Market Overview

SunTrust Reports Third Quarter 2015 Results

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Results Marked By Higher Net Interest Income, Improved Efficiency, and Strong Asset Quality

Capital and Liquidity Position Remain Robust

ATLANTA, Oct. 16, 2015 /PRNewswire/ -- SunTrust Banks, Inc. (NYSE: STI) reported net income available to common shareholders of $519 million, or $1.00 per average common diluted share.  This compares to $0.89 per share in the prior quarter and $1.06 and $0.81 per share in the third quarter of 2014, on a reported and adjusted basis, respectively.  The current quarter was favorably impacted by $0.07 per share in discrete tax benefits and $0.04 per share in recoveries related to the resolution of previous mortgage matters.  Earnings per share, when excluding the net $0.11 per share benefit of these items, grew 10% compared to the adjusted level a year ago.

For the first nine months of 2015, earnings per share were $2.67 compared to $2.51 per share for the same period last year.  Prior year earnings included a $0.16 per share net benefit related to a tax item and the gain on sale of RidgeWorth, partially offset by the resolution of specific legacy mortgage-related matters.

"SunTrust delivered solid earnings performance in the third quarter, driven by continued loan and deposit growth, improved efficiency, and strong asset quality trends," said William H. Rogers, Jr., chairman and chief executive officer of SunTrust Banks, Inc.  "Our fundamentals are strong and, despite the challenging operating environment, I am confident in our ability to deliver further value to our clients and shareholders as we continue to execute against our key strategies."

Third Quarter 2015 Financial Highlights

Income Statement

  • Net income available to common shareholders was $519 million, or $1.00 per average common diluted share.
    • Third quarter 2015 earnings included $0.07 per share in discrete tax benefits and $0.04 per share in benefits related to the resolution of certain legacy mortgage matters.
    • Excluding the total $0.11 per share benefit from these items, earnings per share grew 10% compared to adjusted earnings per share of $0.81 in the third quarter of 2014. This growth was driven by higher capital markets and mortgage-related income and a decline in the provision for loan losses, as a result of continued improvements in asset quality.
  • Total revenues declined slightly compared to the prior quarter, as higher net interest income was offset by lower noninterest income.
    • Net interest income grew 4% sequentially due to an 8 basis point increase in the net interest margin and one additional day in the quarter.
    • Noninterest income declined sequentially, primarily driven by lower capital markets-related income given the record performance in the prior quarter.
  • Noninterest expense declined 5% sequentially, primarily driven by lower employee compensation and benefits costs, as well as the recognition of discrete recoveries related to previous mortgage matters in the third quarter of 2015.
  • The efficiency and tangible efficiency ratios in the current quarter were 61.4% and 61.0%, respectively, and were 63.2% and 62.8%, respectively, on a year-to-date basis.

Balance Sheet

  • Average loan balances were relatively stable as growth in mortgage and consumer direct loans was offset by continued paydowns in commercial loans and lower consumer indirect loans, as a result of the $1.0 billion indirect auto securitization completed in the latter part of the second quarter.
    • Total loans as of September 30, 2015, grew $1.0 billion, or 1%, compared to June 30, 2015 with growth occurring across most portfolios.
  • Average client deposits increased 2% sequentially and 10% compared to the third quarter of 2014. The continued growth in deposits was used to further pay down higher-cost wholesale borrowings.

Capital

  • Estimated capital ratios continue to be well above regulatory requirements. The Common Equity Tier 1 ratio and Tier 1 capital ratios were estimated to be 9.9% and 10.6%, respectively, as of September 30, 2015, on a fully phased-in basis.
  • During the quarter, the Company repurchased $175 million of common stock per its 2015 capital plan.
  • Book value per share was $43.65, and tangible book value per share was $31.75, up 3% and 4%, respectively, compared to June 30, 2015.

Asset Quality

  • Asset quality continued to improve, as nonperforming loans declined 4% from the prior quarter and represented 0.35% of total loans at September 30, 2015.
  • Net charge-offs for the current quarter were $71 million, representing 0.21% of average loans on an annualized basis, declining from $87 million in the prior quarter and $128 million in the third quarter of 2014.
  • The provision for credit losses increased $6 million compared to the prior quarter, but decreased $61 million compared to the third quarter of 2014, driven by the continued improvement in overall asset quality.
  • At September 30, 2015, the allowance for loan and lease losses to period-end loans ratio was 1.34%, 5 basis points lower than the prior quarter, as a result of the continued improvement in overall asset quality.

