STI
$69.68
Suntrust Banks
$1.17
1.71%
Earnings Details
2nd Quarter June 2018
Friday, July 20, 2018 6:00:00 AM
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Summary

Suntrust Banks Beats

Suntrust Banks (STI) reported 2nd Quarter June 2018 earnings of $1.49 per share on revenue of $2.6 billion. The consensus earnings estimate was $1.30 per share on revenue of $2.3 billion. The Earnings Whisper number was $1.34 per share. Revenue grew 7.4% on a year-over-year basis.

SunTrust Banks Inc is a bank holding company and a financial holding company with commercial banking organizations whose businesses provide financial services to consumer, business and corporate clients.

Results
Reported Earnings
$1.49
Earnings Whisper
$1.34
Consensus Estimate
$1.30
Reported Revenue
$2.59 Bil
Revenue Estimate
$2.31 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

SunTrust Reports Second Quarter 2018 Results

ATLANTA, July 20, 2018 /PRNewswire/ -- SunTrust Banks, Inc. (NYSE: STI) reported net income available to common shareholders of $697 million, or $1.49 per average common diluted share.

Diluted earnings per share increased 16% compared to the prior quarter and 45% compared to the second quarter of 2017. For the first half of 2018, earnings per average common diluted share grew 43% compared to the same period a year ago.

"Our performance continues to improve and this quarter was no exception, with earnings per share increasing by 45% year-over-year," said William H. Rogers, Jr., chairman and CEO of SunTrust Banks, Inc. "Importantly, our strategic consistency and improved execution is driving success across multiple fronts: solid revenue growth, improved efficiency, and increased capital returns. We have good momentum going into the second half of the year and I remain confident in our ability to continue to create value for our clients, teammates, communities, and shareholders."

Second Quarter 2018 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 for all periods beginning on or after January 1, 2018 and 35% for all periods prior to January 1, 2018, 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 $697 million, or $1.49 per average common diluted share, compared to $1.29 for the prior quarter and $1.03 for the second quarter of 2017.
  • Total revenue increased 4% sequentially and 3% year-over-year. These increases were driven largely by higher net interest income as a result of net interest margin expansion. The sequential increase was also driven by growth in earnings assets.
  • Net interest margin was 3.28% in the current quarter, up 4 basis points sequentially and up 14 basis points compared to the prior year. The sequential and year-over-year increases were driven primarily by higher earning asset yields arising from higher benchmark interest rates, positive mix shift in the LHFI portfolio, and higher securities yields.
  • Provision for credit losses was relatively stable sequentially and decreased $58 million year-over-year due primarily to a lower allowance for loan and lease losses ("ALLL").
  • Noninterest expense decreased 2% sequentially and remained stable year-over-year. The sequential decrease was driven primarily by a seasonal decline in employee benefits costs.
  • The efficiency and tangible efficiency ratios for the current quarter were 59.4% and 58.7%, respectively, which reflect good improvements compared to the prior quarter and prior year, driven by ongoing expense management initiatives and strong revenue growth. The sequential improvement was also impacted by the seasonal decline in employee benefits costs.

Balance Sheet

  • Average performing LHFI was up 1% compared to the prior quarter and relatively stable year-over-year. The sequential growth was driven by growth in C&I, CRE, and consumer direct loans.
  • Average consumer and commercial deposits remained relatively stable compared to both the prior quarter and the second quarter of 2017.

Capital

  • Estimated capital ratios continue to be well above regulatory requirements. The Common Equity Tier 1 ("CET1") ratio was estimated to be 9.7% as of June 30, 2018, slightly lower than the prior quarter, due to loan growth.
  • During the quarter, the Company:
    • Repurchased $330 million of its outstanding common stock, which completed its share repurchases under its 2017 Capital Plan.
    • Announced its 2018 Capital Plan, which represents a combined 39% increase in total capital returns including:
      • The purchase of up to $2.0 billion of its outstanding common stock between the third quarter of 2018 and the second quarter of 2019 (representing a 52% increase compared to the previous authorization).
      • A 25% increase in the quarterly common stock dividend from $0.40 per common share to $0.50 per share, beginning in the third quarter of 2018, subject to approval by the Company's Board of Directors.
  • Book value per common share was $47.70 and tangible book value per common share was $34.40, both up 1% from March 31, 2018, driven primarily by growth in retained earnings, offset by an increase in accumulated other comprehensive loss.

