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): January 19, 2018 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) Registrant's telephone number, including area code (800) 786-8787 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)) 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 January 19, 2018, SunTrust Banks, Inc. (the Registrant ) announced financial results for the period ended December 31, 2017. 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 January 19, 2018, at 8:00 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 99.1 News release dated January 19, 2018 (furnished with the Commission as a part of this Form 8-K). 99.2 Presentation slides dated January 19, 2018 (furnished with the Commission as a part of this Form 8-K). 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: January 19, 2018 By: /s/ R. Ryan Richards R. Ryan Richards, Senior Vice President, Controller
Exhibit 99.1 News Release Contact: Investors Media Ankur Vyas Mike McCoy (404) 827-6714 (404) 588-7230 For Immediate Release January 19, 2018 SunTrust Reports Fourth Quarter and Full Year 2017 Results 2017 Represents the 6 th Consecutive Year of Higher EPS, Improved Efficiency, and Increased Capital Return Actions Taken in 4Q 17 Better Position the Company for Long-Term Success ATLANTA -- For the fourth quarter of 2017, SunTrust Banks, Inc. (NYSE: STI) reported net income available to common shareholders of $710 million, or $1.48 per average common diluted share, which includes $0.39 per share of net discrete benefits from Form 8-K items announced on December 4, 2017 and the impacts of tax reform-related items summarized below. For the full year, diluted earnings per share was $4.47, up 24% relative to 2016. When excluding the impact of the aforementioned net discrete benefits, earnings per share was up 14% relative to 2016 as a result of strong revenue growth, improved profitability, and reduced shares outstanding. Form 8-K and Tax Reform-related Items Impacting 4th Quarter 2017 Results (Dollars in millions) (Unaudited) Form 8-K items previously announced on December 4, 2017: Impacted Line Item in the Consolidated Statements of Income Gain on sale of Premium Assignment Corporation ("PAC") subsidiary $107 Other noninterest income Net charge related to efficiency actions (36) Other noninterest expense Tax impact of above items (tax expense) (29) 1 Benefit/provision for income taxes SunTrust Mortgage ("STM") state NOL valuation allowance adjustment (tax expense) (27) 1 Benefit/provision for income taxes Net benefit of Form 8-K items (after-tax) $16 2 Tax reform-related items: Charitable contribution to SunTrust Foundation ($50) Marketing and customer development Discretionary 401(k) contribution and other employee benefits (25) Employee compensation and benefits Securities available for sale ("securities AFS") portfolio restructuring losses (109) Net securities (losses)/gains Loss on sale of servicing rights (5) Mortgage servicing related income Tax impact of above items (tax benefit) 70 1 Benefit/provision for income taxes Revaluation of net deferred tax liability and other discrete tax items (tax benefit) 291 Benefit/provision for income taxes Net benefit of tax reform-related items (after-tax) $172 Net benefit of Form 8-K and tax reform-related items (after-tax) $188 1 Amounts are calculated using a federal statutory rate of 35% and are adjusted for permanent items, if applicable. 2 Amount does not foot as presented due to rounding. Our performance this quarter rounded out a very strong year for SunTrust where we continued to deliver on the commitments we have made to our owners," said William H. Rogers, Jr., chairman and CEO of SunTrust Banks, Inc. "Specifically, 2017 marked the sixth consecutive year in which we grew earnings per share, improved efficiency, and increased capital return. We also took significant actions this quarter which better position the company for success and give me increased confidence that 2018 will be another great year for SunTrust. 1
Fourth Quarter 2017 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 35% marginal federal tax rate and 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 through 23.) Income Statement Net income available to common shareholders was $710 million, or $1.48 per average common diluted share, compared to $1.06 for the prior quarter and $0.90 for the fourth quarter of 2016. This quarter was favorably impacted by $0.39 per share of net discrete benefits in connection with the items announced in the December 4, 2017 Form 8-K and tax reform-related items. Total revenue was stable compared to the prior quarter and increased 5% compared to the fourth quarter of 2016. The year-over-year increase was driven primarily by higher net interest income and slightly higher noninterest income. Net interest margin was 3.17% in the current quarter, up 2 basis points sequentially and up 17 basis points compared to the prior year. The yearover-year increase was driven by higher earning asset yields arising from higher benchmark interest rates, positive mix shift in the loans held for investment ("LHFI") portfolio, and higher securities AFS yields given lower premium amortization expense. Provision for credit losses decreased $41 million sequentially due to the prior quarter reserve build related to hurricanes, and decreased $22 million year-over-year due to lower net charge-offs. Noninterest expense increased 9% sequentially and year-over-year. The December 4, 2017 Form 8-K and tax reform-related items impacted noninterest expense by a net $111 million ( $50 million charitable contribution to the SunTrust Foundation, $36 million net charges related to efficiency initiatives, and $25 million discretionary 401(k) contribution and other employee benefits). Excluding these discrete items, noninterest expense was relatively stable compared to the prior quarter and prior year. The efficiency and tangible efficiency ratios for the current quarter were 65.9% and 64.8%, respectively, which were unfavorably impacted by the effect of Form 8-K and tax reform-related items presented in the table on page 1. Excluding these items, the adjusted tangible efficiency ratio was 59.9% for the current quarter, compared to 59.2% for the prior quarter and 63.1% for the fourth quarter of 2016. Balance Sheet For the full year, the efficiency and tangible efficiency ratios were 63.1% and 62.3%, respectively. The adjusted tangible efficiency ratio was 61.0%, down approximately 100 bps from 2016 as a result of positive operating leverage. Average performing LHFI were stable sequentially and grew 1% year-over-year, driven primarily by growth in consumer lending. Average consumer and commercial deposits increase d modest ly compared to the prior quarter and 2% compared to the fourth quarter of 2016, driven largely by growth in NOW and time deposit account balances. Capital Estimated capital ratios continue to be well above regulatory requirements. The Common Equity Tier 1 ("CET1") ratio was estimated to be 9.8% as of December 31, 2017, and 9.6% on a fully phased-in basis, slightly higher than the prior quarter. During the quarter, the Company repurchased $330 million of its outstanding common stock in accordance with its 2017 Capital Plan and issued $500 million of 5.125% noncumulative perpetual preferred stock, Series H. Book value per common share was $47.94 and tangible book value per common share was $34.82, up 2% and 1%, respectively, from September 30, 2017, driven primarily by growth in retained earnings. 2
