SUNTRUST BANKS ATLANTA, April 21, 2017 /PRNewswire/ -- SunTrust Banks, Inc. (NYSE: STI) reported net income available to common shareholders of $451 million, or $0.91 per average common diluted share, which includes $0.04 of tax benefits. When adjusting for these benefits, earnings were $0.87, down 3% sequentially, given typical seasonality, and up 4% compared to the prior year as a result of strong 7% revenue growth and reduced shares outstanding.
"Our performance this quarter is the direct result of the investments we have been making in strengthening our franchise and diversifying our business mix," said William H. Rogers, Jr., chairman and CEO of SunTrust Banks, Inc. "2017 is off to a good start and we remain committed to investing in client growth, improving efficiency, and increasing capital returns."
First Quarter 2017 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 35% marginal federal tax rate and 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 $451 million, or $0.91
per average common diluted share, compared to $0.90 for the prior
quarter and $0.84 for the first quarter of 2016.
-- This quarter was favorably impacted by $0.04 per share of discrete
tax benefits.
-- Total revenue increased 3% compared to the prior quarter and 7% compared
to the first quarter of 2016.
-- These increases were driven largely by higher net interest income
and record investment banking performance in the first quarter of
2017.
-- Net interest margin was 3.09% in the current quarter, up 9 basis points
sequentially and up 5 basis points compared to the prior year, driven by
higher earning asset yields as a result of the steeper yield curve and
the increase in benchmark interest rates. Compared to the prior year,
the net interest margin was also favorably impacted by continued
positive mix shift in the loan portfolio.
-- Provision for credit losses increased $18 million sequentially as a
result of a reserve release in the prior quarter.
-- Noninterest expense increased 5% sequentially and 11% compared to the
prior year.
-- The sequential increase was driven primarily by the seasonal
increase in employee benefit costs in addition to incremental costs
associated with the Pillar acquisition.
-- Compared to the prior year, the increase was driven largely by
higher compensation associated with improved business and stock
price performance, ongoing investments in talent, higher FDIC
premiums, and costs associated with efficiency initiatives including
branch closures.
-- The efficiency and tangible efficiency ratios in the current quarter
were 65.2% and 64.6%, respectively, both higher than the prior quarter
as strong revenue growth was offset by seasonally higher noninterest
expense (as outlined above).
Balance Sheet
-- Average loan balances increased 1% sequentially and 4% year-over-year,
driven primarily by growth in consumer and C&I, partially offset by
declines in residential home equity products.
-- Average consumer and commercial deposits increased 1% sequentially and
6% compared to the first quarter of 2016, driven by growth in NOW and
money market account balances for both periods, as well as an increase
in demand deposits year-over-year.
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 March 31, 2017, and 9.5% on a fully phased-in basis.
-- During the quarter, the Company repurchased $414 million of its
outstanding common stock, which included $240 million under its 2016
capital plan and an incremental $174 million under the 1% of Tier 1
Capital de-minimis exception permitted under the applicable 2016 Capital
Plan Rule.
-- Book value per common share was $45.62 and tangible book value per
common share was $33.06, both up slightly from December 31, 2016, driven
by growth in retained earnings.
Asset Quality
-- Nonperforming loans decreased $56 million from the prior quarter and
represented 0.55% of total loans at March 31, 2017.
-- Net charge-offs for the current quarter were $112 million, or 0.32% of
average loans on an annualized basis, down $24 million sequentially.
-- The provision for credit losses increased $18 million sequentially as a
result of a reserve release in the prior quarter.
-- At March 31, 2017, the ALLL to period-end loans ratio increased 1 basis
point from the prior quarter.
