Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - SUNTRUST BANKS INC | a123117earningsrelease-exh.htm |
| 8-K - 8-K - SUNTRUST BANKS INC | a123117form8-ker.htm |
4Q 17 EARNINGS
PRESENTATION
January 19, 2018
© 2018 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, tangible book value per share, and return on average tangible
common equity. 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 Efficiency ratio-FTE, Tangible efficiency ratio-FTE, and Adjusted 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. 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. Adjusted
tangible efficiency ratio-FTE removes the pre-tax impact of Form 8-K items announced on December 4, 2017 and the impacts of tax reform-related items from the calculation of Tangible efficiency ratio-FTE. The Company believes
this measure is useful to investors because it is more reflective of normalized operations as it reflects results that are primarily client relationship and client transaction driven. These measures are utilized by management to assess
the efficiency of the Company and its lines of business.
• The Company presents adjusted EPS which excludes the impact of Form 8-K items announced on December 4, 2017 and the impacts of tax reform-related items. The Company believes this measure is useful to investors because it
is more reflective of normalized operations as it reflects results that are primarily client relationship and client transaction driven. These measures are utilized by management to assess the earnings 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 considers 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 is useful to investors who wish to understand the Company's current compliance with future regulatory requirements.
Important Cautionary Statement about Forward-Looking Statements
This presentation contains forward-looking statements. Statements regarding future levels of the net interest margin, tangible efficiency ratio, charge-offs and net charge-off ratio, loan loss provision expense, ALLL ratio, commercial real
estate-related income, personnel expenses, the impact of tax reform on investments and growth, future capital returns, capital markets-related income, earnings per share, and the effective tax rate and its impacts on FTE adjustments 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,”
“forecast”, “goals”, “plans,” “targets,” “initiatives,” “opportunity,” “focus”, “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; 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; certain banking laws and certain provisions of our articles of incorporation may have an anti-takeover effect; and the interest rates of our outstanding floating rate indebtedness and assets might be subject to change
based on recent regulatory changes.
IMPORTANT CAUTIONARY STATEMENT
3
$0.90 $0.91
$1.03 $1.06
$1.09
$1.48
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
1. The efficiency ratio and tangible efficiency ratios are reported on fully taxable-equivalent (“FTE”) basis. Please refer to slide 24 for GAAP reconciliations
2. Please refer to slide 25 for Basel III CET1 (transitional) to Basel III CET1 (fully phased-In) reconciliation
4Q 17 AND 2017 EPS OVERVIEW
$3.60
$4.09
$4.47
2016 2017
Reported EPS Adjusted EPS
Quarterly & Annual Trends
Continued Earnings
Momentum
• Reported EPS of $1.48 includes $0.39 of
discrete benefits (see slide 5)
→ 4Q 17 adjusted EPS up 3%, driven by
lower provision expense
• 2017 reported EPS of $4.47, up 24%
→ 2017 adjusted EPS up 14%, driven by
higher revenue (up 4%), improved
profitability, and reduced share count
Continued Efficiency
Progress
• Achieved 2017 efficiency goal
→ 2017 reported efficiency ratio:
63.1%; tangible efficiency ratio
(FTE): 62.3%1
→ 2017 adjusted tangible efficiency
ratio (FTE): 61.0%1, down 100 bps
relative to 2016
Asset Quality & Capital
Remain Strengths
• 2017 NCO ratio: 0.25% | NPL ratio of
0.47%
• Capital ratios remain strong, even after