 















Presented on a fully taxable-equivalent basis











Income Statement (Dollars in millions, except per share data)

3Q 2014



2Q 2015



3Q 2015

Net income available to common shareholders

$563





$467





$519



Earnings per average common diluted share

1.06





0.89





1.00



Adjusted earnings per average common diluted share 1

0.81





0.89





1.00



Total revenue

2,031





2,077





2,058



Net interest income

1,251





1,203





1,247



Provision for credit losses

93





26





32



Noninterest income

780





874





811



Noninterest expense

1,259





1,328





1,264



Net interest margin

3.03

%



2.86

%



2.94

%













Balance Sheet (Dollars in billions)











Average loans

$130.7





$132.8





$132.8



Average consumer and commercial deposits

132.2





142.9





145.2















Capital











Capital ratios at period end 2 :











Tier 1 capital (transitional)

N/A





10.79

%



10.85

%

Common Equity Tier 1 ("CET1") (transitional)

N/A





9.93

%



10.00

%

Common Equity Tier 1 ("CET1") (fully phased-in)

N/A





9.76

%



9.88

%

Total average shareholders' equity to total average assets

12.10

%



12.34

%



12.42

%













Asset Quality











Net charge-offs to average loans (annualized)

0.39

%



0.26

%



0.21

%

Allowance for loan and lease losses to period-end loans

1.49

%



1.39

%



1.34

%

Nonperforming loans to total loans

0.58

%



0.36

%



0.35

%



















1

See page 23 for non-U.S. GAAP reconciliation

2

Current period Tier 1 capital and CET1 ratios are estimated as of the date of this news release. Basel III Final Rules became effective for the Company on January 1, 2015; thus, Basel III capital ratios are not applicable ("N/A") in periods ending prior to January 1, 2015.

 

Consolidated Financial Performance Details

(Presented on a fully taxable-equivalent basis unless otherwise noted)

Revenue

Total revenue was $2.1 billion for the current quarter, a decrease of $19 million compared to the prior quarter.  The decrease was primarily driven by a decline in capital markets-related income, compared to record performance in the prior quarter, partially offset by higher net interest income.  Compared to the third quarter of 2014, total revenue increased $27 million, driven primarily by higher capital markets-related income, mortgage-related income, and gains on the sale of investment securities, partially offset by lower service charges.

For the nine months ended September 30, 2015, total revenue was $6.1 billion, a decline of $134 million compared to the first nine months of 2014.  The decline was driven by the $105 million gain on sale of RidgeWorth during 2014 (and associated foregone revenue) and a decline in net interest income.  This was partially offset by growth in capital markets and mortgage-related income, in addition to higher securities gains.

Net Interest Income

Net interest income was $1.2 billion for the current quarter, an increase of $44 million compared to the prior quarter.  The increase was primarily due to lower premium amortization expense in the securities portfolio, a decline in long-term debt, and higher commercial loan-related swap income, each a result of continued balance sheet management efforts.  Compared to the third quarter of 2014, the $4 million decline in net interest income was driven by lower earning asset yields, almost entirely offset by growth in average earning assets and lower wholesale funding.

Net interest margin for the current quarter was 2.94%, compared to 2.86% in the prior quarter and 3.03% in the third quarter of 2014.  The 8 basis point increase compared to the prior quarter was largely driven by the same factors impacting the sequential quarter increase in net interest income discussed above.  The 9 basis point decline in net interest margin compared to the third quarter of 2014 was due primarily to 9 and 23 basis point declines in loan and investment securities yields, respectively, driven largely by the persistent low interest rate environment.  The declines in earning asset yields were partially offset by a 6 basis point decline in rates paid on interest-bearing liabilities, as a result of the decline in long-term debt.

For the nine months ended September 30, 2015, net interest income was $3.6 billion, a $109 million decrease compared to the first nine months of 2014.  The net interest margin was 2.88% for the first nine months of 2015, a 23 basis point decline compared to the same period in 2014.  The declines in both net interest income and net interest margin were driven by the same factors that impacted the year-over-year comparisons discussed above.

Noninterest Income

Noninterest income was $811 million for the current quarter, compared to $874 million for the prior quarter and $780 million for the third quarter of 2014.  The $63 million decrease from the prior quarter was primarily related to lower capital markets-related income given the record performance in the second quarter of 2015.  Compared to the third quarter of 2014, noninterest income increased $31 million, driven primarily by higher investment banking and mortgage-related income, along with higher gains on the sale of investment securities.

Investment banking income was $115 million for the current quarter, compared to $145 million in the prior quarter and $88 million in the third quarter of 2014.  Despite the challenging market conditions during the quarter, investment banking income remained strong across most product categories, with the only notable declines occurring in high yield and equity origination.  Compared to the third quarter of 2014, the 31% growth was driven by increases across most product areas.

Trading income was $31 million for the current quarter, compared to $54 million in the prior quarter and $46 million in the third quarter of 2014.  Both the sequential quarter and prior year declines were driven by market conditions in the third quarter of 2015, which was marked by wider credit spreads and increased volatility, resulting in pricing pressure and lower client activity. 

Mortgage production-related income for the current quarter was $58 million, compared to $76 million for the prior quarter and $45 million for the third quarter of 2014.  The sequential quarter decrease was primarily due to a decline in closed loan production volume and lower gain-on-sale margins.  The increase compared to the third quarter of 2014 was driven by higher mortgage production volume and higher gain-on-sale margins.  Mortgage production volume declined 5% compared to the prior quarter and increased 36% compared to the third quarter of 2014.

