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SunTrust Reports First Quarter 2015 Results

04/20/2015

Continued Efficiency Progress and Asset Quality Improvements Drive Solid Earnings Growth

ATLANTA, April 20, 2015 /PRNewswire/ -- SunTrust Banks, Inc. (NYSE: STI) today reported net income available to common shareholders of $411 million, or $0.78 per average common diluted share, representing a 7% per share increase compared to  the first quarter of 2014.

Earnings in the prior quarter were $378 million, or $0.72 per average common diluted share, and included a $145 million legal provision expense related to legacy mortgage matters.  Excluding the impact of this expense, adjusted earnings per share for the prior quarter were $0.88.

"Continued expense discipline and strong asset quality performance, coupled with growth in noninterest income, contributed to solid performance in the first quarter and helped to mitigate the impact of the persistent low rate environment," said William H. Rogers, Jr. , chairman and CEO of SunTrust Banks, Inc. "As we look forward, we remain focused on deepening client relationships and executing our strategic priorities, particularly improving returns and efficiency, to further enhance shareholder value."

First quarter 2015 Financial Highlights

Income Statement

  • Net income available to common shareholders was $411 million, or $0.78 per average common diluted share, a 7% increase, per share, over the first quarter of 2014.
  • Total revenues declined 2% compared to the prior quarter and the first quarter of 2014 due to a decline in net interest income.
  • Noninterest income increased 3%, both sequentially and compared to the first quarter of 2014, based largely on higher mortgage production-related income, as well as a gain realized upon the sale of legacy affordable housing properties during the current quarter.
  • Noninterest expense decreased $130 million compared to the prior quarter, primarily driven by the impact of the $145 million legal provision expense related to legacy mortgage matters in the prior quarter.  Excluding this impact, noninterest expense increased $15 million, as seasonally higher compensation and benefits expenses were partially offset by declines in other expense categories.
    • Noninterest expense declined 6% compared to the first quarter of 2014 due to declines in most expense categories and the sale of RidgeWorth Capital Management in the second quarter of 2014.
  • The efficiency and tangible efficiency ratios in the current quarter were 64.2% and 63.9%, respectively.

Balance Sheet

  • Average total loans for the current quarter increased 4% compared to the first quarter of 2014, while loan sales and transfers of loans to held-for-sale during the latter part of the prior quarter resulted in stable average loans on a sequential quarter basis.
  • Average client deposits increased 3% sequentially and 9% compared to the first quarter of 2014.

Capital

  • Estimated capital ratios continued to be well above regulatory requirements. The Basel III Common Equity Tier 1 ratio and Tier 1 Capital ratios were estimated to be 9.8% and 10.8%, respectively, as of March 31, 2015, on a fully phased-in basis.
  • During the quarter, the Company:
    • Repurchased $115 million of common shares.
    • Announced its capital plan, which includes:
      • The purchase of up to $875 million of its common shares between the second quarter of 2015 and the second quarter of 2016.
      • A 20% increase in the quarterly common stock dividend from $0.20 per share to $0.24 per share, beginning in the second quarter of 2015, subject to approval by the Company's Board of Directors.
  • Book value per share was $42.21, and tangible book value per share was $30.49, both up 2% sequentially. The increase was primarily due to growth in retained earnings.

Asset Quality

  • Asset quality continued to improve, as nonperforming loans declined 3% from the prior quarter and totaled 0.46% of total loans at March 31, 2015.
  • Net charge-offs for the current quarter were $99 million, representing 0.30% of average loans on an annualized basis, relatively stable to the prior quarter and the first quarter of 2014.
  • The provision for credit losses decreased $19 million and $47 million compared to the prior quarter and the first quarter of 2014, respectively, driven by the continued improvement in asset quality, combined with lower loan growth in the current quarter.
  • At March 31, 2015, the allowance for loan losses to period-end loans ratio was 1.43%.