47% increase in capital returns relative
to 2016
→ 9.8% Basel III CET1 ratio
(transitional); 9.6% Basel III CET1
ratio (fully phased-in)2
4
62.0% 61.0%
62.6% 61.9%
2016 2017
2017 HIGHLIGHTS
2017 Highlights: Good Progress Across All Fronts
Earnings Per Share1 Total Revenue (FTE) Tangible Efficiency Ratio (FTE)2
Total Capital
Returns
($ in millions)
$3.60
$4.09
2016 2017 2016 2017 2016 2017
$8,742
$9,132
$1,328
$1,948
Total Shareholder Return: 20% (~700 bps above peer median)3
1. 2017 represents adjusted earnings per share. Reported earnings per share were $4.47 for 2017 which includes $0.39 of discrete benefits. Please refer to slide 5 for more details
2. 2017 represents the adjusted efficiency ratio and tangible efficiency ratio. The reported efficiency ratio was 63.1% and reported tangible efficiency ratio was 62.3%. Please refer to slide 9 for more details
and slide 24 for GAAP reconciliations
3. Source: Bloomberg. Reflects 12/31/2016 – 12/31/2017. Peers include BAC, BBT, CFG, FITB, HBAN, KEY, MTB, PNC, RF, USB, WFC. Dividends assumed to be reinvested in same security
Efficiency
Ratio (FTE)
Tangible Efficiency
Ratio (FTE)
73%
Payout
Ratio
89%
Payout
Ratio
5
4Q 17 DISCRETE ITEMS
1. The efficiency ratio and tangible efficiency ratios are reported on fully taxable-equivalent (“FTE”) basis. Please refer to slide 24 for GAAP reconciliations
Pre-Tax After-Tax Line Item Impacted Segment
Gain on sale of Premium Assignment Corporation (PAC) subsidiary $107 $65 Other noninterest income Wholesale
SunTrust Mortgage state NOL valuation allowance adjustment - ($27) Provision for income taxes Corporate Other
Net charge related to efficiency actions ($36) ($22) Other noninterest expense All
Sub-Total $16
EPS Impact $0.03
Revaluation of the net DTL & other discrete tax items - $291 Provision for income taxes Corporate Other
Securities AFS portfolio restructuring losses ($109) ($69) Securities gains/(losses) Corporate Other
Charitable contribution to SunTrust Foundation ($50) ($31) Marketing & customer development Corporate Other
Discretionary 401(k) contribution and other employee benefits ($25) ($16) Employee compensation & benefits All
Loss on sale of servicing rights ($5) ($3) Mortgage servicing related income Consumer
Sub-Total $172
EPS Impact $0.36
Reported Adjusted
Earnings Per Share $1.48 $1.09
Efficiency Ratio (FTE)¹ 65.9% 60.9%
Tangible Efficiency Ratio (FTE)¹ 64.8% 59.9%
Earnings Per Share $4.47 $4.09
Efficiency Ratio (FTE)¹ 63.1% 61.9%
Tangible Efficiency Ratio (FTE)¹ 62.3% 61.0%
Items
Announced
in 12/4 8-K
Tax
Reform
Impacts &
Related
Actions
4Q 17
2017
6
$1,343 $1,366
$1,403 $1,430 $1,434
$1,377
$1,400
$1,439
$1,467 $1,472
3.00%
3.09%
3.14% 3.15%
3.17%
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Net Interest Income Net Interest Income (FTE) NIM (FTE)
NET INTEREST INCOME1
NII growth and NIM expansion continues; NIM up 2 bp QoQ and 17 bps YoY
Prior Quarter Variance
• Net interest margin (FTE) increased 2 bps, driven by:
→ Above average benefits from certain loan-related
fees and nonaccrual recoveries
→ Higher securities yields
• Net interest income (FTE) up slightly as higher
margins offset lower loan balances (which were
partially impacted by the sale of PAC)
Prior Year Variance
• Net interest margin (FTE) increased 17 bps, driven by:
→ Higher loan yields as a result of the increases in
short-term rates
→ Improved loan mix (faster growing consumer
portfolio)
→ Lower premium amortization on the securities
portfolio
• Net interest income (FTE) increased $95 million,
or 7%, driven by NIM expansion and earning asset
growth
1. On this slide, net interest income is reported on an unadjusted and fully taxable-equivalent (“FTE”) basis. The FTE basis adjusts for the tax-favored status of income from certain loans and investments. SunTrust
believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. Net interest margin (FTE) is calculated as net
interest income (FTE) divided by average earning assets (on an annualized basis)
