ATLANTA, July 18, 2019 /PRNewswire/ -- For the second
quarter of 2019, SunTrust Banks, Inc. (NYSE: STI) reported net
income available to common shareholders of $663 million, or $1.48 per average common diluted share, which
includes $0.07 per share of discrete
tax benefits and $(0.03) per share of
merger-related impacts associated with the Company's previously
announced proposed merger with BB&T Corporation. This compares
to $1.24 for the prior quarter, which
included $0.04 per share of discrete
tax benefits and $(0.09) per share of
merger-related impacts, and $1.49 for
the second quarter of 2018.
For the first half of 2019, earnings per average common diluted
share were $2.72 which includes
$59 million, or $(0.11) per share of merger-related impacts. This
compares to $2.78 for the first half
of 2018.
"SunTrust has delivered good performance in the first half of
2019, with revenue increasing by 3%, the adjusted tangible
efficiency ratio improving by 50 basis points, and earnings per
share increasing by 2% (excluding non-core items). The interest
rate environment certainly became more challenging in the second
quarter, which offset some of our core business progress," said
William H. Rogers, Jr., chairman and
CEO of SunTrust Banks, Inc. "As we continue to prepare for the
proposed merger with BB&T, I am increasingly pleased with how
well the teams are working together—we have developed strong levels
of partnership and alignment. We are confident and excited about
the opportunity Truist will have to enhance shareholder value,
improve the client experience, and invest in our teammates,
associates, and communities."
Second Quarter 2019 Financial
Highlights
(Commentary is on a fully taxable-equivalent
basis unless otherwise noted. Consistent with SEC guidance in
Industry Guide 3 that contemplates the calculation of tax-exempt
income on a tax equivalent basis, net interest income, net interest
margin, total revenue, and efficiency ratios are provided on a
fully taxable-equivalent basis, which generally assumes a 21%
marginal federal tax rate as well as state income taxes, where
applicable. We provide unadjusted amounts in the table on page 3 of
this news release and detailed reconciliations and additional
information in Appendix A on pages 12 and 13.)
Income Statement
- Net income available to common shareholders was $663 million, or $1.48 per average common diluted share, compared
to $1.24 for the prior quarter and
$1.49 for the second quarter of
2018.
-
- The second quarter of 2019 included a $205 million insurance settlement benefit related
to financial crisis-related claims which was used to make a
$205 million charitable contribution
to the SunTrust Foundation. The current quarter also included a
$44 million gain on the sale of
accruing troubled debt restructured ("TDR") loans which was largely
offset by a $42 million net
securities loss related to a repositioning of the Company's
securities AFS portfolio.
- Merger-related costs were $8
million in the second quarter of 2019, compared to
$45 million in the first quarter of
2019. In addition to these costs, there were $6 million of other merger-related expenses in
the current quarter that were primarily recorded in 'other
noninterest expense'. Combined, this represented $14 million, or $(0.03) per share, of merger-related impacts in
the current quarter.
- Total revenue was up 10% both sequentially and year-over-year,
driven primarily by the aforementioned insurance settlement.
Excluding the insurance settlement, total revenue was up 1%
sequentially and 2% year-over-year. The sequential increase was
driven by higher noninterest income and the year-over-year increase
was driven by higher net interest income.
- Net interest margin was 3.16% in the current quarter,
reflecting an 11 and 12 basis point decline sequentially and
year-over-year, respectively, driven by higher funding costs and
declines in short-term and long-term interest rates.
- Provision for credit losses decreased $26 million sequentially and increased
$95 million year-over-year. The
sequential decrease was primarily driven by slower loan growth and
lower net charge-offs. The year-over-year increase was driven
primarily by an allowance for loan and lease losses ("ALLL") to
period-end loans held for investment ("LHFI") ratio that increased
1 basis point sequentially (from March 31,
2019 to June 30, 2019),
compared to a 5 basis point decline a year ago (from March 31, 2018 to June 30,
2018).
- Noninterest expense increased $149
million sequentially and $248
million year-over-year. Excluding the aforementioned
$205 million charitable contribution
to the SunTrust Foundation and the $14
million and $45 million of
merger-related impacts in the current and prior quarter,
respectively, noninterest expense decreased $25 million sequentially and increased
$29 million compared to the prior
year. The sequential decrease was driven by improved operating
losses and lower other noninterest expense. The year-over-year
increase was driven by higher employee compensation and benefits
and ongoing investments in technology.
- The efficiency and tangible efficiency ratios for the current
quarter were 63.4% and 62.8%, respectively, which were unfavorably
impacted by the merger-related impacts and the charitable
contribution, but favorably impacted by the insurance settlement.
Excluding these items, the adjusted tangible efficiency ratio was
59.0% for the current quarter, compared to 60.8% for the prior
quarter and 58.7% for the prior year.
Balance Sheet
- Average performing LHFI was up 1% compared to the prior quarter
and up 9% year-over-year, driven primarily by growth in C&I,
CRE, consumer direct, and consumer indirect loans.
- Average consumer and commercial deposits remained relatively
stable compared to the prior quarter and were up 1% year-over-year,
driven primarily by growth in NOW accounts and time deposits. This
growth was partially offset by a decline in money market account
balances compared to both prior periods as well as a decline in
demand deposits compared to the second quarter of 2018.
Capital
- Estimated capital ratios continue to be well above regulatory
requirements. The Common Equity Tier 1 ("CET1") ratio was estimated
to be 9.2% as of June 30, 2019,
slightly higher relative to the prior quarter.
- Book value per common share was $53.47 and tangible book value per common share
was $39.54, up 5% and 6%,
respectively, from March 31, 2019,
driven primarily by growth in retained earnings and a decrease in
accumulated other comprehensive loss.
Asset Quality
- Nonperforming loans ("NPLs") increased $14 million from the prior quarter and
represented 0.34% of period-end LHFI at both June 30, 2019 and March
31, 2019.
- Net charge-offs for the current quarter were $85 million, or 0.22% of total average LHFI on an
annualized basis, compared to 0.26% during the prior quarter and
0.20% during the second quarter of 2018.
- At June 30, 2019, the ALLL to
period-end LHFI ratio was 1.07%, up 1 basis point compared to the
prior quarter and down 7 basis points relative to the prior
year.