Asset Quality Nonperforming loans ("NPLs") decreased $23 million from the prior quarter and represented 0.47% of period-end LHFI at December 31, 2017. The sequential decrease was driven primarily by continued improvements in the energy portfolio. Net charge-offs for the current quarter were $107 million, or 0.29% of total average LHFI on an annualized basis, up $29 million sequentially and down $29 million year-over-year. The sequential increase was driven by higher net charge-offs associated with C&I and consumer loans, while the year-over-year reduction was driven by overall asset quality improvements and lower energy-related charge-offs. The provision for credit losses decrease d $41 million sequentially, due primarily to the prior quarter reserve build related to hurricanes that impacted the Company's footprint. At December 31, 2017, the allowance for loan and lease losses ("ALLL") to period-end LHFI ratio was 1.21%, a 2 basis point decline compared to the prior quarter, driven by continued improvements in asset quality. Income Statement (Dollars in millions, except per share data) 4Q 2017 3Q 2017 2Q 2017 1Q 2017 4Q 2016 Net interest income $1,434 $1,430 $1,403 $1,366 $1,343 Net interest income-fte 2 1,472 1,467 1,439 1,400 1,377 Net interest margin 3.09% 3.07% 3.06% 3.02% 2.93% Net interest margin-fte 2 3.17 3.15 3.14 3.09 3.00 Noninterest income $833 $846 $827 $847 $815 Total revenue 2,267 2,276 2,230 2,213 2,158 Total revenue-fte 2 2,305 2,313 2,266 2,247 2,192 Noninterest expense 1,520 1,391 1,388 1,465 1,397 Provision for credit losses 79 120 90 119 101 Net income available to common shareholders 710 512 505 451 448 Earnings per average common diluted share 1.48 1.06 1.03 0.91 0.90 Balance Sheet (Dollars in billions) Average LHFI $144.0 $144.7 $144.4 $143.7 $142.6 Average consumer and commercial deposits 160.7 159.4 159.1 158.9 158.0 Capital Capital ratios at period end 1 : Tier 1 capital (transitional) 11.15% 10.74% 10.81% 10.40% 10.28% Common Equity Tier 1 ("CET1") (transitional) 9.75 9.62 9.68 9.69 9.59 Common Equity Tier 1 ("CET1") (fully phased-in) 2 9.60 9.48 9.53 9.54 9.43 Total average shareholders equity to total average assets 12.09 11.94 11.80 11.59 11.84 Asset Quality Net charge-offs to total average LHFI (annualized) 0.29% 0.21% 0.20% 0.32% 0.38% ALLL to period-end LHFI 3 1.21 1.23 1.20 1.20 1.19 NPLs to period-end LHFI 0.47 0.48 0.52 0.55 0.59 1 Current period Tier 1 capital and CET1 ratios are estimated as of the date of this news release. 2 See Appendix A on pages 22 through 23 for non-u.s. GAAP reconciliations and additional information. 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 $2.3 billion for the current quarter, a decrease of $8 million compared to the prior quarter. Net interest income increased $5 million sequentially due to a higher net interest margin. Noninterest income decrease d $13 million sequentially. The December 4, 2017 Form 8-K and tax reformrelated items negatively impacted noninterest income by a net $7 million with the remaining $6 million of the $13 million sequential decrease driven by lower capital markets-related income, offset partially by higher commercial real estate-related income. Compared to the fourth quarter of 2016, total revenue increased $113 million, or 5%, driven by a $95 million increase in net interest income (resulting from a higher net interest margin and growth in average earning assets) and an $18 million increase in total noninterest income. Net Interest Income Net interest income was $1.5 billion for the current quarter, an increase of $5 million compared to the prior quarter due to higher earning asset yields. The $95 million increase relative to the prior year was driven by higher earning asset yields and growth of $1.8 billion in average earning assets. Net interest margin for the current quarter was 3.17%, compared to 3.15% in the prior quarter and 3.00% in the fourth quarter of 2016. The increase relative to the prior quarter and prior year was driven primarily by higher earning asset yields arising from higher benchmark interest rates, continued positive mix shift in the LHFI portfolio, and lower premium amortization in the securities AFS portfolio, partially offset by higher rates paid on interestbearing liabilities. Net interest income was $5.8 billion for 2017, a $419 million increase compared to the twelve months ended December 31, 2016. The net interest margin for the full year 2017 was 3.14%, a 14 basis point increase compared to 2016. The increases in both net interest income and net interest margin were driven by the same factors that impacted the prior year comparison discussed above. Noninterest Income Noninterest income was $833 million for the current quarter, compared to $846 million for the prior quarter and $815 million for the fourth quarter of 2016. The discrete items outlined on page 1 resulted in a net $7 million negative impact to noninterest income ( $107 million gain from the sale of PAC offset by $114 million of securities AFS and servicing rights losses) with the remaining $6 million of the $13 million sequential decrease driven by lower capital markets-related income, offset partially by higher commercial real estate related income. Compared to the fourth quarter of 2016, noninterest income increase d $18 million driven largely by higher commercial real estate related income and wealth management-related income. Investment banking income was $119 million for the current quarter, compared to $166 million in the prior quarter and $122 million in the prior year. The $47 million decrease compared to the sequential quarter was due to lower equity offerings and M&A advisory activity following strong investment banking performance in the prior quarter. Trading income was $41 million for the current quarter, compared to $51 million in the prior quarter and $58 million in the fourth quarter of 2016. The sequential and year-over-year decrease s were due to lower core trading revenue during the current quarter. The decrease compared to the fourth quarter of 2016 was also driven by a higher counterparty credit valuation reserve in the current quarter. Mortgage production income for the current quarter was $61 million, compared to $61 million for the prior quarter and $78 million for the fourth quarter of 2016. The $17 million decrease from the fourth quarter of 2016 was due to lower production volume and a lower repurchase reserve release during the current quarter. Mortgage application volume decreased 8% sequentially and 14% compared to the fourth quarter of 2016. Closed loan volume increased 2% sequentially and decreased 27% compared to the fourth quarter of 2016. 4
Mortgage servicing income was $43 million for the current quarter, compared to $46 million in the prior quarter and $25 million in the fourth quarter of 2016. The $3 million sequential decrease was due to the aforementioned $5 million loss on sale of servicing rights, offset partially by higher servicing fee income during the current quarter. The $18 million increase compared to the fourth quarter of 2016 was due to higher net hedge performance, lower servicing asset decay, and higher servicing fees during the current quarter. At December 31, 2017 and 2016, the servicing portfolio totaled $165.5 billion and $160.2 billion, respectively, and was $165.3 billion at September 30, 2017. Trust and investment management income was $80 million for the current quarter, compared to $79 million for the prior quarter and $73 million for the fourth quarter of 2016. The $7 million increase compared to the prior year quarter was due to an increase in trust and institutional assets under management as well as trust termination fees received during the current quarter. Commercial real estate related income was $62 million for the current quarter, compared to $17 million for the prior quarter and $33 million for the fourth quarter of 2016. The $45 million sequential increase was driven primarily by higher structured real estate and tax credit-related income, as well as higher production volume from the Pillar & Cohen Financial businesses ("Pillar"). The $29 million increase compared to the fourth quarter of 2016 was driven by revenue from Pillar, which the Company acquired in December 2016, in addition to higher structured real estate and tax credit-related income earned during the current quarter. Client transaction-related fees (namely service charges on deposits, other charges and fees, and card fees) were stable sequentially. Compared to the fourth quarter of 2016, client transaction-related fees increased $4 million due to higher client-related transaction activity, offset partially by the impact of the enhanced posting order process instituted during the fourth quarter of 