UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2013
SunTrust Banks, Inc.
(Exact name of registrant as specified in its charter)
Georgia | 001-08918 | 58-1575035 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
303 Peachtree Street, N.E., Atlanta, Georgia | 30308 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code (404) 558-7711
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events.
On April 19, 2013, SunTrust Banks, Inc. (the Company) furnished to the Securities and Exchange Commission (the Commission) a copy of a news release announcing the Companys results for the quarter ended March 31, 2013 as Exhibit 99.1 to a current report on Form 8-K. The Company is filing this current report on Form 8-K for the sole purpose of causing portions of such news release to be deemed filed with the Commission and thereby incorporated into certain registration statements. The portions of the April 19, 2013 news release that the Company is filing with the Commission is attached hereto as Exhibit 99.1, and Exhibit 99.1 to this current report is incorporated herein by reference. All information in Exhibit 99.1 is provided as of the date thereof and the Company does not assume any obligation to update such information in the future.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 | Financial data as of March 31, 2013. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SUNTRUST BANKS, INC. | ||||||||
(Registrant) | ||||||||
Date: April 26, 2013 | By: | /s/ Thomas E. Panther | ||||||
Thomas E. Panther, | ||||||||
Senior Vice President, Director of Corporate Finance and Controller |
Exhibit 99.1
First Quarter 2013 Financial Highlights
Income Statement
| Continued expense reductions and improvement in credit quality drove net income available to common shareholders of $340 million, or $0.63 per average common diluted share. |
| Revenue, excluding securities gains, decreased 4% compared to the first quarter of last year, due to declines in both net interest and noninterest income. |
| Net interest income declined due to net interest margin compression of 16 basis points compared to the first quarter of last year, as the decline in earning asset yields outpaced the decline in interest-bearing liability costs. |
| Noninterest income decreased from the prior quarter due to lower mortgage production income. Investment banking income also declined, as the seasonally lower first quarter followed a record fourth quarter. |
| Noninterest expense decreased 12% compared to the first quarter of last year, on broad based reductions across most categories. Expenses were at their lowest level in three years. |
1
Balance Sheet
| Average loans decreased 1% compared to the first quarter of last year. The decreases were predominantly related to declines in residential real estate and government guaranteed student loans, which were substantially offset by targeted growth in commercial and industrial loans. |
| Average client deposits were essentially flat on a sequential quarter basis and increased 1% compared to the first quarter of last year. In both periods, we experienced a shift out of higher cost time deposits into lower cost deposit products. |
Capital
| Estimated capital ratios continued to be well above current regulatory requirements. The Tier 1 common equity ratio increased to an estimated 10.10%, up from 10.04% at year end. |
| During the quarter, the Company announced capital plans that included up to $200 million of common share repurchases by the end of the first quarter of 2014. |
Asset Quality
| The overall risk profile of the balance sheet continued to improve. Nonperforming loans decreased 5% during the quarter and were 1.21% of total loans at March 31, 2013, compared to 2.16% a year ago. |
| Annualized net charge-offs decreased to 0.76% of average loans compared to 1.38% in the first quarter of last year. Current quarter net charge-offs were at their lowest level in five years. |
| The provision for credit losses declined approximately 35% compared to the first quarter of last year. |
Three Months Ended March 31, |
||||||||
Income Statement (presented on a fully taxable-equivalent basis) | 2012 | 2013 | ||||||
(Dollars in millions, except per share data) | ||||||||
Net income available to common shareholders |
$ | 245 | $ | 340 | ||||
Earnings per average common diluted share |
0.46 | 0.63 | ||||||
Total revenue |
2,218 | 2,114 | ||||||
Total revenue, excluding net securities gains/losses |
2,200 | 2,112 | ||||||
Net interest income |
1,342 | 1,251 | ||||||
Provision for credit losses |
317 | 212 | ||||||
Noninterest income |
876 | 863 | ||||||
Noninterest expense |
1,541 | 1,363 | ||||||
Net interest margin |
3.49 | % | 3.33 | % | ||||
Balance Sheet | ||||||||
(Dollars in billions) | ||||||||
Average loans |
$ | 122.5 | $ | 120.9 | ||||
Average consumer and commercial deposits |
125.8 | 127.7 | ||||||
Capital | ||||||||
Tier 1 capital ratio (1) |
11.00 | % | 11.20 | % | ||||
Tier 1 common equity ratio (1) |
9.33 | % | 10.10 | % | ||||
Total average shareholders equity to total average assets |
11.45 | % | 12.29 | % | ||||
Asset Quality | ||||||||
Net charge-offs to average loans (annualized) |
1.38 | % | 0.76 | % | ||||
Allowance for loan losses to period end loans |
1.92 | % | 1.79 | % | ||||
Nonperforming loans to total loans |
2.16 | % | 1.21 | % |
(1) | Current period Tier 1 capital and Tier 1 common equity ratios are estimated as of April 19, 2013. |
2
Consolidated Financial Performance Details
(Presented on a fully taxable-equivalent basis unless otherwise noted)
Revenue
Total revenue was $2.1 billion for the first quarter, a decrease of $177 million compared to the prior quarter. The decline was driven by lower mortgage-related income, record fourth quarter investment banking revenue, and lower net interest income. Total revenue compared to the first quarter of last year decreased $104 million due primarily to lower net interest income.
Net Interest Income
Net interest income was $1.3 billion for the current quarter, a decrease of $25 million from the prior quarter, primarily driven by two fewer days in the current quarter. Net interest income decreased $91 million compared to the first quarter of last year due to lower earning asset yields, which were impacted by a decrease in commercial loan-related swap income and the foregone dividend income related to the third quarter 2012 accelerated termination of the agreements regarding the shares formerly owned in The Coca-Cola Company. These decreases were partially offset by lower deposit rates and a reduction in long-term debt.
Net interest margin for the first quarter was 3.33%, a decrease of 3 basis points from the prior quarter and 16 basis points from the first quarter of last year. On a sequential quarter basis, earning asset yields declined 6 basis points as a result of the continued low interest rate environment. Partially offsetting this decrease was a 2 basis point reduction on interest-bearing liabilities due to modestly lower rates paid on deposits. Compared to the first quarter of last year, the decrease in net interest margin was primarily due to a 34 basis point decrease in loan yields, driven by the continued low interest rate environment and a decrease in commercial loan-related swap income, as well as a 60 basis point decrease in the yield on the investment securities portfolio, approximately 26 basis points of which was due to the forgone dividend income associated with The Coca-Cola Company stock. These decreases were partially offset by a 25 basis point decline in rates paid on interest-bearing liabilities, primarily related to time deposits and long-term debt.
Noninterest Income
Total noninterest income was $863 million for the current quarter compared to $1,015 million for the prior quarter and $876 million for the first quarter of last year. The $152 million sequential quarter decrease was largely driven by lower mortgage and capital markets-related revenue, as well as a reduction in certain other categories due to fewer business days in the current quarter. Compared to the first quarter of last year, the $13 million decrease was primarily driven by reductions in mortgage servicing related income, securities gains, and trading income and was largely offset by a lower mortgage repurchase provision.
3
Mortgage production income for the current quarter was $159 million compared to $241 million for the prior quarter and $63 million for the first quarter of last year. The $82 million sequential quarter decrease was primarily driven by declines in margins. Partially offsetting the decline was higher origination fees due to the 11% increase in loan production volume as compared to prior quarter. Relative to the first quarter of last year, mortgage production income increased $96 million due to the $161 million decline in the mortgage repurchase provision, partially offset by reduced margins. At March 31, 2013, the reserve for mortgage repurchases totaled $513 million, a decrease of $119 million from the prior quarter as resolution activity on outstanding repurchase requests increased during the current quarter. Consistent with prior expectations, repurchase demands increased in the current quarter compared to recent quarters, while full file requests - a leading indicator of future demands - decreased.