- Provision for credit losses decreased $26 million sequentially and increased
$95 million year-over-year. The
sequential decrease was driven primarily by slower loan growth and
lower net charge-offs. The year-over-year increase was driven
primarily by an ALLL ratio that increased 1 basis point
sequentially (from March 31, 2019 to
June 30, 2019), compared to a 5 basis
point decline a year ago (from March 31,
2018 to June 30, 2018).
|
|
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|
|
|
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|
|
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Income
Statement (Dollars in millions, except per share
data)
|
2Q
2019
|
|
1Q 2019
|
|
4Q 2018
|
|
3Q 2018
|
|
2Q 2018
|
Net interest
income
|
$1,535
|
|
|
$1,544
|
|
|
$1,547
|
|
|
$1,512
|
|
|
$1,488
|
|
Net interest
income-FTE 1
|
1,557
|
|
|
1,567
|
|
|
1,570
|
|
|
1,534
|
|
|
1,510
|
|
Net interest
margin
|
3.12
|
%
|
|
3.22
|
%
|
|
3.22
|
%
|
|
3.22
|
%
|
|
3.23
|
%
|
Net interest
margin-FTE 1
|
3.16
|
|
|
3.27
|
|
|
3.27
|
|
|
3.27
|
|
|
3.28
|
|
Noninterest
income
|
$1,025
|
|
|
$784
|
|
|
$818
|
|
|
$782
|
|
|
$829
|
|
Total
revenue
|
2,560
|
|
|
2,328
|
|
|
2,365
|
|
|
2,294
|
|
|
2,317
|
|
Total revenue-FTE
1
|
2,582
|
|
|
2,351
|
|
|
2,388
|
|
|
2,316
|
|
|
2,339
|
|
Noninterest
expense
|
1,638
|
|
|
1,489
|
|
|
1,482
|
|
|
1,384
|
|
|
1,390
|
|
Provision for credit
losses
|
127
|
|
|
153
|
|
|
87
|
|
|
61
|
|
|
32
|
|
Net income available
to common shareholders
|
663
|
|
|
554
|
|
|
632
|
|
|
726
|
|
|
697
|
|
Earnings per average
common diluted share
|
1.48
|
|
|
1.24
|
|
|
1.40
|
|
|
1.56
|
|
|
1.49
|
|
|
|
|
|
|
|
|
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Balance
Sheet (Dollars in billions)
|
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|
|
|
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Average
LHFI
|
$156.2
|
|
|
$154.3
|
|
|
$149.7
|
|
|
$146.0
|
|
|
$144.2
|
|
Average consumer and
commercial deposits
|
159.9
|
|
|
159.9
|
|
|
161.6
|
|
|
159.3
|
|
|
159.0
|
|
|
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|
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Capital
|
|
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|
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Basel III capital
ratios at period end 2 :
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|
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|
|
Tier 1
capital
|
10.24
|
%
|
|
10.15
|
%
|
|
10.30
|
%
|
|
10.72
|
%
|
|
10.86
|
%
|
Common Equity Tier 1
("CET1")
|
9.19
|
|
|
9.09
|
|
|
9.21
|
|
|
9.60
|
|
|
9.72
|
|
Total average
shareholders' equity to total average assets
|
11.42
|
|
|
11.25
|
|
|
11.21
|
|
|
11.71
|
|
|
11.78
|
|
|
|
|
|
|
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Asset
Quality
|
|
|
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|
Net charge-offs to
total average LHFI (annualized)
|
0.22
|
%
|
|
0.26
|
%
|
|
0.26
|
%
|
|
0.24
|
%
|
|
0.20
|
%
|
ALLL to period-end
LHFI 3
|
1.07
|
|
|
1.06
|
|
|
1.06
|
|
|
1.10
|
|
|
1.14
|
|
NPLs to period-end
LHFI
|
0.34
|
|
|
0.34
|
|
|
0.35
|
|
|
0.47
|
|
|
0.52
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1
|
See Appendix A on
pages 12 and 13 for non-U.S. GAAP reconciliations and additional
information.
|
2
|
Basel III capital
ratios are calculated under the standardized approach using
regulatory capital methodology applicable to the Company for each
period presented, including the phase-in of transition provisions
through January 1, 2018. Capital ratios at June 30, 2019 are
estimated as of the date of this document.
|
3
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LHFI measured at fair
value were excluded from period-end LHFI in the calculation as no
allowance is recorded for loans measured at fair value.
|
Consolidated Financial Performance
Details
(Commentary is on a fully taxable-equivalent
basis unless otherwise noted)
Revenue
Total revenue was $2.6 billion for
the current quarter, an increase of 10%, compared to the prior
quarter and the prior year. Excluding the $205 million insurance settlement benefit related
to financial crisis-related claims recognized in the current
quarter, total revenue was up 1% sequentially and 2%
year-over-year. The sequential increase was driven by higher
noninterest income and the year-over-year increase was driven by
higher net interest income.
Net Interest Income
Net interest income was $1.6
billion for the second quarter of 2019, a decrease of
$10 million compared to the prior
quarter due primarily to lower earning asset yields and higher
funding costs, which drove a decline in the net interest margin,
partially offset by a $2.0 billion,
or 1%, increase in average performing LHFI. The $47 million increase relative to the prior year
was driven by a 9% increase in average performing LHFI, partially
offset by a decline in the net interest margin.
Net interest margin for the current quarter was 3.16%, compared
to 3.27% and 3.28% in the prior quarter and prior year,
respectively. The decrease relative to the prior periods was driven
primarily by higher funding costs and declines in short-term and
long-term interest rates which drove a decline in earning asset
yields.
For the six months ended June 30,
2019, net interest income was $3.1
billion, a $152 million, or
5%, increase compared to the six months ended June 30, 2018. The net interest margin was 3.22%
for the first half of 2019, a 4 basis point decrease compared to
the same period in 2018. The increase in net interest income was
driven primarily by a $12.2 billion,
or 7%, increase in average earning assets, partially offset by a 4
basis point decline in the net interest margin.
Noninterest Income
Noninterest income was $1.0
billion for the current quarter, compared to $784 million for the prior quarter and
$829 million for the second quarter
of 2018. Excluding the $205 million
insurance settlement benefit related to financial crisis-related
claims, noninterest income increased $36
million sequentially and decreased $9
million year-over-year. The sequential increase was driven
by higher commercial real estate related income and investment
banking income. The year-over-year decline was driven by lower
investment banking income and client transaction-related fees,
which were largely offset by higher commercial real estate related
income.
Client transaction-related fees (namely service charges on
deposits, other charges and fees, and card fees) increased
$3 million sequentially and decreased
$11 million year-over-year. The
sequential increase was driven by one more day during the current
quarter while the year-over-year decrease was driven primarily by
lower client-related transaction activity.
Investment banking income was $142
million for the current quarter, compared to $130 million in the prior quarter and
$169 million for the second quarter
of 2018. The $12 million sequential
increase was due primarily to higher equity offerings, while the
year-over-year decrease was driven by lower syndicated finance and
M&A activity.
Mortgage related income for the current quarter was $86 million, compared to $100 million for the prior quarter and
$83 million for the second quarter of
2018. The $14 million sequential
decline was driven primarily by lower servicing-related income
attributable to both unfavorable net hedge performance and higher
decay, offset partially by higher production-related income due to
increased purchase and refinance volumes. At June 30, 2019,
the servicing portfolio totaled $167.2
billion, down 1% compared to the prior quarter and 2%
year-over-year.
Retail investment services income was $75
million for the current quarter, compared to $69 million for the prior quarter and
$73 million for the prior year. The
$6 million sequential increase was
due primarily to increased client transaction activity as well as
improved market conditions, which led to an increase in retail
brokerage assets under management.
Commercial real estate related income was $50 million for the current quarter, compared to
$24 million for the prior quarter and
$18 million for the prior year. The
sequential and year-over-year increases were driven primarily by
higher structured real estate related income, in addition to higher
commercial mortgage production from the Company's agency lending
business.