2016. Net securities (losses)/gains was ($109) million for the current quarter compared to no net securities (losses)/gains in both the prior quarter and prior year quarter. The current quarter losses were due to the aforementioned restructuring of the securities AFS portfolio as a result of tax reform. Other noninterest income was $134 million for the current quarter, compared to $25 million in the prior quarter and $29 million in the fourth quarter of 2016. The increase compared to both periods was due primarily to the $107 million pre-tax gain from the sale of PAC during the fourth quarter of 2017. For the year ended December 31, 2017, noninterest income was $3.4 billion, a decrease of $29 million compared to 2016 as lower mortgage-related income was offset partially by higher capital markets and commercial real estate related income. Noninterest Expense Noninterest expense was $1.5 billion in the current quarter, representing increase s of $129 million sequentially and $123 million compared to the fourth quarter of 2016. The December 4, 2017 Form 8-K and tax reform-related items impacted noninterest expense by a net $111 million ( $50 million charitable contribution to the SunTrust Foundation, $36 million net charges related to efficiency initiatives, and $25 million discretionary 401(k) contribution and other employee benefits). Excluding these discrete items, noninterest expense was relatively stable compared to the prior quarter and prior year. Employee compensation and benefits expense was $803 million in the current quarter, compared to $806 million in the prior quarter and $762 million in the fourth quarter of 2016. The $41 million increase compared to the fourth quarter of 2016 was due primarily to the tax reform-related 401(k) discretionary contribution and the Pillar acquisition. Operating (gains)/losses were $23 million in the current quarter, compared to ($34) million in the prior quarter and $23 million in the fourth quarter of 2016. The increase relative to the sequential quarter was driven by the favorable resolution of several legal matters during the prior quarter. 5
Outside processing and software expense was $214 million in the current quarter, compared to $203 million in the prior quarter and $209 million in the fourth quarter of 2016. The increase compared to the prior quarter was driven primarily by higher transaction volume and the timing of third party services. The increase relative to the prior year was due to a benefit recognized during the fourth quarter of 2016 resulting from a contract renegotiation with a key vendor. Marketing and customer development expense was $104 million in the current quarter, compared to $45 million in the prior quarter and $52 million in the fourth quarter of 2016. The increase relative to both prior periods was primarily due to the $50 million tax reform-related contribution to the SunTrust Foundation to support financial well-being initiatives. Amortization expense was $25 million in the current quarter, compared to $22 million in the prior quarter and $14 million in the fourth quarter of 2016. The increase relative to both prior periods was primarily due to an increase in amortizable community development investments. These investments generate tax credits that reduce the provision for income taxes over time. Other noninterest expense was $170 million in the current quarter, compared to $168 million in the prior quarter and $154 million in the fourth quarter of 2016. The increase relative to the prior year was driven primarily by the aforementioned net $36 million charge related to efficiency actions, including severance costs in connection with the voluntary early retirement program, branch and corporate real estate closure costs, and software write-downs. For the twelve months ended December 3 1, 2017, noninterest expense was $5.8 billion compared to $5.5 billion for 2016. The $296 million increase was driven largely by the aforementioned discrete charges recognized in the fourth quarter of 2017, in addition to higher employee compensation expense (primarily related to higher revenue and the acquisition of Pillar which closed in December 2016) and higher net occupancy costs (in part due to the reduction of amortized gains from previous sale leaseback transactions). These increases were offset partially by the aforementioned favorable resolution of several legal matters in the third quarter of 2017. Income Taxes For the current quarter, the Company recorded an income tax benefit of ($74) million compared to income tax provisions of $225 million for the prior quarter and $193 million for the fourth quarter of 2016. The tax provision for the current quarter includes a $303 million tax benefit for the estimated impact of the re-measurement of the Company's estimated net deferred tax liabilities at December 31, 2017 due to tax reform, a $27 million discrete expense related to the increase in STM's state NOL valuation allowance, and a $12 million tax expense related to other discrete tax items. The effective tax rate for the current quarter was (11)%, compared to 29% in both the prior quarter and the fourth quarter of 2016. Excluding the impacts from actions highlighted in the December 4 th 8-K and tax reform-related items (see table on page 1 for more information), the Company s effective tax rate was 30% for the current quarter. Balance Sheet At December 31, 2017, the Company had total assets of $206.0 billion and total shareholders equity of $25.2 billion, representing 12% of total assets. Book value per common share was $47.94 and tangible book value per common share was $34.82, up 2% and 1%, respectively, compared to September 30, 2017, driven primarily by growth in retained earnings. Loans Average performing LHFI totaled $143.4 billion for the current quarter, relatively stable compared to the prior quarter and a 1% increase over the fourth quarter of 2016. The year-over-year growth was driven primarily by increases in consumer lending, offset partially by declines in home equity products and C&I loans. 6
Deposits Average consumer and commercial deposits for the current quarter were $160.7 billion, a 1% increase over the prior quarter and a 2% increase over the fourth quarter of 2016. The sequential growth was due largely to a 6% increase in time deposits and a 4% increase in NOW account balances, offset partially by a decline in money market account balances. The year-over-year growth was driven primarily by increases in NOW and time deposit account balances, offset partially by a decline in money market account balances. 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 9.8% at December 31, 2017, and 9.6% on a fully phased-in basis. The ratios of average total equity to average total assets and tangible common equity to tangible assets were 12.1% and 8.2%, respectively, at December 31, 2017. The Company continues to have substantial available liquidity in the form of cash, highquality government-backed or government-sponsored securities, and other available contingency funding sources. The Company declared a common stock dividend of $0.40 per common share and repurchased $330 million of its outstanding common stock in the fourth quarter of 2017. The Company currently expects to repurchase approximately $660 million of additional common stock over the next two quarters in accordance with its 2017 Capital Plan. Additionally, the Company issued $500 million of 5.125% noncumulative perpetual preferred stock, Series H, in November 2017. Asset Quality Total nonperforming assets ("NPAs") were $741 million at December 31, 2017, down $51 million compared to the prior quarter and $178 million compared to the fourth quarter of 2016. The decrease in NPAs compared to both the prior quarter and the prior year was driven primarily by continued improvements in the energy portfolio. The ratio of NPLs to period-end LHFI was 0.47%, 0.48%, and 0.59% at December 31, 2017, Septemb er 30, 2017, and December 31, 2016, respectively. Net charge-offs were $107 million during the current quarter, an increase of $29 million compared to the prior quarter and a decrease of $29 million compared to