Income Statement (Dollars in millions, except per share data) 1Q 2017 4Q 2016 3Q 2016 2Q 2016 1Q 2016
------- ------- ------- ------- -------
Net interest income $1,366 $1,343 $1,308 $1,288 $1,282
Net interest income-FTE (2) 1,400 1,377 1,342 1,323 1,318
Net interest margin 3.02% 2.93% 2.88% 2.91% 2.96%
Net interest margin-FTE (2) 3.09 3.00 2.96 2.99 3.04
Noninterest income $847 $815 $889 $898 $781
Total revenue 2,213 2,158 2,197 2,186 2,063
Total revenue-FTE (2) 2,247 2,192 2,231 2,221 2,099
Noninterest expense 1,465 1,397 1,409 1,345 1,318
Provision for credit losses 119 101 97 146 101
Net income available to common shareholders 451 448 457 475 430
Earnings per average common diluted share 0.91 0.90 0.91 0.94 0.84
Balance Sheet (Dollars in billions)
Average loans $143.7 $142.6 $142.3 $141.2 $138.4
Average consumer and commercial deposits 158.9 158.0 155.3 154.2 149.2
Capital
Capital ratios at period end (1) :
Tier 1 capital (transitional) 10.40% 10.28% 10.50% 10.57% 10.63%
Common Equity Tier 1 ("CET1") (transitional) 9.69 9.59 9.78 9.84 9.90
Common Equity Tier 1 ("CET1") (fully phased-in) (2) 9.54 9.43 9.66 9.73 9.77
Total average shareholders' equity to total average assets 11.59 11.84 12.12 12.11 12.33
Asset Quality
Net charge-offs to average loans (annualized) 0.32% 0.38% 0.35% 0.39% 0.25%
Allowance for loan and lease losses to period-end loans 1.20 1.19 1.23 1.25 1.27
Nonperforming loans to total loans 0.55 0.59 0.67 0.67 0.70
(1) Current period Tier 1 capital and CET1 ratios are estimated as of the date of this news release.
(2) See Appendix A on page 12 for non-U.S. GAAP reconciliations and additional information.
Consolidated Financial Performance Details
(Commentary is on a fully taxable-equivalent basis unless otherwise noted)
Revenue
Total revenue was $2.2 billion for the current quarter, an increase of $55 million compared to the prior quarter. Net interest income increased $23 million sequentially due to a higher net interest margin and growth in average earning assets. Noninterest income increased $32 million sequentially driven by higher investment banking and mortgage-related income. Compared to the first quarter of 2016, total revenue increased $148 million, driven by an $82 million increase in net interest income (due to the same reasons noted above) and a $69 million increase in investment banking income.
Net Interest Income
Net interest income was $1.4 billion for the current quarter, an increase of $23 million and $82 million compared to the prior quarter and prior year, respectively. Both increases were driven primarily by an increase in the net interest margin and growth in earning assets.
Net interest margin for the current quarter was 3.09%, compared to 3.00% in the prior quarter and 3.04% in the first quarter of 2016. The 9 and 5 basis point increases relative to the prior quarter and prior year were driven primarily by higher earning asset yields as a result of the steeper yield curve and the increase in benchmark interest rates. Compared to the prior year, the net interest margin was also favorably impacted by continued positive mix shift in the loan portfolio.
Noninterest Income
Noninterest income was $847 million for the current quarter, compared to $815 million for the prior quarter and $781 million for the first quarter of 2016. The $32 million sequential increase was due primarily to higher investment banking and mortgage-related income, partially offset by a decrease in commercial real estate related income due to typical seasonality. Compared to the first quarter of 2016, noninterest income increased $66 million, driven largely by record investment banking income, partially offset by lower mortgage-related income.
Investment banking income was $167 million for the current quarter, compared to $122 million in the prior quarter and $98 million in the first quarter of 2016. The $45 million increase compared to the prior quarter and $69 million increase compared to the first quarter of 2016 were due to broad-based growth across most products, particularly syndicated finance and M&A advisory, which both had record quarters.
Trading income was $51 million for the current quarter, compared to $58 million in the prior quarter and $55 million in the first quarter of 2016. The sequential decrease was due primarily to lower counterparty credit valuation reserves recognized in the prior quarter, which offset the increase in core trading revenue in the current quarter. The decrease compared to the first quarter of 2016 was driven largely by lower client-related interest rate hedging activity.