Asset Quality

  • Nonperforming loans ("NPLs") increased $43 million from the prior quarter and represented 0.52% of period-end LHFI at June 30, 2018. The increase was driven primarily by the downgrade of one borrower.
  • Net charge-offs for the current quarter were $73 million, or 0.20% of total average LHFI on an annualized basis, compared to 0.22% during the prior quarter and 0.20% during the second quarter of 2017.
  • At June 30, 2018, the ALLL to period-end LHFI ratio was 1.14%, a 5 basis point decline compared to the prior quarter, driven by lower reserves for hurricane-related losses and continued improvements in asset quality.
  • Provision for credit losses was relatively stable sequentially and decreased $58 million year-over-year due primarily to a lower ALLL.

 











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

2Q 2018


1Q 2018


4Q 2017


3Q 2017


2Q 2017

Net interest income

$1,488



$1,441



$1,434



$1,430



$1,403


Net interest income-FTE 1

1,510



1,461



1,472



1,467



1,439


Net interest margin

3.23

%


3.20

%


3.09

%


3.07

%


3.06

%

Net interest margin-FTE 1

3.28



3.24



3.17



3.15



3.14


Noninterest income

$829



$796



$833



$846



$827


Total revenue

2,317



2,237



2,267



2,276



2,230


Total revenue-FTE 1

2,339



2,257



2,305



2,313



2,266


Noninterest expense

1,390



1,417



1,520



1,391



1,388


Provision for credit losses

32



28



79



120



90


Net income available to common shareholders

697



612



710



512



505


Earnings per average common diluted share

1.49



1.29



1.48



1.06



1.03












Balance Sheet (Dollars in billions)










Average LHFI

$144.2



$142.9



$144.0



$144.7



$144.4


Average consumer and commercial deposits

159.0



159.2



160.7



159.4



159.1












Capital










Basel III capital ratios at period end 2 :










Tier 1 capital

10.86

%


11.00

%


11.15

%


10.74

%


10.81

%

Common Equity Tier 1 ("CET1")

9.73



9.84



9.74



9.62



9.68


Total average shareholders' equity to total average assets

11.78



12.05



12.09



11.94



11.80












Asset Quality










Net charge-offs to total average LHFI (annualized)

0.20

%


0.22

%


0.29

%


0.21

%


0.20

%

ALLL to period-end LHFI 3

1.14



1.19



1.21



1.23



1.20


NPLs to period-end LHFI

0.52



0.50



0.47



0.48



0.52



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, 2018 are estimated as of the date of this document.

3 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 $2.3 billion for the current quarter, an increase of $82 million compared to the prior quarter. Net interest income increased $49 million sequentially due to a higher net interest margin, a $1.7 billion increase in average earning assets, and one more day in the current quarter. Noninterest income increased $33 million sequentially due largely to higher capital markets-related income, offset partially by lower mortgage servicing related income and other noninterest income. Compared to the second quarter of 2017, total revenue increased by $73 million, driven by a $71 million increase in net interest income.

Net Interest Income

Net interest income was $1.5 billion for the current quarter, an increase of $49 million compared to the prior quarter due primarily to a 4 basis point expansion in the net interest margin, a $1.7 billion increase in average earning assets, and one more day in the current quarter. The $71 million increase relative to the prior year was driven largely by a 14 basis point expansion in the net interest margin.

Net interest margin for the current quarter was 3.28%, compared to 3.24% in the prior quarter and 3.14% in the second quarter of 2017. The 4 and 14 basis point increases relative to the prior quarter and prior year were driven primarily by higher earning asset yields arising from higher benchmark interest rates, positive mix shift in the loan portfolio, and higher securities yields, offset partially by higher deposit costs and higher levels of wholesale funding.

For the six months ended June 30, 2018, net interest income was $3.0 billion, a $132 million increase compared to the six months ended June 30, 2017. The net interest margin was 3.26% for the first half of 2018, a 15 basis point increase compared to the same period in 2017. The increases in both net interest income and net interest margin were driven by the same factors that impacted the sequential and year-over-year comparisons discussed above.

Noninterest Income

Noninterest income was $829 million for the current quarter, compared to $796 million for the prior quarter and $827 million for the second quarter of 2017. The $33 million sequential increase is due primarily to higher capital markets-related income as well as higher client transaction-related fees, offset partially by lower other noninterest income, mortgage servicing related income and commercial real estate related income. Compared to the second quarter of 2017, noninterest income was stable as higher capital markets-related income and other noninterest income was offset by lower mortgage-related income, client transaction-related fees, and commercial real estate related income.