the fourth quarter of 2016. The sequential increase was driven by higher net charge-offs associated with C&I and consumer loans, while the year-over-year decrease was driven by overall asset quality improvements as well as lower energy-related net charge-offs. The ratio of annualized net charge-offs to total average LHFI was 0.29% during the current quarter, compared to 0.21% during the prior quarter and 0.38% during the fourth quarter of 2016. The provision for credit losses was $79 million in the current quarter, a sequential decrease of $41 million due primarily to the prior quarter reserve build related to hurricanes, and a decrease of $22 million compared to the fourth quarter of 2016 due to lower net charge-offs. At December 31, 2017, the ALLL was $1.7 billion, which represented 1.21% of period-end loans, a 2 basis point decline relative to Septemb er 30, 2017. Early stage delinquencies increased 9 basis points from the prior quarter to 0.80% at December 31, 2017. Excluding government-guaranteed loans which account for 0.48%, early stage delinquencies were 0.32%, up 3 basis points compared to the prior quarter and up 5 basis points from a year ago, primarily resulting from impacts associated with the recent hurricanes. 7
OTHER INFORMATION About SunTrust Banks, Inc. SunTrust Banks, Inc. is a purpose-driven company dedicated to Lighting the Way to Financial Well-Being for the people, businesses, and communities it serves. 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 December 31, 2017, SunTrust had total assets of $206 billion and total deposits of $161 billion. The Company provides deposit, credit, trust, investment, mortgage, asset management, securities brokerage, and capital market services. SunTrust leads onup, a national movement inspiring Americans to build financial confidence. Join the movement at onup.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. In the second quarter of 2017, the Company realigned its business segment structure from three segments to two segments in conjunction with the Company-wide organizational changes that were announced during the first quarter of 2017. Specifically, the Company retained the previous composition of the Wholesale Banking segment and changed the basis of presentation of the Consumer Banking and Private Wealth Management segment and Mortgage Banking segment such that those segments were combined into a single Consumer segment. In conjunction with this business segment structure realignment, the Company made certain adjustments to its internal funds transfer pricing methodology. Information for periods prior to the second quarter of 2017 was revised to conform to the new business segment structure and the updated internal funds transfer pricing methodology. 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 matchedmaturity funds transfer pricing credits and charges. A detailed discussion of the business segment results will be included in the Company s forthcoming Form 10-K. Corresponding Financial Tables and Information Investors are encouraged to review the foregoing summary and discussion of SunTrust s earnings and financial condition in conjunction with the detailed financial tables and information which SunTrust has also published today and SunTrust s forthcoming Form 10-K. Detailed financial tables and other information are also available at investors.suntrust.com. This information is also included in a current report on Form 8-K furnished with the SEC today. Conference Call SunTrust management will host a conference call on January 19, 2018, at 8:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals may call in beginning at 7:15 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 January 19, 2018, and will remain available until February 19, 2018, by dialing 1-800-475-6701 (domestic) or 1-320-365-3844 (international) (Passcode: 438631). Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust investor relations website at investors.suntrust.com. Beginning the afternoon of January 19, 2018, 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. 8
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 35% and 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 result from merger and acquisition activity and amortization expense (the level of which may vary from company to company), it allows 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 Form 8-K items announced on December 4, 2017 and the impacts of tax reform-related items from the calculation of Tangible efficiency ratio-fte. The Company believes this measure 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. These measures are utilized by management to assess the efficiency of the Company and its lines of business. The Company presents the Basel III Common Equity Tier 1 (CET1) ratio, on a fully phased-in basis. The fully phased-in ratio considers a 250% riskweighting for MSRs and deduction from capital of certain carryforward DTAs, the overfunded pension asset, and other intangible assets. The Company believes this measure is useful to investors who wish to understand the Company's current compliance with future regulatory requirements. Important Cautionary Statement About Forward-Looking Statements This news release contains forward-looking statements. Statements regarding potential future share repurchases and the provision for income taxes are forwardlooking 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. Future dividends, and the amount of any such dividend, must be declared by our board of directors in the future in their discretion. Also, future share repurchases and the timing of any such repurchase are subject to market conditions and management's discretion. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016 and in other periodic reports that we file with the SEC. 9
SunTrust Banks, Inc. and Subsidiaries FINANCIAL HIGHLIGHTS Three Months Ended December 31 % 3 Twelve Months Ended December 3 1 % (Dollars in millions and shares in thousands, except per share data) (Unaudited) 2017 2016 Change 2017 2016 Change EARNINGS & DIVIDENDS Net income $740 $465 59 % $2,273 $1,878 21 % Net income available to common shareholders 710 448 58 2,179 1,811 20 Total revenue 2,267 2,158 5 8,987 8,604 4 Total revenue-fte 1 2,305 2,192 5 9,132 8,742 4 Net income per average common share: Diluted $1.48 $0.90 64 % $4.47 $3.60 24 % Basic 1.50 0.91 65 4.53 3.63 25 Dividends paid per common share 0.40 0.26 54 1.32 1.00 32 CONDENSED BALANCE SHEETS Selected Average Balances: Total assets $205,219 $203,146 1 % $204,931 $199,004 3 % Earning assets 184,306 182,475 1 184,212 178,825 3 Loans held for investment ("LHFI") 144,039 142,578 1 144,216 141,118 2 Intangible assets including residential mortgage servicing rights ("MSRs") 8,077 7,654 6 8,034 7,545 6 Residential MSRs 1,662 1,291 29 1,615 1,190 36 Consumer and commercial deposits 160,745 157,996 2 159,549 154,189 3 Total shareholders equity 24,806 24,044 3 24,301 24,068 1 Preferred stock 2,236 1,225 83 1,792 1,225 46 Period End Balances: Total assets $205,962 $204,875 1 % Earning assets 182,710 184,610 (1) LHFI 143,181 143,298 Allowance for loan and lease losses ("ALLL") 1,735 1,709 2 Consumer and commercial deposits 159,795 158,864 1 Total shareholders equity 25,154 23,618 7 FINANCIAL RATIOS & OTHER DATA Return on average total assets 1.43 % 0.91% 57 % 1.11% 0.94% 18 % Return on average common shareholders equity 12.54 7.85 60 9.72 7.97 22 Return on average tangible common shareholders' equity 1 17.24 10.76 60 13.39 10.91 23 Net interest margin 3.09 2.93 5 3.06 2.92 5 Net interest margin-fte 1 3.17 3.00 6 3.14 3.00 5 Efficiency ratio 67.03 64.74 4 64.14 63.55 1 Efficiency ratio-fte 1 65.94 63.73 3 63.12 62.55 1 Tangible efficiency ratio-fte 1 64.84 63.08 3 62.30 61.99 1 Adjusted tangible efficiency ratio-fte 1 59.85 63.08 (5) 61.04 61.99 (2) Effective tax rate (11) 29 NM 19 30 (37) Basel III capital ratios at period end (transitional) 2 : Common Equity Tier 1 ("CET1") 9.75% 9.59% 2 % Tier 1 capital 11.15 10.28 8 Total capital 13.10 12.26 7 Leverage 9.80 9.22 6 Basel III fully phased-in CET1 ratio 1, 2 9.60 9.43 2 Total average shareholders equity to total average assets 12.09 % 11.84% 2 % 11.86 12.09 (2) Tangible equity to tangible assets 1 9.50 8.82 8 Tangible common equity to tangible assets 1 8.21 8.15 1 Book value per common share $47.94 $45.38 6 Tangible book value per common share 1 34.82 32.95 6 Market capitalization 30,417 26,942 13 Average common shares outstanding: Diluted 480,359 497,055 (3) 486,954 503,466 (3) Basic 474,300 491,497 (3) 481,339 498,638 (3) Full-time equivalent employees 23,785 24,375 (2) Number of ATMs 2,116 2,165 (2) Full service banking offices 1,268 1,367 (7)