Net securities (losses)/gains totaled ($42) million for the current quarter. These
securities losses arose from a repositioning of the Company's
securities AFS portfolio. There were no net securities
(losses)/gains in either the prior quarter or prior year.
Other noninterest income was $72
million for the current quarter, compared to $24 million in the prior quarter and $38 million in the second quarter of 2018. The
sequential and year-over-year increases were due primarily to a
$44 million gain on the sale of
accruing TDRs during the second quarter of 2019. The year-over-year
increase was partially offset by a $12
million remeasurement gain on an equity investment in
GreenSky, Inc. (a financial technology company with which the
Company partners) recognized during the prior year quarter.
For the six months ended June 30,
2019, noninterest income was $1.8
billion, compared to $1.6
billion for the six months ended June
30, 2018. The $184 million
increase compared to the prior year was driven by the insurance
settlement in the current quarter.
Noninterest Expense
Noninterest expense was $1.6
billion in the current quarter, up $149 million sequentially and $248 million compared to the second quarter of
2018. The sequential and year-over-year increases were driven
primarily by the $205 million
charitable contribution to the SunTrust Foundation. When excluding
the $205 million charitable
contribution and $14 million in
merger-related impacts, noninterest expense decreased $25 million sequentially and increased
$29 million compared to the prior
year. The sequential decrease was driven by improved operating
losses and lower other noninterest expense. The year-over-year
increase was driven by higher employee compensation and benefits
and ongoing investments in technology.
Employee compensation and benefits expense was $828 million in the current quarter, compared to
$824 million in the prior quarter and
$802 million in the second quarter of
2018. The $4 million sequential
increase was driven primarily by higher salaries, due to merit
increases, and an increase in incentive plan compensation, almost
entirely offset by the seasonal second quarter decline in employee
benefit costs and FICA taxes. The $26
million year-over-year increase was driven primarily by
higher salary and benefits costs in the current quarter.
Outside processing and software expense was $241 million in the current quarter, compared to
$238 million in the prior quarter and
$227 million in the second quarter of
2018. The $14 million year-over-year
increase was driven primarily by higher software-related costs
resulting from the amortization of new and upgraded technology
assets.
Net occupancy expense was $102
million in the current quarter, stable compared to the prior
quarter and $12 million higher than
the second quarter of 2018. The year-over-year increase was driven
primarily by lease termination gains recognized in the prior year
and higher rent expense.
Merger-related costs captures certain merger-related expenses
associated with the Company's proposed merger with BB&T
Corporation as announced on February 7,
2019. Current quarter costs totaled $8 million and were primarily comprised of legal
fees. In addition to these costs, there were $6 million of other merger-related expenses that
were primarily recorded in 'other noninterest expense'. The prior
quarter costs totaled $45 million and
were primarily comprised of M&A advisory and legal fees.
Operating losses were $14 million
in the current quarter, compared to $22
million in the prior quarter and $17
million in the second quarter of 2018. The sequential
decrease was driven primarily by lower fraud-related and legal
costs recognized during the quarter.
Regulatory assessments expense was $17
million in the current quarter, compared to $19 million in the prior quarter and $39 million in the prior year. The year-over-year
decrease was driven by the cessation of the FDIC Deposit Insurance
Fund surcharge in the fourth quarter of 2018.
Other noninterest expense was $124
million in the current quarter, compared to $141 million in the prior quarter and
$114 million in the second quarter of
2018. The $17 million sequential
decline was related to lower branch closure costs while the
$10 million year-over-year increase
was driven primarily by higher gains on the sale of certain real
estate assets in the second quarter of 2018 (recorded as a contra
expense).
For the six months ended June 30,
2019, noninterest expense was $3.1
billion compared to $2.8
billion for the six months ended June
30, 2018. The $321 million
increase was driven largely by the $205
million charitable contribution, $59
million in merger-related impacts, $46 million in outside processing and software
expense, and $20 million in net
occupancy expenses.
Income Taxes
For the second quarter of 2019, the Company recorded a provision
for income taxes of $105 million
compared to $104 million for the
prior quarter and $171 million for
the second quarter of 2018. The effective tax rate for the
current quarter was 13%, compared to 15% in the prior quarter and
19% in the second quarter of 2018. The second quarter of 2019
included $32 million of discrete tax
benefits related primarily to the resolution of certain tax
matters, while the first quarter of 2019 included $17 million of discrete tax benefits primarily
related to the typical seasonal impact from stock-based
compensation.
Balance Sheet
At June 30, 2019, the Company had total assets of
$222.3 billion and total
shareholders' equity of $25.9
billion, representing 12% of total assets. Book value per
common share was $53.47 and tangible
book value per common share was $39.54, up 5% and 6%, respectively, compared to
March 31, 2019, driven primarily by growth in retained
earnings and a decrease in accumulated other comprehensive
loss.
Loans and Deposits
Average performing LHFI totaled $155.7
billion for the current quarter, up 1% compared to the prior
quarter and up 9% compared to the prior year. The sequential growth
was driven primarily by increases in C&I, CRE, consumer direct,
and consumer indirect loans, offset partially by declines in
residential home equity products and nonguaranteed residential
mortgages. Year-over-year loan growth was led by increases in the
same loan categories that drove the sequential growth, in addition
to growth in nonguaranteed residential mortgages.
Average consumer and commercial deposits totaled $159.9 billion for the current quarter,
relatively stable compared to the prior quarter and up 1% compared
to the second quarter of 2018. Sequentially, a decline in money
market account balances was largely offset by growth across all
other consumer deposit products. Year-over-year increases in NOW
accounts and time deposits were offset, in large part, by declines
in demand deposits and money market accounts.
Capital and Liquidity
The Company's estimated capital ratios were well above current
regulatory requirements with the Common Equity Tier 1 ratio
estimated to be 9.2% at June 30, 2019. The ratios of average
total equity to average total assets and tangible common equity to
tangible assets were 11.4% and 8.1%, respectively, at June 30, 2019. 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.
The Company declared a common stock dividend of $0.50 per common share in the second quarter of
2019. Additionally, SunTrust Bank issued $1.35 billion of 3-year fixed rate senior notes
and $650 million of 3-year floating
rate senior notes in the second quarter of 2019 under its Global
Bank Note program.
Asset Quality
Overall asset quality performance continues to be strong.
Nonperforming assets ("NPAs") totaled $598
million at June 30, 2019, down $50 million from the prior quarter and
$216 million year-over-year. The
ratio of NPLs to period-end LHFI was 0.34%, 0.34%, and 0.52% at
June 30, 2019, March 31, 2019, and June
30, 2018, respectively. The year-over-year decrease was
driven primarily by lower residential mortgage NPLs due to loans
transitioning from non-accruing status (as a result of forbearance
relief provided after hurricanes) back to accruing status.
Net charge-offs totaled $85
million during the current quarter, a decline of
$12 million compared to the prior
quarter and an increase of $12
million compared to the second quarter of 2018. The ratio of
annualized net charge-offs to total average LHFI was 0.22% during
the current quarter, compared to 0.26% during the prior quarter and
0.20% during the prior year.
