SUNTRUST BANKS ATLANTA, Jan. 22, 2016 /PRNewswire/ -- SunTrust Banks, Inc. (NYSE: STI) reported net income available to common shareholders of $467 million, or $0.91 per average common diluted share, which includes $0.03 per share in discrete tax benefits. This compares to $1.00 per share in the prior quarter, which was favorably impacted by discrete items totaling $0.11 per share, and $0.72 per share in the fourth quarter of 2014, which was negatively impacted by legal matters totaling $0.17 per share.
For 2015, earnings increased 11% to $3.58 per share compared to $3.23 per share in 2014, driven by improved credit quality and efficiency.
"Our solid performance in the fourth quarter and strong 11 percent earnings growth for the year are the result of consistent execution of our strategies and the diversity of our business model," said William H. Rogers, Jr., chairman and chief executive officer of SunTrust Banks, Inc. "Looking ahead, we will further advance our purpose of improving the financial well-being of our clients and communities, thus driving long-term value for our shareholders."
Fourth Quarter 2015 Financial Highlights
Income Statement
-- Net income available to common shareholders was $467 million, or $0.91
per average common diluted share.
-- The current quarter included $0.03 per share in discrete tax
benefits while the third quarter included $0.07 per share in
discrete tax benefits and $0.04 per share in discrete recoveries
related to the resolution of certain legacy mortgage matters.
-- Excluding the $0.03 per share benefit in the current quarter and
$0.11 per share combined benefit in the prior quarter, earnings per
share were relatively stable sequentially.
-- Total revenue declined slightly compared to the prior quarter.
-- Net interest income grew 3%, driven by 2% average loan growth and a
4 basis point increase in net interest margin.
-- Noninterest income decreased, as asset disposition gains declined
and wealth management-related revenue was negatively impacted by
market conditions.
-- Provision for credit losses increased due to a modest increase in net
charge-offs.
-- Noninterest expense increased 2% sequentially, driven primarily by
discrete benefits recognized in the prior quarter.
-- The efficiency and tangible efficiency ratios in the current quarter
were 63.0% and 62.1%, respectively. For 2015, the efficiency and
tangible efficiency ratio were 63.1% and 62.6%, respectively.
Balance Sheet
-- Average loan balances increased 2% sequentially with growth across most
loan categories.
-- Average consumer and commercial deposits increased 2% sequentially and
8% compared to the prior year.
Capital
-- Estimated capital ratios continue to be well above regulatory
requirements. The Common Equity Tier 1 and Tier 1 capital ratios were
estimated to be 9.8% and 10.6%, respectively, as of December 31, 2015,
on a fully phased-in basis.
-- During the quarter, the Company repurchased $214 million of common
stock.
-- Book value per share was $43.66, and tangible book value per share was
$31.65, up 5% and 6%, respectively, compared to December 31, 2014.
Asset Quality
-- Nonperforming loans increased $209 million from the prior quarter and
represented 0.49% of total loans at December 31, 2015. The sequential
increase was due largely to additional downgrades of certain
energy-related loans.
-- Net charge-offs for the current quarter were $83 million, representing
0.24% of average loans on an annualized basis, increasing from $71
million in the prior quarter and decreasing from $94 million in the
fourth quarter of 2014.
-- The provision for credit losses increased $19 million compared to the
prior quarter driven by increased net charge-offs, as well as a lower
decline in the allowance for loan and lease losses, as a result of
higher loan growth.
-- At December 31, 2015, the allowance for loan and lease losses to
period-end loans ratio was 1.29%, 5 basis points lower than the prior
quarter, as a result of further improvement in overall credit quality.
Excluding government-guaranteed loans, the allowance for loan and lease
losses to period-end loans ratio was 1.34%.
Presented on a fully
taxable-equivalent
basis
Income Statement
(Dollars in
millions, except per
share data) 4Q 2015 3Q 2015 2Q 2015 1Q 2015 4Q 2014
------- ------- ------- ------- -------
Net interest income $1,281 $1,247 $1,203 $1,175 $1,248
Net interest margin 2.98% 2.94% 2.86% 2.83% 2.96%
Noninterest income $765 $811 $874 $817 $795
Total revenue 2,046 2,058 2,077 1,992 2,043
Noninterest expense 1,288 1,264 1,328 1,280 1,410
Provision for credit
losses 51 32 26 55 74
Net income available
to common
shareholders 467 519 467 411 378
Earnings per average
common diluted share 0.91 1.00 0.89 0.78 0.72
Adjusted earnings per
average common
diluted share (1) 0.91 1.00 0.89 0.78 0.88
Balance Sheet
(Dollars in
billions)
Average loans $135.2 $132.8 $132.8 $133.3 $133.4
Average consumer and
commercial deposits 148.2 145.2 142.9 140.5 136.9
Capital
Capital ratios at
period end (2) :
Tier 1 capital
(transitional) 10.80% 10.90% 10.79% 10.76% N/A
Common Equity Tier 1
("CET1")
(transitional) 9.95% 10.04% 9.93% 9.89% N/A
Common Equity Tier 1
("CET1") (fully
phased-in) 9.81% 9.89% 9.76% 9.74% N/A
Total average
shareholders' equity
to total average
assets 12.43% 12.42% 12.34% 12.24% 12.08%
Asset Quality
Net charge-offs to
average loans
(annualized) 0.24% 0.21% 0.26% 0.30% 0.28%
Allowance for loan
and lease losses to
period-end loans 1.29% 1.34% 1.39% 1.43% 1.46%
Nonperforming loans
to total loans 0.49% 0.35% 0.36% 0.46% 0.48%
(1) See page 23 for non-U.S. GAAP
reconciliation
(2) Current period Tier 1 capital
and CET1 ratios are estimated
as of the date of this news
release. Basel III Final Rules
became effective for the
Company on January 1, 2015;
thus, Basel III capital ratios
are not applicable ("N/A") in
periods ending prior to January
1, 2015.