Mortgage servicing income was $38 million for the current quarter compared to $45 million for the prior quarter and $81 million for the first quarter of last year. The $7 million sequential quarter decrease was due to lower servicing fees resulting from a decline in the mortgage servicing portfolio. The $43 million decrease compared to the first quarter of last year was due to lower servicing fees and less favorable net hedge performance. At March 31, 2013, the servicing portfolio was $142 billion compared to $155 billion at March 31, 2012, with the decline driven by the elevated level of refinance volume and the sales of certain loans in the portfolio.
Investment banking income was $68 million for the current quarter compared to $112 million in the prior quarter and $71 million in the first quarter of last year. The sequential quarter decrease was due to the record fourth quarter, which included an accelerated level of deal activity at year end, whereas the current quarter experienced seasonally lower levels of activity, most notably in loan syndications and high yield bond originations.
Trading income was $42 million for the current quarter compared to $65 million for the prior quarter and $57 million for the first quarter of last year. The $23 million sequential quarter decrease was largely attributable to reduced trading-related litigation reserves recognized in the previous quarter. The $15 million decline in trading income compared to the first quarter of last year was largely driven by an addition to our counterparty valuation reserve in the current quarter. Mark-to-market valuation losses on the Companys fair value debt and index-linked CDs were $24 million in the current quarter, which was approximately equal to the losses experienced during the first and fourth quarters of last year.
Other noninterest income for the current quarter was $44 million compared to $18 million for the prior quarter and $57 million for the first quarter of last year. The $26 million sequential quarter increase was primarily due to $25 million of net losses recognized from the sales of loans in the prior quarter. The $13 million decrease from the first quarter of last year was primarily due to lower gains from the sales of leases.
Noninterest Expense
Noninterest expense was $1.4 billion for the current quarter, a sequential quarter decrease of $147 million, or 10%, and a decline from the prior year of $178 million, or 12%. The declines from both periods were broad-based, reflecting the Companys continued expense reduction initiatives and the abatement of cyclically high costs.
Employee compensation and benefits expense was $759 million in the current quarter, up $21 million on a sequential quarter basis, primarily due to an approximate $35 million seasonal increase in employee benefits. The higher benefits expense was partially offset by a decrease in salaries, attributable to a reduction in full-time equivalent employees during the quarter, and lower incentive compensation. Compared to the first quarter of last year, employee compensation and benefits expense decreased $38 million, largely attributable to the reduction in full-time equivalent employees, as well as lower incentive compensation.
Operating losses were $39 million in the current quarter, a decrease of $38 million compared to the prior quarter and $21 million compared to the first quarter of last year. On a sequential quarter basis, the decline was primarily due to the $32 million fourth quarter expense related to the Acceleration and Remediation Agreement with the Federal Reserve Board and the Office of the Comptroller of the Currency regarding the Independent Foreclosure Review. The decrease compared to the first quarter of last year was driven by declines in litigation-related expenses and mortgage servicing-related compensatory fees.
Marketing and customer development expense was $30 million in the current quarter. This was a $20 million decline on a sequential basis due to seasonality and a modest increase compared to the first quarter of last year.
4
Other noninterest expense was $163 million, a decrease of $98 million from the prior quarter and $122 million from the first quarter of last year. The sequential quarter decline was largely driven by reductions in legal and consulting expenses, credit-related expenses (which are comprised of other real estate expenses and credit and collection costs), and franchise taxes. The decrease compared to the first quarter of last year was primarily due to reductions in credit-related, severance, and legal and consulting expenses.
Income Taxes
For the current quarter, the Company recorded an income tax provision of $151 million compared to $62 million for the prior quarter and $69 million for the first quarter of last year. The effective tax rate was 30% for the current quarter compared to 15% for the prior quarter and 22% for the first quarter of last year. The increase in the effective tax rate from the prior quarter was primarily due to the favorable impact of certain discrete tax items during the fourth quarter. The effective tax rate increase compared to the first quarter of last year was due to higher pre-tax earnings in the current quarter.
Balance Sheet
At March 31, 2013, the Company had total assets of $172 billion and shareholders equity of $21 billion, representing 12% of total assets. Book value and tangible book value per common share increased compared to the first quarter of last year, and were $37.89 and $26.33, respectively.
Loans
For the current quarter, average performing loans were $119.4 billion, a decrease of $0.6 billion, or 1%, from the prior quarter driven by declines in government guaranteed student and residential real estate loans, partially offset by increases in C&I and indirect auto loans. Average loans decreased $1.7 billion, or 1%, compared to the first quarter of last year. The decline was due to government guaranteed student and mortgage loans, which decreased $1.9 billion and $2.4 billion, respectively, due to sales during 2012. Home equity loans also decreased $0.9 billion due to continued loan payoffs. Partially offsetting these decreases was an increase in C&I loans, which increased $4.2 billion, or 9%.
Securities Available for Sale
For the current quarter, the securities available for sale portfolio averaged $23.3 billion, an increase of $1.7 billion from the prior quarter and a decrease of $4.3 billion from the first quarter of last year. The increase compared to the prior quarter was primarily the result of increased holdings of U.S. Treasury and government agency securities, as we opportunistically reinvested the proceeds from fourth quarter loan sales. The investment portfolio declined from the first quarter of last year due to the aforementioned transaction regarding The Coca-Cola Company stock, as well as reduced holdings of government agency mortgage-backed securities.
Deposits
Average consumer and commercial deposits for the current quarter were $127.7 billion compared to $127.9 billion for the prior quarter and $125.8 billion for the first quarter of last year. The slight decrease during the current quarter was driven by a seasonal decline of $1.3 billion, or 3%, in demand deposits and a decrease of $0.6 billion, or 4%, in time deposits. These decreases were predominantly offset by increases of $0.8 billion, or 3%, in interest bearing transaction accounts, $0.5 billion, or 1%, in money market accounts, and $0.3 billion, or 6%, in savings accounts. The $1.8 billion, or 1%, increase compared to the first quarter of last year was driven by the favorable shift during 2012 toward lower-cost accounts as average demand deposits increased $2.7 billion, or 8%, interest bearing transaction accounts increased $1.1 billion, or 4%, money market accounts increased $0.5 billion, or 1%, and savings accounts increased $0.7 billion, or 14%. The growth in these categories was partially offset by a decrease of $3.2 billion, or 18%, in higher-cost time deposits.
5
Capital and Liquidity
The Companys estimated capital ratios are well above current regulatory requirements with Tier 1 capital and Tier 1 common ratios increasing to an estimated 11.20% and 10.10%, respectively, at March 31, 2013. The ratios of total average equity to total average assets and tangible equity to tangible assets were 12.29% and 9.00%, respectively, at March 31, 2013, each increasing from the prior quarter and first quarter of last year. The Company continues to have substantial available liquidity provided in the form of its client deposit base and other available funding resources, as well as its portfolio of high-quality government-backed securities and cash.
During the first quarter, the Company announced capital plans in conjunction with the 2013 CCAR process and the completion of the Federal Reserves review of the Companys capital plan. The Company plans to repurchase up to $200 million of its common stock between the second quarter of 2013 and the first quarter of 2014. Additionally, it has increased its quarterly common stock dividend to $0.10 per common share from $0.05 per common share, and plans to maintain dividend payments on the Companys preferred stock. The Board of Directors had previously authorized the share repurchase, subject to the non-objection of the Companys capital plan by the Federal Reserve.
