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| 8-K - FORM 8-K - SUNTRUST BANKS INC | d8k.htm |
 SunTrust Banks, Inc.
Barclays Capital Americas Select Conference
May 23, 2011
Aleem Gillani
Chief Financial Officer
Exhibit 99.1 |
 1
Important Cautionary Statement About Forward-Looking Statements
The following should be read in conjunction with the financial statements, notes and other information
contained in the Company’s 2010 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K.
This presentation 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 of this
presentation. In this presentation, net interest income and net interest margin are presented on a
fully taxable-equivalent (“FTE”) basis, and ratios are presented 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 presentation may contain forward-looking statements. 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,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such
as “may,” “will,” “should,” “would,” and
“could.” Such statements are based upon the current beliefs and expectations of management and on information currently available to management. Such 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. Factors that could cause actual results to differ
materially from those described in the forward-looking statements can be found in Item 1A of Part II of our 10-K and
in other periodic reports that we file with the SEC. Those factors include: difficult market
conditions have adversely affected our industry; recent levels of market volatility are unprecedented; we are subject
to capital adequacy guidelines and, if we fail to meet these guidelines, our financial condition would
be adversely affected; emergency measures designed to stabilize the U.S. banking system are beginning
to wind down; we are subject to credit risk; weakness in the economy and in the real estate market,
including specific weakness within our geographic footprint, has adversely affected us and may continue
to adversely affect us; weakness in the real estate market, including the secondary residential
mortgage loan markets, has adversely affected us and may continue to adversely affect us; as a financial
services company, adverse changes in general business or economic conditions could have a material
adverse effect on our financial condition and results of operations; changes in market interest rates or
capital markets could adversely affect our revenue and expense, the value of assets and obligations,
and the availability and cost of capital or liquidity; the fiscal and monetary policies of the federal
government and its agencies could have a material adverse effect on our earnings; we may be required to
repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of
representations and warranties, borrower fraud, or certain borrower defaults, which could harm our
liquidity, results of operations, and financial condition; we may continue to suffer increased losses in our
loan portfolio despite enhancement of our underwriting policies; depressed market values for our stock
may require us to write down goodwill; clients could pursue alternatives to bank deposits, causing us
to lose a relatively inexpensive source of funding; consumers may decide not to use banks to complete
their financial transactions, which could affect net income; we have businesses other than banking
which subject us to a variety of risks; hurricanes and other natural disasters may adversely affect
loan portfolios and operations and increase the cost of doing business; negative public opinion could
damage our reputation and adversely impact business and revenues; we rely on other companies to provide
key components of our business infrastructure; the soundness of other financial institutions
could adversely affect us; we rely on our systems, employees, and certain counterparties, and certain
failures could materially adversely affect our operations; we depend on the accuracy and
completeness of information about clients and counterparties; we are subject to certain litigation, and
our expenses related to this litigation may adversely affect our results; regulation by federal and state
agencies could adversely affect the business, revenue, and profit margins; competition in the financial
services industry is intense and could result in losing business or reducing margins; future legislation
could harm our competitive position; maintaining or increasing market share depends on market
acceptance and regulatory approval of new products and services; we may not pay dividends on your
common stock; our ability to receive dividends from our subsidiaries accounts for most of our revenue
and could affect our liquidity and ability to pay dividends; significant legal actions could subject us to
substantial uninsured liabilities; recently declining values of real estate, increases in unemployment,
and the related effects on local economies may increase our credit losses, which would negatively affect
our financial results; deteriorating credit quality, particularly in real estate loans, has adversely
impacted us and may continue to adversely impact us; our ALLL may not be adequate to cover our eventual
losses; we will realize future losses if the proceeds we receive upon liquidation of nonperforming
assets are less than the carrying value of such assets; disruptions in our ability to access global capital
markets may negatively affect our capital resources and liquidity; in 2009 and 2010, credit rating
agencies downgraded the credit ratings of SunTrust Bank and SunTrust Banks, Inc., and these downgrades
and any subsequent downgrades could adversely impact the price and liquidity of our securities and
could have an impact on our businesses and results of operations; we have in the past and may in the
future pursue acquisitions, which could affect costs and from which we may not be able to realize
anticipated benefits; we depend on the expertise of key personnel, and if these individuals leave or change
their roles without effective replacements, operations may suffer; we may not be able to hire or retain
additional qualified personnel and recruiting and compensation costs may increase as a result of
turnover, both of which may increase costs and reduce profitability and may adversely impact our
ability to implement our business strategy; our accounting policies and processes are critical to how we
report our financial condition and results of operations, and require management to make estimates
about matters that are uncertain; changes in our accounting policies or in accounting standards could
materially affect how we report our financial results and condition; our stock price can be volatile;
our disclosure controls and procedures may not prevent or detect all errors or acts of fraud; our financial
instruments carried at fair value expose us to certain market risks; our revenues derived from our
investment securities may be volatile and subject to a variety of risks; and we may enter into transactions
with off-balance sheet affiliates or our subsidiaries. |
 SunTrust has an attractive footprint
and a diverse business mix
SunTrust has an attractive footprint
and a diverse business mix
2 |
 1.