The provision for credit losses was $127
million in the current quarter, a decrease of $26 million sequentially and an increase of
$95 million year-over-year. The
sequential decrease was driven primarily by slower loan growth and
lower net charge-offs. The year-over-year increase was driven
primarily by an ALLL ratio that increased 1 basis point
sequentially (from March 31, 2019 to
June 30, 2019), compared to a 5 basis
point decline a year ago (from March 31,
2018 to June 30, 2018). At
June 30, 2019, the ALLL was
$1.7 billion, which represented 1.07%
of period-end loans, up 1 basis point relative to March 31, 2019 and a 7 basis point decline
relative to June 30, 2018, the latter
of which was driven by improved asset quality.
Early stage delinquencies decreased 5 basis points from the
prior quarter and 13 basis points from June
30, 2018 to 0.59% at June 30,
2019. Excluding government-guaranteed loans, early stage
delinquencies were 0.23%, up 2 basis points compared to the prior
quarter and up 1 basis point compared to the second quarter of
2018.
OTHER INFORMATION
About SunTrust Banks, Inc.
SunTrust Banks,
Inc. (NYSE: STI) is a purpose-driven company dedicated to
Lighting the Way to Financial Well-Being for the people,
businesses, and communities it serves. SunTrust leads onUp, a
national movement inspiring Americans to build financial
confidence. Headquartered in Atlanta, the Company has two
business segments: Consumer and Wholesale. Its flagship
subsidiary, SunTrust Bank, operates an extensive branch and
ATM network throughout the high-growth Southeast and Mid-Atlantic
states, along with 24-hour digital access. Certain business lines
serve consumer, commercial, corporate, and institutional clients
nationally. As of June 30, 2019, SunTrust had total
assets of $222 billion and total deposits of $161
billion. The Company provides deposit, credit, trust, investment,
mortgage, asset management, securities brokerage, and capital
market services. Learn more at suntrust.com.
Business Segment Results
The Company has included its
business segment financial tables as part of this release. Revenue
and income amounts labeled "FTE" in the business segment tables are
reported on a fully taxable-equivalent basis. For the business
segments, net interest income is computed using matched-maturity
funds transfer pricing and noninterest income includes federal and
state tax credits that are grossed-up on a pre-tax equivalent
basis. Further, provision/(benefit) for credit losses represents
net charge-offs by segment combined with an allocation to the
segments of the provision/(benefit) attributable to each segment's
quarterly change in the allowance for loan and lease losses
("ALLL") and unfunded commitments 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 Total Corporate
Other results presented in this document also include Reconciling
Items, which are comprised of 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
included in this release and the earnings presentation which
SunTrust has also published today and SunTrust's forthcoming Form
10-Q. Detailed financial tables and the earnings presentation 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 July 18, 2019, at
11:00 a.m. (Eastern Time) to discuss
the earnings results and business trends. Individuals may call in
beginning at 10:45 a.m. (Eastern
Time) by dialing 1-877-209-9920 (Passcode: SunTrust).
Individuals calling from outside the
United States should dial 1-612-332-1210 (Passcode:
SunTrust). A replay of the call will be available approximately one
hour after the call ends on July 18,
2019, and will remain available until August 18, 2019, by dialing 1-800-475-6701
(domestic) or 1-320-365-3844 (international) (Passcode:
467809). 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
July 18, 2019, individuals may access
an archived version of the webcast in the "Events &
Presentations" section of the SunTrust investor relations website.
This webcast will be archived and available for one year.
Non-GAAP Financial Measures
This news release includes
non-GAAP financial measures to describe SunTrust's performance.
Additional information and reconciliations of those measures to
GAAP measures are provided in the appendix to this news release
beginning at page 12.
In this news release, consistent with SEC Industry Guide 3, the
Company presents total revenue, net interest income, net interest
margin, and efficiency ratios on a fully taxable equivalent ("FTE")
basis, and ratios on an 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 21%, as well as 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 equity, Tangible common equity, the ratio
of Tangible equity to tangible assets, the ratio of Tangible common
equity to tangible assets, Tangible book value per share, and the
Return on tangible common shareholders' equity, which removes the
after-tax impact of purchase accounting intangible assets from
shareholders' equity and removes related intangible asset
amortization from Net income available to common shareholders. The
Company believes these measures are useful to investors because, by
removing the amount of intangible assets that results from merger
and acquisition activity and amortization expense (the level of
which may vary from company to company), they allow investors to
more easily compare the Company's capital position and return on
average tangible common shareholders' equity to other companies in
the industry who present similar measures. The Company also
believes that removing these items provides a more relevant measure
of the return on the Company's common shareholders' equity. These
measures are utilized by management to assess capital adequacy and
profitability 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 unusual or infrequent items from the
calculation of Tangible efficiency ratio-FTE. These items include
the charitable contribution to the SunTrust Foundation and the
insurance settlement benefit related to financial crisis-related
claims recognized in the second quarter of 2019, merger-related
impacts recognized in the first and second quarters of 2019, and
the legacy National Commerce Financial Corporation ("NCF") pension
plan settlement charge recognized in the fourth quarter of 2018.
See slide 21 in the earnings presentation (Exhibit 99.2) as well as
Appendix A in this news release for more details on these items.
The Company believes this measure (Adjusted tangible efficiency
ratio-FTE) 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. This measure is
utilized by management to assess the efficiency of the Company and
its lines of business.
Important Cautionary Statement About Forward-Looking
Statements
This news release contains forward-looking
statements. Statements regarding the Company's proposed merger with
BB&T, including the benefits thereof, and the availability of
liquidity to the Company 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,"
"opportunity," "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. 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, 2018 and in other periodic
reports that we file with the SEC.
Additional Information about the Merger and Where to Find
It
In connection with the Company's proposed merger with
BB&T, BB&T has filed with the SEC a registration statement
on Form S-4 to register the shares of BB&T's capital
stock to be issued in connection with the merger, as amended on
May 7, 2019, June 14, 2019, and June
19, 2019. The registration statement includes a joint proxy
statement/prospectus. BB&T and SunTrust commenced mailing the
joint proxy statement/prospectus to shareholders on or about
June 27, 2019.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY
STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON
FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE
FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION
BECAUSE THESE DOCUMENTS DO AND WILL CONTAIN IMPORTANT INFORMATION
ABOUT BB&T, SUNTRUST, AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain copies of these
documents free of charge through the website maintained by the SEC
at www.sec.gov or from BB&T at its website, www.bbt.com, or
from SunTrust at its website, www.suntrust.com. Documents filed
with the SEC by BB&T will be available free of charge by
accessing BB&T's website at http://bbt.com/ under the tab
"About BB&T" and then under the heading "Investor Relations"
or, alternatively, by directing a request by telephone or mail to
BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina
27101, (336) 733-3065, and documents filed with the SEC
by SunTrust will be available free of charge by accessing
SunTrust's website at http://suntrust.com/ under the tab
"Investor Relations," and then under the heading "Regulatory &
Legal" or, alternatively, by directing a request by telephone or
mail to SunTrust Banks, Inc., 303 Peachtree Street, N.E.,
Atlanta, Georgia 30308,
(877) 930-8971.