Asset Quality
Asset quality continued to improve during the quarter, including further decreases in nonperforming loans and nonperforming assets. Nonperforming loans totaled $1.5 billion at March 31, 2013, down $80 million, or 5%, relative to year end, led by decreases in residential loans. Compared to a year ago, nonperforming loans decreased $1.2 billion, or 45%, with reductions across all loan categories, most significantly nonguaranteed residential mortgages, commercial real estate, and commercial construction. At March 31, 2013, the percentage of nonperforming loans to total loans was 1.21%, down from 2.16% at the end of the first quarter of last year, respectively. Other real estate owned totaled $223 million at the end of the current quarter, down 46% since a year ago.
Net charge-offs were $226 million during the current quarter compared to $398 million for the prior quarter and $422 million for the first quarter of last year. The prior quarter net charge-offs included $79 million related to discharged Chapter 7 bankruptcy loans and $39 million associated with nonperforming loan sales. The decrease in net charge-offs from the prior year was driven primarily by residential and commercial loans.
The ratio of annualized net charge-offs to total average loans was 0.76% for the current quarter and 1.38% for the first quarter of last year. Net charge-offs resulting from the sale of nonperforming loans and Chapter 7 bankruptcy loans added 38 basis points to the prior quarter ratio. The ratio of annualized net charge-offs to total loans ended the current quarter at its lowest level since the first quarter of 2008. The provision for credit losses was $212 million, which decreased $105 million from the first quarter of last year.
At March 31, 2013, the allowance for loan losses was $2.2 billion and represented 1.79% of total loans, down one basis point from December 31, 2012. Excluding government guaranteed loans, the allowance for loan losses was 1.93% of total loans. The $22 million decrease in the allowance for loan losses during the current quarter was primarily the result of the decrease in total loans and is also reflective of continued improvement in asset quality.
Early stage delinquencies decreased 15 basis points from the end of the prior year to 0.78% at March 31, 2013. The decrease was primarily due to residential and consumer loans. Excluding government-guaranteed loans, early stage delinquencies were 0.41%, a decrease of seven basis points from December 31, 2012.
Accruing restructured loans totaled $2.5 billion, and nonaccruing restructured loans totaled $0.7 billion at March 31, 2013. $2.9 billion of restructured loans related to residential loans, $0.2 billion were commercial loans, and $0.1 billion related to consumer loans.
6
BUSINESS SEGMENT FINANCIAL PERFORMANCE
Business Segment Results
The Companys 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 loan losses is represented by net charge-offs. 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), certain matched-maturity funds transfer pricing credits and charges, differences in provision for loan losses compared to net charge-offs, as well as equity and its related impact. A detailed discussion of the business segment results will be included in the Companys forthcoming Form 10-Q.
Corresponding Financial Tables and Information
Investors are encouraged to review the foregoing summary and discussion of SunTrusts earnings and financial condition in conjunction with the detailed financial tables and information which SunTrust has also published today and SunTrusts forthcoming Form 10-Q. Detailed financial tables and other information are also available on the Investor Relations portion of the Companys website at www.suntrust.com/investorrelations.
Important Cautionary Statement About Forward-Looking Statements
This financial information includes non-GAAP financial measures to describe SunTrusts performance. The reconciliations of those measures to GAAP measures are provided within or in the appendix to this financial information. In this financial information, 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 financial information contains forward-looking statements. Statements regarding potential share repurchases and future 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,
7
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. 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 managements 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, 2012 and in other periodic reports that we file with the SEC.
8
SunTrust Banks, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(Dollars in millions, except per share data) (Unaudited)
Three Months Ended March 31 | ||||||||
2013 | 2012 | |||||||
EARNINGS & DIVIDENDS |
||||||||
Net income |
$ | 352 | $ | 250 | ||||
Net income available to common shareholders |
340 | 245 | ||||||
Total revenue - FTE 1, 2 |
2,114 | 2,218 | ||||||
Total revenue - FTE excluding securities gains, net 1, 2 |
2,112 | 2,200 | ||||||
Net income per average common share |
||||||||
Diluted |
0.63 | 0.46 | ||||||
Basic |
0.64 | 0.46 | ||||||
Dividends paid per common share |
0.05 | 0.05 | ||||||
CONDENSED BALANCE SHEETS |
||||||||
Selected Average Balances |
||||||||
Total assets |
$ | 171,808 | $ | 176,855 | ||||
Earning assets |
152,471 | 154,623 | ||||||
Loans |
120,882 | 122,542 | ||||||
Consumer and commercial deposits |
127,655 | 125,843 | ||||||
Brokered time and foreign deposits |
2,170 | 2,274 | ||||||
Total shareholders equity |
21,117 | 20,256 | ||||||
As of |
||||||||
Total assets |
172,435 | 178,226 | ||||||
Earning assets |
152,783 | 154,950 | ||||||
Loans |
120,804 | 122,691 | ||||||
Allowance for loan and lease losses |
2,152 | 2,348 | ||||||
Consumer and commercial deposits |
127,735 | 127,718 | ||||||
Brokered time and foreign deposits |
2,180 | 2,314 | ||||||
Total shareholders equity |
21,194 | 20,241 | ||||||
FINANCIAL RATIOS & OTHER DATA |
||||||||
Return on average total assets |
0.83 | % | 0.57 | % | ||||
Return on average common shareholders equity |
6.77 | 4.94 | ||||||
Net interest margin 2 |
3.33 | 3.49 | ||||||
Efficiency ratio 2 |
64.46 | 69.50 | ||||||
Tangible efficiency ratio 1, 2 |
64.17 | 69.02 | ||||||
Effective tax rate |
30.04 | 21.55 | ||||||
Tier 1 common equity 3 |
10.10 | 9.33 | ||||||
Tier 1 capital 3 |
11.20 | 11.00 | ||||||
Total capital 3 |
13.45 | 13.73 | ||||||
Tier 1 leverage 3 |
9.25 | 8.77 | ||||||
Total average shareholders equity to total average assets |
12.29 | 11.45 | ||||||
Tangible equity to tangible assets 1 |
9.00 | 8.14 | ||||||
Book value per common share |
$ | 37.89 | $ | 37.11 | ||||