Mortgage production income for the current quarter was $53 million, compared to $78 million for the prior quarter and $60 million for the first quarter of 2016. The $25 million sequential decrease was due primarily to lower refinancing activity in addition to a mortgage repurchase reserve release in the prior quarter. Mortgage application volume decreased 6% sequentially and 16% compared to the first quarter of 2016, and closed loan volume decreased 37% sequentially, but increased 11% compared to the first quarter of 2016.
Mortgage servicing income was $58 million for the current quarter, compared to $25 million in the prior quarter and $62 million in the first quarter of 2016. The $33 million sequential increase was due to higher servicing fees (driven by acquisitions which closed in the first quarter of 2017) and lower servicing asset decay. At March 31, 2017 and 2016, the servicing portfolio totaled $164.5 billion and $148.9 billion, respectively.
Trust and investment management income was $75 million for the current quarter, compared to $73 million for the prior quarter and $75 million for the first quarter of 2016. The $2 million increase from the prior quarter was primarily due to an increase in trust and institutional assets under management.
Client transaction-related fees (namely service charges on deposits, other charges and fees, and card fees) decreased $3 million compared to the prior quarter due largely to the residual impact of the enhanced posting order process instituted during the fourth quarter of 2016. Compared to first quarter of 2016, client transaction-related fees were stable.
Commercial real estate related income was $20 million for the current quarter, compared to $33 million for the prior quarter and $17 million for the first quarter of 2016. This new income statement line item includes noninterest income from Pillar & Cohen Financial ("Pillar"), which the Company acquired in December 2016, as well as noninterest income from other commercial real estate-related businesses (specifically Structured Real Estate and SunTrust Community Capital), which were previously recorded in 'other noninterest income'. The $13 million sequential decrease was due largely to a decline in revenue from SunTrust Community Capital, which is typically higher in the fourth quarter. The $3 million increase compared to the first quarter of 2016 was attributable to income from Pillar, partially muted by higher structured real estate-related revenue in the first quarter of 2016.
Other noninterest income was $30 million for the current quarter, compared to $29 million in the prior quarter and $21 million in the first quarter of 2016. The $9 million increase compared to the prior year was due primarily to gains on the sale of affordable housing investments recognized in the current quarter as well as certain asset impairment charges recognized during the first quarter of 2016.
Noninterest Expense
Noninterest expense was $1.5 billion in the current quarter, representing a sequential increase of $68 million and an increase of $147 million compared to the first quarter of 2016. The sequential increase was driven by the seasonal increase in employee benefit costs in addition to incremental costs associated with the Pillar acquisition. The increase relative to the prior year was driven by higher costs associated with improved business and stock price performance, ongoing investments in talent, higher FDIC premiums, and costs associated with ongoing efficiency initiatives including branch closures and severance costs.
Employee compensation and benefits expense was $852 million in the current quarter, compared to $762 million in the prior quarter and $774 million in the first quarter of 2016. The sequential increase of $90 million was due to the seasonal increase in employee benefit costs and incremental compensation costs associated with the Pillar acquisition. The $78 million increase compared to the first quarter of 2016 was due primarily to higher compensation costs associated with improved business performance and stock price performance, continued investments in talent and technology, and the incremental compensation costs associated with the Pillar acquisition.
Operating losses were $32 million in the current quarter, compared to $23 million in the prior quarter and $24 million in the first quarter of 2016. The increase relative to both quarters was due primarily to higher legal accruals recognized during the current quarter.
Outside processing and software expense was $205 million in the current quarter, compared to $209 million in the prior quarter and $198 million in the first quarter of 2016. The $4 million sequential decrease was due to normal quarterly variability. The $7 million year-over-year increase was driven primarily by higher utilization of third-party services as a result of increased business activity.
FDIC premium and regulatory expense was $48 million in the current quarter, compared to $46 million in the prior quarter and $36 million in the first quarter of 2016. The increase compared to the prior year was driven by the FDIC surcharge on large banks, which became effective during the third quarter of 2016, and a larger assessment base attributable to balance sheet growth.