Participants in the Solicitation
BB&T, SunTrust
and certain of their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies
from the shareholders of BB&T and SunTrust in connection with
the proposed transaction under the rules of the SEC. Certain
information regarding the interests of these participants and a
description of their direct and indirect interests, by security
holdings or otherwise, are included in the joint proxy
statement/prospectus regarding the proposed transaction and will be
included in other relevant materials to be filed with the SEC when
they become available. Additional information about BB&T, and
its directors and executive officers, may be found in the
definitive proxy statement of BB&T relating to its 2019 Annual
Meeting of Shareholders filed with the SEC on March 19, 2019, and other documents filed by
BB&T with the SEC. Additional information about SunTrust, and
its directors and executive officers, may be found in the
definitive proxy statement of SunTrust relating to its 2019 Annual
Meeting of Shareholders filed with the SEC on March 8, 2019, and other documents filed by
SunTrust with the SEC. These documents can be obtained free of
charge from the sources described above.
SunTrust Banks,
Inc. and Subsidiaries FINANCIAL HIGHLIGHTS
|
|
(Dollars in millions
and shares in thousands, except per share data)
(Unaudited)
|
Three Months Ended
June 30
|
|
%
|
|
Six Months Ended
June 30
|
|
%
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
EARNINGS & DIVIDENDS
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$688
|
|
|
$722
|
|
|
(5)
|
%
|
|
$1,268
|
|
|
$1,365
|
|
|
(7)
|
%
|
Net income available
to common shareholders
|
663
|
|
|
697
|
|
|
(5)
|
|
|
1,217
|
|
|
1,310
|
|
|
(7)
|
|
Total
revenue
|
2,560
|
|
|
2,317
|
|
|
10
|
|
|
4,888
|
|
|
4,554
|
|
|
7
|
|
Total
revenue-FTE 1
|
2,582
|
|
|
2,339
|
|
|
10
|
|
|
4,933
|
|
|
4,597
|
|
|
7
|
|
Net income per
average common share:
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
$1.48
|
|
|
$1.49
|
|
|
(1)
|
%
|
|
$2.72
|
|
|
$2.78
|
|
|
(2)
|
%
|
Basic
|
1.49
|
|
|
1.50
|
|
|
(1)
|
|
|
2.74
|
|
|
2.80
|
|
|
(2)
|
|
Dividends declared
per common share
|
0.50
|
|
|
0.40
|
|
|
25
|
|
|
1.00
|
|
|
0.80
|
|
|
25
|
|
CONDENSED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
Selected Average
Balances:
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$220,827
|
|
|
$204,548
|
|
|
8
|
%
|
|
$219,124
|
|
|
$204,341
|
|
|
7
|
%
|
Earning
assets
|
197,395
|
|
|
184,566
|
|
|
7
|
|
|
195,898
|
|
|
183,725
|
|
|
7
|
|
Loans held for
investment ("LHFI")
|
156,224
|
|
|
144,156
|
|
|
8
|
|
|
155,246
|
|
|
143,542
|
|
|
8
|
|
Intangible assets
including residential mortgage servicing rights ("MSRs")
|
8,271
|
|
|
8,355
|
|
|
(1)
|
|
|
8,332
|
|
|
8,300
|
|
|
—
|
|
Residential
MSRs
|
1,860
|
|
|
1,944
|
|
|
(4)
|
|
|
1,922
|
|
|
1,889
|
|
|
2
|
|
Consumer and
commercial deposits
|
159,854
|
|
|
158,957
|
|
|
1
|
|
|
159,887
|
|
|
159,063
|
|
|
1
|
|
Total shareholders'
equity
|
25,209
|
|
|
24,095
|
|
|
5
|
|
|
24,840
|
|
|
24,349
|
|
|
2
|
|
Preferred
stock
|
2,025
|
|
|
2,025
|
|
|
—
|
|
|
2,025
|
|
|
2,206
|
|
|
(8)
|
|
Period End
Balances:
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
|
|
|
$222,288
|
|
|
$207,505
|
|
|
7
|
%
|
Earning
assets
|
|
|
|
|
|
|
198,065
|
|
|
185,304
|
|
|
7
|
|
LHFI
|
|
|
|
|
|
|
156,589
|
|
|
144,935
|
|
|
8
|
|
Allowance for loan
and lease losses ("ALLL")
|
|
|
|
|
|
|
1,681
|
|
|
1,650
|
|
|
2
|
|
Consumer and
commercial deposits
|
|
|
|
|
|
|
159,719
|
|
|
160,410
|
|
|
—
|
|
Total shareholders'
equity
|
|
|
|
|
|
|
25,862
|
|
|
24,316
|
|
|
6
|
|
FINANCIAL
RATIOS & OTHER DATA
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
total assets
|
1.25
|
%
|
|
1.42
|
%
|
|
(12)
|
%
|
|
1.17
|
%
|
|
1.35
|
%
|
|
(13)
|
%
|
Return on average
common shareholders' equity
|
11.51
|
|
|
12.73
|
|
|
(10)
|
|
|
10.80
|
|
|
11.98
|
|
|
(10)
|
|
Return on average
tangible common shareholders' equity 1
|
15.73
|
|
|
17.74
|
|
|
(11)
|
|
|
14.85
|
|
|
16.67
|
|
|
(11)
|
|
Net interest
margin
|
3.12
|
|
|
3.23
|
|
|
(3)
|
|
|
3.17
|
|
|
3.21
|
|
|
(1)
|
|
Net interest
margin-FTE 1
|
3.16
|
|
|
3.28
|
|
|
(4)
|
|
|
3.22
|
|
|
3.26
|
|
|
(1)
|
|
Efficiency
ratio
|
64.00
|
|
|
59.98
|
|
|
7
|
|
|
63.99
|
|
|
61.63
|
|
|
4
|
|
Efficiency
ratio-FTE 1
|
63.45
|
|
|
59.41
|
|
|
7
|
|
|
63.40
|
|
|
61.06
|
|
|
4
|
|
Tangible efficiency
ratio-FTE 1
|
62.77
|
|
|
58.69
|
|
|
7
|
|
|
62.74
|
|
|
60.37
|
|
|
4
|
|
Adjusted tangible
efficiency ratio-FTE 1
|
58.99
|
|
|
58.69
|
|
|
1
|
|
|
59.88
|
|
|
60.37
|
|
|
(1)
|
|
Effective tax
rate
|
13
|
|
|
19
|
|
|
(32)
|
|
|
14
|
|
|
19
|
|
|
(26)
|
|
Basel III capital
ratios at period end 2:
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
("CET1")
|
|
|
|
|
|
|
9.19
|
%
|
|
9.72
|
%
|
|
(5)
|
%
|
Tier 1
capital
|
|
|
|
|
|
|
10.24
|
|
|
10.86
|
|
|
(6)
|
|
Total
capital
|
|
|
|
|
|
|
11.93
|
|
|
12.67
|
|
|
(6)
|
|
Leverage
|
|
|
|
|
|
|
9.25
|
|
|
9.82
|
|
|
(6)
|
|
Total average
shareholders' equity to total average assets
|
11.42
|
%
|
|
11.78
|
%
|
|
(3)
|
%
|
|
11.34
|
|
|
11.92
|
|
|
(5)
|
|
Tangible equity to
tangible assets 1
|
|
|
|
|
|
|
9.11
|
|
|
9.01
|
|
|
1
|
|
Tangible common
equity to tangible assets 1
|
|
|
|
|
|
|
8.13
|
|
|
7.96
|
|
|
2
|
|
Book value per common
share
|
|
|
|
|
|
|
$53.47
|
|
|
$47.70
|
|
|
12
|
|
Tangible book value
per common share 1
|
|
|
|
|
|
|
39.54
|
|
|
34.40
|
|
|
15
|
|
Market
capitalization
|
|
|
|
|
|
|
27,896
|
|
|
30,712
|
|
|
(9)
|
|
Average common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
446,391
|
|
|
469,339
|
|
|
(5)
|
%
|
|
446,526
|
|
|
471,468
|
|
|
(5)
|
%
|
Basic
|
443,806
|
|
|
465,529
|
|
|
(5)
|
|
|
443,687
|
|
|
467,117
|
|
|
(5)
|
|
Full-time equivalent
employees
|
|
|
|
|
|
|
22,726
|
|
|
23,199
|
|
|
(2)
|
|
Number of
ATMs
|
|
|
|
|
|
|
2,024
|
|
|
2,062
|
|
|
(2)
|
|
Full service banking
offices
|
|
|
|
|
|
|
1,149
|
|
|
1,222
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
See Appendix A for
additional information and reconcilements of non-U.S. GAAP
performance measures.