Tangible book value per common share 1 |
26.33 | 25.49 | ||||||
Market price: |
||||||||
High |
29.98 | 24.93 | ||||||
Low |
26.93 | 18.07 | ||||||
Close |
28.81 | 24.17 | ||||||
Market capitalization |
15,563 | 13,005 | ||||||
Average common shares outstanding (000s) |
||||||||
Diluted |
539,862 | 536,407 | ||||||
Basic |
535,680 | 533,100 | ||||||
Full-time equivalent employees |
26,238 | 28,615 | ||||||
Number of ATMs |
2,882 | 2,914 | ||||||
Full service banking offices |
1,574 | 1,651 |
1 | See Appendix A for reconcilements of non-GAAP performance measures. |
2 | Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent (FTE) basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. Total revenue - FTE equals net interest income on a FTE basis plus noninterest income. |
3 | Current period tier 1 common equity, tier 1 capital, total capital, and tier 1 leverage ratios are estimated as of April 19, 2013. |
9
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share data) (Unaudited)
Three Months Ended March 31 |
||||||||
2013 | 2012 | |||||||
Interest income |
$ | 1,359 | $ | 1,534 | ||||
Interest expense |
138 | 223 | ||||||
|
|
|
|
|||||
NET INTEREST INCOME |
1,221 | 1,311 | ||||||
Provision for credit losses |
212 | 317 | ||||||
|
|
|
|
|||||
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES |
1,009 | 994 | ||||||
|
|
|
|
|||||
NONINTEREST INCOME |
||||||||
Service charges on deposit accounts |
160 | 164 | ||||||
Trust and investment management income |
124 | 130 | ||||||
Retail investment services |
61 | 59 | ||||||
Other charges and fees |
89 | 97 | ||||||
Investment banking income |
68 | 71 | ||||||
Trading income |
42 | 57 | ||||||
Card fees 1 |
76 | 79 | ||||||
Mortgage production related income |
159 | 63 | ||||||
Mortgage servicing related income |
38 | 81 | ||||||
Other noninterest income |
44 | 57 | ||||||
Net securities gains |
2 | 18 | ||||||
|
|
|
|
|||||
Total noninterest income |
863 | 876 | ||||||
|
|
|
|
|||||
NONINTEREST EXPENSE |
||||||||
Employee compensation and benefits |
759 | 797 | ||||||
Net occupancy expense |
89 | 88 | ||||||
Outside processing and software |
178 | 176 | ||||||
Equipment expense |
45 | 45 | ||||||
Marketing and customer development |
30 | 27 | ||||||
Amortization/impairment of intangible assets/goodwill |
6 | 11 | ||||||
Operating losses |
39 | 60 | ||||||
FDIC premium/regulatory exams |
54 | 52 | ||||||
Other noninterest expense |
163 | 285 | ||||||
|
|
|
|
|||||
Total noninterest expense |
1,363 | 1,541 | ||||||
|
|
|
|
|||||
INCOME BEFORE PROVISION FOR INCOME TAXES |
509 | 329 | ||||||
Provision for income taxes |
151 | 69 | ||||||
|
|
|
|
|||||
INCOME INCLUDING INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST |
358 | 260 | ||||||
Net income attributable to noncontrolling interest |
6 | 10 | ||||||
|
|
|
|
|||||
NET INCOME |
$ | 352 | $ | 250 | ||||
|
|
|
|
|||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ | 340 | $ | 245 | ||||
Net interest income - FTE 2 |
1,251 | 1,342 | ||||||
Net income per average common share |
||||||||
Diluted |
0.63 | 0.46 | ||||||
Basic |
0.64 | 0.46 | ||||||
Cash dividends paid per common share |
0.05 | 0.05 | ||||||
Average common shares outstanding (000s) |
||||||||
Diluted |
539,862 | 536,407 | ||||||
Basic |
535,680 | 533,100 |
1 | PIN interchange fees are presented in card fees along with other interchange fee income for the three months ended March 31, 2013. Previously, these PIN interchange fees were presented in other charges and fees and therefore, for comparative purposes, $18 million of PIN interchange fees has been reclassified to card fees for the three months ended March 31, 2012. |
2 | Net interest income includes the effects of FTE adjustments using a federal tax rate of 35% and state income taxes where applicable to increase tax-exempt interest income to a taxable-equivalent basis. See Appendix A for a reconcilement of this non-GAAP measure to the related GAAP measure. |
10
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in millions and shares in thousands) (Unaudited)
March 31 2013 |
December 31 2012 |
|||||||
ASSETS |
||||||||
Cash and due from banks |
$ | 4,787 | $ | 7,134 | ||||
Federal funds sold and securities borrowed or purchased under agreements to resell |
1,154 | 1,101 | ||||||
Interest-bearing deposits in other banks |
21 | 22 | ||||||
Trading assets |
6,250 | 6,049 | ||||||
Securities available for sale |
23,823 | 21,953 | ||||||
Loans held for sale |
3,193 | 3,399 | ||||||
Loans held for investment: |
||||||||
Commercial and industrial |
54,343 | 54,048 | ||||||
Commercial real estate |
4,261 | 4,127 | ||||||
Commercial construction |
634 | 713 | ||||||
Residential mortgages - guaranteed |
3,930 | 4,252 | ||||||
Residential mortgages - nonguaranteed |
23,051 | 23,389 | ||||||
Residential home equity products |
14,617 | 14,805 | ||||||
Residential construction |
683 | 753 | ||||||
Consumer student loans - guaranteed |
5,275 | 5,357 | ||||||
Consumer other direct |
2,387 | 2,396 | ||||||
Consumer indirect |
11,009 | 10,998 | ||||||
Consumer credit cards |
614 | 632 | ||||||
|
|
|
|
|||||
Total loans held for investment |
120,804 | 121,470 | ||||||
Allowance for loan and lease losses |
(2,152 | ) | (2,174 | ) | ||||
|
|
|
|
|||||
Net loans held for investment |
118,652 | 119,296 | ||||||
Goodwill |
6,369 | 6,369 | ||||||
Other intangible assets |
1,076 | 956 | ||||||
Other real estate owned |
224 | 264 | ||||||
Other assets |
6,886 | 6,899 | ||||||
|
|
|
|
|||||
Total assets 1 |
$ | 172,435 | $ | 173,442 | ||||
|
|
|
|
|||||
LIABILITIES |
||||||||
Deposits: |
||||||||
Noninterest-bearing consumer and commercial deposits |
$ | 38,593 | $ | 39,481 | ||||
Interest-bearing consumer and commercial deposits: |
||||||||
NOW accounts |
26,736 | 27,617 | ||||||
Money market accounts |
42,231 | 42,846 | ||||||
Savings |
5,769 | 5,314 | ||||||
Consumer time |
9,281 | 9,569 | ||||||
Other time |
5,125 | 5,353 | ||||||
|
|
|
|
|||||
Total consumer and commercial deposits |
127,735 | 130,180 | ||||||
Brokered time deposits |
2,080 | 2,136 | ||||||
Foreign deposits |
100 | | ||||||
|
|
|
|
|||||
Total deposits |
129,915 | 132,316 | ||||||
Funds purchased |
605 | 617 | ||||||
Securities sold under agreements to repurchase |
1,854 | 1,574 | ||||||
Other short-term borrowings |
4,169 | 3,303 | ||||||
Long-term debt |
9,331 | 9,357 | ||||||
Trading liabilities |
1,348 | 1,161 | ||||||
Other liabilities |
4,019 | 4,129 | ||||||
|
|
|
|
|||||
Total liabilities |
151,241 | 152,457 | ||||||
|
|
|
|
|||||
SHAREHOLDERS EQUITY |
||||||||
Preferred stock, no par value |
725 | 725 | ||||||
Common stock, $1.00 par value |
550 | 550 | ||||||
Additional paid in capital |
