0000750556-19-000155.txt : 20190718 0000750556-19-000155.hdr.sgml : 20190718 20190718082541 ACCESSION NUMBER: 0000750556-19-000155 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 40 CONFORMED PERIOD OF REPORT: 20190718 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190718 DATE AS OF CHANGE: 20190718 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNTRUST BANKS INC CENTRAL INDEX KEY: 0000750556 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 581575035 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08918 FILM NUMBER: 19960497 BUSINESS ADDRESS: STREET 1: 303 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30308 BUSINESS PHONE: 4045887711 MAIL ADDRESS: STREET 1: 303 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30308 8-K 1 a63019form8-k.htm 8-K Document
false0000750556SUNTRUST BANKS INC Series A Preferred StockSeries B Preferred Stock 0000750556 2019-01-01 2019-06-30 0000750556 exch:XNYS 2019-01-01 2019-06-30 0000750556 exch:XNYS us-gaap:PreferredClassBMember 2019-01-01 2019-06-30 0000750556 exch:XNYS us-gaap:PreferredClassAMember 2019-01-01 2019-06-30 0000750556 2019-07-18 2019-07-18


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):
 
July 18, 2019

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,
GA
 
 
 
30308
(Address of principal executive offices)
 
 
 
(Zip Code)

Registrant's telephone number, including area code:
 
(800)
786-8787

 
 
Not Applicable
 
 
(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class
 
Trading Symbol(s)
 
Name of Exchange on Which Registered
Common Stock
 
STI
 
New York Stock Exchange
Depositary Shares, Each Representing a 1/4000th Interest in a Share of Perpetual Preferred Stock, Series A
 
STI PRA
 
New York Stock Exchange
5.853% Fixed-to-Floating Rate Normal Preferred Purchase Securities of SunTrust Preferred Capital I (representing interests in shares of Perpetual Preferred Stock, Series B)
 
STI/PRI
 
New York Stock Exchange

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02 Results of Operations and Financial Condition.

Item 7.01 Regulation FD.
On July 18, 2019, SunTrust Banks, Inc. (the “Registrant”) announced financial results for the period ended June 30, 2019. A copy of the news release announcing such results is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The Registrant intends to hold an investor call and webcast to discuss these results on July 18, 2019, at 11:00 a.m. Eastern time. Additional presentation materials relating to such call are furnished hereto as Exhibit 99.2 and are incorporated herein by reference.
The foregoing information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition,” and Item 7.01, “Regulation FD.” Consequently, it is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. It may only be incorporated by reference into another filing under the Exchange Act or Securities Act of 1933 if such subsequent filing specifically references this Form 8-K. All information in the news release and presentation materials speak as of the date thereof and the Registrant does not assume any obligation to update said information in the future. In addition, the Registrant disclaims any inference regarding the materiality of such information which otherwise may arise as a result of its furnishing such information under Item 2.02 or Item 7.01 of this report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number
 
Description
 
News release dated July 18, 2019 (furnished with the Commission as a part of this Form 8-K).
 
 
 
 
Presentation slides dated July 18, 2019 (furnished with the Commission as a part of this Form 8-K).

Forward Looking Statements
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and the future performance of BB&T and SunTrust. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “could,” “may,” “should,” “will” or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on BB&T’s and SunTrust’s current expectations and assumptions regarding BB&T’s and SunTrust’s businesses, the economy, and other future conditions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Many possible events or factors could affect BB&T’s or SunTrust’s future financial results and performance and could cause actual results or performance to differ materially from anticipated results or performance. Such risks and uncertainties include, among others: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between BB&T and SunTrust, the outcome of any legal proceedings that may be instituted against BB&T or SunTrust, delays in completing the transaction, the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and shareholder approvals or to satisfy any of the other conditions to the transaction on a timely basis or at all, the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where BB&T and SunTrust do business, the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, diversion of management’s attention from ongoing business operations and opportunities, potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction, the ability to complete the transaction and integration of BB&T and SunTrust successfully, and the dilution caused by BB&T’s issuance of additional shares of its capital stock in connection with the transaction. Except to the extent required by applicable law or regulation, each of BB&T and SunTrust disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Further information regarding BB&T, SunTrust and factors which could affect the forward-looking statements contained herein can be found under the captions “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in BB&T’s and SunTrust’s joint proxy statement/prospectus that forms part of the registration statement on Form S-4 filed by BB&T, in BB&T’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and its other filings with the Securities and Exchange Commission (“SEC”), and in SunTrust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and its other filings with the SEC.





Additional Information about the Merger and Where to Find It
In connection with the SunTrust's proposed merger with BB&T, BB&T has filed with the SEC a registration statement on Form S-4 to register the shares of BB&T’s capital stock to be issued in connection with the merger, as amended on May 7, 2019, June 14, 2019, and June 19, 2019. The registration statement includes a joint proxy statement/prospectus. BB&T and SunTrust commenced mailing the joint proxy statement/prospectus to shareholders on or about June 27, 2019.

INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THESE DOCUMENTS DO AND WILL CONTAIN IMPORTANT INFORMATION ABOUT BB&T, SUNTRUST, AND THE PROPOSED TRANSACTION.

Investors and security holders may obtain copies of these documents free of charge through the website maintained by the SEC at www.sec.gov or from BB&T at its website, www.bbt.com, or from SunTrust at its website, www.suntrust.com. Documents filed with the SEC by BB&T will be available free of charge by accessing BB&T’s website at http://bbt.com/ under the tab “About BB&T” and then under the heading “Investor Relations” or, alternatively, by directing a request by telephone or mail to BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101, (336) 733-3065, and documents filed with the SEC by SunTrust will be available free of charge by accessing SunTrust’s website at http://suntrust.com/ under the tab “Investor Relations,” and then under the heading “Regulatory & Legal” or, alternatively, by directing a request by telephone or mail to SunTrust Banks, Inc., 303 Peachtree Street, N.E., Atlanta, Georgia 30308, (877) 930-8971.
Participants in the Solicitation
BB&T, SunTrust and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of BB&T and SunTrust in connection with the proposed transaction under the rules of the SEC. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, are included in the joint proxy statement/prospectus regarding the proposed transaction and will be included in other relevant materials to be filed with the SEC when they become available. Additional information about BB&T, and its directors and executive officers, may be found in the definitive proxy statement of BB&T relating to its 2019 Annual Meeting of Shareholders filed with the SEC on March 19, 2019, and other documents filed by BB&T with the SEC. Additional information about SunTrust, and its directors and executive officers, may be found in the definitive proxy statement of SunTrust relating to its 2019 Annual Meeting of Shareholders filed with the SEC on March 8, 2019, and other documents filed by SunTrust with the SEC. These documents can be obtained free of charge from the sources described above.



