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SunTrust Reports Fourth Quarter and Fiscal Year 2014 Results

Continued Execution of Core Strategies Drives Strong Quarterly and Yearly Performance

Jan 16, 2015

ATLANTA, Jan. 16, 2015 /PRNewswire/ -- SunTrust Banks, Inc. (NYSE: STI) today reported net income available to common shareholders of $378 million, or $0.72 per average common diluted share.  The current quarter's results include a $145 million legal provision, or $0.17 per share, related to legacy mortgage matters, to increase legal reserves and complete the resolution of a specific matter.  Excluding the impact of this expense, adjusted earnings per share for the current quarter were $0.88 compared to $0.81, on an adjusted basis, in the prior quarter and $0.77 in the fourth quarter of 2013.

For 2014, SunTrust earned $3.23 per share compared to $2.41 per share for 2013.  Adjusted earnings per share were $3.24 for 2014, representing an 18% improvement compared to 2013 adjusted earnings per share of $2.74.  Please see Appendix A for reconcilement of non-U.S. GAAP measures.

"Core earnings growth of 18 percent over the past year reflects our focus on expanding client relationships and executing our core strategies.  Our strong performance in the fourth quarter and 2014 was driven by good loan and deposit growth, continued expense discipline, and improved credit quality," said William H. Rogers, Jr. chairman and chief executive officer of SunTrust Banks, Inc. "Looking into 2015, we will build on the momentum generated in 2014 to meet more client needs and expand key businesses, creating a more valuable company for all of our stakeholders."

Fourth Quarter 2014 Financial Highlights

Income Statement

  • Net income available to common shareholders was $378 million, or $0.72 per average common diluted share.  Excluding the aforementioned legacy mortgage-related expense, net income available to common shareholders was $466 million, or $0.88 per share.
    • On an adjusted basis, earnings per share increased $0.07, or 9%, compared to the prior quarter and increased $0.11, or 14%, compared to the fourth quarter of 2013.
  • Total revenues were essentially stable compared to the prior quarter and the fourth quarter of 2013.
  • Reported noninterest expense increased $151 million compared to the prior quarter.  Excluding the $145 million legal provision for legacy mortgage matters, noninterest expense was relatively stable compared to the prior quarter and declined $96 million, or 7%, compared to the fourth quarter of 2013.
  • The efficiency and tangible efficiency ratios in the current quarter were 69.0% and 68.4%, respectively, and for 2014 were 66.7% and 66.4%, respectively.

Balance Sheet

  • Average total loans for the current quarter increased 2% and 6% compared to the prior quarter and the fourth quarter of 2013, respectively, driven by growth in the C&I, commercial real estate, and consumer loan portfolios.
  • Average client deposits increased 4% sequentially and 7% compared to the fourth quarter of 2013, with the favorable mix shift toward lower-cost deposits continuing.

Capital

  • Estimated capital ratios continued to be well above regulatory requirements. The Basel I Tier 1 common and Basel III Common Equity Tier 1 ratios were estimated to be 9.6% and 9.7%, respectively, as of December 31, 2014.
  • During the quarter, the Company repurchased $110 million of common shares and issued $500 million of preferred stock.
  • Book value per share was $41.52, and tangible book value per share was $29.82, 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 17% from the prior quarter and totaled 0.48% of total loans at December 31, 2014. 
  • Net charge-offs for the current quarter were $94 million, representing 0.28% of average loans on an annualized basis, down 11 basis points sequentially.
  • The provision for credit losses decreased $19 million compared to the prior quarter due to lower net charge-offs, partially offset by a smaller reduction in the allowance for credit losses.
  • At December 31, 2014, the allowance for loan losses to period-end loans ratio was 1.46%.