9,132 | 9,174 | ||||||
Retained earnings |
11,133 | 10,817 | ||||||
Treasury stock, at cost, and other |
(531 | ) | (590 | ) | ||||
Accumulated other comprehensive income |
185 | 309 | ||||||
|
|
|
|
|||||
Total shareholders equity |
21,194 | 20,985 | ||||||
|
|
|
|
|||||
Total liabilities and shareholders equity |
$ | 172,435 | $ | 173,442 | ||||
|
|
|
|
|||||
Common shares outstanding |
540,187 | 538,959 | ||||||
Common shares authorized |
750,000 | 750,000 | ||||||
Preferred shares outstanding |
7 | 7 | ||||||
Preferred shares authorized |
50,000 | 50,000 | ||||||
Treasury shares of common stock |
9,734 | 10,962 |
1 | Includes earning assets of $152,783 and $151,223 at March 31, 2013 and December 31, 2012, respectively. |
11
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED DAILY AVERAGE BALANCES,
AVERAGE YIELDS EARNED AND RATES PAID
(Dollars in millions; yields on taxable-equivalent basis) (Unaudited)
Three Months Ended | ||||||||||||
March 31, 2013 | ||||||||||||
Average Balances |
Interest Income/ Expense |
Yields/ Rates |
||||||||||
ASSETS |
||||||||||||
Loans: |
||||||||||||
Commercial and industrial - FTE 1 |
$ | 53,763 | $ | 556 | 4.20 | % | ||||||
Commercial real estate |
4,092 | 35 | 3.50 | |||||||||
Commercial construction |
663 | 6 | 3.75 | |||||||||
Residential mortgages - guaranteed |
4,079 | 27 | 2.62 | |||||||||
Residential mortgages - nonguaranteed |
22,386 | 238 | 4.25 | |||||||||
Home equity products |
14,363 | 129 | 3.64 | |||||||||
Residential construction |
615 | 7 | 4.61 | |||||||||
Guaranteed student loans |
5,397 | 52 | 3.92 | |||||||||
Other direct |
2,398 | 26 | 4.43 | |||||||||
Indirect |
10,996 | 96 | 3.53 | |||||||||
Credit cards |
617 | 15 | 9.52 | |||||||||
Nonaccrual |
1,513 | 11 | 2.91 | |||||||||
|
|
|
|
|
|
|||||||
Total loans |
120,882 | 1,198 | 4.02 | |||||||||
Securities available for sale: |
||||||||||||
Taxable |
22,209 | 140 | 2.53 | |||||||||
Tax-exempt - FTE 1 |
294 | 4 | 5.22 | |||||||||
|
|
|
|
|
|
|||||||
Total securities available for sale |
22,503 | 144 | 2.57 | |||||||||
Federal funds sold and securities borrowed or purchased under agreements to resell |
1,092 | | 0.04 | |||||||||
Loans held for sale |
3,752 | 31 | 3.29 | |||||||||
Interest-bearing deposits |
21 | | 0.13 | |||||||||
Interest earning trading assets |
4,221 | 16 | 1.53 | |||||||||
|
|
|
|
|
|
|||||||
Total earning assets |
152,471 | 1,389 | 3.69 | |||||||||
Allowance for loan and lease losses |
(2,178 | ) | ||||||||||
Cash and due from banks |
4,462 | |||||||||||
Other assets |
14,342 | |||||||||||
Noninterest earning trading assets |
1,917 | |||||||||||
Unrealized gains on securities available for sale, net |
794 | |||||||||||
|
|
|||||||||||
Total assets |
$ | 171,808 | ||||||||||
|
|
|||||||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||
Interest-bearing deposits: |
||||||||||||
NOW accounts |
$ | 26,383 | $ | 5 | 0.08 | % | ||||||
Money market accounts |
42,995 | 15 | 0.15 | |||||||||
Savings |
5,527 | 1 | 0.06 | |||||||||
Consumer time |
9,421 | 27 | 1.16 | |||||||||
Other time |
5,245 | 18 | 1.37 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing consumer and commercial deposits |
89,571 | 66 | 0.30 | |||||||||
Brokered time deposits |
2,087 | 13 | 2.61 | |||||||||
Foreign deposits |
83 | | 0.15 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing deposits |
91,741 | 79 | 0.35 | |||||||||
Funds purchased |
716 | | 0.11 | |||||||||
Securities sold under agreements to repurchase |
1,705 | 1 | 0.19 | |||||||||
Interest-bearing trading liabilities |
723 | 4 | 2.21 | |||||||||
Other short-term borrowings |
3,721 | 3 | 0.29 | |||||||||
Long-term debt |
9,357 | 51 | 2.22 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing liabilities |
107,963 | 138 | 0.52 | |||||||||
Noninterest-bearing deposits |
38,084 | |||||||||||
Other liabilities |
4,048 | |||||||||||
Noninterest-bearing trading liabilities |
596 | |||||||||||
Shareholders equity |
21,117 | |||||||||||
|
|
|||||||||||
Total liabilities and shareholders equity |
$ | 171,808 | ||||||||||
|
|
|
|
|||||||||
Interest Rate Spread |
3.17 | % | ||||||||||
|
|
|
|
|||||||||
Net Interest Income - FTE 1 |
$ | 1,251 | ||||||||||
|
|
|||||||||||
Net Interest Margin 2 |
3.33 | % | ||||||||||
|
|
1 | The fully taxable-equivalent (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. |
2 | The net interest margin is calculated by dividing annualized net interest income - FTE by average total earning assets. |
12
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED DAILY AVERAGE BALANCES,
AVERAGE YIELDS EARNED AND RATES PAID, continued
(Dollars in millions; yields on taxable-equivalent basis) (Unaudited)
Three Months Ended | ||||||||||||
March 31, 2012 | ||||||||||||
Average Balances |
Interest Income/ Expense |
Yields/ Rates |
||||||||||
ASSETS |
||||||||||||
Loans: |
||||||||||||
Commercial and industrial - FTE 1 |
$ | 49,542 | $ | 599 | 4.86 | % | ||||||
Commercial real estate |
4,737 | 44 | 3.72 | |||||||||
Commercial construction |
921 | 9 | 3.89 | |||||||||
Residential mortgages - guaranteed |
6,478 | 53 | 3.25 | |||||||||
Residential mortgages - nonguaranteed |
21,946 | 259 | 4.71 | |||||||||
Home equity products |
15,283 | 141 | 3.70 | |||||||||
Residential construction |
738 | 9 | 5.13 | |||||||||
Guaranteed student loans |
7,308 | 71 | 3.93 | |||||||||
Other direct |
2,100 | 23 | 4.45 | |||||||||
Indirect |
10,112 | 100 | 3.99 | |||||||||
Credit cards |
545 | 14 | 10.59 | |||||||||
Nonaccrual |
2,832 | 7 | 1.05 | |||||||||
|
|
|
|
|
|
|||||||
Total loans |
122,542 | 1,329 | 4.36 | |||||||||
Securities available for sale: |
||||||||||||
Taxable |
24,250 | 190 | 3.14 | |||||||||
Tax-exempt - FTE 1 |
420 | 6 | 5.41 | |||||||||
|
|
|
|
|
|
|||||||
Total securities available for sale |
24,670 | 196 | 3.17 | |||||||||
Federal funds sold and securities borrowed or purchased under agreements to resell |
731 | | 0.03 | |||||||||
Loans held for sale |
2,649 | 25 | 3.70 | |||||||||
Interest-bearing deposits |
21 | | 0.21 | |||||||||
Interest earning trading assets |
4,010 | 15 | 1.49 | |||||||||
|
|
|
|
|
|
|||||||
Total earning assets |
154,623 | 1,565 | 4.07 | |||||||||
Allowance for loan and lease losses |
(2,428 | ) | ||||||||||
Cash and due from banks |
4,563 | |||||||||||
Other assets |
14,893 | |||||||||||
Noninterest earning trading assets |
2,260 | |||||||||||
Unrealized gains on securities available for sale, net |
2,944 | |||||||||||
|
|
|||||||||||
Total assets |
$ | 176,855 | ||||||||||
|
|
|||||||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||
Interest-bearing deposits: |
||||||||||||
NOW accounts |
$ | 25,262 | $ | 6 | 0.10 | % | ||||||