2. Please refer to slide 24 for a reconciliation of net interest income to net interest income (FTE)
2
($ in millions)
7
NONINTEREST INCOME
Prior Quarter Variance
• Noninterest income decreased $13 million, or 2%
driven by:
→ $57 million decrease in capital markets-related
income, given strong 3Q 17 performance
→ FY 17 investment banking income up 21%
(10th consecutive record year)
→ $7 million net discrete charges in 4Q 17 (see
slide 5)
→ Partially offset by $45 million increase in
commercial real estate-related income given
increased structured real estate activity and
seasonality
Prior Year Variance
• Noninterest income increased $18 million, or 2%
driven by:
→ $29 million increase in commercial real estate-
related income
→ $8 million increase in wealth management-
related income
$815
$847
$827 $846 $833
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Noninterest income up 2% YoY
($ in millions)
Reported Noninterest Income 4Q 17 Adjusted Noninterest Income
$840
8
Increase in expenses driven by discrete costs recognized in 4Q 17; adjusted expenses
relatively stable
NONINTEREST EXPENSE
Prior Quarter Variance
• $129 million increase in noninterest expense driven by
discrete items including:
→ $75 million contribution to communities and
teammates in response to tax reform
→ $36 million discrete charges associated with
efficiency initiatives (other noninterest expense)
→ Voluntary early retirement program
→ Branch and corporate real estate closures
→ Software write-downs
→ $14 million net discrete benefits recognized in
3Q 17 ($58 million legal accrual reversals
partially offset by $44 million of costs associated
with efficiency initiatives)
Prior Year Variance
• Noninterest expense increased $123 million, driven
primarily by the $111 million in discrete expenses
recognized in 4Q 17
→ Overall, solid expense management resulted in
stable adjusted expenses despite 5% increase in
revenue
($ in millions)
Reported Noninterest Expense 4Q 17 Adjusted Noninterest Expense
$1,397 $1,465 $1,388 $1,391
$1,409
$111
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
$1,520
9
71.5%
66.9%
65.3%
63.3% 62.6% 62.0% 61.0% 60%-
61% <60%
72.0%
67.4%
65.6%
63.7%
63.1%
62.6%
61.9%
2011 2012 2013 2014 2015 2016 2017 2018
TER Goal
2019
TER Goal
63.1%
64.6%
60.6%
59.2% 59.9%
63.7%
65.2%
61.2%
60.1%
60.9%
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Efficiency progress continues; delivered 100 bps improvement in 2017
Expect further progress in 2018, even after ~50 bp FTE calculation headwind
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 6
2. 2012, 2013, 2014, 4Q 17, and 2017 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 24 for reconciliations related to the GAAP efficiency ratio
3. The FTE adjustment (which grosses up reported net interest income) was $145 million in 2017. The adjustment will decline by approximately half in 2018 and beyond given lower corporate tax rates
EFFICIENCY RATIO & TANGIBLE EFFICIENCY RATIO1
Efficiency Ratio (FTE) Tangible Efficiency Ratio (FTE)
2 2 2
Annual Trend 5-Quarter Trend
2 2
3 3
Prior to tax reform
(and resulting impact
to FTE calculation),
expected ~60% TER
10
CREDIT QUALITY
Overall asset quality continues to be very strong
($ in millions)
NPLs decline further, driven by C&I NCO ratio well below historical averages; 25 bps NCO for FY 17
Nonperforming Loans Net Charge-offs
$845
$789
$754
$697 $674
0.59% 0.55% 0.52% 0.48% 0.47%
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
NPLs Total NPL Ratio
$136
$112
$70
$78
$107
0.38%
0.32%
0.20% 0.21%
0.29%
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
NCOs Total NCO Ratio (annualized)
Allowance for Loan and Lease Losses
$1,709 $1,714
$1,731
$1,772
$1,735
1.19% 1.20% 1.20% 1.23% 1.21%
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
ALLL ALLL Ratio
Provision for Credit Losses
$101
$119
$90
$120
$79
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Provision declined sequentially given hurricane-related provision in 3Q 17 Continued asset quality improvements drive decline in ALLL ratio