1 See Appendix A for additional information and reconcilements of non-u.s. GAAP performance measures. 2 Current period capital ratios are estimated as of the earnings release date. 3 NM - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 10
SunTrust Banks, Inc. and Subsidiaries FIVE QUARTER FINANCIAL HIGHLIGHTS Three Months Ended December 31 September 30 June 30 March 31 December 31 (Dollars in millions and shares in thousands, except per share data) (Unaudited) 2017 2017 2017 2017 2016 EARNINGS & DIVIDENDS Net income $740 $538 $528 $468 $465 Net income available to common shareholders 710 512 505 451 448 Total revenue 2,267 2,276 2,230 2,213 2,158 Total revenue-fte 1 2,305 2,313 2,266 2,247 2,192 Net income per average common share: Diluted $1.48 $1.06 $1.03 $0.91 $0.90 Basic 1.50 1.07 1.05 0.92 0.91 Dividends paid per common share 0.40 0.40 0.26 0.26 0.26 CONDENSED BALANCE SHEETS Selected Average Balances: Total assets $205,219 $205,738 $204,494 $204,252 $203,146 Earning assets 184,306 184,861 184,057 183,606 182,475 LHFI 144,039 144,706 144,440 143,670 142,578 Intangible assets including residential MSRs 8,077 8,009 8,024 8,026 7,654 Residential MSRs 1,662 1,589 1,603 1,604 1,291 Consumer and commercial deposits 160,745 159,419 159,136 158,874 157,996 Total shareholders equity 24,806 24,573 24,139 23,671 24,044 Preferred stock 2,236 1,975 1,720 1,225 1,225 Period End Balances: Total assets $205,962 $208,252 $207,223 $205,642 $204,875 Earning assets 182,710 185,071 184,518 183,279 184,610 LHFI 143,181 144,264 144,268 143,529 143,298 ALLL 1,735 1,772 1,731 1,714 1,709 Consumer and commercial deposits 159,795 161,778 158,319 161,531 158,864 Total shareholders equity 25,154 24,522 24,477 23,484 23,618 FINANCIAL RATIOS & OTHER DATA Return on average total assets 1.43 % 1.04% 1.03% 0.93% 0.91% Return on average common shareholders equity 12.54 9.03 9.08 8.19 7.85 Return on average tangible common shareholders' equity 1 17.24 12.45 12.51 11.28 10.76 Net interest margin 3.09 3.07 3.06 3.02 2.93 Net interest margin-fte 1 3.17 3.15 3.14 3.09 3.00 Efficiency ratio 67.03 61.12 62.24 66.20 64.74 Efficiency ratio-fte 1 65.94 60.14 61.24 65.19 63.73 Tangible efficiency ratio-fte 1 64.84 59.21 60.59 64.60 63.08 Adjusted tangible efficiency ratio-fte 1 59.85 59.21 60.59 64.60 63.08 Effective tax rate (11) 29 30 25 29 Basel III capital ratios at period end (transitional) 2 : CET1 9.75 % 9.62% 9.68% 9.69% 9.59% Tier 1 capital 11.15 10.74 10.81 10.40 10.28 Total capital 13.10 12.69 12.75 12.37 12.26 Leverage 9.80 9.50 9.55 9.08 9.22 Basel III fully phased-in CET1 ratio 1, 2 9.60 9.48 9.53 9.54 9.43 Total average shareholders equity to total average assets 12.09 11.94 11.80 11.59 11.84 Tangible equity to tangible assets 1 9.50 9.12 9.15 8.72 8.82 Tangible common equity to tangible assets 1 8.21 8.10 8.11 8.06 8.15 Book value per common share $47.94 $47.16 $46.51 $45.62 $45.38 Tangible book value per common share 1 34.82 34.34 33.83 33.05 32.95 Market capitalization 30,417 28,451 27,319 26,860 26,942 Average common shares outstanding: Diluted 480,359 483,640 488,020 496,002 497,055 Basic 474,300 478,258 482,913 490,091 491,497 Full-time equivalent employees 23,785 24,215 24,278 24,215 24,375 Number of ATMs 2,116 2,108 2,104 2,132 2,165 Full service banking offices 1,268 1,275 1,281 1,316 1,367
1 See Appendix A for additional information and reconcilements of non-u.s. GAAP performance measures. 2 Current period capital ratios are estimated as of the earnings release date. 11
SunTrust Banks, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Twelve Months End ed December 31 Increase/(Decrease) December 31 Increase/(Decrease) (Dollars in millions and shares in thousands, except per share data) (Unaudited) 2017 2016 Amount % 3 2017 2016 Amount % 3 Interest income $1,640 $1,492 $148 10 % $6,387 $5,778 $609 11 % Interest expense 206 149 57 38 754 557 197 35 NET INTEREST INCOME 1,434 1,343 91 7 5,633 5,221 412 8 Provision for credit losses 79 101 (22) (22) 409 444 (35) (8) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 1,355 1,242 113 9 5,224 4,777 447 9 NONINTEREST INCOME Service charges on deposit accounts 150 154 (4) (3) 603 630 (27) (4) Other charges and fees 94 90 4 4 385 380 5 1 Card fees 88 84 4 5 344 327 17 5 Investment banking income 119 122 (3) (2) 599 494 105 21 Trading income 41 58 (17) (29) 189 211 (22) (10) Trust and investment management income 80 73 7 10 309 304 5 2 Retail investment services 70 69 1 1 278 281 (3) (1) Mortgage production related income 61 78 (17) (22) 231 366 (135) (37) Mortgage servicing related income 43 25 18 72 191 189 2 1 Commercial real estate related income 1 62 33 29 88 123 69 54 78 Net securities (losses)/gains (109) (109) NM (108) 4 (112) NM Other noninterest income 1 134 29 105 NM 210 128 82 64 Total noninterest income 833 815 18 2 3,354 3,383 (29) (1) NONINTEREST EXPENSE Employee compensation and benefits 803 762 41 5 3,257 3,071 186 6 Outside processing and software 214 209 5 2 826 834 (8) (1) Net occupancy expense 97 94 3 3 377 349 28 8 Equipment expense 41 43 (2) (5) 164 170 (6) (4) Regulatory assessments 43 46 (3) (7) 187 173 14 8 Marketing and customer development 104 52 52 100 232 172 60 35 Operating losses 23 23 40 108 (68) (63) Amortization 25 14 11 79 75 49 26 53 Other noninterest expense 170 154 16 10 606 542 64 12 Total noninterest expense 1,520 1,397 123 9 5,764 5,468 296 5 INCOME BEFORE (BENEFIT)/PROVISION FOR INCOME TAXES 668 660 8 1 2,814 2,692 122 5 (Benefit)/provision for income taxes (74) 193 (267) NM 532 805 (273) (34) NET INCOME INCLUDING INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST 742 467 275 59 2,282 1,887 395 21 Less: Net income attributable to noncontrolling interest 2 2 9 9 NET INCOME $740 $465 $275 59 % $2,273 $1,878 $395 21 % NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $710 $448 $262 58 % $2,179 $1,811 $368 20 % Net interest income-fte 2 1,472 1,377 95 7 5,778 5,359 419 8 Total revenue 2,267 2,158 109 5 8,987 8,604 383 4 Total revenue-fte 2 2,305 2,192 113 5 9,132 8,742 390 4 Net income per average common share: Diluted 1.48 0.90 0.58 64 4.47 3.60 0.87 24 Basic 1.50 0.91 0.59 65 4.53 3.63 0.90 25 Cash dividends paid per common share 0.40 0.26 0.14 54 1.32 1.00 0.32 32 Average common shares outstanding: Diluted 480,359 497,055 (16,696) (3) 486,954 503,466 (16,512) (3) Basic 474,300 491,497 (17,197) (3) 481,339 498,638 (17,299) (3) 1 Beginning January 1, 2017, the Company began presenting income related to the Company's Pillar & Cohen Financial, Community Capital, and Structured Real Estate businesses as a separate line item on the Consolidated Statements of Income titled Commercial real estate related income. For periods prior to January 1, 2017, these amounts were previously presented in Other noninterest income and have been reclassified to Commercial real estate related income for comparability. 2 See Appendix A for additional information and reconcilements of non-u.s. GAAP measures to the related U.S.GAAP measures. 