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:
July 18, 2019
 
By: /s/ R. Ryan Richards
 
 
 
R. Ryan Richards,
Senior Vice President and Controller



EX-99.1 2 a63019exhibit991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
suntrustlogo2q2019.jpg
News Release
Contact:
 
 
 
Investors
 
Media
 
Ankur Vyas
 
Mike McCoy
 
(404) 827-6714
 
(404) 588-7230
 
For Immediate Release
July 18, 2019

SunTrust Reports Second Quarter 2019 Results
Solid Core Business Results: Healthy Loan Growth, Improved Fee Income,
Continued Expense Management, and Strong Credit Quality
Higher Funding Costs and Declining Interest Rates Negatively Impact NIM
Planned Merger with BB&T Progressing Well

ATLANTA — For the second quarter of 2019, SunTrust Banks, Inc. (NYSE: STI) reported net income available to common shareholders of $663 million, or $1.48 per average common diluted share, which includes $0.07 per share of discrete tax benefits and $(0.03) per share of merger-related impacts associated with the Company's previously announced proposed merger with BB&T Corporation. This compares to $1.24 for the prior quarter, which included $0.04 per share of discrete tax benefits and $(0.09) per share of merger-related impacts, and $1.49 for the second quarter of 2018.

For the first half of 2019, earnings per average common diluted share were $2.72 which includes $59 million, or $(0.11) per share of merger-related impacts. This compares to $2.78 for the first half of 2018.

“SunTrust has delivered good performance in the first half of 2019, with revenue increasing by 3%, the adjusted tangible efficiency ratio improving by 50 basis points, and earnings per share increasing by 2% (excluding non-core items). The interest rate environment certainly became more challenging in the second quarter, which offset some of our core business progress,” said William H. Rogers, Jr., chairman and CEO of SunTrust Banks, Inc. “As we continue to prepare for the proposed merger with BB&T, I am increasingly pleased with how well the teams are working together—we have developed strong levels of partnership and alignment. We are confident and excited about the opportunity Truist will have to enhance shareholder value, improve the client experience, and invest in our teammates, associates, and communities.”

1



Second Quarter 2019 Financial Highlights
(Commentary is on a fully taxable-equivalent basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a tax equivalent basis, net interest income, net interest margin, total revenue, and efficiency ratios are provided on a fully taxable-equivalent basis, which generally assumes a 21% marginal federal tax rate as well as state income taxes, where applicable. We provide unadjusted amounts in the table on page 3 of this news release and detailed reconciliations and additional information in Appendix A on pages 22 and 23.)

Income Statement
Net income available to common shareholders was $663 million, or $1.48 per average common diluted share, compared to $1.24 for the prior quarter and $1.49 for the second quarter of 2018.
The second quarter of 2019 included a $205 million insurance settlement benefit related to financial crisis-related claims which was used to make a $205 million charitable contribution to the SunTrust Foundation. The current quarter also included a $44 million gain on the sale of accruing troubled debt restructured (“TDR”) loans which was largely offset by a $42 million net securities loss related to a repositioning of the Company's securities AFS portfolio.
Merger-related costs were $8 million in the second quarter of 2019, compared to $45 million in the first quarter of 2019. In addition to these costs, there were $6 million of other merger-related expenses in the current quarter that were primarily recorded in ‘other noninterest expense’. Combined, this represented $14 million, or $(0.03) per share, of merger-related impacts in the current quarter.
Total revenue was up 10% both sequentially and year-over-year, driven primarily by the aforementioned insurance settlement. Excluding the insurance settlement, total revenue was up 1% sequentially and 2% year-over-year. The sequential increase was driven by higher noninterest income and the year-over-year increase was driven by higher net interest income.
Net interest margin was 3.16% in the current quarter, reflecting an 11 and 12 basis point decline sequentially and year-over-year, respectively, driven by higher funding costs and declines in short-term and long-term interest rates.
Provision for credit losses decreased $26 million sequentially and increased $95 million year-over-year. The sequential decrease was primarily driven by slower loan growth and lower net charge-offs. The year-over-year increase was driven primarily by an allowance for loan and lease losses (“ALLL”) to period-end loans held for investment (“LHFI”) ratio that increased 1 basis point sequentially (from March 31, 2019 to June 30, 2019), compared to a 5 basis point decline a year ago (from March 31, 2018 to June 30, 2018).
Noninterest expense increased $149 million sequentially and $248 million year-over-year. Excluding the aforementioned $205 million charitable contribution to the SunTrust Foundation and the $14 million and $45 million of merger-related impacts in the current and prior quarter, respectively, noninterest expense decreased $25 million sequentially and increased $29 million compared to the prior year. The sequential decrease was driven by improved operating losses and lower other noninterest expense. The year-over-year increase was driven by higher employee compensation and benefits and ongoing investments in technology.
The efficiency and tangible efficiency ratios for the current quarter were 63.4% and 62.8%, respectively, which were unfavorably impacted by the merger-related impacts and the charitable contribution, but favorably impacted by the insurance settlement. Excluding these items, the adjusted tangible efficiency ratio was 59.0% for the current quarter, compared to 60.8% for the prior quarter and 58.7% for the prior year.

Balance Sheet
Average performing LHFI was up 1% compared to the prior quarter and up 9% year-over-year, driven primarily by growth in C&I, CRE, consumer direct, and consumer indirect loans.
Average consumer and commercial deposits remained relatively stable compared to the prior quarter and were up 1% year-over-year, driven primarily by growth in NOW accounts and time deposits. This growth was partially offset by a decline in money market account balances compared to both prior periods as well as a decline in demand deposits compared to the second quarter of 2018.


2



Capital
Estimated capital ratios continue to be well above regulatory requirements. The Common Equity Tier 1 (“CET1”) ratio was estimated to be 9.2% as of June 30, 2019, slightly higher relative to the prior quarter.
Book value per common share was $53.47 and tangible book value per common share was $39.54, up 5% and 6%, respectively, from March 31, 2019, driven primarily by growth in retained earnings and a decrease in accumulated other comprehensive loss.

Asset Quality
Nonperforming loans (“NPLs”) increased $14 million from the prior quarter and represented 0.34% of period-end LHFI at both June 30, 2019 and March 31, 2019.
Net charge-offs for the current quarter were $85 million, or 0.22% of total average LHFI on an annualized basis, compared to 0.26% during the prior quarter and 0.20% during the second quarter of 2018.
At June 30, 2019, the ALLL to period-end LHFI ratio was 1.07%, up 1 basis point compared to the prior quarter and down 7 basis points relative to the prior year.
Provision for credit losses decreased $26 million sequentially and increased $95 million year-over-year. The sequential decrease was driven primarily by slower loan growth and lower net charge-offs. The year-over-year increase was driven primarily by an ALLL ratio that increased 1 basis point sequentially (from March 31, 2019 to June 30, 2019), compared to a 5 basis point decline a year ago (from March 31, 2018 to June 30, 2018).
 