Consolidated Financial Performance Details
(Presented on a fully taxable-equivalent basis unless otherwise noted)
Revenue
Total revenue was $2.0 billion for the current quarter, a decrease of $12 million compared to the prior quarter. The decline was driven primarily by lower wealth management-related revenue, as well as a reduction in asset disposition gains, partially offset by higher net interest income and mortgage-related revenue. Compared to the fourth quarter of 2014, total revenue was relatively stable as higher net interest income was offset by lower noninterest income.
For 2015, total revenue was $8.2 billion, a decline of $131 million compared to 2014. The decline was largely driven by the $105 million gain on sale of RidgeWorth during 2014 (and associated foregone revenue in 2015) and lower net interest income, partially offset by growth in capital markets and mortgage-related revenue, in addition to higher securities gains.
Net Interest Income
(Presented on a fully taxable-equivalent basis)
Net interest income was $1.3 billion for the current quarter, an increase of $34 million compared to the prior quarter. The increase was primarily due to solid loan growth, higher securities yields, and a reduction in average long-term debt. Compared to the fourth quarter of 2014, the $33 million increase in net interest income was driven by growth in average earning assets and a decrease in long-term debt, partially offset by a slight decline in earning asset yields.
Net interest margin for the current quarter was 2.98%, compared to 2.94% in the prior quarter and 2.96% in the fourth quarter of 2014. The 4 basis point increase compared to the prior quarter was largely driven by higher yields on the investment securities portfolio (as a result of slower prepayment speeds) and lower funding costs. The 2 basis point increase in net interest margin compared to the fourth quarter of 2014 was due primarily to a shift towards lower-cost funding sources.
For 2015, net interest income was $4.9 billion, a $76 million decrease compared to 2014. The net interest margin was 2.91% for 2015 compared to 3.07% for 2014. The declines in both net interest income and net interest margin were driven by lower earning asset yields, largely due to a 15 basis point decline in loan yields, partially offset by strong deposit growth that enabled a decline in higher-cost long-term debt.
Noninterest Income
Noninterest income was $765 million for the current quarter, compared to $811 million for the prior quarter and $795 million for the fourth quarter of 2014. The $46 million decrease from the prior quarter was primarily related to lower wealth management-related revenue, as well as a decline in asset disposition gains, partially offset by higher mortgage-related revenue. Compared to the fourth quarter of 2014, noninterest income decreased $30 million, driven by many of the same factors impacting the sequential comparison.
Investment banking income was $104 million for the current quarter, compared to $115 million in the prior quarter and $109 million in the fourth quarter of 2014. The $11 million decrease from the prior quarter was driven by a decline in debt origination activity stemming from challenging market conditions in the fourth quarter, partially offset by growth in equity originations. Compared to the fourth quarter of 2014, the $5 million decrease was largely driven by the same trends impacting the sequential comparison. For 2015, investment banking income increased 14% compared to 2014, driven by strong performances across most products and sectors.
Trading income was $42 million for the current quarter, compared to $31 million in the prior quarter and $40 million in the fourth quarter of 2014. The $11 million increase from the prior quarter was driven primarily by increased client-driven interest rate risk management activity.
Mortgage production-related income for the current quarter was $53 million, compared to $58 million for the prior quarter and $61 million for the fourth quarter of 2014. The $5 million decrease from the prior quarter was primarily due to a decline in loan production. The $8 million decrease compared to the fourth quarter of 2014 was driven by a modest decline in gain-on-sale margins. Mortgage production volume declined 20% compared to the prior quarter, due to the typical seasonal decline in new purchase activity.
Mortgage servicing income was $56 million for the current quarter, compared to $40 million in the prior quarter and $53 million in the fourth quarter of 2014. The $16 million increase from the prior quarter was driven by higher servicing fees, improved net hedge performance, and a decline in the servicing asset decay expense. The $3 million increase compared to the fourth quarter of 2014 was due to higher servicing fees as a result of a larger servicing portfolio. The servicing portfolio was $148 billion at December 31, 2015, compared to $142 billion at December 31, 2014, driven by portfolio acquisitions.