(Dollars in millions, except per-share data)









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

4Q 2013


3Q 2014


4Q 2014

Net income available to common shareholders

$413



$563



$378


Earnings per average common diluted share

0.77



1.06



0.72


Adjusted earnings per average common diluted share (1)

0.77



0.81



0.88


Total revenue

2,061



2,031



2,043


Net interest income

1,247



1,251



1,248


Provision for credit losses

101



93



74


Noninterest income

814



780



795


Noninterest expense

1,361



1,259



1,410


Net interest margin

3.20

%


3.03

%


2.96

%










Balance Sheet









(Dollars in billions)









Average loans

$125.6



$130.7



$133.4


Average consumer and commercial deposits

127.5



132.2



136.9











Capital









Tier 1 capital ratio (2)

10.81

%


10.54

%


10.75

%

Tier 1 common ratio (2)

9.82

%


9.63

%


9.55

%

Total average shareholders' equity to total average assets

12.23

%


12.10

%


12.08

%










Asset Quality









Net charge-offs to average loans (annualized)

0.40

%


0.39

%


0.28

%

Allowance for loan and lease losses to period-end loans

1.60

%


1.49

%


1.46

%

Nonperforming loans to total loans

0.76

%


0.58

%


0.48

%


(1) See page 24 for non-U.S. GAAP reconciliation

(2) Current period Tier 1 capital and Tier 1 common ratios are estimated as of the date of this news release

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, an increase of $12 million compared to the prior quarter.  The increase was driven by higher mortgage-related and investment banking income, partially offset by declines in other revenue categories.  Compared to the fourth quarter of 2013, total revenue declined $18 million, largely driven by foregone RidgeWorth revenue and lower trading income, partially offset by higher mortgage-related and investment banking income. 

For 2014, total revenue was $8.3 billion, an increase of $111 million compared to 2013.  Excluding the $105 million pre-tax gain-on-sale of RidgeWorth, total revenue was relatively stable, as higher mortgage servicing, investment banking, and retail investment income was offset by lower mortgage production income and lower trust and investment management income due to the sale of RidgeWorth.

Net Interest Income

Net interest income was $1.2 billion for the current quarter, a decline of $3 million compared to the prior quarter.  The decrease was primarily due to a 7 basis point decline in net interest margin, substantially offset by higher average earning assets.  Similarly, compared to the fourth quarter of 2013, a 24 basis point decline in net interest margin was offset by solid growth in average earning assets.

Net interest margin for the current quarter was 2.96%. The 7 basis point decline compared to the prior quarter was primarily driven by lower commercial loan swap income and an 8 basis point decline in investment securities yields.  The 24 basis point decline compared to the fourth quarter of 2013 was largely due to a 23 and 26 basis point reduction in loan and investment securities yields, respectively.

For both 2014 and 2013, net interest income was $5.0 billion. The net interest margin for 2014 was 3.07%, a decrease of 17 basis points compared to 2013.  The decline in net interest margin was primarily driven by a 25 basis point reduction in loan yields during 2014.

Noninterest Income

Noninterest income was $795 million for the current quarter, compared to $780 million for the prior quarter and $814 million for the fourth quarter of 2013.  The $15 million sequential increase was primarily due to increased mortgage-related and investment banking revenue, partially offset by reductions in other revenue categories.  Compared to the fourth quarter of 2013, noninterest income declined $19 million, largely driven by foregone RidgeWorth revenue and lower trading income, partially offset by higher mortgage-related and investment banking income.

Mortgage production income for the current quarter was $61 million compared to $45 million for the prior quarter and $31 million for the fourth quarter of 2013.  The increase compared to both prior periods was due to higher mortgage production volume, improved gain-on-sale margins, and a lower mortgage repurchase provision.  Mortgage production volume increased 4% sequentially and 20% compared to the fourth quarter of 2013.

Mortgage servicing income was $53 million in the current quarter, compared to $44 million in the prior quarter and $38 million in the fourth quarter of 2013.  The sequential increase was primarily driven by higher servicing fees, due to recent servicing portfolio acquisitions and typical fourth quarter seasonal activity.  Compared to the fourth quarter of 2013, the $15 million increase was due to improved net hedge performance and higher servicing fees.  The servicing portfolio was $142 billion at December 31, 2014, compared to $136 billion at September 30, 2014 and $137 billion at December 31, 2013.