 
 
 
 
 
 
 
 
 
Income Statement (Dollars in millions, except per share data)
2Q 2019
 
1Q 2019
 
4Q 2018
 
3Q 2018
 
2Q 2018
Net interest income
$1,535
 
$1,544
 
$1,547
 
$1,512
 
$1,488
Net interest income-FTE 1
1,557
 
1,567
 
1,570
 
1,534
 
1,510
Net interest margin
3.12
%
 
3.22
%
 
3.22
%
 
3.22
%
 
3.23
%
Net interest margin-FTE 1
3.16

 
3.27

 
3.27

 
3.27

 
3.28

Noninterest income
$1,025
 
$784
 
$818
 
$782
 
$829
Total revenue
2,560

 
2,328

 
2,365

 
2,294

 
2,317

Total revenue-FTE 1
2,582

 
2,351

 
2,388

 
2,316

 
2,339

Noninterest expense
1,638

 
1,489

 
1,482

 
1,384

 
1,390

Provision for credit losses
127

 
153

 
87

 
61

 
32

Net income available to common shareholders
663

 
554

 
632

 
726

 
697

Earnings per average common diluted share
1.48

 
1.24

 
1.40

 
1.56

 
1.49

 
 
 
 
 
 
 
 
 
 
Balance Sheet (Dollars in billions)
 
 
 
 
 
 
 
 
 
Average LHFI

$156.2

 

$154.3

 

$149.7

 

$146.0

 

$144.2

Average consumer and commercial deposits
159.9

 
159.9

 
161.6

 
159.3

 
159.0

 
 
 
 
 
 
 
 
 
 
Capital
 
 
 
 
 
 
 
 
 
Basel III capital ratios at period end 2 :
 
 
 
 
 
 
 
 
 
Tier 1 capital
10.24
%
 
10.15
%
 
10.30
%
 
10.72
%
 
10.86
%
Common Equity Tier 1 ("CET1")
9.19

 
9.09

 
9.21

 
9.60

 
9.72

Total average shareholders’ equity to total average assets
11.42

 
11.25

 
11.21

 
11.71

 
11.78

 
 
 
 
 
 
 
 
 
 
Asset Quality
 
 
 
 
 
 
 
 
 
Net charge-offs to total average LHFI (annualized)
0.22
%
 
0.26
%
 
0.26
%
 
0.24
%
 
0.20
%
ALLL to period-end LHFI 3
1.07

 
1.06

 
1.06

 
1.10

 
1.14

NPLs to period-end LHFI
0.34

 
0.34

 
0.35

 
0.47

 
0.52

1 See Appendix A on pages 22 and 23 for non-U.S. GAAP reconciliations and additional information.
2 Basel III capital ratios are calculated under the standardized approach using regulatory capital methodology applicable to the Company for each period presented, including the phase-in of transition provisions through January 1, 2018. Capital ratios at June 30, 2019 are estimated as of the date of this document.
3 LHFI measured at fair value were excluded from period-end LHFI in the calculation as no allowance is recorded for loans measured at fair value.


3



Consolidated Financial Performance Details
(Commentary is on a fully taxable-equivalent basis unless otherwise noted)
Revenue
Total revenue was $2.6 billion for the current quarter, an increase of 10%, compared to the prior quarter and the prior year. Excluding the $205 million insurance settlement benefit related to financial crisis-related claims recognized in the current quarter, total revenue was up 1% sequentially and 2% year-over-year. The sequential increase was driven by higher noninterest income and the year-over-year increase was driven by higher net interest income.
Net Interest Income
Net interest income was $1.6 billion for the second quarter of 2019, a decrease of $10 million compared to the prior quarter due primarily to lower earning asset yields and higher funding costs, which drove a decline in the net interest margin, partially offset by a $2.0 billion, or 1%, increase in average performing LHFI. The $47 million increase relative to the prior year was driven by a 9% increase in average performing LHFI, partially offset by a decline in the net interest margin.
Net interest margin for the current quarter was 3.16%, compared to 3.27% and 3.28% in the prior quarter and prior year, respectively. The decrease relative to the prior periods was driven primarily by higher funding costs and declines in short-term and long-term interest rates which drove a decline in earning asset yields.
For the six months ended June 30, 2019, net interest income was $3.1 billion, a $152 million, or 5%, increase compared to the six months ended June 30, 2018. The net interest margin was 3.22% for the first half of 2019, a 4 basis point decrease compared to the same period in 2018. The increase in net interest income was driven primarily by a $12.2 billion, or 7%, increase in average earning assets, partially offset by a 4 basis point decline in the net interest margin.
Noninterest Income
Noninterest income was $1.0 billion for the current quarter, compared to $784 million for the prior quarter and $829 million for the second quarter of 2018. Excluding the $205 million insurance settlement benefit related to financial crisis-related claims, noninterest income increased $36 million sequentially and decreased $9 million year-over-year. The sequential increase was driven by higher commercial real estate related income and investment banking income. The year-over-year decline was driven by lower investment banking income and client transaction-related fees, which were largely offset by higher commercial real estate related income.
Client transaction-related fees (namely service charges on deposits, other charges and fees, and card fees) increased $3 million sequentially and decreased $11 million year-over-year. The sequential increase was driven by one more day during the current quarter while the year-over-year decrease was driven primarily by lower client-related transaction activity.
Investment banking income was $142 million for the current quarter, compared to $130 million in the prior quarter and $169 million for the second quarter of 2018. The $12 million sequential increase was due primarily to higher equity offerings, while the year-over-year decrease was driven by lower syndicated finance and M&A activity.
Mortgage related income for the current quarter was $86 million, compared to $100 million for the prior quarter and $83 million for the second quarter of 2018. The $14 million sequential decline was driven primarily by lower servicing-related income attributable to both unfavorable net hedge performance and higher decay, offset partially by higher production-related income due to increased purchase and refinance volumes. At June 30, 2019, the servicing portfolio totaled $167.2 billion, down 1% compared to the prior quarter and 2% year-over-year.
Retail investment services income was $75 million for the current quarter, compared to $69 million for the prior quarter and $73 million for the prior year. The $6 million sequential increase was due primarily to increased client transaction activity as well as improved market conditions, which led to an increase in retail brokerage assets under management.