3 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) December 31 Septemb er 30 Increase/(Decrease) June 30 March 31 December 31 2017 2017 Amount % 3 2017 2017 2016 Interest income $1,640 $1,635 $5 % $1,583 $1,528 $1,492 Interest expense 206 205 1 180 162 149 NET INTEREST INCOME 1,434 1,430 4 1,403 1,366 1,343 Provision for credit losses 79 120 (41) (34) 90 119 101 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 1,355 1,310 45 3 1,313 1,247 1,242 NONINTEREST INCOME Service charges on deposit accounts 150 154 (4) (3) 151 148 154 Other charges and fees 94 92 2 2 103 95 90 Card fees 88 86 2 2 87 82 84 Investment banking income 119 166 (47) (28) 147 167 122 Trading income 41 51 (10) (20) 46 51 58 Trust and investment management income 80 79 1 1 76 75 73 Retail investment services 70 69 1 1 70 68 69 Mortgage production related income 61 61 56 53 78 Mortgage servicing related income 43 46 (3) (7) 44 58 25 Commercial real estate related income 1 62 17 45 NM 24 20 33 Net securities (losses)/gains (109) (109) NM 1 Other noninterest income 1 134 25 109 NM 22 30 29 Total noninterest income 833 846 (13) (2) 827 847 815 NONINTEREST EXPENSE Employee compensation and benefits 803 806 (3) 796 852 762 Outside processing and software 214 203 11 5 204 205 209 Net occupancy expense 97 94 3 3 94 92 94 Equipment expense 41 40 1 3 43 39 43 Regulatory assessments 43 47 (4) (9) 49 48 46 Marketing and customer development 104 45 59 NM 42 42 52 Operating losses/(gains) 23 (34) 57 NM 19 32 23 Amortization 25 22 3 14 15 13 14 Other noninterest expense 170 168 2 1 126 142 154 Total noninterest expense 1,520 1,391 129 9 1,388 1,465 1,397 INCOME BEFORE (BENEFIT)/PROVISION FOR INCOME TAXES 668 765 (97) (13) 752 629 660 (Benefit)/provision for income taxes (74) 225 (299) NM 222 159 193 NET INCOME INCLUDING INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST 742 540 202 37 530 470 467 Less: Net income attributable to noncontrolling interest 2 2 2 2 2 NET INCOME $740 $538 $202 38 % $528 $468 $465 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $710 $512 $198 39 % $505 $451 $448 Net interest income-fte 2 1,472 1,467 5 1,439 1,400 1,377 Total revenue 2,267 2,276 (9) 2,230 2,213 2,158 Total revenue-fte 2 2,305 2,313 (8) 2,266 2,247 2,192 Net income per average common share: Diluted 1.48 1.06 0.42 40 1.03 0.91 0.90 Basic 1.50 1.07 0.43 40 1.05 0.92 0.91 Cash dividends paid per common share 0.40 0.40 0.26 0.26 0.26 Average common shares outstanding: Diluted 480,359 483,640 (3,281) (1) 488,020 496,002 497,055 Basic 474,300 478,258 (3,958) (1) 482,913 490,091 491,497 1 Beginning January 1, 2017, the Company began presenting income related to the Company's Pillar & Cohen Financial, Community Capital, and Structured Real Estate businesses as a separate line item on the Consolidated Statements of Income titled Commercial real estate related income. For periods prior to January 1, 2017, these amounts were previously presented in Other noninterest income and have been reclassified to Commercial real estate related income for comparability. 2 See Appendix A for additional information and reconcilements of non-u.s. GAAP measures to the related U.S.GAAP measures. 3 NM - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 13
SunTrust Banks, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31 Increase/(Decrease) (Dollars in millions and shares in thousands, except per share data) (Unaudited) 2017 2016 Amount % 2 ASSETS Cash and due from banks $5,349 $5,091 $258 5 % Federal funds sold and securities borrowed or purchased under agreements to resell 1,538 1,307 231 18 Interest-bearing deposits in other banks 25 25 Trading assets and derivative instruments 5,093 6,067 (974) (16) Securities available for sale 31,416 30,672 744 2 Loans held for sale ("LHFS") 2,290 4,169 (1,879) (45) Loans held for investment ("LHFI"): Commercial and industrial ("C&I") 66,356 69,213 (2,857) (4) Commercial real estate ("CRE") 5,317 4,996 321 6 Commercial construction 3,804 4,015 (211) (5) Residential mortgages - guaranteed 560 537 23 4 Residential mortgages - nonguaranteed 27,136 26,137 999 4 Residential home equity products 10,626 11,912 (1,286) (11) Residential construction 298 404 (106) (26) Consumer student - guaranteed 6,633 6,167 466 8 Consumer other direct 8,729 7,771 958 12 Consumer indirect 12,140 10,736 1,404 13 Consumer credit cards 1,582 1,410 172 12 Total LHFI 143,181 143,298 (117) Allowance for loan and lease losses ("ALLL") (1,735) (1,709) 26 2 Net LHFI 141,446 141,589 (143) Goodwill 6,331 6,337 (6) Residential MSRs 1,710 1,572 138 9 Other assets 10,764 8,046 2,718 34 Total assets 1 $205,962 $204,875 $1,087 1 % LIABILITIES Deposits: Noninterest-bearing consumer and commercial deposits $42,784 $43,431 ($647) (1)% Interest-bearing consumer and commercial deposits: NOW accounts 47,379 45,534 1,845 4 Money market accounts 51,088 54,166 (3,078) (6) Savings 6,468 6,266 202 3 Consumer time 5,839 5,534 305 6 Other time 6,237 3,933 2,304 59 Total consumer and commercial deposits 159,795 158,864 931 1 Brokered time deposits 985 924 61 7 Foreign deposits 610 (610) (100) Total deposits 160,780 160,398 382 Funds purchased 2,561 2,116 445 21 Securities sold under agreements to repurchase 1,503 1,633 (130) (8) Other short-term borrowings 717 1,015 (298) (29) Long-term debt 9,785 11,748 (1,963) (17) Trading liabilities and derivative instruments 1,283 1,351 (68) (5) Other liabilities 4,179 2,996 1,183 39 Total liabilities 180,808 181,257 (449) SHAREHOLDERS' EQUITY Preferred stock, no par value 2,475 1,225 1,250 NM Common stock, $1.00 par value 550 550 Additional paid-in capital 9,000 9,010 (10) Retained earnings 17,540 16,000 1,540 10 Treasury stock, at cost, and other (3,591) (2,346) 1,245 53 Accumulated other comprehensive loss, net of tax (820) (821) (1) Total shareholders' equity 25,154 23,618 1,536 7 Total liabilities and shareholders' equity $205,962 $204,875 $1,087 1 %
Common shares outstanding 470,931 491,188 (20,257) (4)% Common shares authorized 750,000 750,000 Preferred shares outstanding 25 12 13 NM Preferred shares authorized 50,000 50,000 Treasury shares of common stock 79,133 58,738 20,395 35 1 Includes earning assets of $182,710 and $184,610 at December 31, 2017 and 2016, respectively. 2 NM - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 14
SunTrust Banks, Inc. and Subsidiaries FIVE QUARTER CONSOLIDATED BALANCE SHEETS December 31 Septemb er 30 (Decrease)/Increase June 30 March 31 December 31 (Dollars in millions and shares in thousands, except per share data) (Unaudited) 2017 2017 Amount % 2017 2017 2016 ASSETS Cash and due from banks $5,349 $7,071 ($1,722) (24)% $6,968 $6,957 $5,091 Federal funds sold and securities borrowed or purchased under agreements to resell 1,538 1,182 356 30 1,249 1,292 1,307 Interest-bearing deposits in other banks 25 25 24 25 25 Trading assets and derivative instruments 5,093 6,318 (1,225) (19) 5,847 6,007 6,067 Securities available for sale 31,416 31,444 (28) 31,142 31,127 30,672 LHFS 2,290 2,835 (545) (19) 2,826 2,109 4,169 LHFI: C&I 66,356 67,758 (1,402) (2) 68,511 68,971 69,213 CRE 5,317 5,238 79 2 5,250 5,067 4,996 Commercial construction 3,804 3,964 (160) (4) 4,019 4,215 4,015 Residential mortgages - guaranteed 560 497 63 13 501 549 537 Residential mortgages - nonguaranteed 27,136 27,041 95 26,594 26,110 26,137 Residential home equity products 10,626 10,865 (239) (2) 11,173 11,511 11,912 Residential construction 298 327 (29) (9) 364 380 404 Consumer student - guaranteed 6,633 6,559 74 1 6,543 6,396 6,167 Consumer other direct 8,729 8,597 132 2 8,249 7,904 7,771 Consumer indirect 12,140 11,952 188 2 11,639 11,067 10,736 Consumer credit cards 1,582 1,466 116 8 1,425 1,359 1,410 Total LHFI 143,181 144,264 (1,083) (1) 144,268 143,529 143,298 ALLL (1,735) (1,772) (37) (2) (1,731) (1,714) (1,709) Net LHFI 141,446 142,492 (1,046) (1) 142,537 141,815 141,589 Goodwill 6,331 6,338 (7) 6,338 6,338 6,337 Residential MSRs 1,710 1,628 82 5 1,608 1,645 1,572 Other assets 10,764 8,919 1,845 21 8,684 8,327 8,046 Total assets 1 $205,962 $208,252 ($2,290) (1)% $207,223 $205,642 $204,875 LIABILITIES Deposits: Noninterest-bearing consumer and commercial deposits $42,784 $43,984 ($1,200) (3)% $44,006 $43,437 $43,431 Interest-bearing consumer and commercial deposits: NOW accounts 47,379 47,213 166 43,973 46,222 45,534 Money market accounts 51,088 52,487 (1,399) (3) 53,000 55,261 54,166 Savings 6,468 6,505 (37) (1) 6,599 6,668 6,266 Consumer time 5,839 5,735 104 2 5,610 5,495 5,534 Other time 6,237 5,854 383 7 5,131 4,448 3,933 Total consumer and commercial deposits 159,795 161,778 (1,983) (1) 158,319 161,531 158,864 Brokered time deposits 985 959 26 3 944 917 924 Foreign deposits 610 405 610 Total deposits 160,780 162,737 (1,957) (1) 159,873 162,853 160,398 Funds purchased 2,561 3,118 (557) (18) 3,007 1,037 2,116 Securities sold under agreements to repurchase 1,503 1,422 81 6 1,503 1,704 1,633 Other short-term borrowings 717 909 (192) (21) 2,640 1,955 1,015 Long-term debt 9,785 11,280 (1,495) (13) 10,511 10,496 11,748 Trading liabilities and derivative instruments 1,283 1,284 (1) 1,090 1,225 1,351 Other liabilities 4,179 2,980 1,199 40 4,122 2,888 2,996 Total liabilities 180,808 183,730 (2,922) (2) 182,746 182,158 181,257 SHAREHOLDERS EQUITY Preferred stock, no par value 2,475 1,975 500 25 1,975 1,225 1,225 Common stock, $1.00 par value 550 550 550 550 550 Additional paid-in capital 9,000 8,985 15 8,973 8,966 9,010 Retained earnings 17,540 17,021 519 3 16,701 16,322 16,000 Treasury stock, at cost, and other (3,591) (3,274) 317 10 (2,945) (2,712) (2,346) Accumulated other comprehensive loss, net of tax (820) (735) 85 12 (777) (867) (821) Total shareholders equity 25,154 24,522 632 3 24,477 23,484 23,618 Total liabilities and shareholders equity $205,962 $208,252 ($2,290) (1)% $207,223 $205,642 $204,875