Marketing and customer development expense was $42 million in the current quarter, compared to $52 million in the prior quarter and $44 million in the first quarter of 2016. The decrease relative to both quarters was driven by normal quarterly variability in advertising and client development costs.
Net occupancy expense was $92 million in the current quarter, compared to $94 million in the prior quarter and $85 million in the first quarter of 2016. The increase relative to the prior year was due primarily to a reduction in amortized gains from prior sale leaseback transactions.
Other noninterest expense was $142 million in the current quarter, compared to $154 million in the prior quarter and $107 million in the first quarter of 2016. The $12 million sequential decrease was due largely to higher legal and consulting costs incurred in the prior quarter. The $35 million year-over-year increase was driven primarily by higher legal and consulting fees and higher branch closure and severance costs incurred in the current quarter.
Income Taxes
For the current quarter, the Company recorded an income tax provision of $159 million, compared to $193 million for the prior quarter and $195 million for the first quarter of 2016. The decrease relative to both quarters was attributable in large part to a $22 million discrete tax benefit related to share-based compensation recognized during the current quarter (in accordance with ASU 2016-09, which the Company adopted in the second quarter of 2016). The effective tax rate for the current quarter was 25%, compared to 29% in the prior quarter and 30% in the first quarter of 2016.
Balance Sheet
At March 31, 2017, the Company had total assets of $205.6 billion and total shareholders' equity of $23.5 billion, representing 11% of total assets. Book value per common share was $45.62 and tangible book value per common share was $33.06, both up slightly compared to December 31, 2016 and March 31, 2016, driven primarily by growth in retained earnings.
Loans
Average performing loans were $142.8 billion for the current quarter, a 1% increase over the prior quarter and a 4% increase over the first quarter of 2016. The sequential and year-over-year growth was driven largely by increases in consumer and C&I, offset partially by declines in home equity products.
Deposits
Average consumer and commercial deposits for the current quarter were $158.9 billion, a 1% increase over the prior quarter and a 6% increase over the first quarter of 2016. The sequential growth was due largely to a 4% increase in NOW account balances and a 1% increase in money market account balances, offset largely by a 4% decrease in demand deposits. Compared to the first quarter of 2016, growth was driven primarily by increases in NOW, money market, and demand deposit accounts.
Capital and Liquidity
The Company's estimated capital ratios were well above current regulatory requirements with the Common Equity Tier 1 ratio estimated to be 9.7% at March 31, 2017, and 9.5% on a fully phased-in basis. The ratios of average total equity to average total assets and tangible common equity to tangible assets were 11.6% and 8.1%, respectively, at March 31, 2017. 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 $0.26 per common share and repurchased $414 million of its outstanding common stock in the first quarter of 2017, which included $240 million as originally contemplated under its 2016 capital plan and an incremental $174 million of common stock under the 1% of Tier 1 Capital de-minimis exception permitted under the applicable 2016 Capital Plan Rule. The Company currently expects to repurchase approximately $240 million of additional common stock during the second quarter of 2017 to complete its 2016 capital plan.
Asset Quality
Total nonperforming assets were $858 million at March 31, 2017, down $61 million compared to the prior quarter and $177 million compared to the first quarter of 2016. The decrease in nonperforming assets compared to both the prior quarter and the prior year was due primarily to the continued resolution of problem energy credits. The ratio of nonperforming loans to total loans was 0.55%, 0.59%, and 0.70% at March 31, 2017, December 31, 2016, and March 31, 2016, respectively.
Net charge-offs were $112 million during the current quarter, a decrease of $24 million compared to the prior quarter and an increase of $27 million compared to the first quarter of 2016. The decrease compared to the prior quarter was driven by lower net charge-offs associated with energy, commercial construction, and residential mortgages. The increase compared to the prior year was driven primarily by higher commercial charge-offs. The ratio of annualized net charge-offs to total average loans was 0.32% during the current quarter, compared to 0.38% during the prior quarter and 0.25% during the first quarter of 2016. The provision for credit losses was $119 million in the current quarter, an increase of $18 million compared to both the prior quarter and the first quarter of 2016.