Client transaction-related fees (namely service charges on deposits, other charges and fees, and card fees) increased $8 million sequentially due to an increase in client-related transactional activity. The $19 million year-over-year decrease is due primarily to lower transactional activity and the impact of adopting the revenue recognition accounting standard during the first quarter of 2018, which resulted in the netting of certain expense items against card fees, other charges and fees, and service charges on deposit accounts.

Investment banking income was $167 million for the current quarter, compared to $131 million in the prior quarter and $147 million in the prior year. The $36 million sequential and $20 million year-over-year increases reflected strong deal flow activity across most product categories, led by syndicated finance and equity capital markets.

Trading income was $53 million for the current quarter, compared to $42 million in the prior quarter and $46 million in the second quarter of 2017. The $11 million sequential and $7 million year-over-year increases were due primarily to higher client-related interest rate hedging activity.

Mortgage servicing income was $40 million for the current quarter, compared to $54 million in the prior quarter and $44 million in the second quarter of 2017. The $14 million sequential decrease was due primarily to higher servicing asset decay, arising from seasonally elevated payoffs. The $4 million decrease compared to the second quarter of 2017 was due to higher servicing asset decay and lower net hedge performance, offset partially by higher servicing fee income. At June 30, 2018, the servicing portfolio totaled $170.5 billion, an increase compared to both the prior quarter and prior year due to MSRs purchased in the first quarter of 2018 which transferred in the second quarter.

Mortgage production income for the current quarter was $43 million, compared to $36 million for the prior quarter and $56 million for the second quarter of 2017. The $7 million sequential increase was due primarily to the seasonal increase in purchase volume. The $13 million year-over-year decrease was due largely to lower gain on sale margins and less favorable channel mix. Mortgage application volume increased 18% sequentially and remained stable compared to the second quarter of 2017. Closed loan volume increased 22% sequentially and decreased 3% year-over-year.

Commercial real estate-related income was $18 million for the current quarter, compared to $23 million for the prior quarter and $24 million for the second quarter of 2017. The sequential and year-over-year decreases were driven primarily by lower transactional activity.

Other noninterest income was $38 million for the current quarter, compared to $48 million in the prior quarter and $22 million in the second quarter of 2017. The sequential decrease was due primarily to the recognition of a $23 million remeasurement gain on an equity investment in a fintech company during the prior quarter, offset partially 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 current quarter. The $16 million year-over-year increase was due primarily to the aforementioned gain during the current quarter.

For the six months ended June 30, 2018, noninterest income was $1.6 billion, compared to $1.7 billion for the six months ended June 30, 2017. The $48 million decrease compared to the prior year was driven by lower mortgage-related income, client transaction-related fees, and capital markets-related income, offset partially by an increase in other noninterest income driven by the aforementioned remeasurement gains during the first half of 2018.

Noninterest Expense

Noninterest expense was $1.4 billion in the current quarter, down $27 million sequentially and up $2 million compared to the second quarter of 2017. The sequential decrease was driven largely by the seasonal decline in employee benefit costs, offset partially by higher outside processing and software expense and higher operating losses.

Employee compensation and benefits expense was $802 million in the current quarter, compared to $853 million in the prior quarter and $796 million in the second quarter of 2017. The $51 million sequential decrease was due to the seasonal decline in employee benefit costs and FICA taxes. The $6 million year-over-year increase was due primarily to higher compensation costs associated with revenue growth.

Operating losses were $17 million in the current quarter, compared to $6 million in the prior quarter and $19 million in the second quarter of 2017. The sequential increase was due primarily to a $10 million net benefit recognized in the prior quarter related to the progression of certain legal developments.

Outside processing and software expense was $227 million in the current quarter, compared to $206 million in the prior quarter and $204 million in the second quarter of 2017. The increase compared to the prior quarter and prior year was driven primarily by higher software-related costs, related to ongoing investments in technology.

Regulatory assessments expense was $39 million in the current quarter, compared to $41 million in the prior quarter and $49 million in the second quarter of 2017. The year-over-year decrease was driven by a reduced FDIC assessment rate resulting primarily from a lower risk profile.