 







(Dollars in millions, except per-share data)






Income Statement (presented on a fully taxable-equivalent basis)

1Q 2014


4Q 2014


1Q 2015

Net income available to common shareholders

$393



$378



$411


Earnings per average common diluted share

0.73



0.72



0.78


Adjusted earnings per average common diluted share (1)

0.73



0.88



0.78


Total revenue

2,030



2,043



1,992


Net interest income

1,239



1,248



1,175


Provision for credit losses

102



74



55


Noninterest income

791



795



817


Noninterest expense

1,357



1,410



1,280


Net interest margin

3.19

%


2.96

%


2.83

%







Balance Sheet






(Dollars in billions)






Average loans

$128.5



$133.4



$133.3


Average consumer and commercial deposits

128.4



136.9



140.5








Capital






Basel III capital ratios at period end (2) :






Tier 1 capital (transitional)

N/A


N/A


10.75

%

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

N/A


N/A


9.90

%

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

N/A


N/A


9.80

%

Total average shareholders' equity to total average assets

12.28

%


12.08

%


12.24

%







Asset Quality






Net charge-offs to average loans (annualized)

0.35

%


0.28

%


0.30

%

Allowance for loan and lease losses to period-end loans

1.58

%


1.46

%


1.43

%

Nonperforming loans to total loans

0.72

%


0.48

%


0.46

%










(1) See page 22 for non-U.S. GAAP reconciliation










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


Consolidated Financial Performance Details
(Presented on a fully taxable-equivalent basis unless otherwise noted)

Revenue

Total revenue was $2.0 billion for the current quarter, a decrease of $51 million compared to the prior quarter.  The decline was primarily driven by lower net interest income, partially offset by an increase in noninterest income, which benefited from higher mortgage production-related income.  Compared to the first quarter of 2014, total revenue declined $38 million, driven largely by a decrease in net interest income and foregone RidgeWorth revenue, partially offset by higher mortgage production-related and capital markets-related income. 

Net Interest Income

Net interest income was $1.2 billion for the current quarter, a decline of $73 million compared to the prior quarter.  The decrease was primarily due to the expected decline in commercial loan swap income, higher mortgage-backed securities (MBS) premium amortization, and two fewer days in the current quarter.  Compared to the first quarter of 2014, the $64 million decline in net interest income was driven by lower commercial loan swap income, higher MBS premium amortization expense, and lower loan yields, partially offset by growth in average earning assets.

Net interest margin for the current quarter was 2.83% compared to 2.96% in the prior quarter and 3.19% in the first quarter of 2014. The 13 basis point decline compared to the prior quarter was driven primarily by lower commercial loan swap income and higher MBS premium amortization expense.  The 36 basis point decline in net interest margin compared to the first quarter of 2014 was due primarily to 32 and 53 basis point declines in loan and investment securities yields, respectively, due to the aforementioned factors, combined with the impact of the prolonged low interest rate environment on asset yields.

Noninterest Income

Noninterest income was $817 million for the current quarter, compared to $795 million for the prior quarter and $791 million for the first quarter of 2014.  The $22 million increase from the prior quarter was due largely to increased mortgage-related and trading revenue, as well an $18 million gain on the sale of legacy affordable housing investments, partially offset by declines in other fee income categories. Compared to the first quarter of 2014, noninterest income increased $26 million, driven primarily by higher mortgage-related and capital markets-related income, as well as the gain on the sale of legacy affordable housing investments, partially offset by foregone RidgeWorth revenue. 

Mortgage production-related income for the current quarter was $83 million compared to $61 million for the prior quarter and $43 million for the first quarter of 2014.  The increase compared to both prior periods was due to higher mortgage production volume and improved gain-on-sale margins.  Mortgage production volume increased 8% sequentially and 64% compared to the first quarter of 2014.

Mortgage servicing-related income was $43 million in the current quarter, compared to $53 million in the prior quarter and $54 million in the first quarter of 2014.  The decline compared to the prior quarter was driven in large part by higher servicing asset decay expense arising from increased prepayment volume, combined with elevated servicing fees in the prior quarter that reflected seasonal activity.  Compared to the first quarter of 2014, the $11 million decline was due to higher decay, partially offset by higher servicing fees from a larger servicing portfolio.  The servicing portfolio was $142 billion at March 31, 2015, compared to $142 billion at December 31, 2014 and $135 billion at March 31, 2014.