At March 31, 2017, the allowance for loan and lease losses was $1.7 billion, which represented 1.20% of total loans, an increase of $5 million, or 1 basis point, relative to December 31, 2016.
Early stage delinquencies were 0.72% at March 31, 2017, unchanged compared to the prior quarter. Excluding government-guaranteed loans which accounts for 0.50%, early stage delinquencies were 0.22%, down 5 basis points from the prior quarter and down 7 basis points compared to a year ago.
Accruing restructured loans totaled $2.5 billion and nonaccruing restructured loans totaled $329 million at March 31, 2017, of which $2.6 billion were residential loans, $170 million were consumer loans, and $150 million were commercial loans.
OTHER INFORMATION
About SunTrust Banks, Inc.
SunTrust Banks, Inc. is a purpose-driven company dedicated to Lighting the Way to Financial Well-Being for the people, businesses, and communities it serves. Headquartered in Atlanta, the Company has three business segments: Consumer Banking and Private Wealth Management, Wholesale Banking, and Mortgage Banking. 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 March 31, 2017, SunTrust had total assets of $206 billion and total deposits of $163 billion. The Company provides deposit, credit, trust, investment, mortgage, asset management, securities brokerage, and capital market services. SunTrust leads onUp, a national movement inspiring Americans to build financial confidence. Join the movement at onUp.com.
Business Segment Results
The Company has included its business segment financial tables as part of this release. 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 21, 2017, 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 1-877-209-9920 (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 April 21, 2017, and will remain available until May 21, 2017, by dialing 1-800-475-6701 (domestic) or 1-320-365-3844 (international) (Passcode: 420348). 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 21, 2017, 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.
Non-GAAP Financial Measures
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 beginning at page 12.
In this news release, consistent with Securities and Exchange Commission Industry Guide 3, the Company presents total revenue, net interest income, net interest margin, and efficiency ratios on a fully taxable equivalent ("FTE") 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 35% and state income taxes where applicable to increase tax-exempt interest income to a taxable-equivalent basis. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. Total revenue-FTE equals net interest income-FTE plus noninterest income.
The Company presents the following additional non-GAAP measures because many investors find them useful. Specifically:
-- The Company presents the allowance for loan and lease losses and early
stage delinquencies excluding government-guaranteed loans 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.
-- 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 the capital adequacy and
profitability of the Company.
-- Similarly, the Company presents an efficiency ratio-FTE and a 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. The 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. This measure is utilized by management to assess the
efficiency of the Company and its lines of business.
-- The Company presents the Basel III Common Equity Tier 1 (CET1), on a
fully-phased in basis. Fully phased-in ratios consider a 250%
risk-weighting for MSRs and deduction from capital of certain
carryforward DTAs, the overfunded pension asset, and other intangible
assets. The Company believes this measure is useful to investors who
wish to understand the Company's current compliance with future
regulatory requirements.