11
$77.4 $78.2 $78.4 $77.4 $76.4
$38.8 $38.3 $38.1 $38.3 $38.2
$25.5 $26.3 $27.2 $28.2 $28.7
$141.7 $142.8 $143.7 $144.0 $143.4
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Commercial Residential Consumer
LOANS
Average performing loans stable sequentially and up 1% YoY
($ in billions, average balances)
Note: Totals may not foot due to rounding
Prior Quarter Variance
• Average performing loans stable as 2% consumer loan
growth was offset by a decline in C&I loans
→ PAC sale closed on December 1st and included
$1.3 billion of C&I loan balances (impacted
average balances by ~$400 million)
Prior Year Variance
• Average performing loans increased $1.7 billion, or 1%
• Strategic investments drove strong growth in
consumer lending and further balance sheet
optimization
→ Consumer other direct up 14% (primarily driven
by LightStream and partnership with GreenSky)
→ Credit card up 14%
• Offset by 2% decline in C&I loans
12
DEPOSITS
Average client deposits up 1% sequentially and 2% YoY
($ in billions, average balances)
Prior Quarter Variance
• Average client deposits up 1%, driven by seasonal
growth in NOW accounts
• Interest-bearing deposit costs up 2 bps
Prior Year Variance
• Average client deposits up 2%, reflects continued
success in deepening client relationships across the
Company
→ Consumer average deposits up 2%
→ Wholesale average deposits up 2%
• Interest-bearing deposit costs up 16 bps
$54.4 $54.9 $54.2 $53.3 $52.0
$44.8 $43.1 $43.6 $43.8 $44.1
$42.9 $44.7 $44.4 $44.6 $46.2
$9.6 $9.7 $10.2 $11.2 $11.9
$6.3 $6.4 $6.6 $6.5 $6.5
$158.0 $158.9 $159.1 $159.4 $160.7
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Money Market DDA (Nonint bearing) NOW Time Savings
Note: Totals may not foot due to rounding
13
CAPITAL POSITION
($ 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 25 for additional details on the current quarter’s calculation
2. Please refer to slide 26 for a reconcilement of total equity to tangible common equity and total assets to tangible assets
3. Please refer to slide 26 for a reconcilement of book value per share to tangible book value per share
11.8% 11.6% 11.8% 11.9%
12.1%
8.2% 8.1% 8.1% 8.1% 8.2%
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Avg. Equity/Avg. Assets Tangible Common Equity/Tangible Assets
$45.38 $45.62 $46.51
$47.16 $47.94
$32.95 $33.05 $33.83 $34.34
$34.82
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Book Value Per Share Tangible Book Value Per Share
$16.9 $16.8 $17.0 $17.0
$17.1
9.6% 9.7% 9.7% 9.6%
9.8%
9.4% 9.5% 9.5% 9.5%
9.6%
0
0
0
0
0
0
0
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Basel III CET1 ratio Basel III fully phased-in CET1 ratio
Capital ratios up YoY, even after 89% total payout ratio in 2017
14
($ in millions) 4Q 16 3Q 17 4Q17 FY 16 FY 17
%Δ
Prior Yr
Net Interest Income $886 $942 $946 $3,465 $3,698 7 %
Noninterest Income 468 473 473 2,036 1,874 (8)%
Total Revenue 1,354 1,415 1,419 5,501 5,572 1 %
Provision for Credit Losses 82 136 69 172 368 NM
Noninterest Expense 952 894 1,011 3,796 3,842 1 %
Net Income $206 $245 $217 $965 $871 (10)%
Key Statistics ($ in billions)
Total Loans (average) $70.6 $73.4 $73.8 $69.5 $72.6 5 %
Client Deposits (average) $101.1 $103.2 $102.9 $99.4 $102.8 3 %
Managed Assets (EOP) $53.2 $57.8 $58.9 $53.2 $58.9 11 %
Full-Service Branches 1,367 1,275 1,268 1,367 1,268 (7)%
Efficiency Ratio 70.3% 63.1% 71.3% 69.0% 68.9%
Tangible Efficiency Ratio¹ 69.1% 62.0% 70.1% 67.9% 67.8%
Mortgage Data:
Servicing Portfolio for Others (EOP) $129.6 $135.4 $136.1 $129.6 $136.1 5 %
Production Volume $8.7 $6.2 $6.3 $29.4 $24.4 (17)%
Application Volume $8.3 $7.7 $7.1 $40.6 $30.8 (24)%
CONSUMER SEGMENT HIGHLIGHTS
Full Year Highlights
Prior Quarter Variance
• Solid loan and deposit growth, improved
loan mix
→ Net interest income increased 7%
• Wealth management momentum
improving
→ Managed assets up 11%
• Making core efficiency progress
→ Branches down 7%
→ Mobile deposits up 20%
• Integrated Mortgage into broader