4



Commercial real estate related income was $50 million for the current quarter, compared to $24 million for the prior quarter and $18 million for the prior year. The sequential and year-over-year increases were driven primarily by higher structured real estate related income, in addition to higher commercial mortgage production from the Company's agency lending business.
Net securities (losses)/gains totaled ($42) million for the current quarter. These securities losses arose from a repositioning of the Company's securities AFS portfolio. There were no net securities (losses)/gains in either the prior quarter or prior year.
Other noninterest income was $72 million for the current quarter, compared to $24 million in the prior quarter and $38 million in the second quarter of 2018. The sequential and year-over-year increases were due primarily to a $44 million gain on the sale of accruing TDRs during the second quarter of 2019. The year-over-year increase was partially offset by a $12 million remeasurement gain on an equity investment in GreenSky, Inc. (a financial technology company with which the Company partners) recognized during the prior year quarter.
For the six months ended June 30, 2019, noninterest income was $1.8 billion, compared to $1.6 billion for the six months ended June 30, 2018. The $184 million increase compared to the prior year was driven by the insurance settlement in the current quarter.
Noninterest Expense
Noninterest expense was $1.6 billion in the current quarter, up $149 million sequentially and $248 million compared to the second quarter of 2018. The sequential and year-over-year increases were driven primarily by the $205 million charitable contribution to the SunTrust Foundation. When excluding the $205 million charitable contribution and $14 million in merger-related impacts, noninterest expense decreased $25 million sequentially and increased $29 million compared to the prior year. The sequential decrease was driven by improved operating losses and lower other noninterest expense. The year-over-year increase was driven by higher employee compensation and benefits and ongoing investments in technology.
Employee compensation and benefits expense was $828 million in the current quarter, compared to $824 million in the prior quarter and $802 million in the second quarter of 2018. The $4 million sequential increase was driven primarily by higher salaries, due to merit increases, and an increase in incentive plan compensation, almost entirely offset by the seasonal second quarter decline in employee benefit costs and FICA taxes. The $26 million year-over-year increase was driven primarily by higher salary and benefits costs in the current quarter.
Outside processing and software expense was $241 million in the current quarter, compared to $238 million in the prior quarter and $227 million in the second quarter of 2018. The $14 million year-over-year increase was driven primarily by higher software-related costs resulting from the amortization of new and upgraded technology assets.
Net occupancy expense was $102 million in the current quarter, stable compared to the prior quarter and $12 million higher than the second quarter of 2018. The year-over-year increase was driven primarily by lease termination gains recognized in the prior year and higher rent expense.
Merger-related costs captures certain merger-related expenses associated with the Company’s proposed merger with BB&T Corporation as announced on February 7, 2019. Current quarter costs totaled $8 million and were primarily comprised of legal fees. In addition to these costs, there were $6 million of other merger-related expenses that were primarily recorded in ‘other noninterest expense’. The prior quarter costs totaled $45 million and were primarily comprised of M&A advisory and legal fees.
Operating losses were $14 million in the current quarter, compared to $22 million in the prior quarter and $17 million in the second quarter of 2018. The sequential decrease was driven primarily by lower fraud-related and legal costs recognized during the quarter.

5



Regulatory assessments expense was $17 million in the current quarter, compared to $19 million in the prior quarter and $39 million in the prior year. The year-over-year decrease was driven by the cessation of the FDIC Deposit Insurance Fund surcharge in the fourth quarter of 2018.
Other noninterest expense was $124 million in the current quarter, compared to $141 million in the prior quarter and $114 million in the second quarter of 2018. The $17 million sequential decline was related to lower branch closure costs while the $10 million year-over-year increase was driven primarily by higher gains on the sale of certain real estate assets in the second quarter of 2018 (recorded as a contra expense).
For the six months ended June 30, 2019, noninterest expense was $3.1 billion compared to $2.8 billion for the six months ended June 30, 2018. The $321 million increase was driven largely by the $205 million charitable contribution, $59 million in merger-related impacts, $46 million in outside processing and software expense, and $20 million in net occupancy expenses.
Income Taxes
For the second quarter of 2019, the Company recorded a provision for income taxes of $105 million compared to $104 million for the prior quarter and $171 million for the second quarter of 2018. The effective tax rate for the current quarter was 13%, compared to 15% in the prior quarter and 19% in the second quarter of 2018. The second quarter of 2019 included $32 million of discrete tax benefits related primarily to the resolution of certain tax matters, while the first quarter of 2019 included $17 million of discrete tax benefits primarily related to the typical seasonal impact from stock-based compensation.
Balance Sheet
At June 30, 2019, the Company had total assets of $222.3 billion and total shareholders’ equity of $25.9 billion, representing 12% of total assets. Book value per common share was $53.47 and tangible book value per common share was $39.54, up 5% and 6%, respectively, compared to March 31, 2019, driven primarily by growth in retained earnings and a decrease in accumulated other comprehensive loss.
Loans and Deposits
Average performing LHFI totaled $155.7 billion for the current quarter, up 1% compared to the prior quarter and up 9% compared to the prior year. The sequential growth was driven primarily by increases in C&I, CRE, consumer direct, and consumer indirect loans, offset partially by declines in residential home equity products and nonguaranteed residential mortgages. Year-over-year loan growth was led by increases in the same loan categories that drove the sequential growth, in addition to growth in nonguaranteed residential mortgages.
Average consumer and commercial deposits totaled $159.9 billion for the current quarter, relatively stable compared to the prior quarter and up 1% compared to the second quarter of 2018. Sequentially, a decline in money market account balances was largely offset by growth across all other consumer deposit products. Year-over-year increases in NOW accounts and time deposits were offset, in large part, by declines in demand deposits and money market accounts.
Capital and Liquidity
The Company’s estimated capital ratios were well above current regulatory requirements with the Common Equity Tier 1 ratio estimated to be 9.2% at June 30, 2019. The ratios of average total equity to average total assets and tangible common equity to tangible assets were 11.4% and 8.1%, respectively, at June 30, 2019. The Company continues to have substantial available liquidity in the form of cash, high-quality government-backed or government-sponsored securities, and other available contingency funding sources.
The Company declared a common stock dividend of $0.50 per common share in the second quarter of 2019. Additionally, SunTrust Bank issued $1.35 billion of 3-year fixed rate senior notes and $650 million of 3-year floating rate senior notes in the second quarter of 2019 under its Global Bank Note program.

6



Asset Quality
Overall asset quality performance continues to be strong. Nonperforming assets (“NPAs”) totaled $598 million at June 30, 2019, down $50 million from the prior quarter and $216 million year-over-year. The ratio of NPLs to period-end LHFI was 0.34%, 0.34%, and 0.52% at June 30, 2019, March 31, 2019, and June 30, 2018, respectively. The year-over-year decrease was driven primarily by lower residential mortgage NPLs due to loans transitioning from non-accruing status (as a result of forbearance relief provided after hurricanes) back to accruing status. 
Net charge-offs totaled $85 million during the current quarter, a decline of $12 million compared to the prior quarter and an increase of $12 million compared to the second quarter of 2018. The ratio of annualized net charge-offs to total average LHFI was 0.22% during the current quarter, compared to 0.26% during the prior quarter and 0.20% during the prior year.
The provision for credit losses was $127 million in the current quarter, a decrease of $26 million sequentially and an increase of $95 million year-over-year. The sequential decrease was driven primarily by slower loan growth and lower net charge-offs. The year-over-year increase was driven primarily by an ALLL ratio that increased 1 basis point sequentially (from March 31, 2019 to June 30, 2019), compared to a 5 basis point decline a year ago (from March 31, 2018 to June 30, 2018). At June 30, 2019, the ALLL was $1.7 billion, which represented 1.07% of period-end loans, up 1 basis point relative to March 31, 2019 and a 7 basis point decline relative to June 30, 2018, the latter of which was driven by improved asset quality.
Early stage delinquencies decreased 5 basis points from the prior quarter and 13 basis points from June 30, 2018 to 0.59% at June 30, 2019. Excluding government-guaranteed loans, early stage delinquencies were 0.23%, up 2 basis points compared to the prior quarter and up 1 basis point compared to the second quarter of 2018
OTHER INFORMATION