|
2
|
Basel III capital
ratios are calculated under the standardized approach using
regulatory capital methodology applicable to the Company for each
period presented, including the phase-in of transition provisions
through January 1, 2018. Capital ratios at June 30, 2019 are
estimated as of the date of this release.
|
SunTrust Banks,
Inc. and Subsidiaries FIVE QUARTER FINANCIAL
HIGHLIGHTS
|
|
|
Three Months
Ended
|
|
June
30
|
|
March 31
|
|
December
31
|
|
September
30
|
|
June 30
|
(Dollars in millions
and shares in thousands, except per share data)
(Unaudited)
|
2019
|
|
2019
|
|
2018
|
|
2018
|
|
2018
|
EARNINGS & DIVIDENDS
|
|
|
|
|
|
|
|
|
|
Net income
|
$688
|
|
|
$580
|
|
|
$658
|
|
|
$752
|
|
|
$722
|
|
Net income available
to common shareholders
|
663
|
|
|
554
|
|
|
632
|
|
|
726
|
|
|
697
|
|
Total
revenue
|
2,560
|
|
|
2,328
|
|
|
2,365
|
|
|
2,294
|
|
|
2,317
|
|
Total revenue-FTE
1
|
2,582
|
|
|
2,351
|
|
|
2,388
|
|
|
2,316
|
|
|
2,339
|
|
Net income per
average common share:
|
|
|
|
|
|
|
|
|
|
Diluted
|
$1.48
|
|
|
$1.24
|
|
|
$1.40
|
|
|
$1.56
|
|
|
$1.49
|
|
Basic
|
1.49
|
|
|
1.25
|
|
|
1.41
|
|
|
1.58
|
|
|
1.50
|
|
Dividends declared
per common share
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
|
0.40
|
|
CONDENSED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
Selected Average
Balances:
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$220,827
|
|
|
$217,403
|
|
|
$212,934
|
|
|
$207,395
|
|
|
$204,548
|
|
Earning
assets
|
197,395
|
|
|
194,385
|
|
|
190,742
|
|
|
186,344
|
|
|
184,566
|
|
LHFI
|
156,224
|
|
|
154,258
|
|
|
149,708
|
|
|
145,995
|
|
|
144,156
|
|
Intangible assets
including residential MSRs
|
8,271
|
|
|
8,394
|
|
|
8,491
|
|
|
8,396
|
|
|
8,355
|
|
Residential
MSRs
|
1,860
|
|
|
1,984
|
|
|
2,083
|
|
|
1,987
|
|
|
1,944
|
|
Consumer and
commercial deposits
|
159,854
|
|
|
159,921
|
|
|
161,573
|
|
|
159,348
|
|
|
158,957
|
|
Total shareholders'
equity
|
25,209
|
|
|
24,466
|
|
|
23,873
|
|
|
24,275
|
|
|
24,095
|
|
Preferred
stock
|
2,025
|
|
|
2,025
|
|
|
2,025
|
|
|
2,025
|
|
|
2,025
|
|
Period End
Balances:
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$222,288
|
|
|
$220,425
|
|
|
$215,543
|
|
|
$211,276
|
|
|
$207,505
|
|
Earning
assets
|
198,065
|
|
|
196,316
|
|
|
192,497
|
|
|
188,141
|
|
|
185,304
|
|
LHFI
|
156,589
|
|
|
155,233
|
|
|
151,839
|
|
|
147,215
|
|
|
144,935
|
|
ALLL
|
1,681
|
|
|
1,643
|
|
|
1,615
|
|
|
1,623
|
|
|
1,650
|
|
Consumer and
commercial deposits
|
159,719
|
|
|
161,092
|
|
|
161,544
|
|
|
159,332
|
|
|
160,410
|
|
Total shareholders'
equity
|
25,862
|
|
|
24,823
|
|
|
24,280
|
|
|
24,139
|
|
|
24,316
|
|
FINANCIAL
RATIOS & OTHER DATA
|
|
|
|
|
|
|
|
|
|
Return on average
total assets
|
1.25
|
%
|
|
1.08
|
%
|
|
1.23
|
%
|
|
1.44
|
%
|
|
1.42
|
%
|
Return on average
common shareholders' equity
|
11.51
|
|
|
10.06
|
|
|
11.54
|
|
|
13.01
|
|
|
12.73
|
|
Return on average
tangible common shareholders' equity 1
|
15.73
|
|
|
13.91
|
|
|
16.13
|
|
|
18.06
|
|
|
17.74
|
|
Net interest
margin
|
3.12
|
|
|
3.22
|
|
|
3.22
|
|
|
3.22
|
|
|
3.23
|
|
Net interest
margin-FTE 1
|
3.16
|
|
|
3.27
|
|
|
3.27
|
|
|
3.27
|
|
|
3.28
|
|
Efficiency
ratio
|
64.00
|
|
|
63.97
|
|
|
62.66
|
|
|
60.34
|
|
|
59.98
|
|
Efficiency ratio-FTE
1
|
63.45
|
|
|
63.35
|
|
|
62.06
|
|
|
59.76
|
|
|
59.41
|
|
Tangible efficiency
ratio-FTE 1
|
62.77
|
|
|
62.70
|
|
|
61.13
|
|
|
58.94
|
|
|
58.69
|
|
Adjusted tangible
efficiency ratio-FTE 1
|
58.99
|
|
|
60.78
|
|
|
58.63
|
|
|
58.94
|
|
|
58.69
|
|
Effective tax
rate
|
13
|
|
|
15
|
|
|
17
|
|
|
11
|
|
|
19
|
|
Basel III capital
ratios at period end 2:
|
|
|
|
|
|
|
|
|
|
CET1
|
9.19
|
%
|
|
9.09
|
%
|
|
9.21
|
%
|
|
9.60
|
%
|
|
9.72
|
%
|
Tier 1
capital
|
10.24
|
|
|
10.15
|
|
|
10.30
|
|
|
10.72
|
|
|
10.86
|
|
Total
capital
|
11.93
|
|
|
11.85
|
|
|
12.02
|
|
|
12.47
|
|
|
12.67
|
|
Leverage
|
9.25
|
|
|
9.15
|
|
|
9.26
|
|
|
9.66
|
|
|
9.82
|
|
Total average
shareholders' equity to total average assets
|
11.42
|
|
|
11.25
|
|
|
11.21
|
|
|
11.71
|
|
|
11.78
|
|
Tangible equity to
tangible assets 1
|
9.11
|
|
|
8.71
|
|
|
8.65
|
|
|
8.76
|
|
|
9.01
|
|
Tangible common
equity to tangible assets 1
|
8.13
|
|
|
7.71
|
|
|
7.63
|
|
|
7.72
|
|
|
7.96
|
|
Book value per common
share
|
$53.47
|
|
|
$51.15
|