Mortgage servicing income was $40 million for the current quarter, compared to $30 million in the prior quarter and $44 million in the third quarter of 2014.  The sequential increase was driven by higher servicing fees, as a result of a larger servicing portfolio, and a decline in servicing asset decay expense.  Compared to the third quarter of 2014, the decline was due to higher decay and lower net hedge performance in the current quarter, partially offset by higher servicing fees as a result of a larger servicing portfolio.  The servicing portfolio was $149 billion at September 30, 2015, compared to $136 billion at September 30, 2014, driven by portfolio acquisitions.

Trust and investment management income was $86 million for the current quarter, compared to $84 million in the prior quarter and $93 million in the third quarter of 2014.  The $7 million decline compared to the prior year was largely due to a decline in assets under management.

Other noninterest income was $58 million for the current quarter, compared to $52 million for both the prior quarter and the third quarter of 2014.  The increase compared to both periods was primarily due to higher leasing-related income.  Securities gains of $7 million and $14 million were recognized in the current and prior quarter, respectively, as a result of a slight repositioning of the securities portfolio, compared to a $9 million loss in the prior year.

For the nine months ended September 30, 2015, noninterest income was $2.5 billion, a decrease of $25 million compared to the first nine months of 2014.  The decline was due to the gain on the sale of RidgeWorth and associated foregone revenue, partially offset by higher investment banking and mortgage-related income, as well as growth in other noninterest income categories and higher gains from the sale of securities.

Noninterest Expense

Noninterest expense was $1.3 billion in the current quarter, a decline of $64 million compared to the prior quarter and stable compared to the prior year.  The sequential decline was primarily due to lower employee compensation and benefits costs, as well as the recognition of discrete recoveries as a result of the resolution of previous mortgage matters.

Employee compensation and benefits expense was $725 million in the current quarter, compared to $756 million in the prior quarter and $730 million in the third quarter of 2014.  The sequential decrease of $31 million was due to lower incentive compensation (given higher expense in the prior quarter due to business performance), lower employee medical benefit costs, and a seasonal decline in FICA and 401(k) costs.

Operating losses were $3 million in the current quarter, compared to $16 million in the prior quarter and $29 million in the third quarter of 2014.  The declines were primarily due to the aforementioned recoveries.

Outside processing and software expense was $200 million in the current quarter, compared to $204 million in the prior quarter and $184 million in the third quarter of 2014.  The $16 million increase compared to third quarter of 2014 was due to the higher utilization of third party services as well as increased investments in technology.

Marketing and customer development expense was $42 million in the current quarter, compared to $34 million in the prior quarter and $35 million in the third quarter of 2014.  The increase over both the prior quarter and prior year was due to higher advertising costs.

Other noninterest expense was $126 million in the current quarter, compared to $149 million in the prior quarter and $120 million in the third quarter of 2014.  The $23 million sequential decline was driven primarily by the aforementioned recoveries and a lease impairment charge recognized in the prior quarter.  In addition, debt extinguishment costs (net of related hedges) of $11 million and $14 million were recognized in the current and prior quarter, respectively.

For the nine months ended September 30, 2015, noninterest expense was $3.9 billion compared to $4.1 billion for the first nine months of 2014.  The $262 million decrease was driven by a decline in mortgage-related operating losses and affordable housing impairment charges recognized in 2014, the decline in RidgeWorth-related expenses, and the continued focus on expense management. These declines were partially offset by $24 million of debt extinguishment charges (net of related hedges) during 2015.

Income Taxes

For the current quarter, the Company recorded an income tax provision of $187 million, compared to $202 million for the prior quarter and $67 million for the third quarter of 2014.  The effective tax rate for the current quarter was approximately 26%, compared to approximately 29% in the prior quarter, and approximately 10% in the third quarter of 2014.  The effective tax rates in the current and prior quarters were favorably impacted by $35 million and $15 million in discrete income tax items, respectively, while the third quarter of 2014 included a $130 million tax benefit as a result of the completion of a tax authority examination.

Balance Sheet

At September 30, 2015, the Company had total assets of $187.0 billion and total shareholders' equity of $23.7 billion, representing 13% of total assets.  Book value per share was $43.65 and tangible book value per share was $31.75, up 3% and 4%, respectively, compared to June 30, 2015, due to growth in retained earnings and an increase in accumulated other comprehensive income (AOCI).

Loans

Average performing loans were $132.4 billion for the current quarter, a slight increase from the prior quarter.  Sequential quarter growth in nonguaranteed residential mortgages and consumer direct loans of $630 million and $410 million, respectively, was offset by declines in C&I loans, consumer indirect loans, and home equity products of $474 million, $316 million, and $276 million, respectively. 

Compared to the third quarter of 2014, average performing loans increased $2.5 billion, or 2%, with growth concentrated in C&I and consumer direct loans.  This growth was partially offset by declines in home equity products, consumer indirect, and guaranteed student loans. 

The sequential and prior year decline in average consumer indirect loans was primarily due to the securitization of approximately $1 billion of indirect auto loans in the latter part of the second quarter of 2015.