Trust and investment management income was $79 million for the current quarter, compared to $86 million in the prior quarter and $84 million in the fourth quarter of 2014. The $7 million sequential decline was due to seasonal fees earned in the third quarter, as well as a decline in market value of assets under management impacting the fourth quarter. The $5 million decline compared to the prior year was largely due to a decline in assets under management.
Retail investment income was $71 million for the current quarter, compared to $77 million in the prior quarter and $73 million in the fourth quarter of 2014. The $6 million sequential decline was both a result of lower assets under management and reduced transactional activity.
Other noninterest income was $30 million for the current quarter, compared to $58 million in the prior quarter and $42 million in the fourth quarter of 2014. The decrease compared to the prior quarter was primarily due to a decline in leasing-related income and lower gains on loan sales, in addition to an impairment of loans held-for-sale recognized in the fourth quarter. The decrease compared to the fourth quarter of 2014 was largely due to foregone income from the sale of affordable housing investments.
For 2015, noninterest income was $3.3 billion, a decrease of $55 million compared to 2014. The decline was due to the gain on sale of RidgeWorth in 2014 (and associated foregone revenue) and lower service charges on deposits, partially offset by higher investment banking and mortgage-related revenue, as well as higher gains from the sale of securities.
Noninterest Expense
Noninterest expense was $1.3 billion in the current quarter, an increase of $24 million compared to the prior quarter and a decrease of $122 million compared to the fourth quarter of 2014. The sequential increase was primarily due to discrete recoveries recognized in the prior quarter as a result of the resolution of previous mortgage matters. The $122 million decline compared to a year ago was due primarily to the $145 million legal provision related to legacy mortgage matters in the fourth quarter of 2014.
Employee compensation and benefits expense was $690 million in the current quarter, compared to $725 million in the prior quarter and $670 million in the fourth quarter of 2014. The sequential decrease of $35 million was due to lower employee benefit costs. The $20 million increase compared to the fourth quarter of 2014 was due primarily to higher employee compensation expense, in part attributable to improved business performance, partially offset by a decrease in employee benefit costs.
Operating losses were $22 million in the current quarter, compared to $3 million in the prior quarter and $174 million in the fourth quarter of 2014. The sequential increase was due primarily to discrete recoveries recognized in the prior quarter resulting from the resolution of previous mortgage matters. The $152 million decline compared to a year ago was due primarily to the aforementioned $145 million mortgage-related legal provision in the fourth quarter of 2014.
Outside processing and software expense was $222 million in the current quarter, compared to $200 million in the prior quarter and $206 million in the fourth quarter of 2014. The increase compared to both periods was due to higher utilization of third-party services, increased business activity, and certain discrete costs incurred in the current quarter.
Marketing and customer development expense was $48 million in the current quarter, compared to $42 million in the prior quarter and $43 million in the fourth quarter of 2014. The increase over both the prior quarter and prior year was due largely to higher advertising and client development costs.
Other noninterest expense was $127 million and $126 million in the current and prior quarter, and $146 million in the fourth quarter of 2014. The $19 million decrease compared to the fourth quarter of 2014 was largely due to lower credit and collections costs and lower consulting expenses. Amortization expense increased compared to the prior quarter and the fourth quarter of 2014, driven by increased investments in low-income community development projects, also resulting in a similar increase in tax credits.
For 2015, noninterest expense was $5.2 billion compared to $5.5 billion for 2014. The $383 million decrease was driven by a decline in mortgage-related operating losses and affordable housing impairment charges recognized in 2014, the decline in RidgeWorth-related expenses, and the continued focus on expense management. These declines were partially offset by $24 million of debt extinguishment charges (net of related hedges) and higher outside processing costs during 2015.
Income Taxes
For the current quarter, the Company recorded an income tax provision of $185 million, compared to $187 million for the prior quarter and $128 million for the fourth quarter of 2014. The effective tax rate for the current quarter was approximately 28%, compared to approximately 26% in the prior quarter and approximately 25% in the fourth quarter of 2014. The effective tax rates in the current and prior quarter were favorably impacted by $17 million and $35 million in discrete income tax items, respectively.
Balance Sheet
At December 31, 2015, the Company had total assets of $190.8 billion and total shareholders' equity of $23.4 billion, representing 12% of total assets. Book value per share was $43.66 and tangible book value per share was $31.65, relatively stable compared to September 30, 2015, as growth in retained earnings was offset by a decline in accumulated other comprehensive income (AOCI).
Loans
Average performing loans were $134.7 billion for the current quarter, a 2% increase over both the prior quarter and fourth quarter of 2014. Sequential growth in average C&I loans, consumer loans, and commercial construction loans of $1.1 billion, $814 million, and $327 million, respectively, was offset by a $220 million decline in home equity products. Compared to the fourth quarter of 2014, growth was concentrated in C&I loans, consumer direct loans, and nonguaranteed residential mortgages. This growth was partially offset by a decline in consumer indirect loans, primarily due to the $1 billion indirect auto loan securitization in the second quarter of 2015, as well as a decline in home equity products.