Investment banking income was $109 million for the current quarter, compared to $88 million in the prior quarter and $96 million in the fourth quarter of 2013.  The increase compared to both prior periods was primarily driven by higher syndicated finance and M&A advisory revenues, partially offset by a decline in equity and fixed income origination fees.  Trading income was $40 million for the current quarter, compared to $46 million for the prior quarter and $57 million in the fourth quarter of 2013.  The decline compared to both prior periods was primarily driven by lower fixed income-related trading revenue. 

Trust and investment management income was $84 million in the current quarter, compared to $93 million in the prior quarter and $131 million in the fourth quarter of 2013.  The $9 million decline compared to the prior quarter was primarily driven by seasonal fees earned in the third quarter.  The $47 million decline compared to the fourth quarter of 2013 was entirely due to foregone revenue resulting from the sale of RidgeWorth.

Other noninterest income was $42 million for the current quarter, compared to $52 million for the prior quarter and $55 million for the fourth quarter of 2013.  The $10 million decline compared to the prior quarter was due to lower gains on the sale of loans, partially offset by lower impairment of lease financing assets in the current quarter.  The $13 million decline compared to the fourth quarter of 2013 was primarily driven by lower gains on the sale of lease financing and other assets, partially offset by lower asset impairment charges.

For 2014, noninterest income was $3.3 billion, an increase of $109 million compared to 2013.  Excluding the $105 million gain-on-sale of RidgeWorth during the second quarter of 2014, noninterest income was relatively stable as higher mortgage servicing, investment banking, and retail investment income, combined with gains related to the sale of mortgage loans, were mostly offset by declines in mortgage production income and foregone revenue related to the sale of RidgeWorth.

Noninterest Expense

Noninterest expense for the current quarter was $1.4 billion, compared to $1.3 billion in the prior quarter and $1.4 billion in the fourth quarter of 2013.  The current quarter included a $145 million legal provision for legacy mortgage matters.  Excluding this expense, noninterest expense was relatively stable sequentially and declined $96 million, or 7%, compared to the fourth quarter of 2013.  This decline was driven by lower employee compensation and benefits expense in the current quarter and, more broadly, the Company's overall efficiency and expense management focus.

Employee compensation and benefits expense was $670 million in the current quarter, compared to $730 million in the prior quarter and $723 million in the fourth quarter of 2013.  The sequential decline of $60 million was due to lower incentive compensation costs, as well as a decline in salaries and medical costs.  Full-year incentive compensation costs increased due to improved business performance.  The $53 million decrease from the fourth quarter of 2013 was primarily due to a decline in salaries, 401(k) costs, medical costs, and incentive compensation costs, in part due to a decline in full-time equivalent employees.

Operating losses were $174 million in the current quarter, which included the $145 million legal provision related to legacy mortgage matters, compared to $29 million in the prior quarter and $42 million in the fourth quarter of 2013.

Outside processing and software expense was $206 million in the current quarter, compared to $184 million in the prior quarter and $191 million in the fourth quarter of 2013.  The $22 million sequential increase was primarily due to higher utilization of certain third-party services.

Marketing and customer development expense was $43 million in the current quarter, compared to $35 million in the prior quarter and $40 million in the fourth quarter of 2013.  Compared to the prior quarter, the $8 million increase was primarily driven by the typical seasonal increase in advertising expenses.

FDIC premium and regulatory costs were $32 million in the current quarter, compared to $29 million in the prior quarter, which included an $8 million refund from the FDIC, and $41 million in the fourth quarter of 2013.  Excluding the prior-quarter refund, the decline related to both prior periods was driven by lower FDIC insurance premiums, reflecting improvements in the Company's risk profile.

Other noninterest expense was $146 million in the current quarter, compared to $120 million in the prior quarter and $187 million in the fourth quarter of 2013.  The $26 million sequential increase was driven by higher consulting fees and an increase in severance costs in the current quarter.  The $41 million decrease compared to the fourth quarter of 2013 was primarily driven by lower credit and collections services expenses in the current quarter and higher costs related to the resolution of certain legacy mortgage matters recognized in the fourth quarter of 2013.