About SunTrust Banks, Inc.
SunTrust Banks, Inc. (NYSE: STI) is a purpose-driven company dedicated to Lighting the Way to Financial Well-Being for the people, businesses, and communities it serves. SunTrust leads onUp, a national movement inspiring Americans to build financial confidence. Headquartered in Atlanta, the Company has two business segments: Consumer and Wholesale. Its flagship subsidiary, SunTrust Bank, operates an extensive branch and ATM network throughout the high-growth Southeast and Mid-Atlantic states, along with 24-hour digital access. Certain business lines serve consumer, commercial, corporate, and institutional clients nationally. As of June 30, 2019, SunTrust had total assets of $222 billion and total deposits of $161 billion. The Company provides deposit, credit, trust, investment, mortgage, asset management, securities brokerage, and capital market services. Learn more at suntrust.com.
Business Segment Results
The Company has included its business segment financial tables as part of this release. Revenue and income amounts labeled “FTE” in the business segment tables are reported on a fully taxable-equivalent basis. For the business segments, net interest income is computed using matched-maturity funds transfer pricing and noninterest income includes federal and state tax credits that are grossed-up on a pre-tax equivalent basis. Further, provision/(benefit) for credit losses represents net charge-offs by segment combined with an allocation to the segments of the provision/(benefit) attributable to each segment's quarterly change in the allowance for loan and lease losses (“ALLL”) and unfunded commitments 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 Total Corporate Other results presented in this document also include Reconciling Items, which are comprised of differences created between internal management accounting practices and U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and certain matched-maturity funds transfer pricing credits and charges. A detailed discussion of the business segment results will be included in the Company’s forthcoming Form 10-Q.
Corresponding Financial Tables and Information
Investors are encouraged to review the foregoing summary and discussion of SunTrust’s earnings and financial condition in conjunction with the detailed financial tables included in this release and the earnings presentation which SunTrust has also published today and SunTrust’s forthcoming Form 10-Q. Detailed financial tables and the earnings presentation are also

7



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 July 18, 2019, at 11:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals may call in beginning at 10:45 a.m. (Eastern Time) by dialing 1-877-209-9920 (Passcode: SunTrust). Individuals calling from outside the United States should dial 1-612-332-1210 (Passcode: SunTrust). A replay of the call will be available approximately one hour after the call ends on July 18, 2019, and will remain available until August 18, 2019, by dialing 1-800-475-6701 (domestic) or 1-320-365-3844 (international) (Passcode: 467809). 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 July 18, 2019, individuals may access an archived version of the webcast in the “Events & Presentations” section of the SunTrust investor relations website. This webcast will be archived and available for one year.
Non-GAAP Financial Measures
This news release includes non-GAAP financial measures to describe SunTrust’s performance. Additional information and reconciliations of those measures to GAAP measures are provided in the appendix to this news release beginning at page 22.
In this news release, consistent with SEC Industry Guide 3, the Company presents total revenue, net interest income, net interest margin, and efficiency ratios on a fully taxable equivalent (“FTE”) basis, and ratios on an annualized basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments using a federal tax rate of 21%, as well as state income taxes, where applicable, to increase tax-exempt interest income to a taxable-equivalent basis. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. Total revenue-FTE equals net interest income-FTE plus noninterest income.
The Company presents the following additional non-GAAP measures because many investors find them useful. Specifically:
The Company presents certain capital information on a tangible basis, including Tangible equity, Tangible common equity, the ratio of Tangible equity to tangible assets, the ratio of Tangible common equity to tangible assets, Tangible book value per share, and the Return on tangible common shareholders’ equity, which removes the after-tax impact of purchase accounting intangible assets from shareholders' equity and removes related intangible asset amortization from Net income available to common shareholders. The Company believes these measures are useful to investors because, by removing the amount of intangible assets that results from merger and acquisition activity and amortization expense (the level of which may vary from company to company), they allow investors to more easily compare the Company’s capital position and return on average tangible common shareholders' equity to other companies in the industry who present similar measures. The Company also believes that removing these items provides a more relevant measure of the return on the Company's common shareholders' equity. These measures are utilized by management to assess capital adequacy and profitability of the Company.
Similarly, the Company presents Efficiency ratio-FTE, Tangible efficiency ratio-FTE, and Adjusted tangible efficiency ratio-FTE. The efficiency ratio is computed by dividing Noninterest expense by Total revenue. Efficiency ratio-FTE is computed by dividing Noninterest expense by Total revenue-FTE. Tangible efficiency ratio-FTE excludes the amortization related to intangible assets and certain tax credits. The Company believes this measure is useful to investors because, by removing the impact of amortization (the level of which may vary from company to company), it allows investors to more easily compare the Company’s efficiency to other companies in the industry. Adjusted tangible efficiency ratio-FTE removes the pre-tax impact of unusual or infrequent items from the calculation of Tangible efficiency ratio-FTE. These items include the charitable contribution to the SunTrust Foundation and the insurance settlement benefit related to financial crisis-related claims recognized in the second quarter of 2019, merger-related impacts recognized in the first and second quarters of 2019, and the legacy National Commerce Financial Corporation (“NCF”) pension plan settlement charge recognized in the fourth quarter of 2018. See slide 21 in the earnings presentation (Exhibit 99.2) as well as Appendix A in this news release for more details on these items. The Company believes this measure (Adjusted tangible efficiency ratio-FTE) is useful to investors because it is more reflective of normalized operations as it reflects results that are primarily client relationship and client transaction driven. This measure is utilized by management to assess the efficiency of the Company and its lines of business.