Money market accounts |
42,489 | 25 | 0.24 | |||||||||
Savings |
4,860 | 1 | 0.12 | |||||||||
Consumer time |
11,472 | 44 | 1.54 | |||||||||
Other time |
6,368 | 28 | 1.69 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing consumer and commercial deposits |
90,451 | 104 | 0.46 | |||||||||
Brokered time deposits |
2,265 | 23 | 4.03 | |||||||||
Foreign deposits |
9 | | 0.13 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing deposits |
92,725 | 127 | 0.55 | |||||||||
Funds purchased |
871 | | 0.10 | |||||||||
Securities sold under agreements to repurchase |
1,634 | 1 | 0.14 | |||||||||
Interest-bearing trading liabilities |
531 | 2 | 1.73 | |||||||||
Other short-term borrowings |
9,170 | 5 | 0.20 | |||||||||
Long-term debt |
11,356 | 88 | 3.13 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing liabilities |
116,287 | 223 | 0.77 | |||||||||
Noninterest-bearing deposits |
35,392 | |||||||||||
Other liabilities |
3,893 | |||||||||||
Noninterest-bearing trading liabilities |
1,027 | |||||||||||
Shareholders equity |
20,256 | |||||||||||
|
|
|||||||||||
Total liabilities and shareholders equity |
$ | 176,855 | ||||||||||
|
|
|
|
|||||||||
Interest Rate Spread |
3.30 | % | ||||||||||
|
|
|
|
|||||||||
Net Interest Income - FTE 1 |
$ | 1,342 | ||||||||||
|
|
|||||||||||
Net Interest Margin 2 |
3.49 | % | ||||||||||
|
|
1 | The fully taxable-equivalent (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. |
2 | The net interest margin is calculated by dividing annualized net interest income - FTE by average total earning assets. |
13
SunTrust Banks, Inc. and Subsidiaries
OTHER FINANCIAL DATA
(Dollars in millions) (Unaudited)
Three Months Ended March 31 | ||||||||
2013 | 2012 | |||||||
CREDIT DATA |
||||||||
Allowance for credit losses - beginning |
$ | 2,219 | $ | 2,505 | ||||
Provision for unfunded commitments |
8 | 4 | ||||||
Provision for loan losses: |
||||||||
Commercial |
64 | 38 | ||||||
Residential |
112 | 258 | ||||||
Consumer |
28 | 17 | ||||||
|
|
|
|
|||||
Total provision for loan losses |
204 | 313 | ||||||
|
|
|
|
|||||
Charge-offs: |
||||||||
Commercial |
(60 | ) | (126 | ) | ||||
Residential |
(178 | ) | (302 | ) | ||||
Consumer |
(35 | ) | (35 | ) | ||||
|
|
|
|
|||||
Total charge-offs |
(273 | ) | (463 | ) | ||||
|
|
|
|
|||||
Recoveries: |
||||||||
Commercial |
15 | 25 | ||||||
Residential |
22 | 5 | ||||||
Consumer |
10 | 11 | ||||||
|
|
|
|
|||||
Total recoveries |
47 | 41 | ||||||
|
|
|
|
|||||
Net charge-offs |
(226 | ) | (422 | ) | ||||
|
|
|
|
|||||
Allowance for credit losses - ending |
$ | 2,205 | $ | 2,400 | ||||
|
|
|
|
|||||
Components: |
||||||||
Allowance for loan and lease losses |
$ | 2,152 | $ | 2,348 | ||||
Unfunded commitments reserve |
53 | 52 | ||||||
|
|
|
|
|||||
Allowance for credit losses |
$ | 2,205 | $ | 2,400 | ||||
|
|
|
|
|||||
Net charge-offs to average loans (annualized): |
||||||||
Commercial |
0.32 | % | 0.72 | % | ||||
Residential |
1.48 | 2.57 | ||||||
Consumer |
0.52 | 0.48 | ||||||
|
|
|
|
|||||
Total net charge-offs to total average loans |
0.76 | % | 1.38 | % | ||||
|
|
|
|
|||||
Period Ended |
||||||||
Nonaccrual/nonperforming loans: |
||||||||
Commercial |
$ | 289 | $ | 815 | ||||
Residential |
1,157 | 1,812 | ||||||
Consumer |
21 | 22 | ||||||
|
|
|
|
|||||
Total nonaccrual/nonperforming loans |
1,467 | 2,649 | ||||||
Other real estate owned (OREO) |
223 | 411 | ||||||
Other repossessed assets |
9 | 14 | ||||||
Nonperforming loans held for sale (LHFS) |
41 | 60 | ||||||
|
|
|
|
|||||
Total nonperforming assets |
$ | 1,740 | $ | 3,134 | ||||
|
|
|
|
|||||
Accruing restructured loans |
$ | 2,499 | $ | 2,750 | ||||
Nonaccruing restructured loans |
655 | 714 | ||||||
Accruing loans past due > 90 days (guaranteed) |
767 | 2,088 | ||||||
Accruing loans past due > 90 days (non-guaranteed) |
56 | 64 | ||||||
Accruing LHFS past due > 90 days |
2 | 3 | ||||||
Nonperforming loans to total loans |
1.21 | % | 2.16 | % | ||||
Nonperforming assets to total loans plus OREO, other repossessed assets, and nonperforming LHFS |
1.44 | 2.54 | ||||||
Allowance to period-end loans 1,2 |
1.79 | 1.92 | ||||||
Allowance to period-end loans, excluding government guaranteed loans 1,2,3 |
1.93 | 2.16 | ||||||
Allowance to nonperforming loans 1,2 |
148 | 89 | ||||||
Allowance to annualized net charge-offs 1 |
2.34x | 1.38x |
1 | This ratio is computed using the allowance for loan and lease losses. |
2 | Loans carried at fair value were excluded from the calculation. |
3 | See Appendix A for reconciliation of non-GAAP performance measures. |
14
SunTrust Banks, Inc. and Subsidiaries
OTHER FINANCIAL DATA
(Dollars in millions) (Unaudited)
Three Months Ended March 31 | ||||||||||||||||
Core Deposit Intangibles |
MSRs - Fair Value |
Other | Total | |||||||||||||
OTHER INTANGIBLE ASSET ROLLFORWARD |
||||||||||||||||
Balance, beginning of period |
$ | 38 | $ | 921 | $ | 58 | $ | 1,017 | ||||||||
Amortization |
(6 | ) | | (5 | ) | (11 | ) | |||||||||
Mortgage servicing rights (MSRs) originated |
| 83 | | 83 | ||||||||||||
Fair value changes due to inputs and assumptions |
| 124 | | 124 | ||||||||||||
Other changes in fair value |
| (57 | ) | | (57 | ) | ||||||||||
Sale of MSRs |
| (1 | ) | | (1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, March 31, 2012 |
$ | 32 | $ | 1,070 | $ | 53 | $ | 1,155 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, beginning of period |
$ | 17 | $ | 899 | $ | 40 | $ | 956 | ||||||||
Amortization |
(3 | ) | | (3 | ) | (6 | ) | |||||||||
MSRs originated |
| 110 | | 110 | ||||||||||||
Fair value changes due to inputs and assumptions |
| 90 | | 90 | ||||||||||||
Other changes in fair value |
| (74 | ) | | (74 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, March 31, 2013 |
$ | 14 | $ | 1,025 | $ | 37 | $ | 1,076 | ||||||||
|
|
|
|
|
|
|
|
15
SunTrust Banks, Inc. and Subsidiaries
RECONCILEMENT OF NON-GAAP MEASURES
APPENDIX A TO THE FINANCIAL INFORMATION
(Dollars in millions, except per share data) (Unaudited)
Three Months Ended | ||||||||
March 31 2013 |
March 31 2012 |
|||||||
NON-GAAP MEASURES PRESENTED IN THE FINANCIAL INFORMATION 1 |
||||||||
Net interest income |
$ | 1,221 | $ | 1,311 | ||||
Taxable-equivalent adjustment |
30 | 31 | ||||||
|
|
|
|
|||||
Net interest income - FTE |
1,251 | 1,342 | ||||||
Noninterest income |
863 | 876 | ||||||
|
|
|
|
|||||
Total revenue - FTE |
2,114 | 2,218 | ||||||
Securities gains, net |
(2 | ) | (18 | ) | ||||
|
|
|
|
|||||
Total revenue - FTE excluding net securities gains 2 |
$ | 2,112 | $ | 2,200 | ||||
|
|
|
|
|||||
Efficiency ratio 3 |
64.46 | % | 69.50 | % | ||||
Impact of excluding amortization of intangible assets |
(0.29 | ) | (0.48 | ) | ||||