Source: SNL Financial, as of 3/31/11. Based upon traditional bank holding
companies headquartered in the United States A Leading Bank with an Attractive
Southeastern Footprint Franchise Overview
Assets
$170.8B
(9
th
)
Deposits
$124.0B
(9
th
)
Branches
1,665
(8
th
)
ATMs
2,924
(7
th
)
Branch Network
Selected Statistics and (U.S. Rank)
1
3 |
 4
1.
Source: SNL Financial-five-year population growth, 2010-2015, MSA +
counties not in any MSA, at 5/12/2011 2.
Source: SNL Financial, as of 6/30/2010 based on MSAs
0.7%
1.1%
2.0%
2.2%
2.9%
3.3%
3.7%
4.0%
4.7%
5.6%
5.7%
6.1%
MTB
PNC
CMA
KEY
FITB
MI
COF
USB
RF
BBT
WFC
STI
U.S. Average:
3.9%
Market Overview
•
We hold a Top 3 Deposit Market Share
Rank in 21 of our Top 25 MSAs
Top 25 MSAs represent 85% of our
total MSA deposits
Our Top 25 MSA average deposit
market share is 14%
Projected
Population
Growth
1
Market Share
2
Strong Market Share in High Growth Markets |
 5
Well-diversified Business Mix
2010
Revenue
-
$8.7B
Retail Banking
Extensive network of traditional and in-store branches. Deposit,
lending, and card products offered to consumers and small businesses
Diversified Commercial Banking
Full line of lending, capital markets, financial risk management,
commercial card, and treasury and payment solutions
Corporate and Investment Banking
Complete offering of investment banking and traditional banking
services. National practice with industry sector focus
Mortgage
Prime-based, national platform for residential mortgages. Top 10
U.S. originator
1
Wealth & Investment Management
Provider of wealth and investment management products and services
to
individual
and
institutional
accounts.
$202B
AUA
2
Corporate Treasury & Other
$27B
high-quality
securities
portfolio
2
Commercial Real Estate
Broad range of financial solutions to CRE developers and investors
Lines of Business
42%
15%
12%
11%
10%
7%
3%
1.
Source: Inside Mortgage Finance
2.
As of March 31, 2011 |
 6
We have improved core performance
and reduced our risk profile
We have improved core performance
and reduced our risk profile |
 7
Earnings Improvement from Lower Provision for Credit Losses and Higher
Pre-Provision Net Revenue
Net Income Trends
1.
1Q09 excludes the after tax $751 million impact of Goodwill Impairment charge
($ in millions) |
 8
Credit Metrics Remain Elevated but are Exhibiting Favorable Trends
Credit Metric Trends
($ in millions)
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
$0
$200
$400
$600
$800
$1,000
$1,200
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
Nonperforming Loans
Net Charge-offs |
 9
Higher-Risk Loan Trends
Higher-risk Loans Down Nearly $10 Billion, or 45%, Since 1Q 09
($ in millions)
$21,893
$14,095
$13,081
$12,010
$16,484
$15,219
Higher-risk
Mortgage
products
include
Prime
2nds,
Residential
Construction,
and
Alt-A.
Higher-risk
Home
Equity
includes
High
LTV
lines
(includes
Florida
lines
>
80%
LTV
and
other
lines
>
90%
LTV),
Brokered
Home
Equity,
and
Home
Equity
Loans.