8



Important Cautionary Statement About Forward-Looking Statements
This news release contains forward-looking statements. Statements regarding the Company's proposed merger with BB&T, including the benefits thereof, and the availability of liquidity to the Company 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,” “opportunity,” “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. 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, 2018 and in other periodic reports that we file with the SEC.
Additional Information about the Merger and Where to Find It
In connection with the Company’s proposed merger with BB&T, BB&T has filed with the SEC a registration statement on Form S-4 to register the shares of BB&T’s capital stock to be issued in connection with the merger, as amended on May 7, 2019, June 14, 2019, and June 19, 2019. The registration statement includes a joint proxy statement/prospectus. BB&T and SunTrust commenced mailing the joint proxy statement/prospectus to shareholders on or about June 27, 2019.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THESE DOCUMENTS DO AND WILL CONTAIN IMPORTANT INFORMATION ABOUT BB&T, SUNTRUST, AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain copies of these documents free of charge through the website maintained by the SEC at www.sec.gov or from BB&T at its website, www.bbt.com, or from SunTrust at its website, www.suntrust.com. Documents filed with the SEC by BB&T will be available free of charge by accessing BB&T’s website at http://bbt.com/ under the tab “About BB&T” and then under the heading “Investor Relations” or, alternatively, by directing a request by telephone or mail to BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101, (336) 733-3065, and documents filed with the SEC by SunTrust will be available free of charge by accessing SunTrust’s website at http://suntrust.com/ under the tab “Investor Relations,” and then under the heading “Regulatory & Legal” or, alternatively, by directing a request by telephone or mail to SunTrust Banks, Inc., 303 Peachtree Street, N.E., Atlanta, Georgia 30308, (877) 930-8971.
Participants in the Solicitation
BB&T, SunTrust and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of BB&T and SunTrust in connection with the proposed transaction under the rules of the SEC. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, are included in the joint proxy statement/prospectus regarding the proposed transaction and will be included in other relevant materials to be filed with the SEC when they become available. Additional information about BB&T, and its directors and executive officers, may be found in the definitive proxy statement of BB&T relating to its 2019 Annual Meeting of Shareholders filed with the SEC on March 19, 2019, and other documents filed by BB&T with the SEC. Additional information about SunTrust, and its directors and executive officers, may be found in the definitive proxy statement of SunTrust relating to its 2019 Annual Meeting of Shareholders filed with the SEC on March 8, 2019, and other documents filed by SunTrust with the SEC. These documents can be obtained free of charge from the sources described above.


9



SunTrust Banks, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(Dollars in millions and shares in thousands, except per share data) (Unaudited) 
Three Months Ended June 30
 
 %
 
Six Months Ended June 30
 
%
2019

2018
 
 Change
 
2019

2018
 
 Change
EARNINGS & DIVIDENDS
 

 
 
 
 
 

 
 
 
Net income

$688

 

$722

 
(5
)%
 

$1,268

 

$1,365

 
(7
)%
Net income available to common shareholders
663

 
697

 
(5
)
 
1,217

 
1,310

 
(7
)
Total revenue
2,560

 
2,317

 
10

 
4,888

 
4,554

 
7

Total revenue-FTE 1
2,582

 
2,339

 
10

 
4,933

 
4,597

 
7

Net income per average common share:
 
 
 
 
 
 
 
 
 
 
 
Diluted

$1.48



$1.49

 
(1
)%
 

$2.72



$2.78

 
(2
)%
Basic
1.49


1.50

 
(1
)
 
2.74


2.80

 
(2
)
Dividends declared per common share
0.50


0.40

 
25

 
1.00


0.80

 
25

CONDENSED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
Selected Average Balances:
 
 
 
 
 
 
 
 
 
 
 
Total assets

$220,827



$204,548

 
8
 %
 

$219,124



$204,341

 
7
 %
Earning assets
197,395


184,566

 
7

 
195,898


183,725

 
7

Loans held for investment ("LHFI")
156,224


144,156

 
8

 
155,246


143,542

 
8

Intangible assets including residential mortgage servicing rights ("MSRs")
8,271


8,355

 
(1
)
 
8,332


8,300

 

Residential MSRs
1,860


1,944

 
(4
)
 
1,922


1,889

 
2

Consumer and commercial deposits
159,854


158,957

 
1

 
159,887


159,063

 
1

Total shareholders’ equity
25,209


24,095

 
5

 
24,840


24,349

 
2

Preferred stock
2,025


2,025

 

 
2,025


2,206

 
(8
)
Period End Balances:
 
 
 
 
 
 
 
 
 
 
 
Total assets
 
 
 
 
 
 

$222,288



$207,505

 
7
 %
Earning assets
 
 
 
 
 
 
198,065


185,304

 
7

LHFI
 
 
 
 
 
 
156,589


144,935

 
8

Allowance for loan and lease losses ("ALLL")
 
 
 
 
 
 
1,681


1,650

 
2

Consumer and commercial deposits
 
 
 
 
 
 
159,719


160,410

 

Total shareholders’ equity
 
 
 
 
 
 
25,862


24,316

 
6

FINANCIAL RATIOS & OTHER DATA
 
 
 
 
 
 
 
 
 
 
 
Return on average total assets
1.25
%

1.42
%
 
(12
)%
 
1.17
%

1.35
%
 
(13
)%
Return on average common shareholders’ equity
11.51


12.73

 
(10
)
 
10.80


11.98

 
(10
)
Return on average tangible common shareholders’ equity 1
15.73


17.74

 
(11
)
 
14.85


16.67

 
(11
)
Net interest margin
3.12


3.23

 
(3
)
 
3.17


3.21

 
(1
)
Net interest margin-FTE 1
3.16

 
3.28

 
(4
)
 
3.22

 
3.26

 
(1
)
Efficiency ratio
64.00

 
59.98

 
7

 
63.99

 
61.63

 
4

Efficiency ratio-FTE 1
63.45


59.41

 
7

 
63.40


61.06

 
4

Tangible efficiency ratio-FTE 1
62.77


58.69

 
7

 
62.74


60.37

 
4

Adjusted tangible efficiency ratio-FTE 1
58.99

 
58.69

 
1

 
59.88

 
60.37

 
(1
)
Effective tax rate 
13


19

 
(32
)
 
14


19

 
(26
)
Basel III capital ratios at period end 2:
 
 
 
 
 
 
 
 
 
 
 
Common Equity Tier 1 ("CET1")
 
 
 
 
 
 
9.19
%
 
9.72
%
 
(5
)%
Tier 1 capital
 
 
 
 
 
 
10.24

 
10.86

 
(6
)
Total capital
 
 
 
 
 
 
11.93

 
12.67

 
(6
)
Leverage
 
 
 
 
 
 
9.25

 
9.82

 
(6
)
Total average shareholders’ equity to total average assets
11.42
%

11.78
%
 
(3
)%
 
11.34


11.92

 
(5
)
Tangible equity to tangible assets 1
 
 
 
 
 
 
9.11


9.01

 
1

Tangible common equity to tangible assets 1
 
 
 
 
 
 
8.13

 
7.96

 
2

Book value per common share
 
 
 
 
 
 

$53.47



$47.70

 
12

Tangible book value per common share 1
 
 
 
 
 
 
39.54


34.40

 
15

Market capitalization
 
 
 
 
 
 
27,896


30,712

 
(9
)
Average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Diluted
446,391


469,339

 
(5
)%
 
446,526


471,468

 
(5
)%
Basic
443,806


465,529

 
(5
)
 
443,687


467,117

 
(5
)
Full-time equivalent employees
 
 
 
 
 
 
22,726


23,199

 
(2
)
Number of ATMs
 
 
 
 
 
 
2,024


2,062

 
(2
)
Full service banking offices
 
 
 
 
 
 
1,149


1,222

 
(6
)
 
 
 
 
 
 
 
 
 
 
 
 
1 
See Appendix A for additional information and reconcilements of non-U.S. GAAP performance measures.
2 
Basel III capital ratios are calculated under the standardized approach using regulatory capital methodology applicable to the Company for each period presented, including the phase-in of transition provisions through January 1, 2018. Capital ratios at June 30, 2019 are estimated as of the date of this release.




