (4Q 16 to 1Q 17) trends, unless otherwise noted
$0.84
$0.94
$0.91 $0.90 $0.91
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
4
NET INTEREST INCOME1
Net interest income up 2% sequentially and 6% YoY, driven by balance sheet growth and NIM
expansion
Prior Quarter Variance
• Net interest margin (FTE) increased 9 bps, driven by:
→ Steeper yield curve (higher securities / fixed-
rate loan yields) (~4 bps)
→ Fewer days in the quarter (~3 bps)
→ Net effect of increases in short-term rates
(~2 bps)3
• Net interest income (FTE) increased $23 million, or
2%, as a result of NIM improvement and 1% growth in
average earning assets, partially offset by 2 fewer
days in the quarter
Prior Year Variance
• Net interest margin (FTE) increased 5 bps, driven by
the same factors impacting the sequential increase in
addition to ongoing positive mix shift in the loan
portfolio
• Net interest income (FTE) increased $82 million,
or 6%, driven by NIM expansion and 5% growth in
average earning assets
1. On this slide, net interest income is reported on an unadjusted and fully taxable-equivalent (“FTE”) basis. The FTE basis adjusts for the tax-favored status of income from certain loans and investments. SunTrust
believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. Net interest margin is calculated as net interest
income (FTE) divided by average earning assets (on an annualized basis)
2. Please refer to slide 23 for a reconciliation of net interest income to net interest income (FTE)
3. Includes impact of contractual changes in short-term indices (LIBOR, Prime) net of increases in deposit costs
2
$1,282 $1,288 $1,308
$1,343 $1,366
$1,318 $1,323
$1,342
$1,377
$1,400
3.04%
2.99%
2.96%
3.00%
3.09%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Net Interest Income Net Interest Income (FTE) NIM (FTE)
($ in millions)
5
NONINTEREST INCOME
Prior Quarter Variance
• Noninterest income increased $32 million, or 4%, as a
result of:
→ Record performance for investment banking,
$45 million increase
o Driven by syndicated finance and M&A
→ $8 million increase in mortgage-related income
o Growth of servicing portfolio diversifies
revenue mix and reduces volatility of
mortgage-related income
• Note: new income statement line item ‘commercial
real estate related income’ is comprised of
noninterest income from Pillar/Cohen (“Pillar”)1,
SunTrust Community Capital (STCC), and Structured
Real Estate
→ Sequential decline due to seasonal variability of
STCC (activity typically higher in 4Q)
Prior Year Variance
• Noninterest income increased $66 million, or 8%, due
to the $69 million increase in investment banking
income
$781
$898 $889
$815
$847
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Noninterest income up 4% QoQ and 8% YoY as a result of diverse business mix and
investments in growth
($ in millions)
1. “Pillar” refers to Pillar Financial, LLC and Cohen Financial Services, LLC (a wholly owned subsidiary of Pillar Financial, LLC)
6
NONINTEREST EXPENSE
Prior Quarter Variance
• Noninterest expense up 5%
→ Driven entirely by a $90 million increase in
personnel costs as a result of:
o Typical seasonality related to employee
benefits costs (FICA, 401k)
o Incremental compensation costs associated
with the acquisition of Pillar1
→ Other noninterest expense includes ~$19 million
of costs associated with ongoing efficiency
initiatives (branch closures, severance)
Prior Year Variance
• Noninterest expense up 11%, driven by:
→ Higher compensation costs as a result of strong
revenue growth, ongoing investments in talent,