Deposits
Average consumer and commercial deposits for the current quarter were $148.2 billion, a 2% increase over the prior quarter and 8% compared to the prior year. The sequential increase was driven by a 4% increase in NOW account balances and a 2% increase in money market account balances. Slightly offsetting this growth in lower-cost deposits was a 1% decline in time deposits and a 2% decline in savings account balances. Compared to the fourth quarter of 2014, average client deposits increased 8%, driven by increases in lower-cost deposits, partially offset by an 11% decline in time deposits.
Capital and Liquidity
The Company's estimated capital ratios were well above current regulatory requirements with the Common Equity Tier 1 and Tier 1 capital ratios at an estimated 9.8% and 10.6%, respectively, at December 31, 2015, on a fully phased-in basis. The ratios of average total equity to average total assets and tangible equity to tangible assets were 12.43% and 9.39%, respectively, at December 31, 2015. The Company continues to have substantial available liquidity in the form of cash, high-quality government-backed or government-sponsored securities, and other available contingency funding sources.
Per its 2015 capital plan, the Company declared a common stock dividend of $0.24 per common share and repurchased $175 million of its outstanding common stock in the fourth quarter. In addition, the Company repurchased an incremental $39 million of common stock in the fourth quarter. Consistent with its capital plan, the Company currently expects to repurchase approximately $350 million of additional common stock in the first half of 2016.
Asset Quality
Total nonperforming assets were $735 million at December 31, 2015, up $203 million compared to the prior quarter and down $45 million compared to the fourth quarter of 2014. The sequential increase was primarily due to downgrades of certain energy-related loans during the fourth quarter of 2015. At December 31, 2015, the percentage of nonperforming loans to total loans was 0.49%, compared to 0.35% at September 30, 2015, and 0.48% at December 31, 2014. Other real estate owned totaled $56 million, a 10% decrease from the prior quarter and a 43% decrease from the fourth quarter of 2014.
Net charge-offs were $83 million during the current quarter, an increase of $12 million and a decrease of $11 million compared to the prior quarter and the fourth quarter of 2014, respectively. The ratio of annualized net charge-offs to total average loans was 0.24% during the current quarter, compared to 0.21% during the prior quarter and 0.28% during the fourth quarter of 2014. The provision for credit losses was $51 million in the current quarter, an increase of $19 million from the prior quarter due to higher net charge-offs and a reduction in the decline in the allowance for loan and lease losses, as a result of higher loan growth. The provision for credit losses decreased $23 million compared to the fourth quarter of 2014, driven by the overall improvement in asset quality, in addition to lower net charge-offs.
At December 31, 2015, the allowance for loan and lease losses was $1.8 billion, which represented 1.29% of total loans, a decline of $34 million, or 5 basis points, from September 30, 2015. Excluding government-guaranteed loans, the allowance for loan and lease losses to period-end loans ratio was 1.34% as of December 31, 2015.
Early stage delinquencies increased 9 basis points from the prior quarter to 0.70% at December 31, 2015. Excluding government-guaranteed loans, early stage delinquencies were 0.30%, down 1 basis point from the prior quarter.
Accruing restructured loans totaled $2.6 billion and nonaccruing restructured loans totaled $176 million at December 31, 2015, of which $2.6 billion were residential loans, $131 million were consumer loans, and $74 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-K.
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-K. 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 January 22, 2016, 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: 4Q15). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 4Q15). A replay of the call will be available approximately one hour after the call ends on January 22, 2016, and will remain available until February 22, 2016, by dialing 1-800-964-3385 (domestic) or 1-203-369-3095 (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 January 22, 2016, listeners may access an archived version of the webcast in the "Events & Presentations" section of the investor relations website. This webcast will be archived and available for one year.
SunTrust Banks, Inc., headquartered in Atlanta, is one of the nation's largest banking organizations, serving a broad range of consumer, commercial, corporate and institutional clients. The Company operates an extensive branch and ATM network throughout the Southeast and Mid-Atlantic States and a full array of technology-based, 24-hour delivery channels. The Company also serves clients in selected markets nationally. Its primary businesses include deposit, credit, and trust and investment management services. Through various subsidiaries, the Company provides mortgage banking, insurance, brokerage, equipment leasing, and capital markets services. SunTrust's Internet address is www.suntrust.com.
Important Cautionary Statement About Forward-Looking Statements
This news release includes non-GAAP financial measures to describe SunTrust's performance. The reconciliations of those measures to GAAP measures are provided within or in the appendix to this news release. In this news release, the Company presents net interest income and net interest margin on a fully taxable-equivalent ("FTE") basis, and ratios on an annualized basis. The FTE basis adjusts for the tax-favored status of income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.