Consumer segment
→ Creates increased alignment and
opportunity
• 4Q 17 net income, excluding discrete
items on slide 5, of $233mm
• Revenues stable sequentially
• Expenses up $117 million due to discrete
items
→ 4Q 17 includes efficiency-related
charges and discretionary 401(k)
contribution
→ 3Q 17 includes $58 million benefit
from legal accrual reversals
• Provision expense down $67 million due
to prior quarter reserve build for
anticipated hurricane losses
Note: NM = not meaningful
1. Please refer to page 24 of the earnings press release for a reconciliation of efficiency ratio to tangible efficiency ratio
15
WHOLESALE SEGMENT HIGHLIGHTS
($ in millions) 4Q 16 3Q 17 4Q 17 FY 16 FY 17
%Δ
Prior Yr
Net Interest Income (FTE) $565 $606 $616 $2,154 $2,389 11 %
Noninterest Income 360 406 516 1,356 1,710 26 %
Total Revenue (FTE) 925 1,012 1,132 3,510 4,099 17 %
Provision/(Benefit) for Credit Losses 19 (16) 11 272 41 NM
Noninterest Expense 436 459 469 1,676 1,869 12 %
Net Income $295 $358 $407 $979 $1,373 40 %
Key Statistics ($ in billions)
Total Loans (average) $71.9 $71.2 $70.1 $71.6 $71.5 (0)%
Client Deposits (average) $56.9 $56.1 $57.8 $54.7 $56.6 3 %
Efficiency Ratio (FTE)¹ 47.1% 45.3% 41.5% 47.8% 45.6%
Tangible Efficiency Ratio (FTE)¹ 45.1% 42.9% 38.8% 45.9% 43.4%
Prior Quarter Variance
Note: NM = not meaningful
1. Please refer to page 26 of the earnings press release for a reconciliation of efficiency ratio to tangible efficiency ratio
2. “Pillar/Cohen” refers to the businesses purchased in December 2016 from Pillar Financial, LLC and its wholly owned subsidiaries (including Cohen Financial Services (DE), LLC)
• Record revenue and net income
→ Revenue up 14% (excluding PAC gain)
→ 10th consecutive record year for
investment banking
→ Strong net interest income growth
even after modest balance sheet
growth; maintaining strong return
discipline
→ Continued efficiency progress
• Optimizing business mix and opportunity
set
→ First full year of Pillar/Cohen2
(revenues in line with initial
expectations)
→ Expanded Commercial Banking into
Ohio and Texas
→ Sold PAC
• Continued momentum results in another
record revenue quarter (excluding PAC
gain)
→ Net interest income (FTE) up 1%,
due to NIM expansion
→ Excluding PAC gain, noninterest
income stable
• Net income increased $49 million
driven by the sale of PAC
Full Year Highlights
16
$0.94 $3.59 $2.41 $3.23 $3.58 $3.60 $4.47
GAAP EPS
Strong & Diverse Franchise;
Investing in Growth
Improving Efficiency
& Returns
Strong Capital Position
Supports Growth
(Dividends & share buybacks as a % of net income) (Tangible efficiency ratio (FTE)2)
(Adjusted earnings per share1)
$0.94
$2.19
$2.74
$3.23
$3.58 $3.60
$4.09
2011 2012 2013 2014 2015 2016 2017
71.5%
66.9%
65.3%
63.3%
62.6% 62.0%
61.0%
2011 2012 2013 2014 2015 2016 2017
8% 11%
26%
48%
62%
73%
89%
2011 2012 2013 2014 2015 2016 2017
LONG-TERM TRENDS
• 2017 adjusted tangible efficiency ratio
(FTE): 61.0%2; reflects 100 bps
improvement
→ Committed to further progress in
2018 even after impact from tax
reform
• 14 bp increase in NIM (FTE)
• ROE: 9.7% | adjusted ROTCE: 12.2%3
6th consecutive year of
improved efficiency
6th consecutive year of
higher capital returns
• 47% increase in capital returns
→ 27% increase in dividends
→ 58% increase in share repurchases
→ 3% decline in average shares
outstanding
• 9.6% Basel III CET1 ratio (fully phased-
in)3
→ Up relative to 2016, even after 89%
total payout ratio
• 14% adjusted EPS growth despite 37%
decline in mortgage production income;
reflects franchise diversity
→ Record revenue and net income for
Wholesale segment
• Strong growth in consumer lending
→ Avg. consumer direct balances up 20%
• Investing in technology: mobile deposits
up 20%
6th consecutive year of EPS
growth
1. 2012, 2013, and 2017 values represent adjusted earnings per share. The impact of excluding discrete items was ($1.40), $0.33, and ($0.39) for 2012, 2013, and 2017, respectively. For the reconciliation to GAAP EPS for 2012 and 2013, please