and higher stock price
→ Higher FDIC premium and net occupancy costs,
which increased in 3Q 16
$1,318 $1,345
$1,409 $1,397 $1,465
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Seasonality and strong revenue growth drive increase in expenses
1. “Pillar” refers to Pillar Financial, LLC and Cohen Financial Services, LLC (a wholly owned subsidiary of Pillar Financial, LLC)
($ in millions)
7
71.5%
66.9%
65.3%
63.3% 62.6% 62.0% 61%-
62% <60%
72.0%
67.4%
65.6%
63.7% 63.1% 62.6%
2011 2012 2013 2014 2015 2016
1Q efficiency higher than 4Q due to typical seasonality; remain on track to achieve targets
1. The efficiency ratio and tangible efficiency ratios are reported on fully taxable-equivalent (“FTE”) basis. The FTE basis adjusts net interest income for the tax-favored status of income from certain loans and
investments. Unadjusted net interest income can be found on slide 4
2. 2011, 2012, 2013, and 2014 values represent the adjusted efficiency ratio and adjusted tangible efficiency ratio. Adjusted figures are intended to provide management and investors information on trends that are
more comparable across periods and potentially more comparable across institutions. Please refer to slide 23 of the appendix for reconciliations related to the efficiency ratio
2019
TER
Target
EFFICIENCY RATIO & TANGIBLE EFFICIENCY RATIO1
2 2 2 2 2017
TER
Target
62.3%
60.1%
62.5% 63.1%
64.6%
62.8%
60.6%
63.1%
63.7%
65.2%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Tangible Efficiency Ratio (TER) Efficiency Ratio
8
CREDIT QUALITY
ALLL remains relatively stable; provision expense approximates net charge-offs
Overall asset quality remains strong; NCOs and NPLs improve
($ in millions)
NPLs decline, driven by the resolution of problem energy credits NCO ratio improves; energy losses abating
Nonperforming Loans Net Charge-offs
Provision for Credit Losses Allowance for Loan and Lease Losses
$975 $944 $949
$845 $789
0.70% 0.67% 0.67% 0.59% 0.55%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
NPLs Total NPL Ratio
$85
$137
$126
$136
$112
0.25%
0.39% 0.35% 0.38% 0.32%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
NCOs Total NCO Ratio (annualized)
$101
$146
$97 $101
$119
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
$1,770 $1,774 $1,743 $1,709 $1,714
1.27% 1.25% 1.23% 1.19% 1.20%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
ALLL ALLL Ratio
9
LOANS
Average performing loans up 1% sequentially and 4% YoY
($ in billions, average balances)
Note: Totals may not foot due to rounding
Prior Quarter Variance
• Average performing loans up 1% as a result of growth
in C&I and consumer
• Period-end loans stable
→ Driven primarily by decline in home equity and
C&I, offset by continued consumer lending
growth
Prior Year Variance
• Average performing loans increased $5.2 billion, or
4%, as a result of growth across most loan categories
• Positive mix shift continues, driven by ongoing
investments in LightStream, credit card, and third-
party partnerships
→ Consumer loans up 16%
→ Commercial loans up 2%
$76.4 $77.6 $77.1 $77.4 $78.2
$38.6 $38.8 $39.0 $38.8 $38.3
$22.7 $23.9 $25.2 $25.5 $26.3
$137.6 $140.3
$141.3 $141.7 $142.8
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Commercial Residential Consumer
10
DEPOSITS
Average client deposits up 6% YoY
($ in billions, average balances)
Prior Quarter Variance
• Average client deposits up 1%
• Period-end balances up 2% as a result of seasonal
increases in retail deposits
• Interest-bearing deposit costs increased 4 bps
Prior Year Variance