Higher-risk
Commercial
Construction
represents
investor
owned
construction
loans.
Data
reflects
period
end
balances and includes performing and nonperforming loans
|
 10
Client Deposit Trends
($ in millions, average balances)
Favorable Deposit Growth and Mix Shift Trends
1.
Lower-cost deposits includes DDA, NOW, Money Market and Savings
2.
Higher-cost deposits includes Consumer Time and Other Time
from
1Q 09
CAGR
Total
Client
Deposits
+$13.2B
6.0%
Higher-
Cost
Deposits
-$10.5B
-18.9%
Lower-
Cost
Deposits
+$23.7B
14.4%
$107,515
$116,460
$115,084
$117,009
$117,233
$114,486
$113,528
$119,688
$120,710 |
 11
Net Interest Margin Trends
Net Interest Margin Expansion for Eight Consecutive Quarters
|
 12
Tier 1 Common Ratio Trends
Tier 1 Common Ratio Significantly Exceeds Current and Proposed Regulatory
Standards |
 13
Our focus on three guiding principles
is yielding tangible results |
 We
accomplish this by focusing on three principles: Market Approach
SunTrust’s Mission is Supported by a Core Set of Principles
One Team
Client First
Focus on
Profitable Growth
Our mission is to help people and institutions prosper
14 |
 15
Selected Accomplishments
One Team
Client First
Profitable
Growth
Excellent Client Service is Being Recognized by Our Industry
•
Received 18 Greenwich Excellence Awards for Distinguished Performance in Serving
the Financial Needs of Business Clients in Small and Middle Market Business
Banking One of the top two award recipients nationally
Ranked highest in customer satisfaction in Small Business Banking
•
Ranked
#1
bank
for
customer
experience
Client Service Improvements are Translating into Client Loyalty
•
Client
satisfaction
is
at
an
all-time
high
as
measured
in
our
Service
Excellence
Program
3
•
Achieved #1 industry ranking for client loyalty in Commercial and Private Wealth
Management against key competitors
4
•
Net
new
consumer
checking
accounts
up
30%
from
1Q
2010
driven
by
a
9%
decline
in
closed
accounts, as attrition continues to improve
Focus on Customer-Centric Strategies is Yielding Results
•
Client Deposits reached a record level in 1Q 11
•
Third highest quarter of net income and revenue results for CIB in 1Q
11—revenue up 50% from prior year
•
Wealth
and
Investment
Management
net
income
up
34%
in
1Q
11
from
the
prior
year;
fee
income
up 16%
Teammate Engagement is Improving Markedly
•
Completed second annual employee engagement survey—90% participation:
Realized
positive
improvements
in
every
surveyed
area
1
Working as One Team to Deliver the Organization to Our Clients
•
Improved cross-sell penetration across many of our lines of business
1.
Based upon internal surveys conducted by Gallup
2.
By Forrester Research
3.
Proprietary research conducted by Gallup on behalf of SunTrust
4.
Based upon Gallup survey results within the SunTrust footprint
2 |
 16
Our strategic priorities are intended to
drive further improvements in our
financial performance
Our strategic priorities are intended to
drive further improvements in our
financial performance |
 17
Growth Strategies
•
Diversify the Balance Sheet
•
Optimize Business Mix
•
Improve Expense Efficiency
•
Grow Market Share
Growth Strategies |
 18
Asset-Based
Lending
Small
Business
Administration
lending
Commercial
($5-100MM
revenue)
Middle
Market
($100-750MM
revenue)
Corporate
&
Investment
Banking
($750MM+ revenue)
Targeted Growth
Areas:
High-opportunity
businesses,
segments, and
products where
we are well-
positioned to grow
non-real estate
loans and fee
income
Mass Affluent client segment
Private Wealth Management
Credit Card
Auto Lending (direct and indirect)
Diversify the Balance Sheet & Optimize Business Mix
Targeted Areas for Growth are Intended to Diversify the Loan Portfolio and Enhance
Fee Income
Targeted Growth Areas
Targeted Growth Areas
39%
5%
3%
4%
21%
14%
4%
8%
2%
Commercial & Industrial
Commercial Real Estate
Construction
Resi. Mtg. -
Guaranteed
Resi. Mtg. -
Nonguaranteed
Home Equity
Student Loans -
Guaranteed
Indirect Consumer
Other Consumer
Loan Portfolio Composition –
3/31/11
Commercial Lending / Fee Businesses
Consumer Lending / Fee Businesses |
 19
Total Noninterest
Expenses
Expenses Excl. Adjustments and
Cyclical Items
1
Opportunities to Improve
Efficiency Ratio
•
Continued improvements
in revenue generation
•
Balanced approach to
investments and expense
discipline
•
Abatement of cyclical
expenses
Improve Expense Efficiency
Expense Savings Enabled Continued Investment in the Business while Keeping Core
Expenses Flat
1.