Important Cautionary Statement About Forward-Looking Statements
This 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, 2016 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 %
2017 2016 Change
---- ---- ------
EARNINGS & DIVIDENDS
--------------------
Net income $468 $447 5%
Net income available to common shareholders 451 430 5
Total revenue 2,213 2,063 7
Total revenue-FTE (1) 2,247 2,099 7
Net income per average common share:
Diluted 0.91 0.84 8
Basic 0.92 0.85 8
Dividends paid per common share 0.26 0.24 8
CONDENSED BALANCE SHEETS
------------------------
Selected Average Balances:
Total assets $204,252 $193,014 6%
Earning assets 183,606 174,189 5
Loans 143,670 138,372 4
Intangible assets including mortgage servicing rights ("MSRs") 8,026 7,569 6
MSRs 1,604 1,215 32
Consumer and commercial deposits 158,874 149,229 6
Total shareholders' equity 23,671 23,797 (1)
Preferred stock 1,225 1,225 -
Period End Balances:
Total assets 205,642 194,158 6
Earning assets 183,279 175,710 4
Loans 143,529 139,746 3
Allowance for loan and lease losses ("ALLL") 1,714 1,770 (3)
Consumer and commercial deposits 161,531 151,264 7
Total shareholders' equity 23,484 24,053 (2)
FINANCIAL RATIOS & OTHER DATA
-----------------------------
Return on average total assets 0.93% 0.93% - %
Return on average common shareholders' equity 8.19 7.71 6
Return on average tangible common shareholders' equity (1) 11.28 10.60 6
Net interest margin 3.02 2.96 2
Net interest margin-FTE (1) 3.09 3.04 2
Efficiency ratio 66.20 63.89 4
Efficiency ratio-FTE (1) 65.19 62.81 4
Tangible efficiency ratio-FTE (1) 64.60 62.33 4
Effective tax rate 25 30 (17)
Basel III capital ratios at period end (transitional) (2):
Common Equity Tier 1 ("CET1") 9.69 9.90 (2)
Tier 1 capital 10.40 10.63 (2)
Total capital 12.37 12.39 -
Leverage 9.09 9.50 (4)
Basel III fully phased-in CET1 ratio 1, 2 9.54 9.77 (2)
Total average shareholders' equity to total average assets 11.59 12.33 (6)
Tangible equity to tangible assets (1) 8.72 9.56 (9)
Tangible common equity to tangible assets (1) 8.06 8.85 (9)
Book value per common share $45.62 $44.97 1
Tangible book value per common share (1) 33.06 32.90 -
Market capitalization 26,860 18,236 47
Average common shares outstanding:
Diluted 496,002 509,931 (3)
Basic 490,091 505,482 (3)
Full-time equivalent employees 24,215 23,945 1
Number of ATMs 2,132 2,153 (1)
Full service banking offices 1,316 1,397 (6)
1 See Appendix A for additional information and reconcilements of non-U.S. GAAP performance measures.
2 Current period capital ratios are estimated as of the earnings release date.
SunTrust Banks, Inc. and Subsidiaries
FIVE QUARTER FINANCIAL HIGHLIGHTS
Three Months Ended
March 31 December 31 September 30 June 30 March 31
(Dollars in millions and shares in thousands, except per share data) (Unaudited) 2017 2016 2016 2016 2016
---- ---- ---- ---- ----
EARNINGS & DIVIDENDS
--------------------
Net income $468 $465 $474 $492 $447
Net income available to common shareholders 451 448 457 475 430
Total revenue 2,213 2,158 2,197 2,186 2,063
Total revenue-FTE (1) 2,247 2,192 2,231 2,221 2,099
Net income per average common share:
Diluted 0.91 0.90 0.91 0.94 0.84
Basic 0.92 0.91 0.92 0.95 0.85
Dividends paid per common share 0.26 0.26 0.26 0.24 0.24
CONDENSED BALANCE SHEETS
------------------------
Selected Average Balances:
Total assets $204,252 $203,146 $201,476 $198,305 $193,014
Earning assets 183,606 182,475 180,523 178,055 174,189
Loans 143,670 142,578 142,257 141,238 138,372
Intangible assets including MSRs 8,026 7,654 7,415 7,543 7,569
MSRs 1,604 1,291 1,065 1,192 1,215