Total loans at September 30, 2015, were $133.6 billion, up $1 billion compared to June 30, 2015, driven largely by growth in consumer and mortgage loans.

Deposits

Average client deposits for the current quarter were $145.2 billion, compared to $142.9 billion in the prior quarter and $132.2 billion in the third quarter of 2014.  Sequentially, average client deposits increased 2% due to a $1.4 billion, or 4%, increase in NOW account balances and a $1.5 billion, or 3%, increase in money market account balances.  Partially offsetting this growth in lower-cost deposits was a $0.4 billion, or 3%, decline in time deposits.  Compared to the third quarter of 2014, average client deposits increased 10%, driven by increases in lower-cost deposits, partially offset by a $1.3 billion, or 12%, decrease in time deposits.

Capital and Liquidity

The Company's estimated capital ratios were well above current regulatory requirements with Common Equity Tier 1 and Tier 1 capital ratios at an estimated 9.9% and 10.6%, respectively, at September 30, 2015, on a fully phased-in basis.  The ratios of average total equity to average total assets and tangible equity to tangible assets were 12.42% and 9.71%, respectively, at September 30, 2015.  The Company continues to have substantial available liquidity in the form of cash, high-quality government-backed or government-sponsored securities, and other available contingency funding sources.

During the third quarter, the Company declared a common stock dividend of $0.24 per common share and repurchased $175 million of its outstanding common stock.  Per its 2015 capital plan, the Company currently expects to repurchase approximately $525 million of additional common stock over the next three quarters.

Asset Quality

Total nonperforming assets were $532 million at September 30, 2015, down 19% compared to the prior quarter and down 43% compared to the third quarter of 2014.  During the third quarter, the Company sold $92 million of nonperforming mortgage loans from held for sale and recognized a gain in other noninterest income of $10 million.  At September 30, 2015, the percentage of nonperforming loans to total loans was 0.35%, compared to 0.36% at June 30, 2015, and 0.58% at September 30, 2014.  Other real estate owned totaled $62 million, a 14% decrease from the prior quarter and a 45% decrease from the third quarter of 2014.

The provision for credit losses in the third quarter was $32 million, an increase of $6 million from the prior quarter due to loan growth and a decrease of $61 million from the third quarter of 2014 driven by the continued improvement in asset quality and lower net charge-offs.  Net charge-offs were $71 million during the current quarter, a decrease of $16 million and $57 million compared to the prior quarter and the third quarter of 2014, respectively.  The ratio of annualized net charge-offs to total average loans was 0.21% during the current quarter, compared to 0.26% during the prior quarter and 0.39% during the third quarter of 2014.

At September 30, 2015, the allowance for loan and lease losses was $1.8 billion, which represented 1.34% of total loans, a decline of $48 million, or 5 basis points, from June 30, 2015.  The allowance for credit losses declined $39 million, as the $48 million decline in the allowance for loan and lease losses was partially offset by a $9 million increase in the reserve for unfunded commitments.  The decline in the allowance was due to the continued improvement in overall asset quality during the quarter.

Early stage delinquencies increased 11 basis points from the prior quarter to 0.61% at September 30, 2015.  Excluding government-guaranteed loans, early stage delinquencies were 0.31%, up 6 basis points from the prior quarter.

Accruing restructured loans totaled $2.6 billion and nonaccruing restructured loans totaled $182 million at September 30, 2015, of which $2.5 billion were residential loans, $130 million were consumer loans and $86 million were commercial loans.

OTHER INFORMATION

Business Segment Results

The Company has included business segment financial tables as part of this release. The Company's business segments include: Consumer Banking and Private Wealth Management, Wholesale Banking, and Mortgage Banking. All revenue in the business segment tables is reported on a fully taxable-equivalent basis. For the business segments, results include net interest income, which is computed using matched-maturity funds transfer pricing. Further, provision for credit losses represents net charge-offs by segment combined with an allocation to the segments of the provision attributable to quarterly changes in the allowance for loan and lease losses and unfunded commitment reserve balances. SunTrust also reports results for Corporate Other, which includes the Treasury department as well as the residual expense associated with operational and support expense allocations. The Corporate Other segment also includes differences created between internal management accounting practices and U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and certain matched-maturity funds transfer pricing credits and charges. A detailed discussion of the business segment results will be included in the Company's forthcoming Form 10-Q.

Corresponding Financial Tables and Information

Investors are encouraged to review the foregoing summary and discussion of SunTrust's earnings and financial condition in conjunction with the detailed financial tables and information which SunTrust has also published today and SunTrust's forthcoming Form 10-Q. Detailed financial tables and other information are also available at investors.suntrust.com.  This information is also included in a current report on Form 8-K furnished with the SEC today.

Conference Call

SunTrust management will host a conference call on October 16, 2015, at 9:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals may call in beginning at 8:45 a.m. (Eastern Time) by dialing 1-888-972-7805 (Passcode: 3Q15). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 3Q15).  A replay of the call will be available approximately one hour after the call ends on October 16, 2015, and will remain available until November 16, 2015, by dialing 1-888-562-7623 (domestic) or 1-402-220-6504 (international). Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust investor relations website at investors.suntrust.com.  Beginning the afternoon of October 16, 2015, listeners may access an archived version of the webcast in the "Events & Presentations" section of the investor relations website. This webcast will be archived and available for one year.