refer to page 36 of the 2013 Form 10-K. For the 2017 reconciliation to GAAP EPS, please refer to slide 5
2. 2012, 2013, 2014, and 2017 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 24 for reconciliations related to the GAAP efficiency ratio
3. Reported ROTCE: 13.4%, impact of excluding discrete items outlined on slide 5 is (1.2%)
APPENDIX
18
5-QUARTER & 2-YEAR FINANCIAL HIGHLIGHTS
1. Please refer to slide 24 for the GAAP reconciliations
2. Please refer to page 23 of the earnings press release for GAAP reconciliations
3. Please refer to slide 25 for the reconciliation of Basel III CET1 (transitional) to Basel III CET1 (fully phased-In)
4. Please refer to slide 26 for a reconcilement to book value per share
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 2016 2017
EPS (diluted) $0.90 $0.91 $1.03 $1.06 $1.48 $3.60 $4.47
` Adjusted EPS (diluted) $0.90 $0.91 $1.03 $1.06 $1.09 $3.60 $4.09
Efficiency Ratio (FTE) 63.7% 65.2% 61.2% 60.1% 65.9% 62.6% 63.1%
Tangible Efficiency Ratio (FTE)1 63.1% 64.6% 60.6% 59.2% 64.8% 62.0% 62.3%
Adjusted Tangible Efficiency Ratio (FTE)1 63.1% 64.6% 60.6% 59.2% 59.9% 62.0% 61.0%
Net Interest Margin (FTE) 3.00% 3.09% 3.14% 3.15% 3.17% 3.00% 3.14%
Return on Average Assets 0.91% 0.93% 1.03% 1.04% 1.43% 0.94% 1.11%
Return on Average Common Equity 7.9% 8.2% 9.1% 9.0% 12.5% 8.0% 9.7%
Return on Average Tangible Common Equity2 10.8% 11.3% 12.5% 12.5% 17.2% 10.9% 13.4%
Average Performing Loans ($ in billions) $141.7 $142.8 $143.7 $144.0 $143.4 $140.2 $143.5
Average Client Deposits ($ in billions) $158.0 $158.9 $159.1 $159.4 $160.7 $154.2 $159.5
NPL Ratio 0.59% 0.55% 0.52% 0.48% 0.47% 0.59% 0.47%
NCO Ratio 0.38% 0.32% 0.20% 0.21% 0.29% 0.34% 0.25%
ALLL Ratio 1.19% 1.20% 1.20% 1.23% 1.21% 1.19% 1.21%
Basel III Common Equity Tier 1 Ratio (transitional) 9.6% 9.7% 9.7% 9.6% 9.8% 9.6% 9.8%
Basel III Common Equity Tier 1 Ratio (fully phased-in)3 9.4% 9.5% 9.5% 9.5% 9.6% 9.4% 9.6%
Book Value Per Share $45.38 $45.62 $46.51 $47.16 $47.94 $45.38 $47.94
Tangible Book Value Per Share4 $32.95 $33.05 $33.83 $34.34 $34.82 $32.95 $34.82
Balance
Sheet
Credit &
Capital
Profitability
19
MORTGAGE SERVICING INCOME:
SUPPLEMENTAL INFORMATION
1. Includes contractually specified servicing fees, late charges, interest curtailment expense, and other ancillary revenues
2. Due primarily to the receipt of monthly servicing fees and from prepayments
3. Includes both the fair value mark-to-market of the MSR asset from changes in market rates and other assumption updates, exclusive of the decay, and the impact of using derivatives to hedge the risk of changes in
the fair value of the MSR asset
Note: Totals may not foot due to rounding
($ in millions)
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Servicing Fees1 $93 $100 $100 $99 $101
($69) ($50) ($57) ($58) ($58)
Net MSR Fair Value and Hedge Activity3 $1 $7 $1 $5 ($1)
Mortgage Servicing Income $25 $58 $44 $46 $43
Memo:
Total Loans Serviced for Others (average balance) $126,765 $134,444 $136,376 $135,898 $135,626
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
20
Memo:
30-89 Accruing Delinquencies 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
4Q 17 Loan
Balance
Commercial & industrial 0.05% 0.05% 0.05% 0.08% 0.06% $66,356
Commercial real estate 0.02% 0.03% 0.04% 0.02% 0.00% $5,317
Commercial construction 0.00% 0.00% 0.00% 0.00% 0.00% $3,804
Total Commercial Loans 0.05% 0.04% 0.05% 0.07% 0.06% $75,477
Residential mortgages – guaranteed $560
Residential mortgages – nonguaranteed 0.32% 0.26% 0.21% 0.27% 0.55% $27,136
Home equity products 0.68% 0.63% 0.66% 0.85% 0.71% $10,626
Residential construction 0.64% 0.33% 0.30% 0.28% 2.33% $298
Guaranteed student loans - - - - - $6,633
Other direct 0.43% 0.39% 0.36% 0.44% 0.42% $8,729
Indirect 1.18% 0.83% 0.83% 1.09% 0.91% $12,140
Credit cards 0.83% 0.74% 0.75% 0.89% 0.83% $1,582
Total Consumer Loans¹ ² 0.58% 0.47% 0.45% 0.58% 0.65% $67,704
Total SunTrust - excl. gov.-guaranteed delinquencies³ 0.27% 0.22% 0.22% 0.29% 0.32% $135,988