Consumer and commercial deposits 158,874 157,996 155,313 154,166 149,229
Total shareholders' equity 23,671 24,044 24,410 24,018 23,797
Preferred stock 1,225 1,225 1,225 1,225 1,225
Period End Balances:
Total assets 205,642 204,875 205,091 198,892 194,158
Earning assets 183,279 184,610 181,341 178,852 175,710
Loans 143,529 143,298 141,532 141,656 139,746
ALLL 1,714 1,709 1,743 1,774 1,770
Consumer and commercial deposits 161,531 158,864 157,592 151,779 151,264
Total shareholders' equity 23,484 23,618 24,449 24,464 24,053
FINANCIAL RATIOS & OTHER DATA
-----------------------------
Return on average total assets 0.93% 0.91% 0.94% 1.00% 0.93%
Return on average common shareholders' equity 8.19 7.85 7.89 8.43 7.71
Return on average tangible common shareholders' equity (1) 11.28 10.76 10.73 11.54 10.60
Net interest margin 3.02 2.93 2.88 2.91 2.96
Net interest margin-FTE (1) 3.09 3.00 2.96 2.99 3.04
Efficiency ratio 66.20 64.74 64.13 61.53 63.89
Efficiency ratio-FTE (1) 65.19 63.73 63.14 60.56 62.81
Tangible efficiency ratio-FTE (1) 64.60 63.08 62.54 60.05 62.33
Effective tax rate 25 29 31 29 30
Basel III capital ratios at period end (transitional) (2):
CET1 9.69 9.59 9.78 9.84 9.90
Tier 1 capital 10.40 10.28 10.50 10.57 10.63
Total capital 12.37 12.26 12.57 12.68 12.39
Leverage 9.09 9.22 9.28 9.35 9.50
Basel III fully phased-in CET1 ratio 1, 2 9.54 9.43 9.66 9.73 9.77
Total average shareholders' equity to total average assets 11.59 11.84 12.12 12.11 12.33
Tangible equity to tangible assets (1) 8.72 8.82 9.24 9.53 9.56
Tangible common equity to tangible assets (1) 8.06 8.15 8.57 8.85 8.85
Book value per common share $45.62 $45.38 $46.63 $46.14 $44.97
Tangible book value per common share (1) 33.06 32.95 34.34 33.98 32.90
Market capitalization 26,860 26,942 21,722 20,598 18,236
Average common shares outstanding:
Diluted 496,002 497,055 500,885 505,633 509,931
Basic 490,091 491,497 496,304 501,374 505,482
Full-time equivalent employees 24,215 24,375 23,854 23,940 23,945
Number of ATMs 2,132 2,165 2,163 2,144 2,153
Full service banking offices 1,316 1,367 1,369 1,389 1,397
1 See Appendix A for additional information and reconcilements of non-U.S. GAAP performance measures.
2 Current period capital ratios are estimated as of the earnings release date.
SunTrust Banks, Inc. and Subsidiaries
APPENDIX A TO THE EARNINGS RELEASE - RECONCILEMENT OF NON-U.S. GAAP MEASURES 1
Three Months Ended
March 31 December 31 September 30 June 30 March 31
(Dollars in millions) (Unaudited) 2017 2016 2016 2016 2016
---- ---- ---- ---- ----
Net interest income $1,366 $1,343 $1,308 $1,288 $1,282
Fully taxable-equivalent ("FTE") adjustment 34 34 34 35 36
--- --- --- --- ---
Net interest income-FTE (2) 1,400 1,377 1,342 1,323 1,318
Noninterest income 847 815 889 898 781
--- --- --- --- ---
Total revenue-FTE (2) $2,247 $2,192 $2,231 $2,221 $2,099
Return on average common shareholders' equity 8.19% 7.85% 7.89% 8.43% 7.71%
Impact of removing average intangible assets and related pre-tax amortization, other than 3.09 2.91 2.84 3.11 2.89
MSRs and other servicing rights
Return on average tangible common shareholders' equity (3) 11.28% 10.76% 10.73% 11.54% 10.60%
===== ===== ===== ===== =====
Net interest margin 3.02% 2.93% 2.88% 2.91% 2.96%
Impact of FTE adjustment 0.07 0.07 0.08 0.08 0.08
---- ---- ---- ---- ----
Net interest margin-FTE (2) 3.09% 3.00% 2.96% 2.99% 3.04%
==== ==== ==== ==== ====
Noninterest expense $1,465 $1,397 $1,409 $1,345 $1,318
Total revenue 2,213 2,158 2,197 2,186 2,063
Efficiency ratio 4 66.20% 64.74% 64.13% 61.53% 63.89%
Impact of FTE adjustment (1.01) (1.01) (0.99) (0.97) (1.08)
----- ----- ----- ----- -----