|
|
|
|
|||||
Tangible efficiency ratio 4 |
64.17 | % | 69.02 | % | ||||
|
|
|
|
|||||
Total shareholders equity |
$ | 21,194 | $ | 20,241 | ||||
Goodwill, net of deferred taxes of $169 million and $164 million, respectively |
(6,200 | ) | (6,180 | ) | ||||
Other intangible assets, net of deferred taxes of $5 million and $14 million, respectively, and MSRs |
(1,071 | ) | (1,142 | ) | ||||
MSRs |
1,025 | 1,070 | ||||||
|
|
|
|
|||||
Tangible equity |
14,948 | 13,989 | ||||||
Preferred stock |
(725 | ) | (275 | ) | ||||
|
|
|
|
|||||
Tangible common equity |
$ | 14,223 | $ | 13,714 | ||||
|
|
|
|
|||||
Total assets |
$ | 172,435 | $ | 178,226 | ||||
Goodwill |
(6,369 | ) | (6,344 | ) | ||||
Other intangible assets including MSRs |
(1,076 | ) | (1,155 | ) | ||||
MSRs |
1,025 | 1,070 | ||||||
|
|
|
|
|||||
Tangible assets |
$ | 166,015 | $ | 171,797 | ||||
|
|
|
|
|||||
Tangible equity to tangible assets 5 |
9.00 | % | 8.14 | % | ||||
Tangible book value per common share 6 |
$ | 26.33 | $ | 25.49 | ||||
Total loans |
$ | 120,804 | $ | 122,691 | ||||
Government guaranteed loans |
(9,205 | ) | (13,633 | ) | ||||
Loans held at fair value |
(360 | ) | (413 | ) | ||||
|
|
|
|
|||||
Total loans, excluding government guaranteed and fair value loans |
$ | 111,239 | $ | 108,645 | ||||
|
|
|
|
|||||
Allowance to total loans, excluding government guaranteed and fair value loans 7 |
1.93 | % | 2.16 | % |
1 | Certain amounts in this schedule are presented net of applicable income taxes, which are calculated based on each subsidiarys 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 subsidiarys income tax filing requirements with various tax authorities. In addition, 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 net securities gains. The Company believes noninterest income without net securities gains is more indicative of the Companys performance because it isolates income that is primarily client relationship and client transaction driven and is more indicative of normalized operations. |
3 | 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. |
4 | SunTrust presents a tangible efficiency ratio which excludes the amortization of intangible assets other than MSRs. 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 Companys 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. |
5 | 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 Companys capital adequacy to other companies in the industry. This measure is used by management to analyze capital adequacy. |
6 | 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 Companys book value on common stock to other companies in the industry. |
7 | SunTrust presents a ratio of allowance to total loans, excluding government guaranteed and fair value loans, to exclude loans from the calculation 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. |
16
SunTrust Banks, Inc. and Subsidiaries
CONSUMER BANKING AND PRIVATE WEALTH MANAGEMENT
(Dollars in millions) (Unaudited)
Three Months Ended March 31 | ||||||||
2013 | 2012 | |||||||
Statements of Income: |
||||||||
Net interest income 1 |
$ | 602 | $ | 634 | ||||
FTE adjustment |
| | ||||||
|
|
|
|
|||||
Net interest income - FTE |
602 | 634 | ||||||
Provision for credit losses 2 |
99 | 155 | ||||||
|
|
|
|
|||||
Net interest income - FTE - after provision for credit losses |
503 | 479 | ||||||
|
|
|
|
|||||
Noninterest income before securities gains |
326 | 339 | ||||||
Securities gains, net |
| | ||||||
|
|
|
|
|||||
Total noninterest income |
326 | 339 | ||||||
|
|
|
|
|||||
Noninterest expense before amortization/impairment of intangible assets/goodwill |
669 | 721 | ||||||
Amortization/impairment of intangible assets/goodwill |
5 | 10 | ||||||
|
|
|
|
|||||
Total noninterest expense |
674 | 731 | ||||||
|
|
|
|
|||||
Income before provision for income taxes |
155 | 87 | ||||||
Provision for income taxes |
57 | 32 | ||||||
FTE adjustment |
| | ||||||
|
|
|
|
|||||
Net income including income attributable to noncontrolling interest |
98 | 55 | ||||||
Less: net income attributable to noncontrolling interest |
| | ||||||
|
|
|
|
|||||
Net income |
$ | 98 | $ | 55 | ||||
|
|
|
|
|||||
Total revenue - FTE |
$ | 928 | $ | 973 | ||||
Selected Average Balances: |
||||||||
Total loans |
$ | 39,781 | $ | 41,513 | ||||
Goodwill |
3,955 | 3,930 | ||||||
Other intangible assets excluding MSRs |
41 | 73 | ||||||
Total assets |
44,556 | 46,285 | ||||||
Consumer and commercial deposits |
77,947 | 76,902 | ||||||
Other Information (End of Period): 3 |
||||||||
Assets under administration |
||||||||
Managed (discretionary) assets |
$ | 63,091 | $ | 63,950 | ||||
Non-managed assets |
42,033 | 52,963 | ||||||
|
|
|
|
|||||
Total assets under administration |
105,124 | 116,913 | ||||||
|
|
|
|
|||||
Brokerage assets |
41,257 | 37,715 | ||||||
|
|
|
|
|||||
Total assets under advisement |
$ | 146,381 | $ | 154,628 | ||||
|
|
|
|
1 | Net interest income does not include the funding benefit that would result from holding shareholders equity at the line of business level due to the fact that shareholders equity is not allocated to the lines of business at this time. |
2 | Provision for credit losses represents net charge-offs for the lines of business. |
3 | Reflects the assets under administration/advisement for GenSpring and Private Wealth Management clients. |
17
SunTrust Banks, Inc. and Subsidiaries
WHOLESALE BANKING
(Dollars in millions) (Unaudited)
Three Months Ended March 31 | ||||||||
2013 | 2012 | |||||||
Statements of Income: |
||||||||
Net interest income 1 |
$ | 433 | $ | 424 | ||||
FTE adjustment |
29 | 29 | ||||||
|
|
|
|
|||||
Net interest income - FTE |
462 | 453 | ||||||
Provision for credit losses 2 |
37 | 101 | ||||||
|
|
|
|
|||||
Net interest income - FTE - after provision for credit losses |
425 | 352 | ||||||
|
|
|
|
|||||
Noninterest income before securities gains |
337 | 363 | ||||||
Securities gains, net |
| | ||||||
|
|
|
|
|||||
Total noninterest income |
337 | 363 | ||||||
|
|
|
|
|||||
Noninterest expense before amortization of intangible assets |
425 | 486 | ||||||
Amortization of intangible assets |
1 | 1 | ||||||
|
|
|
|
|||||
Total noninterest expense |
426 | 487 | ||||||
|
|
|
|
|||||
Income - FTE - before provision for income taxes |
336 | 228 | ||||||
Provision for income taxes |
75 | 33 | ||||||
FTE adjustment |
29 | 29 | ||||||
|
|
|
|
|||||
Net income including income attributable to noncontrolling interest |
232 | 166 | ||||||
Less: net income attributable to noncontrolling interest |
4 | 8 | ||||||
|
|
|
|
|||||
Net income |
$ | 228 | $ | 158 | ||||
|
|
|
|
|||||
Total revenue - FTE |
$ | 799 | $ | 816 | ||||
Selected Average Balances: |