This news release contains forward-looking statements. Statements regarding potential future share repurchases and future expected dividends are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words "believes," "expects," "anticipates," "estimates," "intends," "plans," "forecast," "goals," "targets," "initiatives," "focus," "potentially," "probably," "projects," "outlook" or similar expressions or future conditional verbs such as "may," "will," "should," "would," and "could." Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.
Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Future dividends, and the amount of any such dividend, must be declared by our board of directors in the future in their discretion. Also, future share repurchases and the timing of any such repurchase are subject to market conditions and management's discretion. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014 and in other periodic reports that we file with the SEC.
SunTrust Banks, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
Three Months Ended Twelve Months Ended
December 31 % December 31 %
----------- -----------
(Dollars in millions and shares in thousands, except per share data) (Unaudited) 2015 2014 Change 2015 2014 Change
---- ---- ------ ---- ---- ------
EARNINGS & DIVIDENDS
--------------------
Net income $484 $394 23% $1,933 $1,774 9%
Net income available to common shareholders 467 378 24% 1,863 1,722 8%
Adjusted net income available to common shareholders (1) 467 466 0% 1,863 1,729 8%
Total revenue - FTE 1, 2 2,046 2,043 0% 8,174 8,305 -2%
Total revenue - FTE, excluding gain on sale of asset management subsidiary 1, 2 2,046 2,043 0% 8,174 8,200 0%
Net income per average common share:
Diluted 0.91 0.72 26% 3.58 3.23 11%
Adjusted diluted (1) 0.91 0.88 3% 3.58 3.24 10%
Basic 0.92 0.72 28% 3.62 3.26 11%
Dividends paid per common share 0.24 0.20 20% 0.92 0.70 31%
CONDENSED BALANCE SHEETS
------------------------
Selected Average Balances:
Total assets $189,656 $188,341 1% $188,892 $182,176 4%
Earning assets 170,262 167,227 2% 168,813 162,189 4%
Loans 135,214 133,438 1% 133,558 130,874 2%
Intangible assets including mortgage servicing rights ("MSRs") 7,629 7,623 0% 7,604 7,630 0%
MSRs 1,273 1,272 0% 1,250 1,255 0%
Consumer and commercial deposits 148,163 136,892 8% 144,202 132,012 9%
Brokered time and foreign deposits 1,046 1,399 -25% 1,106 1,730 -36%
Total shareholders' equity 23,583 22,754 4% 23,346 22,170 5%
Preferred stock 1,225 1,024 20% 1,225 800 53%
Period End Balances:
Total assets 190,817 190,328 0%
Earning assets 172,114 168,678 2%
Loans 136,442 133,112 3%
Allowance for loan and lease losses ("ALLL") 1,752 1,937 -10%
Consumer and commercial deposits 148,921 139,234 7%
Brokered time and foreign deposits 909 1,333 -32%
Total shareholders' equity 23,437 23,005 2%
FINANCIAL RATIOS & OTHER DATA
-----------------------------
Return on average total assets 1.01% 0.83% 22% 1.02% 0.97% 5%
Return on average common shareholders' equity 8.28 6.91 20% 8.42 8.06 4%
Return on average tangible common shareholders' equity (1) 11.40 9.62 19% 11.64 11.33 3%
Net interest margin (2) 2.98 2.96 1% 2.91 3.07 -5%
Efficiency ratio (2) 62.96 69.00 -9% 63.13 66.74 -5%
Tangible efficiency ratio 1, 2 62.11 68.44 -9% 62.64 66.44 -6%
Effective tax rate 28 25 12% 28 22 27%
Basel III capital ratios at period end (transitional) (3):
CET1 9.95% N/A
Tier 1 capital 10.80 N/A
Total capital 12.55 N/A
Leverage 9.70 N/A
Basel III fully phased-in CET1 ratio 1, 3 9.81 N/A
Basel I capital ratios at period end (3):
Tier 1 common N/A 9.60%
Tier 1 capital N/A 10.80
Total capital N/A 12.51
Tier 1 leverage N/A 9.64
Total average shareholders' equity to total average assets 12.43% 12.08% 3% 12.36% 12.17% 2%
Tangible equity to tangible assets 1 9.39 9.17 2%
Book value per common share $43.66 $41.52 5%
Tangible book value per common share (1) 31.65 29.82 6%
Market capitalization 21,793 21,978 -1%
Average common shares outstanding:
Diluted 514,507 527,959 -3% 520,586 533,391 -2%
Basic 508,536 521,775 -3% 514,844 527,500 -2%
Full-time equivalent employees 24,103 24,638 -2%
Number of ATMs 2,160 2,187 -1%
Full service banking offices 1,401 1,445 -3%
1 See Appendix A for reconcilements of non-U.S. GAAP performance measures.
2 Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent ("FTE") basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest
income arising from taxable and tax-exempt sources. Total revenue - FTE equals net interest income on an FTE basis plus noninterest income.
3 Current period capital ratios are estimated as of the earnings release date. Basel III Final Rules became effective for the Company on January 1, 2015; thus, Basel III capital ratios are not applicable ("N/A") in periods ending prior to January 1, 2015 and Basel I capital ratios are N/A in periods ending subsequent to January 1, 2015.