Impact of excluding gov.-guaranteed delinquencies 0.45% 0.50% 0.44% 0.42% 0.48% $7,193
Total SunTrust - incl. gov.-guaranteed delinquencies4 0.72% 0.72% 0.66% 0.71% 0.80% $143,181
30-89 DAY DELINQUENCIES BY LOAN CLASS
1. Excludes delinquencies on all federally guaranteed mortgages
2. Excludes delinquencies on federally guaranteed student loans
3. Excludes delinquencies on federally guaranteed mortgages and student loans
4. Excludes mortgage loans guaranteed by GNMA that SunTrust has the option, but not the obligation, to repurchase
Note: Totals may not foot due to rounding
($ in millions)
21
NONPERFORMING LOANS BY LOAN CLASS
Note: Totals may not foot due to rounding
Memo:
Nonperforming Loans ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
4Q 17 Loan
Balance
Commercial & industrial $390 $328 $304 $292 $215 $66,356
Commercial real estate 7 6 5 5 24 $5,317
Commercial construction 17 18 16 1 1 $3,804
Total Commercial Loans $414 $352 $325 $298 $240 $75,477
Residential mortgages – guaranteed - - - - - $560
Residential mortgages – nonguaranteed 177 179 181 161 206 $27,136
Home equity products 235 237 226 214 203 $10,626
Residential construction 12 12 12 11 11 $298
Guaranteed student loans - - - - - $6,633
Other direct 6 5 5 6 7 $8,729
Indirect 1 4 5 7 7 $12,140
Credit cards - - - - - $1,582
Total Consumer Loans $431 $437 $429 $399 $434 $67,704
Total SunTrust $845 $789 $754 $697 $674 $143,181
NPLs / Total Loans 0.59% 0.55% 0.52% 0.48% 0.47%
22
NET CHARGE-OFF RATIOS BY LOAN CLASS
Note: Totals may not foot due to rounding
Memo:
Net Charge-off Ratio (annualized) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
4Q 17 Loan
Balance
Commercial & industrial 0.35 % 0.29 % 0.10 % 0.09 % 0.22 % $66,356
Commercial real estate (0.01)% (0.02)% 0.00 % 0.44 % (0.01)% $5,317
Commercial construction 0.88 % (0.02)% 0.10 % (0.01)% (0.01)% $3,804
Total Commercial Loans 0.35 % 0.26 % 0.10 % 0.11 % 0.19 % $75,477
Residential mortgages – guaranteed - - - - - $560
Residential mortgages – nonguaranteed 0.23 % 0.17 % 0.14 % 0.14 % 0.20 % $27,136
Home equity products 0.37 % 0.35 % 0.20 % 0.15 % 0.19 % $10,626
Residential construction (0.50)% (0.34)% 0.84 % 1.63 % 3.39 % $298
Guaranteed student loans - - - - - $6,633
Other direct 0.61 % 0.61 % 0.70 % 0.70 % 0.81 % $8,729
Indirect 0.81 % 0.78 % 0.45 % 0.59 % 0.66 % $12,140
Credit cards 2.32 % 2.61 % 2.77 % 2.55 % 2.77 % $1,582
Total Consumer Loans 0.41 % 0.39 % 0.32 % 0.33 % 0.41 % $67,704
Total SunTrust 0.38 % 0.32 % 0.20 % 0.21 % 0.29 % $143,181
($ in millions)
23
NET CHARGE-OFFS BY LOAN CLASS
Note: Totals may not foot due to rounding
Memo:
Net Charge-offs ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
4Q 17 Loan
Balance
Commercial & industrial $60 $50 $18 $16 $37 $66,356
Commercial real estate - - - 6 - $5,317
Commercial construction 9 - 1 - - $3,804
Total Commercial Loans $69 $50 $19 $22 $37 $75,477
Residential mortgages – guaranteed - - - - - $560
Residential mortgages – nonguaranteed 15 10 9 9 14 $27,136
Home equity products 11 10 5 5 5 $10,626
Residential construction - - 1 1 3 $298
Guaranteed student loans - - - - - $6,633
Other direct 12 12 14 15 18 $8,729
Indirect 21 21 13 18 20 $12,140
Credit cards 8 9 9 8 10 $1,582
Total Consumer Loans $67 $62 $51 $56 $70 $67,704
Total SunTrust $136 $112 $70 $78 $107 $143,181
24
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 2011 2012 2013 2014 2015 2016 2017
Reported (GAAP) Basis
Net Interest Income 1,343 1,366 1,403 1,430 1,434 5,065 5,102 4,853 4,840 4,764 5,221 5,633
Noninterest Income 815 847 827 846 833 3,421 5,373 3,214 3,323 3,268 3,383 3,354
Revenue 2,158 2,213 2,230 2,276 2,267 8,486 10,475 8,067 8,163 8,032 8,604 8,987
Noninterest Expense¹ 1,397 1,465 1,388 1,391 1,520 6,194 6,284 5,831 5,543 5,160 5,468 5,764
Efficiency Ratio 64.7% 66.2% 62.2% 61.1% 67.0% 73.0% 60.0% 72.3% 67.9% 64.2% 63.6% 64.1%
Reconciliation:
Net Interest Income 1,343 1,366 1,403 1,430 1,434 5,065 5,102 4,853 4,840 4,764 5,221 5,633