10



SunTrust Banks, Inc. and Subsidiaries
FIVE QUARTER FINANCIAL HIGHLIGHTS
 
Three Months Ended
 
June 30
 
March 31
 
December 31
 
September 30
 
June 30
(Dollars in millions and shares in thousands, except per share data) (Unaudited)
2019
 
2019
 
2018
 
2018
 
2018
EARNINGS & DIVIDENDS
 
 
 
 
 
 
 
 
 
Net income

$688

 

$580

 

$658

 

$752

 

$722

Net income available to common shareholders
663

 
554

 
632

 
726

 
697

Total revenue
2,560

 
2,328

 
2,365

 
2,294

 
2,317

Total revenue-FTE 1
2,582

 
2,351

 
2,388

 
2,316

 
2,339

Net income per average common share:
 
 
 
 
 
 
 
 
 
Diluted

$1.48

 

$1.24

 

$1.40

 

$1.56

 

$1.49

Basic
1.49

 
1.25

 
1.41

 
1.58

 
1.50

Dividends declared per common share
0.50

 
0.50

 
0.50

 
0.50

 
0.40

CONDENSED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
Selected Average Balances:
 
 
 
 
 
 
 
 
 
Total assets

$220,827

 

$217,403

 

$212,934

 

$207,395

 

$204,548

Earning assets
197,395

 
194,385

 
190,742

 
186,344

 
184,566

LHFI
156,224

 
154,258

 
149,708

 
145,995

 
144,156

Intangible assets including residential MSRs
8,271

 
8,394

 
8,491

 
8,396

 
8,355

Residential MSRs
1,860

 
1,984

 
2,083

 
1,987

 
1,944

Consumer and commercial deposits
159,854

 
159,921

 
161,573

 
159,348

 
158,957

Total shareholders’ equity
25,209

 
24,466

 
23,873

 
24,275

 
24,095

Preferred stock
2,025

 
2,025

 
2,025

 
2,025

 
2,025

Period End Balances:
 
 
 
 
 
 
 
 
 
Total assets

$222,288

 

$220,425

 

$215,543

 

$211,276

 

$207,505

Earning assets
198,065

 
196,316

 
192,497

 
188,141

 
185,304

LHFI
156,589

 
155,233

 
151,839

 
147,215

 
144,935

ALLL
1,681

 
1,643

 
1,615

 
1,623

 
1,650

Consumer and commercial deposits
159,719

 
161,092

 
161,544

 
159,332

 
160,410

Total shareholders’ equity
25,862

 
24,823

 
24,280

 
24,139

 
24,316

FINANCIAL RATIOS & OTHER DATA
 
 
 
 
 
 
 
 
 
Return on average total assets
1.25
%
 
1.08
%
 
1.23
%
 
1.44
%
 
1.42
%
Return on average common shareholders’ equity
11.51

 
10.06

 
11.54

 
13.01

 
12.73

Return on average tangible common shareholders’ equity 1
15.73

 
13.91

 
16.13

 
18.06

 
17.74

Net interest margin
3.12

 
3.22

 
3.22

 
3.22

 
3.23

Net interest margin-FTE 1
3.16

 
3.27

 
3.27

 
3.27

 
3.28

Efficiency ratio
64.00

 
63.97

 
62.66

 
60.34

 
59.98

Efficiency ratio-FTE 1
63.45

 
63.35

 
62.06

 
59.76

 
59.41

Tangible efficiency ratio-FTE 1
62.77

 
62.70

 
61.13

 
58.94

 
58.69

Adjusted tangible efficiency ratio-FTE 1
58.99

 
60.78

 
58.63

 
58.94

 
58.69

Effective tax rate
13

 
15

 
17

 
11

 
19

Basel III capital ratios at period end 2:
 
 
 
 
 
 
 
 
 
CET1
9.19
%
 
9.09
%
 
9.21
%
 
9.60
%
 
9.72
%
Tier 1 capital
10.24

 
10.15

 
10.30

 
10.72

 
10.86

Total capital
11.93

 
11.85

 
12.02

 
12.47

 
12.67

Leverage
9.25

 
9.15

 
9.26

 
9.66

 
9.82

Total average shareholders’ equity to total average assets
11.42

 
11.25

 
11.21

 
11.71

 
11.78

Tangible equity to tangible assets 1
9.11

 
8.71

 
8.65

 
8.76

 
9.01

Tangible common equity to tangible assets 1
8.13

 
7.71

 
7.63

 
7.72

 
7.96

Book value per common share

$53.47

 

$51.15

 

$49.57

 

$48.00

 

$47.70

Tangible book value per common share 1
39.54

 
37.22

 
35.73

 
34.51

 
34.40

Market capitalization
27,896

 
26,290

 
22,541

 
30,632

 
30,712

Average common shares outstanding:
 
 
 
 
 
 
 
 
 
Diluted
446,391

 
446,662

 
452,957

 
464,164

 
469,339

Basic
443,806

 
443,566

 
449,404

 
460,252

 
465,529

Full-time equivalent employees
22,726

 
22,626

 
22,899

 
22,839

 
23,199

Number of ATMs
2,024

 
2,030

 
2,082

 
2,053

 
2,062

Full service banking offices
1,149

 
1,152

 
1,218

 
1,217

 
1,222

 
 
 
 
 
 
 
 
 
 
1 
See Appendix A for additional information and reconcilements of non-U.S. GAAP performance measures.
2 
Basel III capital ratios are calculated under the standardized approach using regulatory capital methodology applicable to the Company for each period presented, including the phase-in of transition provisions through January 1, 2018. Capital ratios at June 30, 2019 are estimated as of the date of this release.