For 2014, noninterest expense was $5.5 billion compared to $5.8 billion in 2013.  The $288 million decrease was due to a decline in cyclical costs and the continued focus on expense management.  These declines were partially offset by higher employee compensation costs, partially as a result of improved business performance in 2014.

Income Taxes

For the current quarter, the Company recorded an income tax provision of $128 million, compared to $67 million for the prior quarter and $138 million for the fourth quarter of 2013.  Excluding the tax impact ($57 million) of the $145 million legal provision expense, the fourth quarter effective tax rate was approximately 28%.  The prior quarter included a $130 million tax benefit as a result of the completion of a tax authority examination.  Excluding this benefit, the effective tax rate in the prior quarter was 31%.

Balance Sheet

At December 31, 2014, the Company had total assets of $190.3 billion and shareholders' equity of $23.0 billion, representing 12% of total assets.  Book value per share was $41.52, and tangible book value per share was $29.82, both up 2% compared to September 30, 2014, driven by growth in retained earnings.

Loans

Average performing loans were $132.7 billion for the current quarter, up 2% and 6% over the prior quarter and the fourth quarter of 2013, respectively.  Sequentially, loan growth was driven by a $2.8 billion increase in C&I loans and a $470 million increase in consumer loans, while average mortgage loans declined $456 million.  Additionally, as part of its balance sheet optimization strategy, during the fourth quarter, the Company sold approximately $475 million of indirect auto loans and $335 million of guaranteed student loans and transferred approximately $600 million of indirect auto loans and $470 million of C&I loans to held-for-sale status.  The net gain/(loss) on the sales and transfers was immaterial.  Compared to the fourth quarter of 2013, average performing loans increased $8.0 billion, with growth across most portfolios other than residential and student loans. 

Deposits

Average client deposits for the current quarter were $136.9 billion, compared to $132.2 billion in the prior quarter and $127.5 billion in the fourth quarter of 2013.  Sequentially, average client deposits increased 4% due to a $2.3 billion, or 5%, increase in money market account balances, a $2.1 billion, or 8%, increase in NOW account balances, and a $0.6 billion, or 2%, increase in demand deposits.  The strong deposit growth in the quarter was due to both client-focused relationship deepening strategies and seasonality.  Partially offsetting this growth in lower-cost deposits was a $0.3 billion, or 3%, decline in time deposits.  Compared to the fourth quarter of 2013, average client deposits increased 7%, driven by increases in lower-cost deposits, partially offset by a $2.2 billion, or 17%, decrease in time deposits.          

Capital and Liquidity

The Company's estimated capital ratios are well above current regulatory requirements with Basel I Tier 1 capital, Basel I Tier 1 common, and Basel III Common Equity Tier 1 ratios at an estimated 10.75%, 9.55%, and 9.70%, respectively, at December 31, 2014.  The ratios of total average equity to total average assets and tangible equity to tangible assets were 12.08% and 9.17%, respectively, at December 31, 2014.  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 fourth 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 fourth quarter of 2013.  Additionally, during the current quarter, the Company repurchased $110 million of its outstanding common stock, bringing the total repurchased in 2014 to $458 million with plans to repurchase between $110 million and $120 million of common stock during the first quarter of 2015.  Lastly, the Company issued $500 million of non-cumulative perpetual preferred stock during the fourth quarter.

Asset Quality

Total nonperforming assets were $780 million at December 31, 2014, down 16% compared to the prior quarter and 33% compared to the fourth quarter of 2013.  The sequential reduction benefited from a transfer of $38 million of nonperforming loans to held-for-sale status. At December 31, 2014, the percentage of nonperforming loans to total loans was 0.48% compared to 0.58% at September 30, 2014.  Other real estate owned totaled $99 million, a 12% decrease from the prior quarter and a 42% decrease from the fourth quarter of 2013.