SunTrust Banks, Inc. and Subsidiaries
FIVE QUARTER FINANCIAL HIGHLIGHTS
Three Months Ended
------------------
December 31 September 30 June 30 March 31 December 31
(Dollars in millions and shares in thousands, except per share data) (Unaudited) 2015 2015 2015 2015 2014
---- ---- ---- ---- ----
EARNINGS & DIVIDENDS
--------------------
Net income $484 $537 $483 $429 $394
Net income available to common shareholders 467 519 467 411 378
Adjusted net income available to common shareholders (1) 467 519 467 411 466
Total revenue - FTE 1, 2 2,046 2,058 2,077 1,992 2,043
Total revenue - FTE, excluding gain on sale of asset management subsidiary 1, 2 2,046 2,058 2,077 1,992 2,043
Net income per average common share:
Diluted 0.91 1.00 0.89 0.78 0.72
Adjusted diluted (1) 0.91 1.00 0.89 0.78 0.88
Basic 0.92 1.01 0.90 0.79 0.72
Dividends paid per common share 0.24 0.24 0.24 0.20 0.20
CONDENSED BALANCE SHEETS
------------------------
Selected Average Balances:
Total assets $189,656 $188,341 $188,310 $189,265 $188,341
Earning assets 170,262 168,334 168,461 168,179 167,227
Loans 135,214 132,837 132,829 133,338 133,438
Intangible assets including MSRs 7,629 7,711 7,572 7,502 7,623
MSRs 1,273 1,352 1,223 1,152 1,272
Consumer and commercial deposits 148,163 145,226 142,851 140,476 136,892
Brokered time and foreign deposits 1,046 1,010 1,118 1,250 1,399
Total shareholders' equity 23,583 23,384 23,239 23,172 22,754
Preferred stock 1,225 1,225 1,225 1,225 1,024
Period End Balances:
Total assets 190,817 187,036 188,858 189,881 190,328
Earning assets 172,114 168,555 168,499 168,269 168,678
Loans 136,442 133,560 132,538 132,380 133,112
ALLL 1,752 1,786 1,834 1,893 1,937
Consumer and commercial deposits 148,921 145,337 143,922 143,239 139,234
Brokered time and foreign deposits 909 1,034 1,015 1,184 1,333
Total shareholders' equity 23,437 23,664 23,223 23,260 23,005
FINANCIAL RATIOS & OTHER DATA
-----------------------------
Return on average total assets 1.01% 1.13% 1.03% 0.92% 0.83%
Return on average common shareholders' equity 8.28 9.30 8.50 7.59 6.91
Return on average tangible common shareholders' equity (1) 11.40 12.84 11.77 10.53 9.62
Net interest margin(2) 2.98 2.94 2.86 2.83 2.96
Efficiency ratio (2) 62.96 61.44 63.92 64.23 69.00
Tangible efficiency ratio 1, 2 62.11 60.99 63.59 63.91 68.44
Effective tax rate 28 26 29 31 25
Basel III capital ratios at period end (transitional) (3):
CET1 9.95% 10.04% 9.93% 9.89% N/A
Tier 1 capital 10.80 10.90 10.79 10.76 N/A
Total capital 12.55 12.72 12.66 12.69 N/A
Leverage 9.70 9.68 9.56 9.41 N/A
Basel III fully phased-in CET1 ratio 1, 3 9.81 9.89 9.76 9.74 N/A
Basel I capital ratios at period end (3):
Tier 1 common N/A N/A N/A N/A 9.60%
Tier 1 capital N/A N/A N/A N/A 10.80
Total capital N/A N/A N/A N/A 12.51
Tier 1 leverage N/A N/A N/A N/A 9.64
Total average shareholders' equity to total average assets 12.43 12.42 12.34 12.24 12.08
Tangible equity to tangible assets 1 9.39 9.71 9.37 9.34 9.17
Book value per common share $43.66 $43.65 $42.46 $42.21 $41.52
Tangible book value per common share (1) 31.65 31.76 30.65 30.49 29.82
Market capitalization 21,793 19,659 22,286 21,450 21,978
Average common shares outstanding:
Diluted 514,507 518,677 522,479 526,837 527,959
Basic 508,536 513,010 516,968 521,020 521,775
Full-time equivalent employees 24,103 24,124 24,237 24,466 24,638
Number of ATMs 2,160 2,142 2,162 2,176 2,187
Full service banking offices 1,401 1,406 1,430 1,444 1,445
1 See Appendix A for reconcilements of non-GAAP performance measures.
2 Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent ("FTE") basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of
net interest income arising from taxable and tax-exempt sources. Total revenue - FTE equals net interest income on an FTE basis plus noninterest income.
3 Current period capital ratios are estimated as of the earnings release date. Basel III Final Rules became effective for the Company on January 1, 2015; thus, Basel III capital ratios are not applicable ("N/A") in periods ending prior to January 1, 2015 and Basel I capital ratios are N/A in periods ending subsequent to January 1, 2015.