Investment banking income was $97 million for the current quarter, compared to $109 million in the prior quarter and $88 million in the first quarter of 2014.  The sequential quarter decline was due primarily to a decline in syndicated finance activity, partially offset by higher equity origination and debt capital markets fees.  Compared to the first quarter of 2014, the increase was due to higher equity origination fees.  Trading income was $55 million for the current quarter, compared to $40 million for the prior quarter and $49 million in the first quarter of 2014.  The sequential quarter increase was driven by an increase in fixed income-related trading revenue.  Compared to the first quarter of 2014, the increase was driven largely by a decline in mark-to-market valuation losses on the Company's debt carried at fair value.

Trust and investment management income was $84 million in both the current and prior quarter and $130 million in the first quarter of 2014.  The $46 million decline compared to the first quarter of 2014 was due entirely to foregone revenue resulting from the sale of RidgeWorth in the second quarter of 2014.

Other noninterest income was $63 million for the current quarter, compared to $42 million for the prior quarter and $38 million for the first quarter of 2014.  The increase compared to both periods was primarily due to the aforementioned $18 million gain from the sale of legacy affordable housing investments in the current quarter.

Noninterest Expense

Noninterest expense for the current quarter was $1.3 billion, compared to $1.4 billion in both the prior quarter and the first quarter of 2014.  The prior quarter included a $145 million legal provision for legacy mortgage matters.  Excluding this expense, noninterest expense was increased slightly sequentially and declined $77 million, or 6%, compared to the first quarter of 2014.  Compared to prior quarter, seasonally higher employee compensation was partially offset by declines in most expense categories.  Compared to the first quarter of 2014, the decline was due to lower employee compensation and benefits expense in the current quarter, primarily driven by a reduction in expenses related to the RidgeWorth sale, as well as reductions in other expense categories resulting from the Company's efficiency efforts, together with the recognition of a $36 million impairment of certain legacy affordable housing investments during the first quarter of 2014.

Employee compensation and benefits expense was $771 million in the current quarter, compared to $670 million in the prior quarter and $800 million in the first quarter of 2014.  The sequential increase of $101 million was due to the seasonal increase in employee benefits and FICA taxes, as well as normalized levels of incentive compensation and medical expenses.  The $29 million decrease from the first quarter of 2014 was largely a result of the sale of RidgeWorth.

Operating losses were $14 million in the current quarter, compared to $174 million in the prior quarter, which included the $145 million legal provision related to legacy mortgage matters, and $21 million in the first quarter of 2014.  Compared to both prior periods, excluding the $145 million legal provision in the prior quarter, the declines were primarily due to recoveries of previously recorded mortgage-related losses.

Outside processing and software expense was $189 million in the current quarter, compared to $206 million in the prior quarter and $170 million in the first quarter of 2014.  The $17 million sequential decline was primarily due to elevated costs in the prior quarter, as a result of timing of rendering certain services in addition to the replacement cost of specific software. The $19 million increase compared to first quarter of 2014 was due to higher utilization of certain third-party services, higher mortgage production volume, and higher software-related expenses tied to technology investments.

Marketing and customer development expense was $27 million in the current quarter, compared to $43 million in the prior quarter and $25 million in the first quarter of 2014.  Compared to the prior quarter, the $16 million decrease was driven largely by a seasonal decline in advertising expenses.

FDIC premium and regulatory costs were $37 million in the current quarter, compared to $32 million in the prior quarter, and $40 million in the first quarter of 2014.  The sequential increase reflected growth in average deposits during 2014, resulting in higher FDIC insurance premiums.  Compared to the first quarter of 2014, the decline was driven by lower FDIC insurance premiums arising from improvements in the Company's risk profile.

Other noninterest expense was $111 million in the current quarter, compared to $146 million in the prior quarter and $168 million in the first quarter of 2014.  The $35 million sequential decrease was primarily driven by a decline in legal and consulting fees alongside $17 million in recoveries of previously recognized losses related to the financial crisis.  The $57 million decrease compared to the first quarter of 2014 was driven primarily by the recognition of a $36 million impairment of legacy affordable housing assets during the first quarter of 2014 and the current quarter recoveries of previously recognized losses related to the financial crisis.