Common shares outstanding 470,931 476,001 (5,070) (1)% 481,644 485,712 491,188 Common shares authorized 750,000 750,000 750,000 750,000 750,000 Preferred shares outstanding 25 20 5 25 20 12 12 Preferred shares authorized 50,000 50,000 50,000 50,000 50,000 Treasury shares of common stock 79,133 74,053 5,080 7 68,369 64,301 58,738 1 Includes earning assets of $182,710, $185,071, $184,518, $183,279, and $184,610 at December 31, 2017, Septemb er 30, 2017, June 30, 2017, March 31, 2017, and December 31, 2016, respectively. 15
SunTrust Banks, Inc. and Subsidiaries CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE, AND AVERAGE YIELDS EARNED/RATES PAID Three Months Ended (Decrease)/Increase From (Dollars in millions) (Unaudited) ASSETS Loans held for investment ("LHFI"): 1 Average Balances December 31, 2017 September 30, 2017 Sequential Quarter Prior Year Quarter Interest Income/ Expense Yields/ Rates Average Balances Interest Income/ Expense Yields/ Rates Average Balances Yields/ Rates Average Balances Yields/ Rates Commercial and industrial ("C&I") $67,238 $575 3.39% $68,277 $583 3.39% ($1,039) ($1,169) 0.20 Commercial real estate ("CRE") 5,209 47 3.57 5,227 47 3.57 (18) 68 0.64 Commercial construction 3,947 39 3.92 3,918 38 3.86 29 0.06 95 0.70 Residential mortgages - guaranteed 546 3 2.12 512 5 3.57 34 (1.45) 4 (0.45) Residential mortgages - nonguaranteed 26,858 254 3.78 26,687 255 3.82 171 (0.04) 793 0.03 Residential home equity products 10,531 116 4.37 10,778 120 4.40 (247) (0.03) (1,278) 0.46 Residential construction 303 3 4.15 333 4 4.68 (30) (0.53) (79) (0.09) Consumer student - guaranteed 6,576 76 4.60 6,535 73 4.44 41 0.16 586 0.48 Consumer other direct 8,651 108 4.94 8,426 104 4.91 225 0.03 1,095 0.30 Consumer indirect 11,999 107 3.53 11,824 105 3.51 175 0.02 1,366 0.09 Consumer credit cards 1,504 39 10.40 1,450 37 10.32 54 0.08 180 0.47 Nonaccrual 677 9 5.12 739 11 5.90 (62) (0.78) (200) 1.35 Total LHFI 144,039 1,376 3.79 144,706 1,382 3.79 (667) 1,461 0.25 Securities available for sale: Taxable 30,837 196 2.54 30,669 191 2.49 168 0.05 1,523 0.27 Tax-exempt 589 4 2.97 504 4 2.99 85 (0.02) 316 (0.11) Total securities available for sale 31,426 200 2.55 31,173 195 2.50 253 0.05 1,839 0.27 Federal funds sold and securities borrowed or purchased under agreements to resell 1,198 2 0.87 1,189 3 0.89 9 (0.02) (134) 0.90 Loans held for sale ("LHFS") 2,622 30 4.53 2,477 24 3.89 145 0.64 (948) 1.11 Interest-bearing deposits in other banks 25 1.62 25 1.88 (0.26) 1 1.15 Interest earning trading assets 4,996 32 2.53 5,291 31 2.38 (295) 0.15 (388) 0.70 Total earning assets 184,306 1,640 3.53 184,861 1,635 3.51 (555) 0.02 1,831 0.28 Allowance for loan and lease losses ("ALLL") (1,768) (1,748) 20 44 Cash and due from banks 5,018 5,023 (5) (387) Other assets 16,794 16,501 293 1,419 Noninterest earning trading assets and derivative instruments 858 948 (90) (245) Unrealized gains on securities available for sale, net 11 153 (142) (501) Total assets $205,219 $205,738 ($519) $2,073 LIABILITIES AND SHAREHOLDERS EQUITY Interest-bearing deposits: NOW accounts $46,238 $42 0.36% $44,604 $37 0.33% $1,634 0.03 $3,309 0.20 Money market accounts 52,025 43 0.33 53,278 43 0.32 (1,253) 0.01 (2,391) 0.11 Savings 6,487 0.02 6,535 0.02 (48) 228 (0.01) Consumer time 5,785 12 0.82 5,675 11 0.76 110 0.06 186 0.13 Other time 6,090 18 1.19 5,552 16 1.14 538 0.05 2,136 0.22 Total interest-bearing consumer and commercial deposits 116,625 115 0.39 115,644 107 0.37 981 0.02 3,468 0.16 Brokered time deposits 971 4 1.32 947 3 1.28 24 0.04 36 0.04 Foreign deposits 295 1 1.13 (295) (1.13) (308) (0.45) Total interest-bearing deposits 117,596 119 0.40 116,886 111 0.38 710 0.02 3,196 0.16 Funds purchased 1,143 3 1.17 1,689 5 1.15 (546) 0.02 135 0.74 Securities sold under agreements to repurchase 1,483 4 1.14 1,464 4 1.07 19 0.07 (225) 0.69 Interest-bearing trading liabilities 969 7 2.73 912 6 2.84 57 (0.11) (177) 0.60 Other short-term borrowings 815 1 0.22 1,797 3 0.56 (982) (0.34) (163) 0.11 Long-term debt 10,981 72 2.60 11,204 76 2.70 (223) (0.10) (651) 0.23 Total interest-bearing liabilities 132,987 206 0.61 133,952 205 0.61 (965) 2,115 0.16 Noninterest-bearing deposits 44,120 43,775 345 (719) Other liabilities 2,860 3,046 (186) (252) Noninterest-bearing trading liabilities and derivative instruments 446 392 54 167 Shareholders equity 24,806 24,573 233 762 Total liabilities and shareholders equity $205,219 $205,738 ($519) $2,073
Interest Rate Spread 2.92% 2.90% 0.02 0.12 Net Interest Income $1,434 $1,430 Net Interest Income-FTE 2 $1,472 $1,467 Net Interest Margin 3 3.09% 3.07% 0.02 0.16 Net Interest Margin-FTE 2, 3 3.17 3.15 0.02 0.17 1 Interest income includes loan fees of $42 million and $45 million for the three months ended December 31, 2017 and September 30, 2017, respectively. 2 See Appendix A for additional information and reconcilements of non-u.s. GAAP performance measures. Approximately 95% of the total FTE adjustment for both the three months ended December 31, 2017 and September 30, 2017 was attributed to C&I loans. 3 Net interest margin is calculated by dividing annualized Net interest income by average Total earning assets. 16
SunTrust Banks, Inc. and Subsidiaries CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE, AND AVERAGE YIELDS EARNED/RATES PAID, continued Three Months Ended June 30, 2017 March 31, 2017 December 31, 2016 (Dollars in millions) (Unaudited) Average Balances Interest Income/ Expense Yields/ Rates Average Balances Interest Income/ Expense Yields/ Rates Average Balances Interest Income/ Expense Yields/ Rates ASSETS LHFI: 1 C&I $69,122 $574 3.33% $69,076 $554 3.25% $68,407 $549 3.19 % CRE 5,157 44 3.38 5,038 39 3.18 5,141 38 2.93 Commercial construction 4,105 37 3.63 4,076 34 3.39 3,852 31 3.22 Residential mortgages - guaranteed 532 4 2.95 567 4 3.07 542 4 2.57 Residential mortgages - nonguaranteed 26,090 248 3.80 25,918 247 3.80 26,065 244 3.75 Residential home equity products 11,113 118 4.27 11,466 116 4.10 11,809 116 3.91 Residential construction 363 4 4.19 385 4 4.04 382 4 4.24 Consumer student - guaranteed 6,462 71 4.42 6,278 65 4.20 5,990 62 4.12 Consumer other direct 8,048 97 4.84 7,819 97 5.02 7,556 88 4.64 Consumer indirect 11,284 98 3.50 10,847 92 3.43 10,633 92 3.44 Consumer credit cards 1,391 35 9.96 1,369 33 9.79 1,324 33 9.93 Nonaccrual 773 8 4.37 831 4 2.03 877 8 3.77 Total LHFI 144,440 1,338 3.72 143,670 1,289 3.64 142,578 1,269 3.54 Securities available for sale: Taxable 30,654 189 2.47 30,590 185 2.42 29,314 166 2.27 Tax-exempt 348 3 3.04 286 2 3.04 273 2 3.08 Total securities available for sale 31,002 192 2.47 30,876 187 2.42 29,587 168 2.28 Federal funds sold and securities borrowed or purchased under agreements to resell 1,237 2 0.68 1,236 1 0.33 1,332 (0.03) LHFS 2,222 21 3.86 2,611 24 3.71 3,570 30 3.42 Interest-bearing deposits in other banks 25 0.62 25 0.64 24 0.47 Interest earning trading assets 5,131 30 2.33 5,188 27 2.09 5,384 25 1.83 Total earning assets 184,057 1,583 3.45 183,606 1,528 3.38 182,475 1,492 3.25 ALLL (1,723) (1,700) (1,724) Cash