SunTrust Banks, Inc., headquartered in Atlanta, is one of the nation's largest banking organizations, serving a broad range of consumer, commercial, corporate and institutional clients. The Company operates an extensive branch and ATM network throughout the Southeast and Mid-Atlantic States and a full array of technology-based, 24-hour delivery channels. The Company also serves clients in selected markets nationally. Its primary businesses include deposit, credit, and trust and investment management services. Through various subsidiaries, the Company provides mortgage banking, insurance, brokerage, equipment leasing, and capital markets services. SunTrust's Internet address is www.suntrust.com.

Important Cautionary Statement About Forward-Looking Statements

This news release 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 to this news release. In this news release, the Company presents net interest income and net interest margin on a fully taxable-equivalent ("FTE") basis, and ratios on an annualized basis. The FTE basis adjusts for the tax-favored status of income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

This news release contains forward-looking statements. Statements regarding potential future share repurchases, and future expected dividends 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," "forecast," "goals," "targets," "initiatives," "focus," "potentially," "probably," "projects," "outlook" or similar expressions or future conditional verbs such as "may," "will," "should," "would," and "could." Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements 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. Future dividends, and the amount of any such dividend, must be declared by our board of directors in the future in their discretion. Also, future share repurchases and the timing of any such repurchase are subject to market conditions and management's discretion. Additional 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, 2014 and in other periodic reports that we file with the SEC.

SunTrust Banks, Inc. and Subsidiaries























FINANCIAL HIGHLIGHTS

















































Three Months Ended







Nine Months Ended







September 30



%



September 30



%

(Dollars in millions and shares in thousands, except per share data) (Unaudited)

2015



2014



Change 4



2015



2014



Change 

EARNINGS & DIVIDENDS























Net income

$537



$576



-7%



$1,449



$1,380



5%

Net income available to common shareholders

519



563



-8%



1,396



1,343



4%

Adjusted net income available to common shareholders 1

519



433



20%



1,396



1,262



11%

Total revenue - FTE 1, 2                              

2,058



2,031



1%



6,128



6,262



-2%

Total revenue - FTE excluding gain on sale of asset management subsidiary 1, 2

2,058



2,031



1%



6,128



6,157



0%

Net income per average common share:               























Diluted 

1.00



1.06



-6%



2.67



2.51



6%

Adjusted diluted 1

1.00



0.81



23%



2.67



2.35



14%

Basic

1.01



1.07



-6%



2.70



2.54



6%

Dividends paid per common share           

0.24



0.20



20%



0.68



0.50



36%

CONDENSED BALANCE SHEETS 























Selected Average Balances:























Total assets

$188,341



$183,433



3%



$188,635



$180,098



5%

Earning assets

168,334



163,688



3%



168,325



160,491



5%

Loans

132,837



130,747



2%



133,000



130,010



2%

Intangible assets including MSRs

7,711



7,615



1%



7,596



7,632



0%

MSRs

1,352



1,262



7%



1,243



1,249



0%

Consumer and commercial deposits

145,226



132,195



10%



142,869



130,369



10%

Brokered time and foreign deposits

1,010



1,624



-38%



1,125



1,841



-39%

Total shareholders' equity

23,384



22,191



5%



23,266



21,972



6%

Preferred stock

1,225



725



69%



1,225



725



69%

Period End balances:























Total assets













187,036



186,818



0%

Earning assets













168,555



165,434



2%

Loans













133,560



132,151



1%

Allowance for loan and lease losses ("ALLL")













1,786



1,968



-9%

Consumer and commercial deposits













145,337



135,077



8%

Brokered time and foreign deposits













1,034



1,430



-28%

Total shareholders' equity













23,664



22,269



6%

FINANCIAL RATIOS & OTHER DATA























Return on average total assets

1.13%



1.25%



-10%



1.03%



1.02%



1%

Return on average common shareholders' equity

9.30



10.41



-11%



8.47



8.45



0%

Return on average tangible common shareholders' equity 1

12.84



14.59



-12%



11.73



11.92



-2%

Net interest margin 2

2.94



3.03



-3%



2.88



3.11



-7%

Efficiency ratio 2

61.44



62.03



-1%



63.19



66.01



-4%

Tangible efficiency ratio 1, 2

60.99



61.69



-1%



62.82



65.79



-5%

Effective tax rate

26



10



NM



29



21



38%

Basel III capital ratios at period end (transitional) 3:























CET1













10.00%



N/A





Tier 1 capital













10.85



N/A





Total capital 













12.70



N/A





Leverage













9.65



N/A





Basel III fully phased-in CET1 ratio 3













9.88



N/A





Basel I capital ratios at period end 3:























Tier 1 common 













N/A



9.63





Tier 1 capital













N/A



10.54





Total capital













N/A



12.32





Tier 1 leverage













N/A



9.51





Total average shareholders' equity to total average assets

12.42



12.10



3%



12.33



12.20



1%

Tangible equity to tangible assets                             













9.71



8.94



9%

























Book value per common share













$43.65



$40.85



7%

Tangible book value per common share 1













31.76



29.21



9%

Market capitalization













19,659



20,055



-2%

Average common shares outstanding:























Diluted 

518,677



533,230



-3%



522,634



535,222



-2%

Basic

513,010



527,402



-3%



516,970



529,429



-2%

Full-time equivalent employees













24,124



25,074



-4%

Number of ATMs













2,142



2,192



-2%

Full service banking offices













1,406



1,454



-3%

























1 See Appendix A for reconcilements of non-U.S. GAAP performance measures.                  







2 Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent ("FTE") basis.  The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments.  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 on an FTE basis plus noninterest income.            

3 Current period capital ratios are estimated as of the earnings release date. Basel III Final Rules became effective for the Company on January 1, 2015; thus, Basel III capital ratios are not applicable ("N/A") in periods ending prior to January 1, 2015 and Basel I capital ratios are N/A in periods ending subsequent to January 1, 2015.

4 "NM" - Not meaningful.  Those changes over 100 percent were not considered to be meaningful.









 

 

SunTrust Banks, Inc. and Subsidiaries



















FIVE QUARTER FINANCIAL HIGHLIGHTS









































Three Months Ended



 September 30 



June 30



March 31



December 31



September 30

(Dollars in millions and shares in thousands, except per share data) (Unaudited)

2015



2015



2015



2014



2014

EARNINGS & DIVIDENDS



















Net income

$537



$483



$429



$394



$576

Net income available to common shareholders

519



467



411



378



563

Adjusted net income available to common shareholders 1

519



467



411



466



433

Total revenue - FTE 1, 2                      

2,058



2,077



1,992



2,043



2,031

Total revenue - FTE excluding gain on sale of asset management subsidiary 1, 2

2,058



2,077



1,992



2,043



2,031

Net income per average common share:               



















Diluted 

1.00



0.89



0.78



0.72



1.06

Adjusted diluted 1

1.00



0.89



0.78



0.88



0.81

Basic

1.01



0.90



0.79



0.72



1.07

Dividends paid per common share        

0.24



0.24



0.20



0.20



0.20

CONDENSED BALANCE SHEETS 



















Selected Average Balances:



















Total assets

$188,341



$188,310



$189,265



$188,341



$183,433

Earning assets

168,334



168,461



168,179



167,227



163,688

Loans

132,837



132,829



133,338



133,438



130,747

Intangible assets including MSRs

7,711



7,572



7,502



7,623



7,615

MSRs

1,352



1,223



1,152



1,272



1,262

Consumer and commercial deposits

145,226



142,851



140,476



136,892



132,195

Brokered time and foreign deposits

1,010



1,118



1,250



1,399



1,624

Total shareholders' equity

23,384



23,239



23,172



22,754



22,191

Preferred stock

1,225



1,225



1,225



1,024



725

Period End Balances:



















Total assets

187,036



188,858



189,881



190,328



186,818

Earning assets

168,555



168,499



168,269



168,678



165,434

Loans

133,560



132,538



132,380



133,112



132,151

ALLL

1,786



1,834



1,893



1,937



1,968

Consumer and commercial deposits

145,337



143,922



143,239



139,234



135,077

Brokered time and foreign deposits

1,034



1,015



1,184



1,333



1,430

Total shareholders' equity

23,664



23,223



23,260



23,005



22,269

FINANCIAL RATIOS & OTHER DATA



















Return on average total assets

1.13%



1.03%



0.92%



0.83%



1.25%

Return on average common shareholders' equity

9.30



8.50



7.59



6.91



10.41

Return on average tangible common shareholders' equity 1

12.84



11.77



10.53



9.62



14.59

Net interest margin2

2.94



2.86



2.83



2.96



3.03

Efficiency ratio 2

61.44



63.92



64.23



69.00



62.03

Tangible efficiency ratio 1, 2

60.99



63.59



63.91



68.44



61.69

Effective tax rate

26



29



31



25



10

Basel III capital ratios at period end (transitional) 3:



















CET1

10.00%



9.93%



9.89%



N/A



N/A

Tier 1 capital

10.85



10.79



10.76



N/A



N/A

Total capital 

12.70



12.66



12.69



N/A



N/A

Leverage

9.65



9.56



9.41



N/A



N/A

Basel III fully phased-in CET1 ratio 3

9.88



9.76



9.74



N/A



N/A

Basel I capital ratios at period end 3:



