• Average client deposits up 6%, reflects ongoing
investments in talent and focus on expanding and
strengthening client relationships across the Company
→ CPWM average deposits up 6%
→ Wholesale Banking average deposits up 7%
$53.1 $53.2 $54.5 $54.4 $54.9
$42.1 $43.0 $43.6 $44.8 $43.1
$38.0 $41.7
$41.2 $42.9 $44.7
$9.9
$9.9 $9.7
$9.6 $9.7 $6.2
$6.4 $6.3
$6.3 $6.4 $149.2
$154.2 $155.3 $158.0
$158.9
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Money Market DDA (Nonint bearing) NOW Time Savings
Note: Totals may not foot due to rounding
11
CAPITAL POSITION
($ in billions, except per-share data)
Total Equity & Tangible Common Equity Ratios2 Basel III Common Equity Tier 1 (fully phased-in)1
Book Value / Tangible Book Value Per Share3
1. Current quarter amounts are estimated at the time of the earnings release and subject to revision. Please refer to slide 24 of the appendix for additional details on the current quarter’s calculation
2. Please refer to slide 25 of the appendix for a reconcilement of total equity to tangible common equity and total assets to tangible assets
3. Please refer to slide 25 of the appendix for a reconcilement of book value per share to tangible book value per share
12.3% 12.1% 12.1% 11.8% 11.6%
8.9% 8.8% 8.6% 8.2% 8.1%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Avg. Equity/Avg. Assets Tangible Common Equity/Tangible Assets
$44.97 $46.14
$46.63 $45.38 $45.62
$32.90 $33.98 $34.34 $32.95 $33.06
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Book Value Per Share Tangible Book Value Per Share
$16.5 $16.7 $16.8
$16.9 $16.8
9.9% 9.8% 9.8%
9.6% 9.7%
9.8% 9.7% 9.7%
9.4% 9.5%
0
0
0
0
0
0
0
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Basel III CET1 ratio Basel III fully phased-in CET1 ratio
12
CONSUMER BANKING & PWM HIGHLIGHTS
1. Please refer to page 23 of the earnings press release for a reconciliation of efficiency ratio to tangible efficiency ratio
Continued loan, deposit, and revenue momentum
($ in millions) 1Q 16 4Q 16 1Q 17
%Δ
Prior Qtr
%Δ
Prior Yr
Net Interest Income $719 $754 $766 2 % 7 %
Noninterest Income 356 365 350 (4)% (2)%
Total Revenue 1,075 1,119 1,116 (0)% 4 %
Provision for Credit Losses 29 78 88 13 % NM
Noninterest Expense 741 761 797 5 % 8 %
Net Income $192 $177 $146 (18)% (24)%
Key Statistics ($ in billions)
Total Loans (average) $41.6 $43.4 $44.1 2 % 6 %
Client Deposits (average) $93.2 $97.3 $98.9 2 % 6 %
Managed Assets $52.7 $53.2 $55.7 5 % 6 %
Efficiency Ratio 68.9% 68.0% 71.5%
Tangible Efficiency Ratio¹ 67.5% 66.7% 70.1%
• Noninterest income down 4% as a result of seasonal declines in service
charges and card fees
• Noninterest expense increased $36 million driven by:
→ Seasonal increases in personnel costs
→ Increased branch closure costs
→ ~$15 million non-recurring benefit recognized in 4Q 16 as a
result of contract renegotiations with a key vendor
• Net income decreased $31 million driven by higher expenses and a
higher provision expense due to loan growth
Prior Quarter Variance
• Net interest income up 7% as a result of strong balance sheet growth
and NIM expansion (average loans and deposits up 6%)
• Noninterest income down 2% as a result of posting order changes
implemented in 4Q 16
• Increase in noninterest expense driven by investments in technology/
marketing, and branch closure costs
→ Enhanced digital capabilities introduced in 1Q 17
→ Branch count down 6%
• Provision expense higher due to home equity-related reserve release in
prior year
• Managed assets up 6%, reflecting successful, strategic growth