|
|
$49.57
|
|
|
$48.00
|
|
|
$47.70
|
|
Tangible book value
per common share 1
|
39.54
|
|
|
37.22
|
|
|
35.73
|
|
|
34.51
|
|
|
34.40
|
|
Market
capitalization
|
27,896
|
|
|
26,290
|
|
|
22,541
|
|
|
30,632
|
|
|
30,712
|
|
Average common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Diluted
|
446,391
|
|
|
446,662
|
|
|
452,957
|
|
|
464,164
|
|
|
469,339
|
|
Basic
|
443,806
|
|
|
443,566
|
|
|
449,404
|
|
|
460,252
|
|
|
465,529
|
|
Full-time equivalent
employees
|
22,726
|
|
|
22,626
|
|
|
22,899
|
|
|
22,839
|
|
|
23,199
|
|
Number of
ATMs
|
2,024
|
|
|
2,030
|
|
|
2,082
|
|
|
2,053
|
|
|
2,062
|
|
Full service banking
offices
|
1,149
|
|
|
1,152
|
|
|
1,218
|
|
|
1,217
|
|
|
1,222
|
|
|
|
|
|
|
|
|
|
|
|
1
|
See Appendix A for
additional information and reconcilements of non-U.S. GAAP
performance measures.
|
2
|
Basel III capital
ratios are calculated under the standardized approach using
regulatory capital methodology applicable to the Company for each
period presented, including the phase-in of transition provisions
through January 1, 2018. Capital ratios at June 30, 2019 are
estimated as of the date of this release.
|
SunTrust Banks,
Inc. and Subsidiaries
APPENDIX A TO THE
EARNINGS RELEASE - RECONCILEMENT OF NON-U.S. GAAP MEASURES
1
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30
|
|
March 31
|
|
December
31
|
|
September
30
|
|
June 30
|
|
June
30
|
(Dollars in millions)
(Unaudited)
|
2019
|
|
2019
|
|
2018
|
|
2018
|
|
2018
|
|
2019
|
|
2018
|
Net interest
income
|
$1,535
|
|
|
$1,544
|
|
|
$1,547
|
|
|
$1,512
|
|
|
$1,488
|
|
|
$3,078
|
|
|
$2,928
|
|
Fully
taxable-equivalent ("FTE") adjustment
|
22
|
|
|
23
|
|
|
23
|
|
|
22
|
|
|
22
|
|
|
45
|
|
|
43
|
|
Net interest
income-FTE 2
|
1,557
|
|
|
1,567
|
|
|
1,570
|
|
|
1,534
|
|
|
1,510
|
|
|
3,123
|
|
|
2,971
|
|
Noninterest
income
|
1,025
|
|
|
784
|
|
|
818
|
|
|
782
|
|
|
829
|
|
|
1,810
|
|
|
1,626
|
|
Total revenue-FTE
2
|
$2,582
|
|
|
$2,351
|
|
|
$2,388
|
|
|
$2,316
|
|
|
$2,339
|
|
|
$4,933
|
|
|
$4,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
common shareholders' equity
|
11.51
|
%
|
|
10.06
|
%
|
|
11.54
|
%
|
|
13.01
|
%
|
|
12.73
|
%
|
|
10.80
|
%
|
|
11.98
|
%
|
Impact of removing
average intangible assets and related
pre-tax amortization, other than residential and
commercial MSRs
|
4.22
|
|
|
3.85
|
|
|
4.59
|
|
|
5.05
|
|
|
5.01
|
|
|
4.05
|
|
|
4.69
|
|
Return on average
tangible common shareholders' equity 3
|
15.73
|
%
|
|
13.91
|
%
|
|
16.13
|
%
|
|
18.06
|
%
|
|
17.74
|
%
|
|
14.85
|
%
|
|
16.67
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin
|
3.12
|
%
|
|
3.22
|
%
|
|
3.22
|
%
|
|
3.22
|
%
|
|
3.23
|
%
|
|
3.17
|
%
|
|
3.21
|
%
|
Impact of FTE
adjustment
|
0.04
|
|
|
0.05
|
|
|
0.05
|
|
|
0.05
|
|
|
0.05
|
|
|
0.05
|
|
|
0.05
|
|
Net interest
margin-FTE 2
|
3.16
|
%
|
|
3.27
|
%
|
|
3.27
|
%
|
|
3.27
|
%
|
|
3.28
|
%
|
|
3.22
|
%
|
|
3.26
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
expense
|
$1,638
|
|
|
$1,489
|
|
|
$1,482
|
|
|
$1,384
|
|
|
$1,390
|
|
|
$3,128
|
|
|
$2,807
|
|
Total
revenue
|
2,560
|
|
|
2,328
|
|
|
2,365
|
|
|
2,294
|
|
|
2,317
|
|
|
4,888
|
|
|
4,554
|
|
Efficiency ratio
4
|
64.00
|
%
|
|
63.97
|
%
|
|
62.66
|
%
|
|
60.34
|
%
|
|
59.98
|
%
|
|
63.99
|
%
|
|
61.63
|
%
|
Impact of FTE
adjustment
|
(0.55)
|
|
|
(0.62)
|
|
|
(0.60)
|
|
|
(0.58)
|
|
|
(0.57)
|
|
|
(0.59)
|
|
|
(0.57)
|
|
Efficiency ratio-FTE
2, 4
|
63.45
|
|
|
63.35
|
|
|
62.06
|
|
|
59.76
|
|
|
59.41
|
|
|
63.40
|
|
|
61.06
|
|
Impact of excluding
amortization related to intangible
assets and certain tax credits
|
(0.68)
|
|
|
(0.65)
|
|
|
(0.93)
|
|
|
(0.82)
|
|
|
(0.72)
|
|
|
(0.66)
|
|
|
(0.69)
|
|
Tangible efficiency
ratio-FTE 2, 5
|
62.77
|
|
|
62.70
|
|
|
61.13
|
|
|
58.94
|
|
|
58.69
|
|
|
62.74
|
|
|
60.37
|
|
Impact of excluding
unusual or infrequent items
|
(3.78)
|
|
|
(1.92)
|
|
|
(2.50)
|
|
|
—
|
|
|
—
|
|
|
(2.86)
|
|
|
—
|
|
Adjusted tangible
efficiency ratio-FTE 2, 5, 6
|
58.99
|
%
|
|
60.78
|
%
|
|
58.63
|
%
|
|
58.94
|
%
|
|
58.69
|
%
|
|
59.88
|
%
|
|
60.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Certain amounts in
this schedule are presented net of applicable income taxes,
calculated based on each subsidiary's federal and state tax rates
and are adjusted for any permanent differences.