The provision for credit losses was $74 million, a decline of $19 million from the prior quarter and $27 million from the fourth quarter of 2013, as asset quality continued to improve.  Net charge-offs were $94 million during the current quarter, a $34 million decrease compared to the prior quarter, as the prior quarter included charge-offs related to targeted de-risking in the residential loan portfolio.  Compared to the fourth quarter of 2013, net charge-offs also declined $34 million, primarily driven by the home equity, nonguaranteed mortgage, and C&I loan portfolios.  The ratio of annualized net charge-offs to total average loans was 0.28% during the current quarter, compared to 0.39% during the prior quarter and 0.40% during the fourth quarter of 2013. 

At December 31, 2014, the allowance for loan and lease losses was $1.9 billion, which represented 1.46% of total loans, a $31 million and 3 basis point decrease from September 30, 2014.  The decline was due to continued asset quality improvements during the quarter.

Early stage delinquencies increased 5 basis points from the prior quarter to 0.64% at December 31, 2014.  Excluding government-guaranteed loans, early stage delinquencies were 0.30%, unchanged from the prior quarter.

Accruing restructured loans totaled $2.6 billion and nonaccruing restructured loans totaled $273 million at December 31, 2014, of which $2.6 billion were residential loans, $129 million were commercial loans, and $126 million were consumer 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 generally accepted accounting principles ("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 16, 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: 4Q14). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 4Q14).  A replay of the call will be available approximately one hour after the call ends on January 16, 2015, and will remain available until February 16, 2015, by dialing 1-888-566-0462 (domestic) or 1-203-369-3609 (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 16, 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, 2013 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




Twelve Months Ended





December 31


%


December 31


%



2014


2013


Change


2014


2013


Change 


EARNINGS & DIVIDENDS













Net income

$394


$426


-8%


$1,774


$1,344


32%


Net income available to common shareholders

378


413


-8%


1,722


1,297


33%


Net income available to common shareholders, excluding
the impact of Form 8-K and other legacy mortgage-related items 1

466


413


13%


1,729


1,476


17%


Total revenue - FTE 1, 2                              

2,043


2,061


-1%


8,305


8,194


1%


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

2,043


2,061


-1%


8,200


8,194


0%


Net income per average common share:        













Diluted 

0.72


0.77


-6%


3.23


2.41


34%


Diluted, excluding the impact of Form
8-K and other legacy mortgage-related items 1

0.88


0.77


14%


3.24


2.74


18%


Basic

0.72


0.78


-8%


3.26


2.43


34%


Dividends paid per common share           

0.20


0.10


100%


0.70


0.35


100%


CONDENSED BALANCE SHEETS 













Selected Average Balances:













Total assets

$188,341


$173,791


8%


$182,176


$172,497


6%


Earning assets

167,227


154,567


8%


162,189


153,728


6%


Loans

133,438


125,649


6%


130,874


122,657


7%


Intangible assets including MSRs

7,623


7,658


0%


7,630


7,535


1%


MSRs

1,272


1,253


2%


1,255


1,121


12%


Consumer and commercial deposits

136,892


127,460


7%


132,012


127,076


4%


Brokered time and foreign deposits

1,399


2,010


-30%


1,730


2,065


-16%


Total shareholders' equity

22,754


21,251


7%


22,170


21,167


5%


Preferred stock

1,024


725


41%


800


725


10%


Period End Balances:













Total assets







190,328


175,335


9%


Earning assets







168,678


156,856


8%


Loans







133,112


127,877


4%


Allowance for loan and lease losses







1,937


2,044


-5%


Consumer and commercial deposits







139,234


127,735


9%


Brokered time and foreign deposits







1,333


2,024


-34%


Total shareholders' equity







23,005


21,422


7%


FINANCIAL RATIOS & OTHER DATA













Return on average total assets

0.83%


0.97%


-14%


0.97%


0.78%


24%


Return on average common shareholders' equity

6.91


7.99


-14%


8.06


6.34


27%


Return on average tangible common shareholders' equity 1

9.62


11.61


-17%


11.33


9.25


22%


Net interest margin 2

2.96


3.20


-8%


3.07


3.24


-5%


Efficiency ratio 2, 3

69.00


66.05


4%


66.74


71.16


-6%


Tangible efficiency ratio 1, 2, 3  

68.44


65.84


4%


66.44


70.89


-6%


Effective tax rate 3

24.60


24.48


0%


21.65


19.13


13%


Tier 1 common 4







9.55


9.82


-3%


Tier 1 capital 4







10.75


10.81


-1%


Total capital 4







12.50


12.81


-2%


Tier 1 leverage 4







9.63


9.58


1%


Total average shareholders' equity to total average assets

12.08


12.23


-1%


12.17


12.27


-1%


Tangible equity to tangible assets                             







9.17


9.00


2%















Book value per common share







$41.52


$38.61


8%


Tangible book value per common share 1







29.82


27.01


10%


Market price:













     High

$43.06


$36.99


16%


43.06


36.99


16%


     Low

33.97


31.97


6%


33.97


26.93


26%


     Close







41.90


36.81


14%


Market capitalization







21,978


19,734


11%


Average common shares outstanding:













     Diluted 

527,959


537,921


-2%


533,391


539,093


-1%


     Basic

521,775


532,492


-2%


527,500


534,283


-1%


Full-time equivalent employees







24,638


26,281


-6%


Number of ATMs







2,187


2,243


-2%


Full service banking offices







1,445


1,497


-3%




























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


2Total 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.            


3Amounts for periods prior to the first quarter of 2014 have been recalculated as a result of the Company's early adoption of ASU 2014-01, which required retrospective application.


4Current period tier 1 common, tier 1 capital, total capital, and tier 1 leverage ratios are estimated as of the earnings release date.          


 

SunTrust Banks, Inc. and Subsidiaries










FIVE QUARTER FINANCIAL HIGHLIGHTS










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





















Three Months Ended


 December 31 


September 30


June 30


March 31


 December 31 


2014


2014


2014


2014


2013

EARNINGS & DIVIDENDS










Net income

$394


$576


$399


$405


$426

Net income available to common shareholders

378


563


387


393


413

Net income available to common shareholders, excluding
the impact of Form 8-K and other legacy mortgage-related items 1

466


433


436


393


413

Total revenue - FTE 1, 2                      

2,043


2,031


2,201


2,030


2,061

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

2,043


2,031


2,096


2,030


2,061

Net income per average common share:       










Diluted 

0.72


1.06


0.72


0.73


0.77

Diluted, excluding the impact of Form 8-K and other legacy mortgage-related items 1

0.88


0.81


0.81


0.73


0.77

Basic

0.72


1.07


0.73


0.74


0.78

Dividends paid per common share        

0.20


0.20


0.20


0.10


0.10

CONDENSED BALANCE SHEETS 










Selected Average Balances:










Total assets

$188,341


$183,433


$179,820


$176,971


$173,791

Earning assets

167,227


163,688


160,373


157,343


154,567

Loans

133,438


130,747


130,734


128,525


125,649

Intangible assets including MSRs

7,623


7,615


7,614


7,666


7,658

MSRs

1,272


1,262


1,220


1,265


1,253

Consumer and commercial deposits

136,892


132,195


130,472


128,396


127,460

Brokered time and foreign deposits

1,399


1,624


1,893


2,013


2,010

Total shareholders' equity

22,754


22,191


21,994


21,727


21,251

Preferred stock

1,024


725


725


725


725

Period End Balances:










Total assets

190,328


186,818


182,559


179,542


175,335

Earning assets

168,678


165,434


162,422


158,487


156,856

Loans

133,112


132,151


129,744


129,196


127,877

Allowance for loan and lease losses

1,937


1,968


2,003


2,040


2,044

Consumer and commercial deposits

139,234


135,077


131,792


130,933


127,735

Brokered time and foreign deposits

1,333


1,430


1,493


2,023


2,024

Total shareholders' equity

23,005


22,269


22,131


21,817


21,422

FINANCIAL RATIOS & OTHER DATA










Return on average total assets

0.83%


1.25%


0.89%


0.93%


0.97%

Return on average common shareholders' equity

6.91


10.41


7.29


7.59


7.99

Return on average tangible common shareholders' equity 1

9.62


14.59


10.29


10.78


11.61

Net interest margin2

2.96


3.03


3.11


3.19


3.20

Efficiency ratio 2, 3

69.00


62.03


68.93


66.83


66.05

Tangible efficiency ratio 1, 2, 3

68.44


61.69


68.77


66.65


65.84

Effective tax rate 3

24.60


10.37


30.00


23.33


24.48

Tier 1 common 4

9.55


9.63


9.72


9.90


9.82

Tier 1 capital 4

10.75


10.54


10.66


10.88


10.81

Total capital 4

12.50


12.32


12.53


12.81


12.81

Tier 1 leverage 4

9.63


9.51


9.56


9.57


9.58

Total average shareholders' equity to total average assets          

12.08


12.10


12.23


12.28


12.23

Tangible equity to tangible assets 1               

9.17


8.94


9.07


9.01


9.00











Book value per common share

$41.52


$40.85


$40.18


$39.44


$38.61

Tangible book value per common share 1

29.82


29.21


28.64


27.82


27.01

Market price:










     High

43.06


40.86


40.84


41.26


36.99

     Low

33.97


36.42


36.82


36.23


31.97

     Close

41.90


38.03


40.06


39.79


36.81

Market capitalization

21,978


20,055


21,344


21,279


19,734

Average common shares outstanding:










     Diluted 

527,959


533,230


535,486


536,992


537,921

     Basic

521,775


527,402


529,764


531,162


532,492

Full-time equivalent employees

24,638


25,074


25,841


25,925


26,281

Number of ATMs

2,187


2,192


2,212


2,243


2,243

Full service banking offices

1,445


1,454


1,473


1,501


1,497





















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

2Total 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.  

3Amounts for periods prior to the first quarter of 2014 have been recalculated as a result of the Company's early adoption of ASU 2014-01, which required retrospective application.

4Current period tier 1 common, tier 1 capital, total capital, and tier 1 leverage ratios are estimated as of the earnings release date.          

 

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


Twelve Months Ended


December 31


September 30


June 30


March 31


December 31


December 31


December 31


2014


2014


2014


2014


2013


2014


2013

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














Net interest income                    

$1,211


$1,215


$1,209


$1,204


$1,213


$4,840


$4,853

Taxable-equivalent adjustment                  

37


36


35


35


34


142


127

Net interest income - FTE                

1,248


1,251


1,244


1,239


1,247


4,982


4,980

Noninterest income                    

795


780


957


791


814


3,323


3,214

Total revenue - FTE              

2,043


2,031


2,201


2,030


2,061


8,305


8,194

Gain on sale of asset management subsidiary

0


0


(105)


0


0


(105)


0

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

$2,043


$2,031


$2,096


$2,030


$2,061


8,200


$8,194

Noninterest income                    

$795


$780


$957


$791


$814


$3,323


$3,214

Gain on sale of asset management subsidiary

0


0


(105)


0


0


(105)


0

Noninterest income excluding gain on sale of asset management subsidiary 2

$795


$780


$852


$791


$814


$3,218


$3,214

Return on average common shareholders' equity

6.91%


10.41%


7.29%


7.59%


7.99%


8.06%


6.34%

Effect of removing average intangibles excluding MSRs

2.71%


4.18%


3.00%


3.19%


3.62%


3.27%


2.91%

Return on average tangible common shareholders' equity 3

9.62%


14.59%


10.29%


10.78%


11.61%


11.33%


9.25%

Efficiency ratio 4, 5                    

69.00%


62.03%


68.93%


66.83%


66.05%


66.74%


71.16%

Impact of excluding amortization of intangible assets

-0.56%


-0.34%


-0.16%


-0.18%


-0.21%


-0.30%


-0.27%

Tangible efficiency ratio 5, 6                       

68.44%


61.69%


68.77%


66.65%


65.84%


66.44%


70.89%

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

-7.10%


0.00%


-5.08%


0.00%


0.00%


-3.10%


-5.62%

Adjusted tangible efficiency ratio 5, 6, 7

61.34%


61.69%


63.69%


66.65%


65.84%


63.34%


65.27%
















December 31


September 30


June 30


March 31


December 31






2014


2014


2014


2014


2013





Total shareholders' equity                

$23,005


$22,269


$22,131


$21,817


$21,422





Goodwill, net of deferred taxes of $214 million, $210 million, $206 million, $193 million, and $186 million, respectively