of retail asset management product
Prior Year Variance
13
WHOLESALE BANKING HIGHLIGHTS
1. Please refer to page 24 of the earnings press release for a reconciliation of efficiency ratio to tangible efficiency ratio
2. Refers to Pillar Financial, LLC and Cohen Financial Services, LLC (a wholly owned subsidiary of Pillar Financial, LLC)
Continued success in expanding and deepening client relationships drives record revenue
• Net income stable as 6% revenue growth was offset by seasonal
increases in noninterest expense
• Record investment banking performance drove a 11% increase in
noninterest income
→ Driven by broad-based growth across most client segments;
successfully meeting more client needs across the platform
→ Record quarter for syndicated finance and M&A
• Net interest income (FTE) up 2% driven by NIM expansion and loan
growth
Prior Quarter Variance
• Net income increased $74 million, or 34%, driven by:
→ Strong revenue growth, up 16%, as a result of growth in
investment banking, increased net interest income, and
acquisition of Pillar2
→ $51 million decrease in provision expense; energy losses abating
• Noninterest expense up 17% as a result of:
→ Higher compensation tied to improved business and stock price
performance
→ Ongoing investments in technology to enhance teammate
effectiveness and improve the client experience
→ Pillar2 (acquired 4Q 16)
Prior Year Variance
($ in millions) 1Q 16 4Q 16 1Q 17
%Δ
Prior Qtr
%Δ
Prior Yr
Net Interest Income (FTE) $530 $566 $577 2 % 9 %
Noninterest Income 313 362 403 11 % 29 %
Total Revenue (FTE) 843 928 980 6 % 16 %
Provision/(Benefit) for Credit Losses 82 19 31 63 % (62)%
Noninterest Expense 411 440 482 10 % 17 %
Net Income $219 $294 $293 (0)% 34 %
Key Statistics ($ in billions)
Total Loans (average) $70.8 $71.9 $72.5 1 % 2 %
Client Deposits (average) $53.6 $57.5 $57.4 (0)% 7 %
Efficiency Ratio (FTE)¹ 48.7% 47.4% 49.2%
Tangible Efficiency Ratio (FTE)¹ 47.0% 45.4% 47.3%
14
MORTGAGE BANKING HIGHLIGHTS
Sequential revenue growth reflects diversity within business; servicing offsets declines in
production
• Total revenue up 1%, due entirely to a $10 million increase in
noninterest income
→ Servicing income up $33 million, driven by lower decay expense
and 5% increase in servicing portfolio (primarily driven by recent
acquisitions)
→ Partially offset by $25 million decrease in production income as
a result of lower refinancing activity
• Net income up $4 million as a result of 1% revenue growth
Prior Quarter Variance
• Total revenue down 7%, driven by:
→ $7 million decline in net interest income as a result of lower
loan spreads
→ $7 million decline in production income as a result of lower
refinancing activity
• Net income down $21 million as a result of lower revenue, larger
reserve release in 1Q 16, and higher expenses
Prior Year Variance
($ in millions) 1Q 16 4Q 16 1Q 17
%Δ
Prior Qtr
%Δ
Prior Yr
Net Interest Income $120 $121 $113 (7)% (6)%
Noninterest Income 126 105 115 10 % (9)%
Total Revenue 246 226 228 1 % (7)%
Provision/(Benefit) for Credit Losses (10) 4 0 NM NM
Noninterest Expense 174 187 184 (2)% 6 %
Net Income $50 $25 $29 16 % (42)%
Key Statistics ($ in billions)
Servicing Portfolio for Others (EOP) $121.3 $129.6 $135.6 5 % 12 %
Production Volume $5.0 $8.7 $5.5 (37)% 11 %
Application Volume $9.2 $8.3 $7.7 (7)% (16)%
Efficiency Ratio 71.1% 82.6% 80.7%
15
EXECUTING AGAINST OUR STRATEGIES:
WELL POSITIONED FOR FUTURE SUCCESS
• 5 bp YoY and 9 bp QoQ increase in NIM
• On track to achieve efficiency ratio targets
→ 2017 TER: 61-62%
→ 2019 TER: <60%