Other noninterest expense was $114 million in the current quarter, compared to $121 million in the prior quarter and $126 million in the second quarter of 2017. The sequential decrease was driven primarily by the gain on sale of certain real estate assets recognized in the current quarter (recorded as a contra expense), in addition to certain asset impairment-related charges and legal and consulting expenses recognized in the prior quarter. The year-over-year decrease was driven primarily by the aforementioned gain on sale of certain real estate assets in the current quarter, in addition to lower legal and consulting expenses.

For the six months ended June 30, 2018, noninterest expense was $2.8 billion compared to $2.9 billion for the six months ended June 30, 2017. The $46 million decrease was driven largely by lower other noninterest expense, operating losses, and regulatory assessments, offset partially by higher outside processing and software expenses.

Income Taxes

For the current quarter, the Company recorded a provision for income taxes of $171 million compared to $147 million for the prior quarter and $222 million for the second quarter of 2017. The effective tax rate for the current quarter was 19%, compared to 19% in the prior quarter and 30% in the second quarter of 2017. The year-over-year decrease in the effective tax rate was due primarily to the reduction in the U.S. federal corporate income tax rate from 35% to 21%.

Balance Sheet

At June 30, 2018, the Company had total assets of $207.5 billion and total shareholders' equity of $24.3 billion, representing 12% of total assets. Book value per common share was $47.70 and tangible book value per common share was $34.40, both up 1% compared to March 31, 2018, driven primarily by growth in retained earnings, offset partially by an increase in accumulated other comprehensive loss.

Loans

Average performing LHFI totaled $143.4 billion for the current quarter, up 1% compared to the prior quarter and relatively stable compared to the second quarter of 2017. The sequential growth was driven primarily by increases in C&I, CRE, and consumer direct loans, offset partially by declines in home equity products, consumer indirect, and commercial construction loans.

Deposits

Average consumer and commercial deposits for the current quarter were $159.0 billion, relatively stable compared to the prior quarter and the second quarter of 2017. Sequentially, declines in NOW and money market account balances were offset by growth in time deposits and savings account balances. Year-over-year, declines in money market accounts and demand deposits were offset by increases in time deposits, savings, and NOW account balances.

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 9.7% at June 30, 2018. The ratios of average total equity to average total assets and tangible common equity to tangible assets were 11.8% and 8.0%, respectively, at June 30, 2018. 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 $0.40 per common share and repurchased $330 million of its outstanding common stock in the second quarter of 2018, which completed its 2017 Capital Plan. Additionally, the Company issued $850 million of 7-year parent company senior notes at a fixed annual coupon rate of 4.00% in the second quarter of 2018.

In June 2018, the Company announced that the Federal Reserve had no objections to its 2018 Capital Plan. This plan includes the repurchase of up to $2.0 billion of the Company's outstanding common stock between the third quarter of 2018 and the second quarter of 2019. Additionally, subject to Board approval, the Company intends to increase its quarterly common stock dividend 25% to $0.50 per common share beginning in the third quarter of 2018 and to maintain the current level of dividend payments on its preferred stock.

Asset Quality

Total nonperforming assets ("NPAs") were $814 million at June 30, 2018, up $36 million from the prior quarter and down $7 million year-over-year. The ratio of NPLs to period-end LHFI was 0.52%, 0.50%, and 0.52% at June 30, 2018, March 31, 2018, and June 30, 2017, respectively.

Net charge-offs were $73 million during the current quarter, a decrease of $6 million compared to the prior quarter and an increase of $3 million compared to the second quarter of 2017. The ratio of annualized net charge-offs to total average LHFI was 0.20% during the current quarter, compared to 0.22% during the prior quarter and 0.20% during the second quarter of 2017.

The provision for credit losses was $32 million in the current quarter, a sequential increase of $4 million and a year-over-year decrease of $58 million. The decrease compared to the prior year was driven by a lower ALLL.

At June 30, 2018, the ALLL was $1.7 billion, which represented 1.14% of period-end loans, a 5 basis point decline relative to March 31, 2018, driven by lower reserves for hurricane-related losses and continued improvements in asset quality.

Early stage delinquencies increased 4 basis points from the prior quarter and 6 basis points from June 30, 2017 to 0.72% at June 30, 2018. Excluding government-guaranteed loans which accounted for 0.50% at June 30, 2018, early stage delinquencies were 0.22%, stable compared to the prior quarter and compared to the second quarter of 2017.