Appendix includes reconciliation of non-GAAP numbers and details of adjustments
and cyclical expenses 2.
Reflects the respective expense item divided by Total Revenue-FTE.
Additional information on the calculation is included in the appendix Impact
on Efficiency Ratio
2
2006
2010
Credit
Expenses
1.8%
7.9%
Regulatory
Assessments
0.3%
3.0%
($ in millions)
$4,867
$5,911
$4,607
$4,797
2006
2010
2006
2010 |
 20
•
The “Live Solid. Bank Solid.”
brand campaign has been
resonating with clients
•
We are developing products and
solutions for our client segments
based on an understanding of
their needs and values
Household Growth
Grow Market Share
Efforts to Grow Market Share are Yielding Results
1.
Source:
2008
&
2009
Nielsen
Claritas
Demographic
Update
2.
Retail Banking checking households
•
We continue to enhance our client
experience with a deeper focus on
cross-channel effectiveness
“Live Solid. Bank Solid.”
Ad Campaign Video |
 Summary
•
SunTrust has an attractive footprint and a diverse
business mix
•
We have reduced our risk profile and improved core
performance
•
Our focus on three guiding principles is yielding
tangible results
•
Our strategic priorities are intended to drive further
improvements in our financial performance
•
SunTrust is well-positioned to manage through the
economic recovery and to capitalize upon our
opportunities
•
SunTrust has an attractive footprint and a diverse
business mix
•
We have reduced our risk profile and improved core
performance
•
Our focus on three guiding principles is yielding
tangible results
•
Our strategic priorities are intended to drive further
improvements in our financial performance
•
SunTrust is well-positioned to manage through the
economic recovery and to capitalize upon our
opportunities
21 |
 Appendix
22 |
 23
Reconciliation
of
Non-GAAP
Measures
–
Expenses
($ in millions)
2006
2010
$MM
CAGR
Total Expenses
$4,867
$5,911
$1,044
5.0%
Adjustments
AHG Writedown
-
16
Loss on Debt Extinguishment
12
71
VISA Contract Termination
-
8
Total Adjustments
12
95
Expenses Excl. Adjustments
1
4,855
5,816
961
4.6%
Cyclical Items
Regulatory Assessments
23
265
Pension Expense
78
66
Credit Expenses:
Credit & Collection Services
102
279
Other Real Estate
0
300
Mortgage Reinsurance
-
26
Operating Losses
45
83
Total Cyclical Items
248
1,019
Expenses Excl. Adjustments & Cyclial Items
2
$4,607
$4,797
$190
1.0%
Contribution to Efficiency Ratio
Total Revenue, FTE
$8,217
$8,699
Credit Expenses
147
688
Regulatory Assessments
23
265
Credit Expenses / Total Revenue
1.8%
7.9%
Regulatory Assessments / Total Revenue
0.3%
3.0%
2010 vs. 2006
1.
Adjusted expense is provided as the removal of certain items that are material and potentially
non-recurring is useful to investors and management in comparing institutions and in evaluating expense trends.
2.
Expense excluding adjustments and cyclical items is provided as it removes expenses that are recurring
in nature, but higher in a recessionary cycle, and is useful to investors and management in assessing
the impact of the recession on non-interest expenses and earnings. It also facilitates
analysis of the effectiveness of management in controlling expense growth. |
 SunTrust Banks, Inc.
Barclays Capital Americas Select Conference
May 23, 2011
Aleem Gillani
Chief Financial Officer |