• 6% YoY reduction in branch count (on track to remove additional 3% by 6/30/17)
Improving Efficiency
& Returns
• Repurchased $414 million of common stock in 1Q 17
• Strong capital position affords opportunity to further increase dividends and share buybacks
→ Continue to adhere to disciplined underwriting standards in order to drive strong CCAR
performance and through-the-cycle returns
• 9.5% Basel III CET1 ratio (fully phased-in)3
Strong Capital
Position
Investment Thesis
Strong & Diverse
Franchise; Investing in
Growth
• 7% revenue growth driven by:
→ 6% increase in net interest income (FTE) as a result of broad-based loan and deposit
growth, continued balance sheet optimization efforts, and improved rate environment
→ Continued momentum in capital markets (record quarter for investment banking income)
→ Consistent growth in consumer lending (average balances up 16%)
→ Recent acquisition of Pillar2
1Q 17 Accomplishments1
1. Figures refer to the YoY change of 1Q 16 vs. 1Q 17 unless otherwise noted
2. Refers to Pillar Financial, LLC and Cohen Financial Services, LLC (a wholly owned subsidiary of Pillar Financial, LLC)
3. Basel III CET1 ratio (transitional) is 9.7%. Please refer to slide 24 of the appendix for Common Equity Tier 1 (Basel III Transitional) to Common Equity Tier 1 (Basel III Fully Phased-In) reconciliation
APPENDIX
17
5-QUARTER FINANCIAL HIGHLIGHTS
1. Please refer to slide 23 of the appendix for the GAAP reconciliations
2. Please refer to slide 24 of the appendix for Common Equity Tier 1 (Basel III Transitional) to Common Equity Tier 1 (Basel III Fully Phased-In) reconciliation
3. Please refer to slide 25 of the appendix for a reconcilement to book value per share
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
EPS (diluted) $0.84 $0.94 $0.91 $0.90 $0.91
Efficiency Ratio (FTE) 62.8% 60.6% 63.1% 63.7% 65.2%
Tangible Efficiency Ratio (FTE)1 62.3% 60.1% 62.5% 63.1% 64.6%
Net Interest Margin (FTE) 3.04% 2.99% 2.96% 3.00% 3.09%
Return on Average Assets 0.93% 1.00% 0.94% 0.91% 0.93%
Average Performing Loans ($ in billions) $137.6 $140.3 $141.3 $141.7 $142.8
Average Client Deposits ($ in billions) $149.2 $154.2 $155.3 $158.0 $158.9
NPL Ratio 0.70% 0.67% 0.67% 0.59% 0.55%
NCO Ratio 0.25% 0.39% 0.35% 0.38% 0.32%
ALLL Ratio 1.27% 1.25% 1.23% 1.19% 1.20%
Basel III Common Equity Tier 1 Ratio (transitional) 9.9% 9.8% 9.8% 9.6% 9.7%
Basel III Common Equity Tier 1 Ratio (fully phased-in)2 9.8% 9.7% 9.7% 9.4% 9.5%
Book Value Per Share $44.97 $46.14 $46.63 $45.38 $45.62
Tangible Book Value Per Share3 $32.90 $33.98 $34.34 $32.95 $33.06
Balance
Sheet
Credit &
Capital
Profitability
18
MORTGAGE SERVICING INCOME:
SUPPLEMENTAL INFORMATION
1. Includes contractually specified servicing fees, late charges, interest curtailment expense, and other ancillary revenues
2. Due primarily to the receipt of monthly servicing fees and from prepayments
3. Includes both the fair value mark-to-market of the MSR asset from changes in market rates and other assumption updates, exclusive of the decay, and the impact of using derivatives to hedge the risk of changes in
the fair value of the MSR asset
Note: Totals may not foot due to rounding
($ in millions)
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Servicing Fees1 $86 $91 $93 $93 $100
($40) ($55) ($60) ($69) ($50)
Net MSR Fair Value and Hedge Activity3 $16 $15 $16 $1 $7
Mortgage Servicing Income $62 $52 $49 $25 $58
Memo:
Total Loans Serviced for Others (average balance) $120,814 $123,629 $124,729 $126,765 $134,444