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, 2018, SunTrust had total assets of $208 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 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 July 20, 2018, at 8:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals may call in beginning at 7:15 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 20, 2018, and will remain available until August 20, 2018, by dialing 1-800-475-6701 (domestic) or 1-320-365-3844 (international) (Passcode: 450198). 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 20, 2018, 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% for all periods beginning on or after January 1, 2018 and 35% for all periods prior to January 1, 2018, 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 result from merger and acquisition activity and amortization expense (the level of which may vary from company to company), it allows 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 Form 8-K items announced on December 4, 2017 and the impacts of tax reform-related items from the calculation of Tangible efficiency ratio-FTE. The Company believes this measure is useful to investors because it is more reflective of normalized operations as it reflects results that are primarily client relationship and client transaction driven. These measures are utilized by management to assess the efficiency of the Company and its lines of business.

Important Cautionary Statement About Forward-Looking Statements
This news release contains forward-looking statements. Statements regarding potential future dividends and share repurchases 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. Future dividends, and the amount of any such dividend, must be declared by our board of directors in their discretion. Also, future share repurchases and the timing of any such repurchases 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, 2017 and in other periodic reports that we file with the SEC.

 

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


%

2018


2017


 Change


2018


2017


 Change

EARNINGS & DIVIDENDS












Net income

$722



$528



37

%


$1,365



$995



37

%

Net income available to common shareholders

697



505



38



1,310



956



37


Total revenue

2,317



2,230



4



4,554



4,443



2


Total revenue-FTE 1

2,339



2,266



3



4,597



4,513



2


Net income per average common share:












Diluted

$1.49



$1.03



45

%


$2.78



$1.94



43

%

Basic

1.50



1.05



43



2.80



1.97



42


Dividends paid per common share

0.40



0.26



54



0.80



0.52



54


CONDENSED BALANCE SHEETS












Selected Average Balances:












Total assets

$204,548



$204,494



%


$204,341



$204,374



%

Earning assets

184,566



184,057





183,725



183,833




Loans held for investment ("LHFI")

144,156



144,440





143,542



144,058




Intangible assets including residential mortgage servicing rights 
     ("MSRs")

8,355



8,024



4



8,300



8,025



3


Residential MSRs

1,944



1,603



21



1,889



1,603



18


Consumer and commercial deposits

158,957



159,136





159,063



159,006




Total shareholders' equity

24,095



24,139





24,349



23,906



2


Preferred stock

2,025



1,720



18



2,206



1,474



50


Period End Balances:












Total assets







$207,505



$207,223



%

Earning assets







185,304



184,518




LHFI







144,935



144,268




Allowance for loan and lease losses ("ALLL")







1,650



1,731



(5)


Consumer and commercial deposits







160,410



158,319



1


Total shareholders' equity







24,316



24,477



(1)


FINANCIAL RATIOS & OTHER DATA












Return on average total assets

1.42

%


1.03

%


38

%


1.35

%


0.98

%


38

%

Return on average common shareholders' equity

12.73



9.08



40



11.98



8.64



39


Return on average tangible common shareholders' equity 1

17.74



12.51



42



16.67



11.90



40


Net interest margin

3.23



3.06



6



3.21



3.04



6


Net interest margin-FTE 1

3.28



3.14



4



3.26



3.11



5


Efficiency ratio

59.98



62.24



(4)



61.63



64.21



(4)


Efficiency ratio-FTE 1

59.41



61.24



(3)



61.06



63.21



(3)


Tangible efficiency ratio-FTE 1

58.69



60.59



(3)



60.37



62.59



(4)


Effective tax rate

19



30



(37)



19



28



(32)


Basel III capital ratios at period end 2:












Common Equity Tier 1 ("CET1")







9.73

%


9.68

%


1

%

Tier 1 capital







10.86



10.81




Total capital







12.67



12.75



(1)


Leverage







9.82



9.55



3


Total average shareholders' equity to total average assets

11.78

%


11.80

%


%


11.92



11.70



2


Tangible equity to tangible assets 1







9.01



9.15



(2)


Tangible common equity to tangible assets 1







7.96



8.11



(2)


Book value per common share







$47.70



$46.51



3


Tangible book value per common share 1







34.40



33.83



2


Market capitalization







30,712



27,319



12


Average common shares outstanding:












Diluted

469,339



488,020



(4)



471,468



491,989



(4)


Basic

465,529



482,913



(4)



467,117



486,482



(4)


Full-time equivalent employees







23,199



24,278



(4)


Number of ATMs







2,062



2,104



(2)


Full service banking offices







1,222



1,281



(5)














See Appendix A for additional information and reconcilements of non-U.S. GAAP performance measures.