Income Taxes

For the current quarter, the Company recorded an income tax provision of $191 million, compared to $128 million for the prior quarter and $125 million for the first quarter of 2014.  The effective tax rate for the current quarter was approximately 31%, compared to approximately 28% in the prior quarter, which excludes the tax impact ($57 million) of the $145 million legal provision expense, and 23% in the first quarter of 2014.  The effective tax rate in the first quarter of 2014 was favorably impacted by certain discrete items.

Balance Sheet

At March 31, 2015, the Company had total assets of $189.9 billion and shareholders' equity of $23.3 billion, representing 12% of total assets.  Book value per share was $42.21, and tangible book value per share was $30.49, both up 2% compared to December 31, 2014, driven by growth in retained earnings.

Loans

Average performing loans were $132.7 billion for the current quarter, unchanged compared to the prior quarter, and up 4% over the first quarter of 2014.  Sequentially, average C&I loans and average consumer direct loans increased $1.2 billion and $402 million, respectively. Average consumer indirect loans and average guaranteed student loans declined $880 million and $403 million, respectively, reflecting the impact of loan sales and transfers to held for sale during the latter part of the prior quarter.  Compared to the first quarter of 2014, average performing loans increased $5.1 billion, or 4%, with growth across most portfolios other than residential, guaranteed student, and consumer indirect loans.

Deposits

Average client deposits for the current quarter were $140.5 billion, compared to $136.9 billion in the prior quarter and $128.4 billion in the first quarter of 2014.  Sequentially, average client deposits increased 3% due to a $2.8 billion, or 9%, increase in NOW account balances and a $1.3 billion, or 3%, increase in money market account balances. Partially offsetting this growth in lower-cost deposits was a $0.3 billion, or 3%, decline in time deposits.  Compared to the first quarter of 2014, average client deposits increased 9%, driven by increases in lower-cost deposits, partially offset by a $2.1 billion, or 16%, decrease in time deposits.

Capital and Liquidity

The Company's estimated capital ratios are well above current regulatory requirements with Basel III Common Equity Tier 1 and Basel III Tier 1 capital ratios at an estimated 9.8% and 10.8%, respectively, at March 31, 2015, on a fully phased-in basis.  The ratios of total average equity to total average assets and tangible equity to tangible assets were 12.24% and 9.34%, respectively, at March 31, 2015.  The Company continues to have substantial available liquidity in the form of its client deposit base, cash, high-quality government-backed securities, and other available funding sources.

During the first quarter, the Company declared a common stock dividend of $0.20 per common share, consistent with the prior quarter and up $0.10 per share from the first quarter of 2014.  Additionally, during the current quarter, the Company repurchased $115 million of its outstanding common stock, which completed the authorized share repurchases in conjunction with the 2014 capital plan.

In March, the Company announced that the Federal Reserve had no objections to the repurchase of up to $875 million of the Company's outstanding common stock to be completed between the second quarter of 2015 and the second quarter of 2016, as part of the Company's capital plan submitted in connection with the 2015 CCAR.  Additionally, subject to Board approval, the Company intends to increase its quarterly common stock dividend 20% to $0.24 per common share beginning in the second quarter of 2015 and maintain the current level of dividend payments on its preferred stock.

Asset Quality

Total nonperforming assets were $696 million at March 31, 2015, down 11% compared to the prior quarter and 36% compared to the first quarter of 2014.  At March 31, 2015, the percentage of nonperforming loans to total loans was 0.46% compared to 0.48% at December 31, 2014.  Other real estate owned totaled $79 million, a 20% decrease from the prior quarter and a 48% decrease from the first quarter of 2014.

The provision for credit losses was $55 million, a decline of $19 million from the prior quarter and $47 million from the first quarter of 2014, driven by the continued improvement in asset quality and lower loan growth in the current quarter.  Net charge-offs were $99 million during the current quarter, relatively stable to the prior quarter and the prior year.  The ratio of annualized net charge-offs to total average loans was 0.30% during the current quarter, compared to 0.28% during the prior quarter and 0.35% during the first quarter of 2014. 