SunTrust Banks, Inc. and Subsidiaries
APPENDIX A TO THE EARNINGS RELEASE - RECONCILEMENT OF NON-U.S. GAAP MEASURES (1)
Three Months Ended Twelve Months Ended
December 31
--- -----------
December 31 September 30 June 30 March 31 December 31
(Dollars in millions) (Unaudited) 2015 2015 2015 2015 2014 2015 2014
---- ---- ---- ---- ---- ---- ----
Net interest income $1,246 $1,211 $1,167 $1,140 $1,211 $4,764 $4,840
Taxable-equivalent adjustment 35 36 36 35 37 142 142
--- --- --- --- --- --- ---
Net interest income - FTE 1,281 1,247 1,203 1,175 1,248 4,906 4,982
Noninterest income 765 811 874 817 795 3,268 3,323
--- --- --- --- --- ----- -----
Total revenue - FTE 2,046 2,058 2,077 1,992 2,043 8,174 8,305
Gain on sale of asset management subsidiary 0 0 0 0 0 0 (105)
--- --- --- --- --- --- ----
Total revenue - FTE, excluding gain on sale of asset management subsidiary (2) $2,046 $2,058 $2,077 $1,992 $2,043 $8,174 $8,200
====== ====== ====== ====== ====== ====== ======
Noninterest income $765 $811 $874 $817 $795 $3,268 $3,323
Gain on sale of asset management subsidiary 0 0 0 0 0 0 (105)
--- --- --- --- --- --- ----
Noninterest income, excluding gain on sale of asset management subsidiary (2) $765 $811 $874 $817 $795 $3,268 $3,218
==== ==== ==== ==== ==== ====== ======
Return on average common shareholders' equity 8.28% 9.30% 8.50% 7.59% 6.91% 8.42% 8.06%
Effect of removing average intangible assets, excluding MSRs 3.12% 3.54% 3.27% 2.94% 2.71% 3.22% 3.27%
Return on average tangible common shareholders' equity (3) 11.40% 12.84% 11.77% 10.53% 9.62% 11.64% 11.33%
===== ===== ===== ===== ==== ===== =====
Efficiency ratio 4 62.96% 61.44% 63.92% 64.23% 69.00% 63.13% 66.74%
Impact of excluding amortization of intangible assets -0.85% -0.45% -0.33% -0.32% -0.56% -0.49% -0.30%
Tangible efficiency ratio 5 62.11% 60.99% 63.59% 63.91% 68.44% 62.64% 66.44%
Impact of Form 8-K and other legacy mortgage-related items 0.00% 0.00% 0.00% 0.00% -7.10% 0.00% -3.10%
Adjusted tangible efficiency ratio 5, 6 62.11% 60.99% 63.59% 63.91% 61.34% 62.64% 63.34%
===== ===== ===== ===== ===== ===== =====
Basel III CET1 ratio (transitional) 7 9.95% 10.04% 9.93% 9.89% N/A 9.95% N/A
Impact of MSRs and other under fully phased-in approach7 -0.14% -0.15% -0.17% -0.15% N/A -0.14% N/A
Basel III fully phased-in CET1 ratio 7 9.81% 9.89% 9.76% 9.74% N/A 9.81% N/A
==== ==== ==== ==== ====
December 31 September 30 June 30 March 31 December 31
(Dollars in millions, except per share data) (Unaudited) 2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Total shareholders' equity $23,437 $23,664 $23,223 $23,260 $23,005
Goodwill, net of deferred taxes of $240 million, $237 million, $234 million, $231 million, and $214 million, (6,097) (6,100) (6,103) (6,106) (6,123)
respectively
Other intangible assets (including other servicing rights), net of deferred taxes of $3 million, $4 million, $4 (1,322) (1,279) (1,412) (1,193) (1,219)
million, $0, and $0, respectively, and MSRs
MSRs 1,307 1,262 1,393 1,181 1,206
Tangible equity 17,325 17,547 17,101 17,142 16,869
Preferred stock (1,225) (1,225) (1,225) (1,225) (1,225)
------ ------ ------ ------ ------
Tangible common equity $16,100 $16,322 $15,876 $15,917 $15,644
======= ======= ======= ======= =======
Total assets $190,817 $187,036 $188,858 $189,881 $190,328
Goodwill (6,337) (6,337) (6,337) (6,337) (6,337)
Other intangible assets (including MSRs and other servicing rights) (1,325) (1,282) (1,416) (1,193) (1,219)
MSRs 1,307 1,262 1,393 1,181 1,206
Tangible assets $184,462 $180,679 $182,498 $183,532 $183,978
======== ======== ======== ======== ========
Tangible equity to tangible assets 8 9.39% 9.71% 9.37% 9.34% 9.17%
Tangible book value per common share 9 $31.65 $31.75 $30.65 $30.49 $29.82
Total loans held for investment $136,442 $133,560 $132,538 $132,380 $133,112
Government guaranteed loans held for investment (5,551) (5,215) (5,026) (4,992) (5,459)
Fair value loans held for investment (257) (262) (263) (268) (272)
Total loans held for investment, excluding government guaranteed and fair value loans $130,634 $128,083 $127,249 $127,120 $127,381
======== ======== ======== ======== ========
ALLL to total loans held for investment, excluding government guaranteed and fair value loans 10 1.34% 1.39% 1.44% 1.49% 1.52%
SunTrust Banks, Inc. and Subsidiaries
APPENDIX A TO THE EARNINGS RELEASE - RECONCILEMENT OF NON-U.S. GAAP MEASURES, continued (1)
------------------------------------------------------------------------------------------
Three Months Ended Twelve Months
Ended December 31
-----------------
December 31 September 30 June 30 March 31 December 31
(Dollars in millions, except per share data) (Unaudited) 2015 2015 2015 2015 2014 2015 2014
---- ---- ---- ---- ---- ---- ----
Net income available to common shareholders $467 $519 $467 $411 $378 $1,863 $1,722