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, 2018 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)

2018


2018


2017


2017


2017

EARNINGS & DIVIDENDS










Net income

$722



$643



$740



$538



$528


Net income available to common shareholders

697



612



710



512



505


Total revenue

2,317



2,237



2,267



2,276



2,230


Total revenue-FTE 1

2,339



2,257



2,305



2,313



2,266


Net income per average common share:










Diluted

$1.49



$1.29



$1.48



$1.06



$1.03


Basic

1.50



1.31



1.50



1.07



1.05


Dividends paid per common share

0.40



0.40



0.40



0.40



0.26


CONDENSED BALANCE SHEETS










Selected Average Balances:










Total assets

$204,548



$204,132



$205,219



$205,738



$204,494


Earning assets

184,566



182,874



184,306



184,861



184,057


LHFI

144,156



142,920



144,039



144,706



144,440


Intangible assets including residential MSRs

8,355



8,244



8,077



8,009



8,024


Residential MSRs

1,944



1,833



1,662



1,589



1,603


Consumer and commercial deposits

158,957



159,169



160,745



159,419



159,136


Total shareholders' equity

24,095



24,605



24,806



24,573



24,139


Preferred stock

2,025



2,390



2,236



1,975



1,720


Period End Balances:










Total assets

$207,505



$204,885



$205,962



$208,252



$207,223


Earning assets

185,304



182,913



182,710



185,071



184,518


LHFI

144,935



142,618



143,181



144,264



144,268


ALLL

1,650



1,694



1,735



1,772



1,731


Consumer and commercial deposits

160,410



161,357



159,795



161,778



158,319


Total shareholders' equity

24,316



24,269



25,154



24,522



24,477


FINANCIAL RATIOS & OTHER DATA










Return on average total assets

1.42

%


1.28

%


1.43

%


1.04

%


1.03

%

Return on average common shareholders' equity

12.73



11.23



12.54



9.03



9.08


Return on average tangible common shareholders' equity 1

17.74



15.60



17.24



12.45



12.51


Net interest margin

3.23



3.20



3.09



3.07



3.06


Net interest margin-FTE 1

3.28



3.24



3.17



3.15



3.14


Efficiency ratio

59.98



63.35



67.03



61.12



62.24


Efficiency ratio-FTE 1

59.41



62.77



65.94



60.14



61.24


Tangible efficiency ratio-FTE 1

58.69



62.11



64.84



59.21



60.59


Adjusted tangible efficiency ratio-FTE 1

58.69



62.11



59.85



59.21



60.59


Effective tax rate

19



19



(11)



29



30


Basel III capital ratios at period end 2:










CET1

9.73

%


9.84

%


9.74

%


9.62

%


9.68

%

Tier 1 capital

10.86



11.00



11.15



10.74



10.81


Total capital

12.67



12.90



13.09



12.69



12.75


Leverage

9.82



9.75



9.80



9.50



9.55


Total average shareholders' equity to total average assets

11.78



12.05



12.09



11.94



11.80


Tangible equity to tangible assets 1

9.01



9.11



9.50



9.12



9.15


Tangible common equity to tangible assets 1

7.96



8.04



8.21



8.10



8.11


Book value per common share

$47.70



$47.14



$47.94



$47.16



$46.51


Tangible book value per common share 1

34.40



33.97



34.82



34.34



33.83


Market capitalization

30,712



31,959



30,417



28,451



27,319


Average common shares outstanding:










Diluted

469,339



473,620



480,359



483,640



488,020


Basic

465,529



468,723



474,300



478,258



482,913


Full-time equivalent employees

23,199



23,208



23,785



24,215



24,278


Number of ATMs

2,062



2,075



2,116



2,108



2,104


Full service banking offices

1,222



1,236



1,268



1,275



1,281












See Appendix A for additional information and reconcilements of non-U.S. GAAP performance measures.