Tier 1 common 

N/A



N/A



N/A



9.60%



9.63%

Tier 1 capital

N/A



N/A



N/A



10.80



10.54

Total capital

N/A



N/A



N/A



12.51



12.32

Tier 1 leverage

N/A



N/A



N/A



9.64



9.51

Total average shareholders' equity to total average assets          

12.42



12.34



12.24



12.08



12.10

Tangible equity to tangible assets 1               

9.71



9.37



9.34



9.17



8.94





















Book value per common share

$43.65



$42.46



$42.21



$41.52



$40.85

Tangible book value per common share 1

31.76



30.65



30.49



29.82



29.21

Market capitalization

19,659



22,286



21,450



21,978



20,055

Average common shares outstanding:



















Diluted 

518,677



522,479



526,837



527,959



533,230

Basic

513,010



516,968



521,020



521,775



527,402

Full-time equivalent employees

24,124



24,237



24,466



24,638



25,074

Number of ATMs

2,142



2,162



2,176



2,187



2,192

Full service banking offices

1,406



1,430



1,444



1,445



1,454





















1 See Appendix A for reconcilements of non-GAAP performance measures.                  









2 Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent ("FTE") basis.  The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments.  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 on an FTE basis plus noninterest income.  

3 Current period capital ratios are estimated as of the earnings release date. Basel III Final Rules became effective for the Company on January 1, 2015; thus, Basel III capital ratios are not applicable ("N/A") in periods ending prior to January 1, 2015 and Basel I capital ratios are N/A in periods ending subsequent to January 1, 2015.

 

 

SunTrust Banks, Inc. and Subsidiaries



























RECONCILEMENT OF NON-U.S. GAAP MEASURES - APPENDIX A TO THE EARNINGS RELEASE 1





































Three Months Ended



Nine Months Ended
September 30



September 30



June 30



March 31



December 31



September 30



(Dollars in millions) (Unaudited)

2015



2015



2015



2014



2014



2015



2014

Net interest income

$1,211



$1,167



$1,140



$1,211



$1,215



$3,518



$3,629

Taxable-equivalent adjustment                  

36



36



35



37



36



107



105

Net interest income - FTE                

1,247



1,203



1,175



1,248



1,251



3,625



3,734

Noninterest income                    

811



874



817



795



780



2,503



2,528

Total revenue - FTE              

2,058



2,077



1,992



2,043



2,031



6,128



6,262

Gain on sale of asset management subsidiary

0



0



0



0



0



0



(105)

Total revenue - FTE, excluding gain on sale of asset management subsidiary 2

$2,058



$2,077



$1,992



$2,043



$2,031



$6,128



$6,157





























Noninterest income                    

$811



$874



$817



$795



$780



$2,503



$2,528

Gain on sale of asset management subsidiary

0



0



0



0



0



0



(105)

Noninterest income, excluding gain on sale of asset management subsidiary 2

$811



$874



$817



$795



$780



$2,503



$2,423





























Return on average common shareholders' equity

9.30%



8.50%



7.59%



6.91%



10.41%



8.47%



8.45%

Effect of removing average intangible assets, excluding MSRs

3.54%



3.27%



2.94%



2.71%



4.18%



3.26%



3.47%

Return on average tangible common shareholders' equity 3

12.84%



11.77%



10.53%



9.62%



14.59%



11.73%



11.92%





























Efficiency ratio 4                    

61.44%



63.92%



64.23%



69.00%



62.03%



63.19%



66.01%

Impact of excluding amortization of intangible assets

-0.45%



-0.33%



-0.32%



-0.56%



-0.34%



-0.37%



-0.22%

Tangible efficiency ratio 5                       

60.99%



63.59%



63.91%



68.44%



61.69%



62.82%



65.79%

Impact of Form 8-K and other legacy mortgage-related items

0.00%



0.00%



0.00%



-7.10%



0.00%



0.00%



-1.79%

Adjusted tangible efficiency ratio 5, 6

60.99%



63.59%



63.91%



61.34%



61.69%



62.82%



64.00%































September 30



June 30



March 31



December 31



September 30









(Dollars in millions, except per share data) (Unaudited)

2015



2015



2015



2014



2014









Total shareholders' equity                

$23,664



$23,223



$23,260



$23,005



$22,269









Goodwill, net of deferred taxes of $237 million, $234 million, $231 million, $214 million, and $210 million, respectively

(6,100)



(6,103)



(6,106)



(6,123)



(6,127)









Other intangible assets (including other servicing rights), net of deferred taxes of $4 million, $4 million, $0, $0, and $0, respectively, and MSRs

(1,279)



(1,412)



(1,193)



(1,219)



(1,320)









MSRs

1,262



1,393



1,181



1,206



1,305









Tangible equity              

17,547



17,101



17,142



16,869



16,127









Preferred stock

(1,225)



(1,225)



(1,225)



(1,225)



(725)









Tangible common equity

$16,322



$15,876



$15,917



$15,644



$15,402





































Total assets                 

$187,036



$188,858



$189,881



$190,328



$186,818









Goodwill                

(6,337)



(6,337)



(6,337)



(6,337)



(6,337)









Other intangible assets (including MSRs and other servicing rights)

(1,282)



(1,416)



(1,193)



(1,219)



(1,320)