Adjusting Items:
Operating losses related to settlement of certain legal matters 0 0 0 0 0 0 204
Gain on sale of asset management subsidiary 0 0 0 0 0 0 (105)
Other legacy mortgage-related matters 0 0 0 0 145 0 120
Tax benefit related to above items 0 0 0 0 (57) 0 (82)
Tax benefit related to completion of tax authority exam 0 0 0 0 0 0 (130)
Total adjusting items 0 0 0 0 88 0 7
--- --- --- --- --- --- ---
Adjusted net income available to common shareholders 6 $467 $519 $467 $411 $466 $1,863 $1,729
==== ==== ==== ==== ==== ====== ======
Net income per average common share, diluted $0.91 $1.00 $0.89 $0.78 $0.72 $3.58 $3.23
Impact of adjusting items 0.00 0.00 0.00 0.00 0.17 0.00 0.01
Adjusted net income per average common share, diluted 6, 11 $0.91 $1.00 $0.89 $0.78 $0.88 $3.58 $3.24
===== ===== ===== ===== ===== ===== =====
(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 are adjusted for any permanent differences.
2 SunTrust presents total revenue -FTE excluding gain on sale of asset management subsidiary and noninterest income excluding gain on sale of asset management subsidiary. The Company believes revenue and noninterest income excluding the gain on sale of the asset management subsidiary is more indicative of the Company's performance because it isolates income
that is primarily client relationship and client transaction driven and is more indicative of normalized operations.
3 SunTrust presents return on average tangible common shareholders' equity to exclude intangible assets, except for MSRs. The Company believes this measure is useful to investors because, by removing the effect of intangible assets, except for MSRs (the level of which may vary from company to company), it allows investors to more easily compare the Company's
return on average common shareholders' equity to other companies in the industry who present a similar measure. The Company also believes that removing intangible assets, except for MSRs, is a more relevant measure of the return on the Company's common shareholders' equity.
4 Computed by dividing noninterest expense by total revenue - FTE. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-
exempt sources.
5 SunTrust presents a tangible efficiency ratio, which excludes the amortization of intangible assets. The Company believes this measure is useful to investors because, by removing the effect of these intangible asset costs (the level of which may vary from company to company), it allows investors to more easily compare the Company's efficiency to other
companies in the industry. This measure is utilized by management to assess the efficiency of the Company and its lines of business.
6 SunTrust presents adjusted net income available to common shareholders, adjusted net income per average common diluted share, and an adjusted tangible efficiency ratio excluding items previously announced on Form 8-Ks filed with the SEC on January 5, 2015, September 9, 2014, and July 3, 2014, as well as other legacy mortgage-related items. The Company
believes this measure is useful to investors because it removes the effect of material items impacting prior periods' results, allowing a more useful view of normalized operations. Removing these items also allows investors to compare the Company's results to other companies in the industry that may not have had similar items impacting their results.
7Current period Basel III capital ratios are estimated as of the earnings release date. Estimated fully phased-in CET1 ratios consider a 250% risk-weighting for MSRs and phase-out from capital of certain DTAs, the overfunded pension asset, and other intangible assets. 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.
8 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.
9 SunTrust presents a tangible book value per common share that excludes the after-tax impact of purchase accounting intangible assets and also excludes preferred stock from tangible equity. The Company believes this measure is useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity as well as
preferred stock (the level of which may vary from company to company), it allows investors to more easily compare the Company's book value of common stock to other companies in the industry.
10 SunTrust presents a ratio of ALLL to total loans held for investment, excluding government guaranteed and fair value loans. The Company believes that the exclusion of loans that are held at fair value with no related allowance, and loans guaranteed by a government agency that do not have an associated allowance recorded due to nominal risk of principal
loss, better depicts the allowance relative to loans the allowance is intended to cover.
11 Amounts may not foot as presented due to rounding.
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SOURCE SunTrust Banks, Inc.