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, 2018 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)

2018


2018


2017


2017


2017


2018


2017

Net interest income

$1,488



$1,441



$1,434



$1,430



$1,403



$2,928



$2,769


Fully taxable-equivalent ("FTE") adjustment

22



20



38



37



36



43



70


Net interest income-FTE 2

1,510



1,461



1,472



1,467



1,439



2,971



2,839


Noninterest income

829



796



833



846



827



1,626



1,674


Total revenue-FTE 2

$2,339



$2,257



$2,305



$2,313



$2,266



$4,597



$4,513
















Return on average common shareholders' equity

12.73

%


11.23

%


12.54

%


9.03

%


9.08

%


11.98

%


8.64

%

Impact of removing average intangible assets and related 
     pre-tax amortization, other than residential MSRs and 
     other servicing rights

5.01



4.37



4.70



3.42



3.43



4.69



3.26


Return on average tangible common shareholders' equity 3

17.74

%


15.60

%


17.24

%


12.45

%


12.51

%


16.67

%


11.90

%















Net interest margin

3.23

%


3.20

%


3.09

%


3.07

%


3.06

%


3.21

%


3.04

%

Impact of FTE adjustment

0.05



0.04



0.08



0.08



0.08



0.05



0.07


Net interest margin-FTE 2

3.28

%


3.24

%


3.17

%


3.15

%


3.14

%


3.26

%


3.11

%















Noninterest expense

$1,390



$1,417



$1,520



$1,391



$1,388



$2,807



$2,853


Total revenue

2,317



2,237



2,267



2,276



2,230



4,554



4,443


Efficiency ratio 4

59.98

%


63.35

%


67.03

%


61.12

%


62.24

%


61.63

%


64.21

%

Impact of FTE adjustment

(0.57)



(0.58)



(1.09)



(0.98)



(1.00)



(0.57)



(1.00)


Efficiency ratio-FTE 2, 4

59.41



62.77



65.94



60.14



61.24



61.06



63.21


Impact of excluding amortization related to intangible 
     assets and certain tax credits

(0.72)



(0.66)



(1.10)



(0.93)



(0.65)



(0.69)



(0.62)


Tangible efficiency ratio-FTE 2, 5

58.69

%


62.11

%


64.84

%


59.21

%


60.59

%


60.37

%


62.59

%

Impact of excluding Form 8-K and other tax reform-related 
     items





(4.99)










Adjusted tangible efficiency ratio-FTE 2, 5, 6

58.69

%


62.11

%


59.85

%


59.21

%


60.59

%


60.37

%


62.59

%















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% for all periods beginning on or after January 1, 2018 and 35% for all periods prior to January 1, 2018, 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 Form 8-K and other tax reform-related items from the calculation of Tangible
   efficiency ratio-FTE. The Company believes this measure is useful to investors because it is more reflective of normalized operations as it reflects results that are primarily client
   relationship and client transaction driven. 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 these items can be found in the Form 8-K furnished with the SEC on January 19, 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)

2018


2018


2017


2017


2017

Total shareholders' equity

$24,316



$24,269



$25,154



$24,522



$24,477


Goodwill, net of deferred taxes of $159 million, $159 million, $163 million, $254 
     million, and $253 million, respectively

(6,172)



(6,172)



(6,168)



(6,084)



(6,085)


Other intangible assets (including residential MSRs and other servicing rights)

(2,036)



(1,996)



(1,791)



(1,706)



(1,689)


Residential MSRs and other servicing rights

2,022



1,981



1,776



1,690



1,671


Tangible equity 2

18,130



18,082



18,971



18,422



18,374


Noncontrolling interest

(103)



(101)



(103)



(101)



(103)


Preferred stock

(2,025)



(2,025)



(2,475)



(1,975)



(1,975)


Tangible common equity 2

$16,002



$15,956



$16,393



$16,346



$16,296












Total assets

$207,505



$204,885



$205,962



$208,252



$207,223


Goodwill

(6,331)



(6,331)



(6,331)



(6,338)



(6,338)


Other intangible assets (including residential MSRs and other servicing rights)

(2,036)



(1,996)



(1,791)



(1,706)



(1,689)


Residential MSRs and other servicing rights

2,022



1,981



1,776



1,690



1,671


Tangible assets

$201,160



$198,539



$199,616



$201,898



$200,867


Tangible equity to tangible assets 2

9.01

%


9.11

%


9.50

%


9.12

%


9.15

%

Tangible common equity to tangible assets 2

7.96



8.04



8.21



8.10



8.11


Tangible book value per common share 3

$34.40



$33.97



$34.82



$34.34



$33.83












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.

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.

 

Cision View original content:http://www.prnewswire.com/news-releases/suntrust-reports-second-quarter-2018-results-300684138.html

SOURCE SunTrust Banks, Inc.