At March 31, 2015, the allowance for loan and lease losses was $1.9 billion, which represented 1.43% of total loans, a $44 million and 3 basis point decline from December 31, 2014.  The decline was primarily due to the continued improvement in asset quality during the quarter.

Early stage delinquencies declined 8 basis points from the prior quarter to 0.56% at March 31, 2015.  Excluding government-guaranteed loans, early stage delinquencies were 0.26%, down 4 basis points from the prior quarter.

Accruing restructured loans totaled $2.6 billion and nonaccruing restructured loans totaled $255 million at March 31, 2015, of which $2.6 billion were residential loans, $126 million were consumer loans, and $109 million were commercial loans.

OTHER INFORMATION

Business Segment Results

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

Corresponding Financial Tables and Information

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

Conference Call

SunTrust management will host a conference call on April 20, 2015, at 8:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals may call in beginning at 7:45 a.m. (Eastern Time) by dialing 1-888-972-7805 (Passcode: 1Q15). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 1Q15).  A replay of the call will be available approximately one hour after the call ends on April 20, 2015, and will remain available until May 20, 2015, by dialing 1-800-568-6276 (domestic) or 1-402-344-6819 (international). Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust investor relations website at investors.suntrust.com.  Beginning the afternoon of April 20, 2015, listeners may access an archived version of the webcast in the "Events & Presentations" section of the investor relations website. This webcast will be archived and available for one year.

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

Important Cautionary Statement About Forward-Looking Statements

This news release includes non-GAAP financial measures to describe SunTrust's performance. The reconciliations of those measures to GAAP measures are provided within or in the appendix to this news release. In this news release, the Company presents net interest income and net interest margin on a fully taxable-equivalent ("FTE") basis, and ratios on an annualized basis. The FTE basis adjusts for the tax-favored status of income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

This news release contains forward-looking statements. Statements regarding potential future share repurchases, and future expected dividends are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words "believes," "expects," "anticipates," "estimates," "intends," "plans," "forecast," "goals," "targets," "initiatives," "focus," "potentially," "probably," "projects," "outlook" or similar expressions or future conditional verbs such as "may," "will," "should," "would," and "could." Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Future dividends, and the amount of any such dividend, must be declared by our board of directors in the future in their discretion. Also, future share repurchases and the timing of any such repurchase are subject to market conditions and management's discretion. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014 and in other periodic reports that we file with the SEC.

 

 

SunTrust Banks, Inc. and Subsidiaries






FINANCIAL HIGHLIGHTS






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










Three Months Ended March 31


%


2015


2014


Change 

EARNINGS & DIVIDENDS






Net income

$429


$405


6%

Net income available to common shareholders

411


393


5%

Total revenue - FTE 1, 2                              

1,992


2,030


-2%

Net income per average common share:               






Diluted 

0.78


0.73


7%

Basic

0.79


0.74


7%

Dividends paid per common share           

0.20


0.10


100%

CONDENSED BALANCE SHEETS 






Selected Average Balances:






Total assets

$189,265


$176,971


7%

Earning assets

168,179


157,343


7%

Loans

133,338


128,525


4%

Intangible assets including MSRs

7,502


7,666


-2%

MSRs

1,152


1,265


-9%

Consumer and commercial deposits

140,476


128,396


9%

Brokered time and foreign deposits

1,250


2,013


-38%

Total shareholders' equity

23,172


21,727


7%

Preferred stock

1,225


725


69%

Period End balances:






Total assets

189,881


179,542


6%

Earning assets

168,269


158,487


6%

Loans

132,380


129,196


2%

Allowance for loan and lease losses ("ALLL")