(6,123)


(6,127)


(6,131)


(6,184)


(6,183)





Other intangible assets, net of deferred taxes of $0, $0, $1 million, $1 million, and $2 million, and MSRs

(1,219)


(1,320)


(1,276)


(1,281)


(1,332)





MSRs

1,206


1,305


1,259


1,251


1,300





Tangible equity              

16,869


16,127


15,983


15,603


15,207





Preferred stock

(1,225)


(725)


(725)


(725)


(725)





Tangible common equity

$15,644


$15,402


$15,258


$14,878


$14,482





Total assets                 

$190,328


$186,818


$182,559


$179,542


$175,335





Goodwill                

(6,337)


(6,337)


(6,337)


(6,377)


(6,369)





Other intangible assets including MSRs                 

(1,219)


(1,320)


(1,277)


(1,282)


(1,334)





MSRs

1,206


1,305


1,259


1,251


1,300





Tangible assets                 

$183,978


$180,466


$176,204


$173,134


$168,932





Tangible equity to tangible assets 8           

9.17%


8.94%


9.07%


9.01%


9.00%





Tangible book value per common share 9

$29.82


$29.21


$28.64


$27.82


$27.01



















Total loans

$133,112


$132,151


$129,744


$129,196


$127,877





Government guaranteed loans

(5,459)


(5,965)


(6,081)


(8,828)


(8,961)





Loans held at fair value

(272)


(284)


(292)


(299)


(302)





Total loans, excluding government guaranteed and fair value loans

$127,381


$125,902


$123,371


$120,069


$118,614





Allowance to total loans, excluding government guaranteed and fair value loans 10

1.52%


1.56%


1.62%


1.70%


1.72%



















 

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


Twelve Months Ended December 31


December 31


September 30


June 30


March 31


December 31



2014


2014


2014


2014


2013


2014


2013

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

Net income available to common shareholders

$378


$563


$387


$393


$413


$1,722


$1,297

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














Operating losses related to settlement of certain legal matters

0


0


204


0


0


204


323

Mortgage repurchase provision related to repurchase settlements

0


0


0


0


0


0


63

Provision for unrecoverable servicing advances

0


0


0


0


0


0


96

Gain on sale of asset management subsidiary

0


0


(105)


0


0


(105)


0

Other legacy mortgage-related matters

145


0


(25)


0


0


120


0

Tax benefit related to above items

(57)


0


(25)


0


0


(82)


(190)

Tax benefit related to completion of tax authority exam

0


(130)


0


0


0


(130)


0

Net tax benefit related to subsidiary reorganization and other

0


0


0


0


0


0


(113)

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

88


(130)


49


0


0


7


179

Net income available to common shareholders, excluding
the impact of Form 8-K and other legacy mortgage-related items 7

$466


$433


$436


$393


$413


$1,729


$1,476















Net income per average common share, diluted

$0.72


$1.06


$0.72


$0.73


$0.77


$3.23


$2.41

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

0.17


(0.25)


0.09


0.00


0.00


0.01


0.33

Adjusted net income per average common diluted share 7, 11

$0.88


$0.81


$0.81


$0.73


$0.77


$3.24


$2.74















1Certain 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.

5Amounts for periods prior to the first quarter of 2014 have been recalculated as a result of the Company's early adoption of ASU 2014-01, which required retrospective application.

6 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.

7 SunTrust presents 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, July 3, 2014, and October 10, 2013, 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.   

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 on common stock to other companies in the industry.

10 SunTrust presents a ratio of allowance 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.

11 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-fourth-quarter-and-fiscal-year-2014-results-300021660.html

SOURCE SunTrust Banks, Inc.

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