FTE Adjustment 34 34 36 37 38 114 123 127 142 142 138 145
Net Interest Income-FTE 1,377 1,400 1,439 1,467 1,472 5,179 5,225 4,980 4,982 4,906 5,359 5,778
Noninterest Income 815 847 827 846 833 3,421 5,373 3,214 3,323 3,268 3,383 3,354
Revenue-FTE 2,192 2,247 2,266 2,313 2,305 8,600 10,598 8,194 8,305 8,174 8,742 9,132
Efficiency Ratio-FTE 63.7% 65.2% 61.2% 60.1% 65.9% 72.0% 59.3% 71.2% 66.7% 63.1% 62.6% 63.1%
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
Premium Assignment Corporation sale 107 107
Securities & MSR losses in connection with tax reform-related actions (114) (114)
Adjusted Noninterest Income 815 847 827 846 840 3,421 3,898 3,277 3,218 3,268 3,383 3,361
Adjusted Revenue-FTE² 2,192 2,247 2,266 2,313 2,313 8,600 9,123 8,257 8,200 8,174 8,742 9,139
Noninterest Expense¹ 1,397 1,465 1,388 1,391 1,520 6,194 6,284 5,831 5,543 5,160 5,468 5,764
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
Potential mortgage servicing settlement & claims expense
Efficiency related charges as outlined in 12/4/17 8-K 36 36
Contribution to communities / teammates in connection with tax-reform 75 75
Adjusted Noninterest Expense² 1,397 1,465 1,388 1,391 1,409 6,194 6,150 5,412 5,219 5,160 5,468 5,653
Amortization Expense 14 13 15 22 25 43 46 23 25 40 49 75
Adjusted Tangible Expenses² 1,383 1,452 1,373 1,369 1,384 6,151 6,104 5,389 5,194 5,120 5,419 5,578
Adjusted Efficiency Ratio-FTE³ 63.7% 65.2% 61.2% 60.1% 60.9% 72.0% 67.4% 65.6% 63.7% 63.1% 62.6% 61.9%
Adjusted Tangible Efficiency Ratio-FTE³ 63.1% 64.6% 60.6% 59.2% 59.9% 71.5% 66.9% 65.3% 63.3% 62.6% 62.0% 61.0%0 0 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 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 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 (0.65%), (0.59%), (0.65%), (0.95%), (1.08%), (0.50%), (0.50%), (0.28%), (0.30%), (0.49%), (0.56%),
and (0.82%) for 4Q 16, 1Q 17, 2Q 17, 3Q 17, 4Q 17, 2011, 2012, 2013, 2014, 2015, 2016, and 2017, respectively
Note: 2012, 2013, 2014, 4Q 17, and 2017 values represent the adjusted efficiency ratio and adjusted tangible efficiency ratio. 4Q 16, 1Q 17, 2Q 17, 3Q 17, 2011, 2015, and 2016 represent reported efficiency ratio and reported tangible efficiency ratio
25
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, subject to revision, and based on current
capital rules
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
4Q 17
Common Equity Tier 1 – Transitional $17.1
Adjustments2 (0.0)
Common Equity Tier 1 – Fully phased-in $17.1
Risk-weighted Assets: Common Equity Tier 1 – Transitional $176.0
Adjustments3 2.7
Risk-weighted Assets: Common Equity Tier 1 – Fully phased-in $178.6
Common Equity Tier 1 – Transitional 9.8%
Common Equity Tier 1 – Fully phased-in 9.6%
($ in billions)
26
RECONCILIATION: OTHER NON-GAAP MEASURES
Note: Totals may not foot due to rounding
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17
Total Shareholders' Equity $23.6 $23.5 $24.5 $24.5 $25.2
Goodwill, Net of Deferred Taxes (6.1) (6.1) (6.1) (6.1) (6.2)
Other Intangible Assets Including MSRs, Net of Deferred Taxes (1.7) (1.7) (1.7) (1.7) (1.8)
MSRs 1.6 1.7 1.7 1.7 1.8
Tangible Equity $17.5 $17.4 $18.4 $18.4 $19.0
Noncontrolling Interest (0.1) (0.1) (0.1) (0.1) (0.1)
Preferred Stock (1.2) (1.2) (2.0) (2.0) (2.5)
Tangible Common Equity $16.2 $16.1 $16.3 $16.3 $16.4
Total Assets 204.9 205.6 207.2 208.3 206.0
Goodwill (6.3) (6.3) (6.3) (6.3) (6.3)
Other Intangible Assets Including MSRs, Net of Deferred Taxes (1.7) (1.7) (1.7) (1.7) (1.8)
MSRs 1.6 1.7 1.7 1.7 1.8
Tangible Assets $198.5 $199.3 $200.9 $201.9 $199.6
Average Equity / Average Assets 11.8% 11.6% 11.8% 11.9% 12.1%
Total Equity / Total Assets 11.5% 11.4% 11.8% 11.8% 12.2%
Tangible Equity / Tangible Assets 8.8% 8.7% 9.2% 9.1% 9.5%
Tangible Common Equity / Tangible Assets 8.2% 8.1% 8.1% 8.1% 8.2%
Book Value Per Common Share $45.38 $45.62 $46.51 $47.16 $47.94
Tangible Book Value Per Common Share $32.95 $33.05 $33.83 $34.34 $34.82
($ in billions, except per-share data)