1,893


2,040


-7%

Consumer and commercial deposits

143,239


130,933


9%

Brokered time and foreign deposits

1,184


2,023


-41%

Total shareholders' equity

23,260


21,817


7%

FINANCIAL RATIOS & OTHER DATA






Return on average total assets

0.92%


0.93%


-1%

Return on average common shareholders' equity

7.59


7.59


0%

Return on average tangible common shareholders' equity 1

10.53


10.78


-2%

Net interest margin 2

2.83


3.19


-11%

Efficiency ratio 2

64.23


66.83


-4%

Tangible efficiency ratio 1, 2

63.91


66.65


-4%

Effective tax rate

31


23


35%

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






CET1

9.90


N/A



Tier 1 capital

10.75


N/A



Total capital 

12.70


N/A



Leverage

9.40


N/A



Basel III fully phased-in CET1 ratio 3

9.80


N/A



Basel I capital ratios at period end 3:






Tier 1 common 

N/A


9.90



Tier 1 capital

N/A


10.88



Total capital

N/A


12.81



Tier 1 leverage

N/A


9.57



Total average shareholders' equity to total average assets

12.24


12.28


0%

Tangible equity to tangible assets                             

9.34


9.01


4%







Book value per common share

$42.21


$39.44


7%

Tangible book value per common share 1

30.49


27.82


10%

Market capitalization

21,450


21,279


1%

Average common shares outstanding:






Diluted 

526,837


536,992


-2%

Basic

521,020


531,162


-2%

Full-time equivalent employees

24,466


25,925


-6%

Number of ATMs

2,176


2,243


-3%

Full service banking offices

1,444


1,501


-4%







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



2 Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent ("FTE") basis.  The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments.  The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.  Total revenue - FTE equals net interest income on a FTE basis plus noninterest income.            

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

 

 

SunTrust Banks, Inc. and Subsidiaries







FIVE QUARTER FINANCIAL HIGHLIGHTS








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














Three Months Ended


 March 31 


December 31


September 30


June 30


 March 31 


2015


2014


2014


2014


2014

EARNINGS & DIVIDENDS










Net income

$429


$394


$576


$399


$405

Net income available to common shareholders

411


378


563


387


393

Adjusted net income available to common shareholders 1

411


466


433


436


393

Total revenue - FTE 1, 2                      

1,992


2,043


2,031


2,201


2,030

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

1,992


2,043


2,031


2,096


2,030

Net income per average common share:   










Diluted 

0.78


0.72


1.06


0.72


0.73

Adjusted diluted 1

0.78


0.88


0.81


0.81


0.73

Basic

0.79


0.72


1.07


0.73


0.74

Dividends paid per common share        

0.20


0.20


0.20


0.20


0.10

CONDENSED BALANCE SHEETS 










Selected Average Balances:










Total assets

$189,265


$188,341


$183,433


$179,820


$176,971

Earning assets

168,179


167,227


163,688


160,373


157,343

Loans

133,338


133,438


130,747


130,734


128,525

Intangible assets including MSRs

7,502


7,623


7,615


7,614


7,666

MSRs

1,152


1,272


1,262


1,220


1,265

Consumer and commercial deposits

140,476


136,892


132,195


130,472


128,396

Brokered time and foreign deposits

1,250


1,399


1,624


1,893


2,013

Total shareholders' equity

23,172


22,754


22,191


21,994


21,727

Preferred stock

1,225


1,024


725


725


725

Period End Balances:










Total assets

189,881


190,328


186,818


182,559


179,542

Earning assets

168,269


168,678


165,434


162,422


158,487

Loans

132,380


133,112


132,151


129,744


129,196

ALLL

1,893


1,937


1,968


2,003


2,040

Consumer and commercial deposits

143,239


139,234


135,077


131,792


130,933

Brokered time and foreign deposits

1,184


1,333


1,430


1,493


2,023

Total shareholders' equity

23,260


23,005


22,269


22,131


21,817

FINANCIAL RATIOS & OTHER DATA










Return on average total assets

0.92%


0.83%


1.25%


0.89%


0.93%

Return on average common shareholders' equity

7.59


6.91


10.41


7.29


7.59

Return on average tangible common shareholders' equity 1

10.53


9.62


14.59


10.29


10.78

Net interest margin2

2.83


2.96


3.03


3.11


3.19

Efficiency ratio 2

64.23


69.00


62.03


68.93


66.83

Tangible efficiency ratio 1, 2

63.91


68.44


61.69


68.77


66.65

Effective tax rate

31


25


10


30


23

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










CET1

9.90


N/A


N/A


N/A


N/A

Tier 1 capital

10.75


N/A


N/A


N/A


N/A

Total capital 

12.70


N/A


N/A


N/A


N/A

Leverage

9.40


N/A


N/A


N/A


N/A

Basel III fully phased-in CET1 ratio 3

9.80


N/A


N/A


N/A


N/A

Basel I capital ratios at period end 3:










Tier 1 common 

N/A


9.60


9.63


9.72


9.90

Tier 1 capital

N/A


10.80


10.54


10.66


10.88

Total capital

N/A


12.51


12.32


12.53


12.81

Tier 1 leverage

N/A


9.64


9.51


9.56


9.57

Total average shareholders' equity to total average assets          

12.24


12.08


12.10


12.23


12.28

Tangible equity to tangible assets 1               

9.34


9.17


8.94


9.07


9.01











Book value per common share

$42.21


$41.52


$40.85


$40.18


$39.44

Tangible book value per common share 1

30.49


29.82


29.21


28.64


27.82

Market capitalization

21,450


21,978


20,055


21,344


21,279

Average common shares outstanding:










Diluted 

526,837


527,959


533,230


535,486


536,992

Basic

521,020


521,775


527,402


529,764


531,162

Full-time equivalent employees

24,466


24,638


25,074


25,841


25,925

Number of ATMs

2,176


2,187


2,192


2,212


2,243

Full service banking offices

1,444


1,445


1,454


1,473


1,501





















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










2 Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent ("FTE") basis.  The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments.  The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.  Total revenue - FTE equals net interest income on a FTE basis plus noninterest income.  

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

 

 

SunTrust Banks, Inc. and Subsidiaries                                                          










RECONCILEMENT OF NON-U.S. GAAP MEASURES                                        









APPENDIX A TO THE EARNINGS RELEASE                                              










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



















Three Months Ended


March 31


December 31


September 30


June 30


March 31


2015


2014


2014


2014


2014

NON-U.S. GAAP MEASURES PRESENTED IN THE EARNINGS RELEASE 1










Net interest income                    

$1,140


$1,211


$1,215


$1,209


$1,204

Taxable-equivalent adjustment                  

35


37


36


35


35

Net interest income - FTE                

1,175


1,248


1,251


1,244


1,239

Noninterest income                    

817


795


780


957


791

Total revenue - FTE              

1,992


2,043


2,031


2,201


2,030

Gain on sale of asset management subsidiary

0


0


0


(105)


0

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

$1,992


$2,043


$2,031


$2,096


$2,030

Noninterest income                    

$817


$795


$780


$957


$791

Gain on sale of asset management subsidiary

0


0


0


(105)


0

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

$817


$795


$780


$852


$791

Return on average common shareholders' equity

7.59%


6.91%


10.41%


7.29%


7.59%

Effect of removing average intangibles excluding MSRs

2.94%


2.71%


4.18%


3.00%


3.19%

Return on average tangible common shareholders' equity 3

10.53%


9.62%


14.59%


10.29%


10.78%

Efficiency ratio 4                    

64.23%


69.00%


62.03%


68.93%


66.83%

Impact of excluding amortization of intangible assets

-0.32%


-0.56%


-0.34%


-0.16%


-0.18%

Tangible efficiency ratio 5                       

63.91%


68.44%


61.69%


68.77%


66.65%

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

0.00%


-7.10%


0.00%


-5.08%


0.00%

Adjusted tangible efficiency ratio 5, 6

63.91%


61.34%


61.69%


63.69%


66.65%












March 31


December 31


September 30


June 30


March 31


2015


2014


2014


2014


2014

Total shareholders' equity                

$23,260


$23,005


$22,269


$22,131


$21,817

Goodwill, net of deferred taxes of $231 million, $214 million, $210 million, $206 million,
and $193 million, respectively

(6,106)


(6,123)


(6,127)


(6,131)


(6,184)

Other intangible assets, net of deferred taxes of $0, $0, $0, $1 million, and $1 million, respectively, and MSRs

(1,193)


(1,219)


(1,320)


(1,276)


(1,281)