Annualized Servicing Fees / Average Loans Serviced for Others (bps) 29 30 30 29 30
Changes in MSR Value from Collection/Realization of Cash Flow (Decay)2
19
Memo:
30-89 Accruing Delinquencies 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
1Q 17 Loan
Balance ($B)
Commercial & industrial 0.16% 0.05% 0.05% 0.05% 0.05% $69.0
Commercial real estate 0.06% 0.03% 0.04% 0.02% 0.03% 5.1
Commercial construction 0.00% 0.00% 0.00% 0.00% 0.00% 4.2
Total Commercial Loans 0.15% 0.04% 0.05% 0.05% 0.04% $78.3
Residential mortgages – guaranteed - - - - - $0.5
Residential mortgages – nonguaranteed 0.35% 0.31% 0.29% 0.32% 0.26% 26.1
Home equity products 0.59% 0.64% 0.63% 0.68% 0.63% 11.5
Residential construction 0.46% 0.11% 0.29% 0.64% 0.33% 0.4
Total Residential Loans¹ 0.43% 0.41% 0.40% 0.44% 0.37% $38.6
Guaranteed student loans - - - - - $6.4
Other direct 0.41% 0.33% 0.38% 0.43% 0.39% 7.9
Indirect 0.73% 0.79% 0.99% 1.18% 0.83% 11.1
Credit cards 0.71% 0.70% 0.77% 0.83% 0.74% 1.4
Total Consumer Loans² 0.62% 0.62% 0.74% 0.86% 0.65% $26.7
Total SunTrust - excl. gov.-guaranteed delinquencies³ 0.29% 0.23% 0.25% 0.27% 0.22% $136.6
Impact of excluding gov.-guaranteed delinquencies 0.38% 0.35% 0.39% 0.45% 0.50% 6.9
Total SunTrust - incl. gov.-guaranteed delinquencies4 0.67% 0.58% 0.64% 0.72% 0.72% $143.5
30-89 DAY DELINQUENCIES BY LOAN CLASS
1. Excludes delinquencies on all federally guaranteed mortgages
2. Excludes delinquencies on federally guaranteed student loans
3. Excludes delinquencies on federally guaranteed mortgages and student loans from the calculation
4. Excludes mortgage loans guaranteed by GNMA that SunTrust has the option, but not the obligation, to repurchase
Note: Totals may not foot due to rounding
20
NONPERFORMING LOANS BY LOAN CLASS
Note: Totals may not foot due to rounding
Memo:
Nonperforming Loans ($ in millions) 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
1Q 17 Loan
Balance ($B)
Commercial & industrial $565 $491 $501 $390 $328 $69.0
Commercial real estate 10 10 10 7 6 5.1
Commercial construction 2 2 2 17 18 4.2
Total Commercial Loans $577 $503 $513 $414 $352 $78.3
Residential mortgages – guaranteed - - - - - $0.5
Residential mortgages – nonguaranteed 198 194 183 177 179 26.1
Home equity products 180 226 235 235 237 11.5
Residential construction 12 13 11 12 12 0.4
Total Residential Loans $390 $433 $429 $424 $428 $38.6
Guaranteed student loans - - - - - $6.4
Other direct 5 5 5 6 5 7.9
Indirect 3 4 2 1 4 11.1
Credit cards - - - - - 1.4
Total Consumer Loans $8 $8 $7 $7 $9 $26.7
Total SunTrust $975 $944 $949 $845 $789 $143.5
NPLs / Total Loans 0.70% 0.67% 0.67% 0.59% 0.55%
21
NET CHARGE-OFF RATIOS BY LOAN CLASS
Note: Totals may not foot due to rounding
Memo:
Net Charge-off Ratio (annualized) 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
1Q 17 Loan
Balance ($B)
Commercial & industrial 0.14 % 0.52 % 0.41 % 0.35 % 0.29 % $69.0
Commercial real estate (0.10)% (0.01)% 0.01 % (0.01)% (0.02)% 5.1
Commercial construction (0.04)% (0.00)% (0.01)% 0.88 % (0.02)% 4.2
Total Commercial Loans 0.12 % 0.46 % 0.37 % 0.35 % 0.26 % $78.3
Residential mortgages – guaranteed - - - - - $0.5
Residential mortgages – nonguaranteed 0.27 % 0.20 % 0.17 % 0.23 % 0.17 % 26.1
Home equity products 0.55 % 0.36 % 0.31 % 0.37 % 0.35 % 11.5
Residential construction 0.24 % 0.07 % 0.11 % (0.50)% (0.34)% 0.4
Total Residential Loans 0.36 % 0.24 % 0.21 % 0.26 % 0.22 % $38.6
Guaranteed student loans - - - - - $6.4
Other direct 0.46 % 0.45 % 0.51 % 0.61 % 0.61 % 7.9
Indirect 0.56 % 0.34 % 0.62 % 0.81 % 0.78 % 11.1