Efficiency ratio-FTE 2, 4 65.19 63.73 63.14 60.56 62.81
Impact of excluding amortization related to intangible assets and certain tax credits (0.59) (0.65) (0.60) (0.51) (0.48)
Tangible efficiency ratio-FTE 2, 5 64.60% 63.08% 62.54% 60.05% 62.33%
===== ===== ===== ===== =====
Basel III Common Equity Tier 1 ("CET1") ratio (transitional) 6 9.69% 9.59% 9.78% 9.84% 9.90%
Impact of MSRs and other under fully phased-in approach (0.15) (0.16) (0.12) (0.11) (0.13)
Basel III fully phased-in CET1 ratio 6 9.54% 9.43% 9.66% 9.73% 9.77%
==== ==== ==== ==== ====
(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, and
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 35% and state income
taxes where applicable to
increase tax-exempt interest
income to a taxable-equivalent
basis. The Company believes this
measure to be the preferred
industry measurement of net
interest income and it enhances
comparability of net interest
income arising from taxable and
tax-exempt sources. Total
revenue-FTE equals net interest
income-FTE plus noninterest
income.
(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 a tangible
efficiency ratio, which 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. This
measure is utilized by management
to assess the efficiency of the
Company and its lines of
business.
6 Current period Basel III capital
ratios are estimated as of the
earnings release date. Fully
phased-in ratios consider a 250%
risk-weighting for MSRs and
deduction from capital of certain
carryforward DTAs, the overfunded
pension asset, and other
intangible assets. The Company
believes these measures may be
useful to investors who wish to
understand the Company's current
compliance with future regulatory
requirements.
SunTrust Banks, Inc. and Subsidiaries
APPENDIX A TO THE EARNINGS RELEASE - RECONCILEMENT OF NON-U.S. GAAP MEASURES, continued 1
March 31 December 31 September 30 June 30 March 31
(Dollars in millions, except per share data) (Unaudited) 2017 2016 2016 2016 2016
---- ---- ---- ---- ----
Total shareholders' equity $23,484 $23,618 $24,449 $24,464 $24,053
Goodwill, net of deferred taxes of $252 million, $251 million, $248 million, $246 million, (6,086) (6,086) (6,089) (6,091) (6,094)
and $243 million, respectively
Other intangible assets (including MSRs and other servicing rights), net of deferred taxes of (1,727) (1,656) (1,129) (1,073) (1,195)
$2 million, $1 million, $2 million, $2 million, and $3 million, respectively
MSRs and other servicing rights 1,711 1,638 1,124 1,067 1,189
----- ----- ----- ----- -----
Tangible equity (2) 17,382 17,514 18,355 18,367 17,953
Noncontrolling interest (101) (103) (101) (103) (101)
Preferred stock (1,225) (1,225) (1,225) (1,225) (1,225)
Tangible common equity (2) $16,056 $16,186 $17,029 $17,039 $16,627
======= ======= ======= ======= =======
Total assets $205,642 $204,875 $205,091 $198,892 $194,158
Goodwill (6,338) (6,337) (6,337) (6,337) (6,337)
Other intangible assets (including MSRs and other servicing rights) (1,729) (1,657) (1,131) (1,075) (1,198)
MSRs and other servicing rights 1,711 1,638 1,124 1,067 1,189
----- ----- ----- ----- -----
Tangible assets $199,286 $198,519 $198,747 $192,547 $187,812
======== ======== ======== ======== ========
Tangible equity to tangible assets (2) 8.72% 8.82% 9.24% 9.53% 9.56%
Tangible common equity to tangible assets (2) 8.06 8.15 8.57 8.85 8.85
Tangible book value per common share (3) $33.06 $32.95 $34.34 $33.98 $32.90
(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.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/suntrust-reports-first-quarter-2017-results-300443271.html
SOURCE SunTrust Banks, Inc.