MSRs

1,181


1,206


1,305


1,259


1,251

Tangible equity              

17,142


16,869


16,127


15,983


15,603

Preferred stock

(1,225)


(1,225)


(725)


(725)


(725)

Tangible common equity

$15,917


$15,644


$15,402


$15,258


$14,878

Total assets                 

$189,881


$190,328


$186,818


$182,559


$179,542

Goodwill                

(6,337)


(6,337)


(6,337)


(6,337)


(6,377)

Other intangible assets including MSRs                 

(1,193)


(1,219)


(1,320)


(1,277)


(1,282)

MSRs

1,181


1,206


1,305


1,259


1,251

Tangible assets                 

$183,532


$183,978


$180,466


$176,204


$173,134

Tangible equity to tangible assets 7           

9.34%


9.17%


8.94%


9.07%


9.01%

Tangible book value per common share 8

$30.49


$29.82


$29.21


$28.64


$27.82











Total loans

$132,380


$133,112


$132,151


$129,744


$129,196

Government guaranteed loans

(4,992)


(5,459)


(5,965)


(6,081)


(8,828)

Loans held at fair value

(268)


(272)


(284)


(292)


(299)

Total loans, excluding government guaranteed and fair value loans

$127,120


$127,381


$125,902


$123,371


$120,069

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

1.49%


1.52%


1.56%


1.62%


1.70%





















 

 

SunTrust Banks, Inc. and Subsidiaries
RECONCILEMENT OF NON-U.S. GAAP MEASURES
APPENDIX A TO THE EARNINGS RELEASE, continued
(Dollars in millions, except per share data) (Unaudited)











Three Months Ended


March 31


December 31


September 30


June 30


March 31


2015


2014


2014


2014


2014

NON-U.S. GAAP MEASURES PRESENTED IN THE EARNINGS RELEASE 1










Net income available to common shareholders

$411


$378


$563


$387


$393

Form 8-K and other legacy mortgage-related items:










Operating losses related to settlement of certain legal matters

0


0


0


204


0

Gain on sale of asset management subsidiary

0


0


0


(105)


0

Other legacy mortgage-related matters

0


145


0


(25)


0

Tax benefit related to above items

0


(57)


0


(25)


0

Tax benefit related to completion of tax authority exam

0


0


(130)


0


0

Total Form 8-K and other legacy mortgage-related items

0


88


(130)


49


0

Adjusted net income available to common shareholders 6

$411


$466


$433


$436


$393











Net income per average common share, diluted

$0.78


$0.72


$1.06


$0.72


$0.73

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

0.00


0.17


(0.25)


0.09


0.00

Adjusted net income per average common diluted share 6, 10

$0.78


$0.88


$0.81


$0.81


$0.73











1 Certain amounts in this schedule are presented net of applicable income taxes, which are calculated based on each subsidiary's federal and state tax rates and laws. In general, the federal marginal tax rate is 35%, but the state marginal tax rates range from 1% to 8% in accordance with the subsidiary's income tax filing requirements with various tax authorities. Additionally, the effective tax rate may differ from the federal and state marginal tax rates in certain cases where a permanent difference exists.

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

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

4 Computed by dividing noninterest expense by total revenue - FTE. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.

5 SunTrust presents a tangible efficiency ratio, which excludes the amortization of intangible assets. The Company believes this measure is useful to investors because, by removing the effect of these intangible asset costs (the level of which may vary from company to company), it allows investors to more easily compare the Company's efficiency to other companies in the industry. This measure is utilized by management to assess the efficiency of the Company and its lines of business.

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

7 SunTrust presents a tangible equity to tangible assets ratio that excludes the after-tax impact of purchase accounting intangible assets. The Company believes this measure is useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity (the level of which may vary from company to company), it allows investors to more easily compare the Company's capital adequacy to other companies in the industry. This measure is used by management to analyze capital adequacy.

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

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

10 Amounts may not foot as presented due to rounding. 

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/suntrust-reports-first-quarter-2015-results-300068242.html

SOURCE SunTrust Banks, Inc.

Investors: Ankur Vyas, (404) 827-6714; Media: Hugh Suhr, (404) 827-6813