Credit cards 2.30 % 2.48 % 2.20 % 2.32 % 2.61 % 1.4
Total Consumer Loans 0.49 % 0.39 % 0.52 % 0.64 % 0.64 % $26.7
Total SunTrust 0.25 % 0.39 % 0.35 % 0.38 % 0.32 % $143.5
22
NET CHARGE-OFFS BY LOAN CLASS
Note: Totals may not foot due to rounding
Memo:
Net Charge-offs ($ in millions) 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
1Q 17 Loan
Balance ($B)
Commercial & industrial $24 $90 $71 $60 $50 $69.0
Commercial real estate (2) - - - - 5.1
Commercial construction - - - 9 - 4.2
Total Commercial Loans $22 $90 $71 $69 $50 $78.3
Residential mortgages – guaranteed - - - - - $0.5
Residential mortgages – nonguaranteed 16 12 11 15 10 26.1
Home equity products 18 11 10 11 10 11.5
Residential construction - - - - - 0.4
Total Residential Loans $35 $24 $21 $26 $20 $38.6
Guaranteed student loans - - - - - $6.4
Other direct 7 7 9 12 12 7.9
Indirect 14 9 17 21 21 11.1
Credit cards 6 7 7 8 9 1.4
Total Consumer Loans $28 $23 $34 $41 $42 $26.7
Total SunTrust $85 $137 $126 $136 $112 $143.5
23
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2011 2012 2013 2014 2015 2016
Reported (GAAP) Basis
Net Interest Income 1,282 1,288 1,308 1,343 1,366 5,065 5,102 4,853 4,840 4,764 5,221
Noninterest Income 781 898 889 815 847 3,421 5,373 3,214 3,323 3,268 3,383
Revenue 2,063 2,186 2,197 2,158 2,213 8,486 10,475 8,067 8,163 8,032 8,604
Noninterest Expense¹ 1,318 1,345 1,409 1,397 1,465 6,194 6,284 5,831 5,543 5,160 5,468
Efficiency Ratio 63.9% 61.5% 64.1% 64.7% 66.2% 73.0% 60.0% 72.3% 67.9% 64.2% 63.6%
Reconciliation:
Net Interest Income 1,282 1,288 1,308 1,343 1,366 5,065 5,102 4,853 4,840 4,764 5,221
FTE Adjustment 36 35 34 34 34 114 123 127 142 142 138
Net Interest Income-FTE 1,318 1,323 1,342 1,377 1,400 5,179 5,225 4,980 4,982 4,906 5,359
Noninterest Income 781 898 889 815 847 3,421 5,373 3,214 3,323 3,268 3,383
Revenue-FTE 2,099 2,221 2,231 2,192 2,247 8,600 10,598 8,194 8,305 8,174 8,742
Efficiency Ratio-FTE 62.8% 60.6% 63.1% 63.7% 65.2% 72.0% 59.3% 71.2% 66.7% 63.1% 62.6%
Adjustment Items (Noninterest Income):
3Q-4Q 12 student / Ginnie Mae loan sale (losses) (92)
Securities gain related to the sale of Coca Cola stock 1,938
Pre-tax mortgage repurchase provision related to loans sold to GSEs prior to 2009 (371)
GSE mortgage repurchase settlements (63)
RidgeWorth sale 105
Adjusted Noninterest Income 781 898 889 815 847 3,421 3,898 3,277 3,218 3,268 3,383
Adjusted Revenue-FTE² 2,099 2,221 2,231 2,192 2,247 8,600 9,123 8,257 8,200 8,174 8,742
Noninterest Expense¹ 1,318 1,345 1,409 1,397 1,465 6,194 6,284 5,831 5,543 5,160 5,468
Adjustment Items (Noninterest Expense):
Legacy affordable housing impairment 96
Charitable contribution of KO shares 38
Impact of certain legacy mortgage legal matters 323 324
Mortgage servicing advances allowance increase 96
Adjusted Noninterest Expense² 1,318 1,345 1,409 1,397 1,465 6,194 6,150 5,412 5,219 5,160 5,468
Amortization Expense 10 11 14 14 13 43 46 23 25 40 49
Adjusted Tangible Expenses² 1,308 1,334 1,395 1,383 1,452 6,151 6,104 5,389 5,194 5,120 5,419
Adjusted Efficiency Ratio-FTE³ 62.8% 60.6% 63.1% 63.7% 65.2% 72.0% 67.4% 65.6% 63.7% 63.1% 62.6%
Adjusted Tangible Efficiency Ratio-FTE³ 62.3% 60.1% 62.5% 63.1% 64.6% 71.5% 66.9% 65.3% 63.3% 62.6% 62.0%
RECONCILIATION: ADJUSTED EFFICIENCY RATIO (FTE) &
ADJUSTED TANGIBLE EFFICIENCY RATIO (FTE)
1. In accordance with updated GAAP, amortization of affordable housing investments of $40 million, $39 million, and $49 million were reclassified and are now presented in provision for income taxes for the 2011, 2012, and 2013, respectively.