|
2
|
The Company presents
Net interest income-FTE, Total revenue-FTE, Net interest
margin-FTE, Efficiency ratio-FTE, Tangible efficiency ratio-FTE,
and Adjusted tangible efficiency ratio-FTE 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 using a federal tax rate of 21%, as well as 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.
|
3
|
The Company presents
Return on average tangible common shareholders' equity, which
removes the after-tax impact of purchase accounting intangible
assets from average common shareholders' equity and removes related
intangible asset amortization from Net income available to common
shareholders. The Company believes this measure is useful to
investors because, by removing the amount of intangible assets and
related pre-tax amortization expense (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. The Company also believes that
removing these items provides a more relevant measure of the return
on the Company's common shareholders' equity. This measure is
utilized by management to assess the profitability of the
Company.
|
4
|
Efficiency ratio is
computed by dividing Noninterest expense by Total revenue.
Efficiency ratio-FTE is computed by dividing Noninterest expense by
Total revenue-FTE.
|
5
|
The Company presents
Tangible efficiency ratio-FTE and Adjusted tangible efficiency
ratio-FTE, which remove the amortization related to intangible
assets and certain tax credits from the calculation of Efficiency
ratio-FTE. The Company believes these measures are 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. These measures are utilized by
management to assess the efficiency of the Company and its lines of
business.
|
6
|
The Company presents
Adjusted tangible efficiency ratio-FTE, which removes the pre-tax
impact of unusual or infrequent items from the calculation of
Tangible efficiency ratio-FTE. These unusual or infrequent items
include (i) the $205 million charitable contribution to the
SunTrust Foundation recognized in the second quarter of 2019, (ii)
the $205 million insurance settlement benefit related to financial
crisis-related claims recognized in the second quarter of 2019,
(iii) $45 million and $14 million of merger-related impacts
recognized in the first and second quarter of 2019, respectively,
and (iv) the $60 million legacy National Commerce Financial
Corporation ("NCF") pension plan settlement charge recognized in
the fourth quarter of 2018. 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. Removing these items
also allows investors to more easily compare the Company's tangible
efficiency to other companies in the industry that may not have had
similar items impacting their results. Additional detail on the
Company's merger agreement with BB&T Corporation and the NCF
pension plan settlement charge can be found in the Company's Annual
Report on Form 10-K for the year ended December 31,
2018.
|
SunTrust Banks,
Inc. and Subsidiaries
APPENDIX A TO THE
EARNINGS RELEASE - RECONCILEMENT OF NON-U.S. GAAP MEASURES,
continued 1
|
|
|
|
June
30
|
|
March 31
|
|
December
31
|
|
September
30
|
|
June 30
|
(Dollars in millions,
except per share data) (Unaudited)
|
2019
|
|
2019
|
|
2018
|
|
2018
|
|
2018
|
Total shareholders'
equity
|
$25,862
|
|
|
$24,823
|
|
|
$24,280
|
|
|
$24,139
|
|
|
$24,316
|
|
Goodwill, net of
deferred taxes of $163 million, $162 million, $160
million, $160 million, and $159 million,
respectively
|
(6,168)
|
|
|
(6,169)
|
|
|
(6,171)
|
|
|
(6,171)
|
|
|
(6,172)
|
|
Other intangible
assets (including residential and commercial MSRs)
|
(1,796)
|
|
|
(1,963)
|
|
|
(2,062)
|
|
|
(2,140)
|
|
|
(2,036)
|
|
Residential and
commercial MSRs
|
1,783
|
|
|
1,949
|
|
|
2,049
|
|
|
2,126
|
|
|
2,022
|
|
Tangible equity
2
|
19,681
|
|
|
18,640
|
|
|
18,096
|
|
|
17,954
|
|
|
18,130
|
|
Noncontrolling
interest
|
(103)
|
|
|
(101)
|
|
|
(103)
|
|
|
(101)
|
|
|
(103)
|
|
Preferred
stock
|
(2,025)
|
|
|
(2,025)
|
|
|
(2,025)
|
|
|
(2,025)
|
|
|
(2,025)
|
|
Tangible common
equity 2
|
$17,553
|
|
|
$16,514
|
|
|
$15,968
|
|
|
$15,828
|
|
|
$16,002
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$222,288
|
|
|
$220,425
|
|
|
$215,543
|
|
|
$211,276
|
|
|
$207,505
|
|
Goodwill
|
(6,331)
|
|
|
(6,331)
|
|
|
(6,331)
|
|
|
(6,331)
|
|
|
(6,331)
|
|
Other intangible
assets (including residential and commercial MSRs)
|
(1,796)
|
|
|
(1,963)
|
|
|
(2,062)
|
|
|
(2,140)
|
|
|
(2,036)
|
|
Residential and
commercial MSRs
|
1,783
|
|
|
1,949
|
|
|
2,049
|
|
|
2,126
|
|
|
2,022
|
|
Tangible
assets
|
$215,944
|
|
|
$214,080
|
|
|
$209,199
|
|
|
$204,931
|
|
|
$201,160
|
|
Tangible equity to
tangible assets 2
|
9.11
|
%
|
|
8.71
|
%
|
|
8.65
|
%
|
|
8.76
|
%
|
|
9.01
|
%
|
Tangible common
equity to tangible assets 2
|
8.13
|
|
|
7.71
|
|
|
7.63
|
|
|
7.72
|
|
|
7.96
|
|
Tangible book value
per common share 3
|
$39.54
|
|
|
$37.22
|
|
|
$35.73
|
|
|
$34.51
|
|
|
$34.40
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Certain amounts in
this schedule are presented net of applicable income taxes,
calculated based on each subsidiary's federal and state tax rates
and are adjusted for any permanent differences.
|
2
|
The Company presents
certain capital information on a tangible basis, including Tangible
equity, Tangible common equity, the ratio of Tangible equity to
tangible assets, and the ratio of Tangible common equity to
tangible assets, which remove the after-tax impact of purchase
accounting intangible assets from shareholders' equity. The Company
believes these measures are useful to investors because, by
removing the amount 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
and these measures are more consistent with regulatory capital
definitions and calculations.
|
3
|
The Company presents
Tangible book value per common share, which excludes the after-tax
impact of purchase accounting intangible assets and also excludes
Noncontrolling interest and Preferred stock from shareholders'
equity. The Company believes this measure is useful to investors
because, by removing the amount of intangible assets,
noncontrolling interest, and preferred stock (the levels 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.
|
View original
content:http://www.prnewswire.com/news-releases/suntrust-reports-second-quarter-2019-results-300887158.html
SOURCE SunTrust Banks, Inc.