||||||||
Total loans |
$ | 53,044 | $ | 50,214 | ||||
Goodwill |
2,414 | 2,414 | ||||||
Other intangible assets excluding MSRs |
12 | 15 | ||||||
Total assets |
66,226 | 63,599 | ||||||
Consumer and commercial deposits |
46,182 | 45,688 | ||||||
Other Information (End of Period): 3 |
||||||||
Managed (discretionary) assets under administration |
$ | 44,620 | $ | 43,443 |
1 | Net interest income does not include the funding benefit that would result from holding shareholders equity at the line of business level due to the fact that shareholders equity is not allocated to the lines of business at this time. |
2 | Provision for credit losses represents net charge-offs for the lines of business. |
3 | Reflects the assets under administration for Ridgeworth clients. |
18
SunTrust Banks, Inc. and Subsidiaries
MORTGAGE BANKING
(Dollars in millions) (Unaudited)
Three Months Ended March 31 | ||||||||
2013 | 2012 | |||||||
Statements of Income: |
||||||||
Net interest income 1 |
$ | 127 | $ | 126 | ||||
FTE adjustment |
| | ||||||
|
|
|
|
|||||
Net interest income - FTE |
127 | 126 | ||||||
Provision for credit losses 2 |
90 | 166 | ||||||
|
|
|
|
|||||
Net interest income - FTE - after provision for credit losses |
37 | (40 | ) | |||||
|
|
|
|
|||||
Noninterest income before securities losses |
198 | 157 | ||||||
Securities losses, net |
| | ||||||
|
|
|
|
|||||
Total noninterest income |
198 | 157 | ||||||
|
|
|
|
|||||
Noninterest expense before amortization of intangible assets |
271 | 333 | ||||||
Amortization of intangible assets |
| | ||||||
|
|
|
|
|||||
Total noninterest expense |
271 | 333 | ||||||
|
|
|
|
|||||
Loss before benefit for income taxes |
(36 | ) | (216 | ) | ||||
Benefit for income taxes |
(15 | ) | (86 | ) | ||||
FTE adjustment |
| | ||||||
|
|
|
|
|||||
Net loss including income attributable to noncontrolling interest |
(21 | ) | (130 | ) | ||||
Less: net income attributable to noncontrolling interest |
| | ||||||
|
|
|
|
|||||
Net loss |
($ | 21 | ) | ($ | 130 | ) | ||
|
|
|
|
|||||
Total revenue - FTE |
$ | 325 | $ | 283 | ||||
Selected Average Balances: |
||||||||
Total loans |
$ | 27,996 | $ | 30,796 | ||||
Goodwill |
| | ||||||
Other intangible assets excluding MSRs |
| | ||||||
Total assets |
33,185 | 35,235 | ||||||
Consumer and commercial deposits |
3,517 | 3,199 | ||||||
Mortgage Servicing Data (End of Period): |
||||||||
Total loans serviced |
$ | 142,320 | $ | 155,351 | ||||
Total loans serviced for others |
111,973 | 121,444 |
1 | Net interest income does not include the funding benefit that would result from holding shareholders equity at the line of business level due to the fact that shareholders equity is not allocated to the lines of business at this time. |
2 | Provision for credit losses represents net charge-offs for the lines of business. |
19
SunTrust Banks, Inc. and Subsidiaries
CORPORATE OTHER
(Dollars in millions) (Unaudited)
Three Months Ended March 31 | ||||||||
2013 | 2012 | |||||||
Statements of Income: |
||||||||
Net interest income |
$ | 59 | $ | 127 | ||||
FTE adjustment |
1 | 2 | ||||||
|
|
|
|
|||||
Net interest income - FTE |
60 | 129 | ||||||
Provision for credit losses 1 |
(14 | ) | (105 | ) | ||||
|
|
|
|
|||||
Net interest income - FTE - after provision for credit losses |
74 | 234 | ||||||
|
|
|
|
|||||
Noninterest (loss)/income before securities gains |
| (1 | ) | |||||
Securities gains, net |
2 | 18 | ||||||
|
|
|
|
|||||
Total noninterest income |
2 | 17 | ||||||
|
|
|
|
|||||
Noninterest expense before amortization of intangible assets |
(8 | ) | (10 | ) | ||||
Amortization of intangible assets |
| | ||||||
|
|
|
|
|||||
Total noninterest expense |
(8 | ) | (10 | ) | ||||
|
|
|
|
|||||
Income - FTE - before provision for income taxes |
84 | 261 | ||||||
Provision for income taxes |
34 | 90 | ||||||
FTE adjustment |
1 | 2 | ||||||
|
|
|
|
|||||
Net income including income attributable to noncontrolling interest |
49 | 169 | ||||||
Less: net income attributable to noncontrolling interest |
2 | 2 | ||||||
|
|
|
|
|||||
Net income |
$ | 47 | $ | 167 | ||||
|
|
|
|
|||||
Total revenue - FTE |
$ | 62 | $ | 146 | ||||
Selected Average Balances: |
||||||||
Total loans |
$ | 61 | $ | 19 | ||||
Securities available for sale |
22,315 | 24,462 | ||||||
Other intangible assets excluding MSRs |
| 3 | ||||||
Total assets |
27,841 | 31,736 | ||||||
Consumer and commercial deposits |
9 | 54 |
1 | Provision for credit losses is the difference between net charge-offs recorded by the lines of business and consolidated provision for credit losses. |
20
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED - SEGMENT TOTALS
(Dollars in millions) (Unaudited)
Three Months Ended March 31 | ||||||||
2013 | 2012 | |||||||
Statements of Income: |
||||||||
Net interest income |
$ | 1,221 | $ | 1,311 | ||||
FTE adjustment |
30 | 31 | ||||||
|
|
|
|
|||||
Net interest income - FTE |
1,251 | 1,342 | ||||||
Provision for credit losses |
212 | 317 | ||||||
|
|
|
|
|||||
Net interest income - FTE - after provision for credit losses |
1,039 | 1,025 | ||||||
|
|
|
|
|||||
Noninterest income before securities gains |
861 | 858 | ||||||
Securities gains, net |
2 | 18 | ||||||
|
|
|
|
|||||
Total noninterest income |
863 | 876 | ||||||
|
|
|
|
|||||
Noninterest expense before amortization/impairment of intangible assets/goodwill |
1,357 | 1,530 | ||||||
Amortization/impairment of intangible assets/goodwill |
6 | 11 | ||||||
|
|
|
|
|||||
Total noninterest expense |
1,363 | 1,541 | ||||||
|
|
|
|
|||||
Income - FTE - before provision for income taxes |
539 | 360 | ||||||
Provision for income taxes |
151 | 69 | ||||||
FTE adjustment |
30 | 31 | ||||||
|
|
|
|
|||||
Net income including income attributable to noncontrolling interest |
358 | 260 | ||||||
Less: net income attributable to noncontrolling interest |
6 | 10 | ||||||
|
|
|
|
|||||
Net income |
$ | 352 | $ | 250 | ||||
|
|
|
|
|||||
Total revenue - FTE |
$ | 2,114 | $ | 2,218 | ||||
Selected Average Balances: |
||||||||
Total loans |
$ | 120,882 | $ | 122,542 | ||||
Goodwill |
6,369 | 6,344 | ||||||
Other intangible assets excluding MSRs |
53 | 91 | ||||||
Total assets |
171,808 | 176,855 | ||||||
Consumer and commercial deposits |
127,655 | 125,843 | ||||||
Other Information (End of Period): |
||||||||
Assets under administration |
||||||||
Managed (discretionary) assets |
$ | 107,711 | $ | 107,393 | ||||
Non-managed assets |
42,033 | 52,963 | ||||||
|
|
|
|
|||||
Total assets under administration |
149,744 | 160,356 | ||||||
|
|
|
|
|||||
Brokerage assets |
41,257 | 37,715 | ||||||
|
|
|
|
|||||
Total assets under advisement |
$ | 191,001 | $ | 198,071 | ||||
|
|
|
|
21