Previously, the amortization was presented in other noninterest expense
2. Adjusted revenue and expenses are provided as they remove certain items that are material and/or potentially non-recurring. Adjusted figures are intended to provide management and investors information on trends that are more comparable
across periods and potentially more comparable across institutions
3. Represents adjusted noninterest expense / adjusted revenue – FTE. Adjusted tangible efficiency ratio excludes amortization expense, the impact of which is (0.48%), (0.50%), (0.63%), (0.64%), (0.58%), (0.50%), (0.50%), (0.28%), (0.30%), (0.49%),
and (0.56%) for 1Q 16, 2Q 16, 3Q 16, 4Q 16, 1Q 17, 2011, 2012, 2013, 2014, 2015, and 2016, respectively
Note: 2011, 2012, 2013, and 2014 values represent the adjusted efficiency ratio and adjusted tangible efficiency ratio, 1Q 16, 2Q 16, 3Q 16, 4Q 16, 1Q 17, 2015 and 2016 represent reported efficiency ratio and reported tangible efficiency ratio
24
RECONCILIATION: COMMON EQUITY TIER 1 RATIO1
1. The Common Equity Tier 1 ratio is subject to certain phase-in requirements under Basel III beginning in 2015, and as such we have presented a reconciliation of the Common Equity Tier 1 ratio as calculated
considering the phase-in requirements (Common Equity Tier 1 – Transitional) to the fully phased-in ratio. All figures are estimated at the time of the earnings release and subject to revision
2. Primarily includes the phase-out from capital of certain DTAs, the overfunded pension asset, and other intangible assets
3. Primarily relates to the increased risk weight to be applied to mortgage servicing assets on a fully phased-in basis
Note: Totals may not foot due to rounding
1Q 17
Common Equity Tier 1 – Transitional $16.8
Adjustments2 (0.0)
Common Equity Tier 1 – Fully phased-in $16.8
Risk-weighted Assets: Common Equity Tier 1 – Transitional $173.8
Adjustments3 2.6
Risk-weighted Assets: Common Equity Tier 1 – Fully phased-in $176.4
Common Equity Tier 1 – Transitional 9.7%
Common Equity Tier 1 – Fully phased-in 9.5%
($ in billions)
25
RECONCILIATION: NON-GAAP MEASURES
Note: Totals may not foot due to rounding
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17
Total Shareholders' Equity $24.1 $24.5 $24.4 $23.6 $23.5
Goodwill, Net of Deferred Taxes (6.1) (6.1) (6.1) (6.1) (6.1)
Other Intangible Assets Including MSRs, Net of Deferred Taxes (1.2) (1.1) (1.1) (1.7) (1.7)
MSRs 1.2 1.1 1.1 1.6 1.7
Tangible Equity $18.0 $18.4 $18.4 $17.5 $17.4
Noncontrolling Interest (0.1) (0.1) (0.1) (0.1) (0.1)
Preferred Stock (1.2) (1.2) (1.2) (1.2) (1.2)
Tangible Common Equity $16.6 $17.0 $17.0 $16.2 $16.1
Total Assets 194.2 198.9 205.1 204.9 205.6
Goodwill (6.3) (6.3) (6.3) (6.3) (6.3)
Other Intangible Assets Including MSRs, Net of Deferred Taxes (1.2) (1.1) (1.1) (1.7) (1.7)
MSRs 1.2 1.1 1.1 1.6 1.7
Tangible Assets $187.8 $192.5 $198.7 $198.5 $199.3
Average Equity / Average Assets 12.3% 12.1% 12.1% 11.8% 11.6%
Total Equity / Total Assets 12.4% 12.3% 11.9% 11.5% 11.4%
Tangible Equity / Tangible Assets 9.6% 9.5% 9.2% 8.8% 8.7%
Tangible Common Equity / Tangible Assets 8.9% 8.8% 8.6% 8.2% 8.1%
Book Value Per Common Share $44.97 $46.14 $46.63 $45.38 $45.62
Tangible Book Value Per Common Share $32.90 $33.98 $34.34 $32.95 $33.06
($ in billions, except per-share data)