MSRs

1,262



1,393



1,181



1,206



1,305









Tangible assets                 

$180,679



$182,498



$183,532



$183,978



$180,466





































Tangible equity to tangible assets 7           

9.71%



9.37%



9.34%



9.17%



8.94%









Tangible book value per common share 8

$31.75



$30.65



$30.49



$29.82



$29.21





































Total loans held for investment

$133,560



$132,538



$132,380



$133,112



$132,151









Government guaranteed loans held for investment

(5,215)



(5,026)



(4,992)



(5,459)



(5,965)









Fair value loans held for investment

(262)



(263)



(268)



(272)



(284)









Total loans held for investment, excluding government guaranteed and fair value loans

$128,083



$127,249



$127,120



$127,381



$125,902





































ALLL to total loans held for investment, excluding government guaranteed and fair value loans 9

1.39%



1.44%



1.49%



1.52%



1.56%





































 

SunTrust Banks, Inc. and Subsidiaries
RECONCILEMENT OF NON-U.S. GAAP MEASURES - APPENDIX A TO THE EARNINGS RELEASE, continued 1



Three Months Ended



Nine Months Ended
September 30



September 30



June 30



March 31



December 31



September 30



(Dollars in millions, except per share data) (Unaudited)

2015



2015



2015



2014



2014



2015



2014

Net income available to common shareholders

$519



$467



$411



$378



$563



$1,396



$1,343

Adjusting Items:



























Operating losses related to settlement of certain legal matters

0



0



0



0



0



0



204

Gain on sale of asset management subsidiary

0



0



0



0



0



0



(105)

Other legacy mortgage-related matters

0



0



0



145



0



0



(25)

Tax benefit related to above items

0



0



0



(57)



0



0



(25)

Tax benefit related to completion of tax authority exam

0



0



0



0



(130)



0



(130)

Total adjusting items

0



0



0



88



(130)



0



(81)

Adjusted net income available to common shareholders 6

$519



$467



$411



$466



$433



$1,396



$1,262





























Net income per average common share, diluted

$1.00



$0.89



$0.78



$0.72



$1.06



$2.67



$2.51

Impact of adjusting items

0.00



0.00



0.00



0.17



(0.25)



0.00



(0.16)

Adjusted net income per average common share, diluted 6, 10

$1.00



$0.89



$0.78



$0.88



$0.81



$2.67



$2.35





























1Certain amounts in this schedule are presented net of applicable income taxes, which are calculated based on each subsidiary's federal and state tax rates and are adjusted for any permanent differences.

2 SunTrust presents total revenue - FTE excluding gain on sale of asset management subsidiary and noninterest income excluding gain on sale of asset management subsidiary. The Company believes revenue and noninterest income excluding the gain on sale of the asset management subsidiary is more indicative of the Company's performance because it isolates income that is primarily client relationship and client transaction driven and is more indicative of normalized operations.

3 SunTrust presents return on average tangible common shareholders' equity to exclude intangible assets, except for MSRs. The Company believes this measure is useful to investors because, by removing the effect of intangible assets, except for MSRs (the level of which may vary from company to company), it allows investors to more easily compare the Company's return on average common shareholders' equity to other companies in the industry who present a similar measure. The Company also believes that removing intangible assets, except for MSRs, is a more relevant measure of the return on the Company's common shareholders' equity.

4 Computed by dividing noninterest expense by total revenue - FTE. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. 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.

5 SunTrust presents a tangible efficiency ratio, which excludes the amortization of intangible assets. The Company believes this measure is useful to investors because, by removing the effect of these intangible asset costs (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 utilized by management to assess the efficiency of the Company and its lines of business.

6 SunTrust presents adjusted net income available to common shareholders, adjusted net income per average common diluted share, and an adjusted tangible efficiency ratio excluding items previously announced on Form 8-Ks filed with the SEC on January 5, 2015, September 9, 2014, and July 3, 2014, as well as other legacy mortgage-related items. The Company believes this measure is useful to investors because it removes the effect of material items impacting prior periods' results, allowing a more useful view of normalized operations. Removing these items also allows investors to compare the Company's results to other companies in the industry that may not have had similar items impacting their results. 

7 SunTrust presents a tangible equity to tangible assets ratio that excludes the after-tax impact of purchase accounting intangible assets. The Company believes this measure is 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. This measure is used by management to analyze capital adequacy.

8 SunTrust presents a tangible book value per common share that excludes the after-tax impact of purchase accounting intangible assets and also excludes preferred stock from tangible equity. The Company believes this measure is useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity as well as preferred stock (the level of which may vary from company to company), it allows investors to more easily compare the Company's book value of common stock to other companies in the industry.

9 SunTrust presents a ratio of ALLL to total loans held for investment, excluding government guaranteed and fair value loans. The Company believes that the exclusion of loans that are held at fair value with no related allowance, and loans guaranteed by a government agency that do not have an associated allowance recorded due to nominal risk of principal loss, better depicts the allowance relative to loans the allowance is intended to cover.

10 Amounts may not foot as presented due to rounding. 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/suntrust-reports-third-quarter-2015-results-300160999.html

SOURCE SunTrust Banks, Inc.

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