11



SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended
 
Increase/(Decrease)
 
Six Months Ended
 
Increase/(Decrease)
(Dollars in millions and shares in thousands, except per share data) (Unaudited)
June 30
 
June 30
 
2019

2018
 
Amount
 
 % 4
 
2019

2018
 
Amount
 
 % 4
Interest income

$2,021



$1,759

 

$262

 
15
 %
 

$4,008



$3,427

 

$581

 
17
 %
Interest expense
486


271

 
215

 
79

 
930


499

 
431

 
86

NET INTEREST INCOME
1,535


1,488

 
47

 
3

 
3,078


2,928

 
150

 
5

Provision for credit losses
127


32

 
95

 
NM

 
280


60

 
220

 
NM

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
1,408


1,456

 
(48
)
 
(3
)
 
2,798


2,868

 
(70
)
 
(2
)
NONINTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
139

 
144

 
(5
)
 
(3
)
 
276


289

 
(13
)
 
(4
)
Other charges and fees 1
88

 
91

 
(3
)
 
(3
)
 
175

 
175

 

 

Card fees
82

 
85

 
(3
)
 
(4
)
 
165


166

 
(1
)
 
(1
)
Investment banking income 1
142

 
169

 
(27
)
 
(16
)
 
272


302

 
(30
)
 
(10
)
Trading income
55

 
53

 
2

 
4

 
114


95

 
19

 
20

Insurance settlement
205

 

 
205

 
NM

 
205

 

 
205

 
NM

Mortgage related income 2
86

 
83

 
3

 
4

 
187

 
174

 
13

 
7

Trust and investment management income
73

 
75

 
(2
)
 
(3
)
 
144

 
150

 
(6
)
 
(4
)
Retail investment services
75

 
73

 
2

 
3

 
144

 
145

 
(1
)
 
(1
)
Commercial real estate related income
50

 
18

 
32

 
NM

 
74

 
42

 
32

 
76

Net securities (losses)/gains
(42
)
 

 
(42
)
 
NM

 
(42
)

1

 
(43
)
 
NM

Other noninterest income
72

 
38

 
34

 
89

 
96


87

 
9

 
10

Total noninterest income
1,025


829

 
196

 
24

 
1,810


1,626

 
184

 
11

NONINTEREST EXPENSE
 
 
 
 
 
 
 
 
 

 
 
 
 
 
Employee compensation and benefits
828

 
802

 
26

 
3

 
1,652


1,656

 
(4
)
 

Outside processing and software
241

 
227

 
14

 
6

 
479


433

 
46

 
11

Charitable contribution to SunTrust Foundation
205

 

 
205

 
NM

 
205

 

 
205

 
NM

Net occupancy expense
102

 
90

 
12

 
13

 
204


184

 
20

 
11

Marketing and customer development
46

 
40

 
6

 
15

 
87

 
81

 
6

 
7

Equipment expense
36

 
44

 
(8
)
 
(18
)
 
78

 
84

 
(6
)
 
(7
)
Merger-related costs
8

 

 
8

 
NM

 
53

 

 
53

 
NM

Operating losses
14

 
17

 
(3
)
 
(18
)
 
37


23

 
14

 
61

Regulatory assessments
17

 
39

 
(22
)
 
(56
)
 
36

 
79

 
(43
)
 
(54
)
Amortization
17

 
17

 

 

 
33

 
32

 
1

 
3

Other noninterest expense
124

 
114

 
10

 
9

 
264


235

 
29

 
12

Total noninterest expense
1,638


1,390

 
248

 
18

 
3,128


2,807

 
321

 
11

INCOME BEFORE PROVISION FOR INCOME TAXES
795


895

 
(100
)
 
(11
)
 
1,480


1,687

 
(207
)
 
(12
)
Provision for income taxes
105


171

 
(66
)
 
(39
)
 
208


318

 
(110
)
 
(35
)
NET INCOME INCLUDING INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
690


724

 
(34
)
 
(5
)
 
1,272


1,369

 
(97
)
 
(7
)
Less: Net income attributable to noncontrolling interest
2


2

 

 

 
4


4

 

 

NET INCOME

$688



$722

 

($34
)
 
(5
)%
 

$1,268



$1,365

 

($97
)
 
(7
)%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

$663



$697

 

($34
)
 
(5
)%
 

$1,217



$1,310

 

($93
)
 
(7
)%
Net interest income-FTE 3
1,557


1,510

 
47

 
3

 
3,123


2,971

 
152

 
5

Total revenue
2,560

 
2,317

 
243

 
10

 
4,888

 
4,554

 
334

 
7

Total revenue-FTE 3
2,582

 
2,339

 
243

 
10

 
4,933

 
4,597

 
336

 
7

Net income per average common share:
 
 
 
 

 

 
 
 
 
 
 
 
 
Diluted
1.48


1.49

 
(0.01
)
 
(1
)
 
2.72


2.78

 
(0.06
)
 
(2
)
Basic
1.49


1.50

 
(0.01
)
 
(1
)
 
2.74


2.80

 
(0.06
)
 
(2
)
Dividends declared per common share
0.50


0.40

 
0.10

 
25

 
1.00


0.80

 
0.20

 
25

Average common shares outstanding:
 
 
 
 

 

 
 
 
 
 
 
 
 
Diluted
446,391


469,339

 
(22,948
)
 
(5
)
 
446,526


471,468

 
(24,942
)
 
(5
)
Basic
443,806


465,529

 
(21,723
)
 
(5
)
 
443,687


467,117

 
(23,430
)
 
(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Beginning July 1, 2018, the Company began presenting bridge commitment fee income related to capital market transactions in Investment banking income on the Consolidated Statements of Income. For periods prior to July 1, 2018, this income was previously presented in Other charges and fees and has been reclassified to Investment banking income for comparability.
2 Beginning with the Company's Annual Report on Form 10-K for the year ended December 31, 2018, the Company began presenting Mortgage production related income and Mortgage servicing related income as a single line item on the Consolidated Statements of Income titled Mortgage related income. Prior periods have been conformed with this updated presentation for comparability.
3 See Appendix A for additional information and reconcilements of non-U.S. GAAP measures to the related U.S.GAAP measures.
4 “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful.

12



SunTrust Banks, Inc. and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended
 
 
 
Three Months Ended
(Dollars in millions and shares in thousands, except per share data)
(Unaudited)
June 30
 
March 31
 
Increase/(Decrease)
 
December 31
 
September 30
 
June 30
2019
 
2019
 
Amount
 
 % 4
 
2018
 
2018
 
2018
Interest income

$2,021

 

$1,987

 

$34

 
2
 %
 

$1,944

 

$1,834

 

$1,759

Interest expense
486

 
443

 
43

 
10

 
397

 
322

 
271

NET INTEREST INCOME
1,535

 
1,544

 
(9
)
 
(1
)
 
1,547

 
1,512

 
1,488

Provision for credit losses
127

 
153

 
(26
)
 
(17
)
 
87

 
61

 
32

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
1,408

 
1,391

 
17

 
1

 
1,460

 
1,451

 
1,456

NONINTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
139

 
137

 
2

 
1

 
146

 
144

 
144

Other charges and fees 1
88

 
87

 
1

 
1

 
92

 
89

 
91

Card fees
82

 
82

 

 

 
83

 
75

 
85

Investment banking income 1
142

 
130

 
12

 
9

 
146

 
150

 
169

Trading income
55

 
60

 
(5
)
 
(8
)
 
24