and due from banks 4,901 5,556 5,405 Other assets 16,248 15,952 15,375 Noninterest earning trading assets and derivative instruments 918 888 1,103 Unrealized gains/(losses) on securities available for sale, net 93 (50) 512 Total assets $204,494 $204,252 $203,146 LIABILITIES AND SHAREHOLDERS EQUITY Interest-bearing deposits: NOW accounts $44,437 $30 0.27% $44,745 $23 0.21% $42,929 $17 0.16 % Money market accounts 54,199 38 0.28 54,902 34 0.25 54,416 30 0.22 Savings 6,638 0.03 6,415 0.02 6,259 0.03 Consumer time 5,555 10 0.71 5,487 9 0.69 5,599 10 0.69 Other time 4,691 12 1.05 4,232 10 0.97 3,954 10 0.97 Total interest-bearing consumer and commercial deposits 115,520 90 0.31 115,781 76 0.27 113,157 67 0.23 Brokered time deposits 929 3 1.29 917 3 1.28 935 3 1.28 Foreign deposits 720 2 0.95 678 1 0.66 308 0.45 Total interest-bearing deposits 117,169 95 0.32 117,376 80 0.28 114,400 70 0.24 Funds purchased 1,155 3 0.96 872 1 0.65 1,008 1 0.43 Securities sold under agreements to repurchase 1,572 3 0.89 1,715 3 0.61 1,708 2 0.45 Interest-bearing trading liabilities 992 6 2.66 1,002 6 2.61 1,146 6 2.13 Other short-term borrowings 2,008 3 0.55 1,753 2 0.49 978 0.11 Long-term debt 10,518 70 2.66 11,563 70 2.45 11,632 70 2.37 Total interest-bearing liabilities 133,414 180 0.54 134,281 162 0.49 130,872 149 0.45 Noninterest-bearing deposits 43,616 43,093 44,839 Other liabilities 2,976 2,860 3,112 Noninterest-bearing trading liabilities and derivative instruments 349 347 279 Shareholders equity 24,139 23,671 24,044 Total liabilities and shareholders equity $204,494 $204,252 $203,146 Interest Rate Spread 2.91% 2.89% 2.80 %
Net Interest Income $1,403 $1,366 $1,343 Net Interest Income-FTE 2 $1,439 $1,400 $1,377 Net Interest Margin 3 3.06% 3.02% 2.93 % Net Interest Margin-FTE 2, 3 3.14 3.09 3.00 1 Interest income includes loan fees of $45 million, $45 million, and $41 million for the three months ended June 30, 2017, March 31, 2017, and December 31, 2016, respectively. 2 See Appendix A for additional information and reconcilements of non-u.s. GAAP performance measures. Approximately 95% of the total FTE adjustment for the three months ended June 30, 2017, March 31, 2017, and December 31, 2016 was attributed to C&I loans. 3 Net interest margin is calculated by dividing annualized Net interest income by average Total earning assets. 17
SunTrust Banks, Inc. and Subsidiaries CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE, AND AVERAGE YIELDS EARNED/RATES PAID, continued Twelve Months End ed (Dollars in millions) (Unaudited) ASSETS LHFI: 1 Average Balances December 31, 2017 December 31, 2016 Increase/(Decrease) Interest Income/ Expense Yields/ Rates Average Balances Interest Income/ Expense Yields/ Rates Average Balances Yields/ Rates C&I $68,423 $2,286 3.34% $68,406 $2,148 3.14% $17 0.20 CRE 5,158 177 3.43 5,808 169 2.92 (650) 0.51 Commercial construction 4,011 148 3.70 2,898 94 3.25 1,113 0.45 Residential mortgages - guaranteed 539 16 2.92 575 20 3.45 (36) (0.53) Residential mortgages - nonguaranteed 26,392 1,003 3.80 25,554 964 3.77 838 0.03 Residential home equity products 10,969 470 4.28 12,297 484 3.94 (1,328) 0.34 Residential construction 346 15 4.26 377 17 4.39 (31) (0.13) Consumer student - guaranteed 6,464 286 4.42 5,551 224 4.03 913 0.39 Consumer other direct 8,239 406 4.93 6,871 313 4.56 1,368 0.37 Consumer indirect 11,492 401 3.49 10,712 365 3.40 780 0.09 Consumer credit cards 1,429 145 10.12 1,188 120 10.10 241 0.02 Nonaccrual 754 32 4.28 881 21 2.43 (127) 1.85 Total LHFI 144,216 5,385 3.73 141,118 4,939 3.50 3,098 0.23 Securities available for sale: Taxable 30,688 761 2.48 28,216 645 2.29 2,472 0.19 Tax-exempt 433 13 2.99 189 6 3.37 244 (0.38) Total securities available for sale 31,121 774 2.49 28,405 651 2.29 2,716 0.20 Federal funds sold and securities borrowed or purchased under agreements to resell 1,215 9 0.69 1,241 1 0.10 (26) 0.59 LHFS 2,483 99 4.00 2,570 92 3.60 (87) 0.40 Interest-bearing deposits in other banks 25 1.20 24 0.40 1 0.80 Interest earning trading assets 5,152 120 2.33 5,467 95 1.73 (315) 0.60 Total earning assets 184,212 6,387 3.47 178,825 5,778 3.23 5,387 0.24 ALLL (1,735) (1,746) (11) Cash and due from banks 5,123 4,999 124 Other assets 16,376 14,880 1,496 Noninterest earning trading assets and derivative instruments 903 1,388 (485) Unrealized gains on securities available for sale, net 52 658 (606) Total assets $204,931 $199,004 $5,927 LIABILITIES AND SHAREHOLDERS EQUITY Interest-bearing deposits: NOW accounts $45,009 $131 0.29% $40,949 $55 0.13% $4,060 0.16 Money market accounts 53,592 157 0.29 53,795 107 0.20 (203) 0.09 Savings 6,519 1 0.02 6,285 2 0.03 234 (0.01) Consumer time 5,626 42 0.75 5,852 43 0.73 (226) 0.02 Other time 5,148 57 1.10 3,908 39 1.00 1,240 0.10 Total interest-bearing consumer and commercial deposits 115,894 388 0.34 110,789 246 0.22 5,105 0.12 Brokered time deposits 941 12 1.29 926 12 1.33 15 (0.04) Foreign deposits 421 4 0.86 123 1 0.42 298 0.44 Total interest-bearing deposits 117,256 404 0.34 111,838 259 0.23 5,418 0.11 Funds purchased 1,217 13 1.02 1,055 4 0.37 162 0.65 Securities sold under agreements to repurchase 1,558 15 0.92 1,734 7 0.42 (176) 0.50 Interest-bearing trading liabilities 968 26 2.70 1,025 24 2.29 (57) 0.41 Other short-term borrowings 1,591 8 0.50 1,452 3 0.23 139 0.27 Long-term debt 11,065 288 2.60 10,767 260 2.42 298 0.18 Total interest-bearing liabilities 133,655 754 0.56 127,871 557 0.44 5,784 0.12 Noninterest-bearing deposits 43,655 43,400 255 Other liabilities 2,936 3,252 (316) Noninterest-bearing trading liabilities and derivative instruments 384 413 (29) Shareholders equity 24,301 24,068 233 Total liabilities and shareholders equity $204,931 $199,004 $5,927 Interest Rate Spread 2.91% 2.79% 0.12
Net Interest Income $5,633 $5,221 Net Interest Income-FTE 2 $5,778 $5,359 Net Interest Margin 3 3.06% 2.92% 0.14 Net Interest Margin-FTE 2, 3 3.14 3.00 0.14 1 Interest income includes loan fees of $177 million and $165 million for the twelve months ended December 3 1, 2017 and 2016, respectively. 2 See Appendix A for additional information and reconcilements of non-u.s. GAAP performance measures. Approximately 95% of the total FTE adjustment for both the twelve months ended December 3 1, 2017 and 2016 was attributed to C&I loans. 3 Net interest margin is calculated by dividing annualized Net interest income by average Total earning assets. 18
SunTrust Banks, Inc. and Subsidiaries OTHER FINANCIAL DATA Three Months Ended Twelve Months End ed December 31 Increase/(Decrease) December 31 (Decrease)/Increase (Dollars in millions) (Unaudited) 2017 2016 Amount % 4 2017 2016 Amount % 4 CREDIT DATA Allowance for credit losses, beginning of period $1,845 $1,811 $34 2 % $1,776 $1,815 ($39) (2)% Provision/(benefit) for unfunded commitments 6 (1) 7 NM 12 4 8 NM Provision for loan losses: Commercial 19 36 (17) (47) 108 329 (221) (67) Consumer 55 66 (11) (17) 289 111 178 NM Total provision for loan losses 74 102 (28) (27) 397 440 (43) (10) Charge-offs: Commercial (44) (78) (34) (44) (167) (287) (120) (42) Consumer (90) (85) 5 6 (324) (304) 20 7 Total charge-offs (134) (163) (29) (18) (491) (591) (100) (17) Recoveries: Commercial 7 9 (2) (22) 40 35 5 14 Consumer 20 18 2 11 84 73 11 15 Total recoveries 27 27 124 108 16 15 Net charge-offs (107) (136) (29) (21) (367) (483) (116) (24) Other (4) 4 NM (4) 4 NM Allowance for credit losses, end of period $1,814 $1,776 $38 2 % $1,814 $1,776 $38 2 % Components: Allowance for loan and lease losses ("ALLL") $1,735 $1,709 $26 2 % Unfunded commitments reserve 79 67 12 18 Allowance for credit losses $1,814 $1,776 $38 2 % Net charge-offs to average loans held for investment ("LHFI") (annualized): Commercial 0.19% 0.35% (0.16) (46)% 0.16% 0.32% (0.16) (50)% Consumer 0.41 0.41 0.36 0.36 Total net charge-offs to total average LHFI 0.29 0.38 (0.09) (24) 0.25 0.34 (0.09) (26) Period Ended Nonaccrual/nonperforming loans ("NPLs"): Commercial $240 $414 ($174) (42)% Consumer 434 431 3 1 Total nonaccrual/npls 674 845 (171) (20) Other real estate owned ( OREO ) 57 60 (3) (5) Other repossessed assets 10 14 (4) (29) Total nonperforming assets ("NPAs") $741 $919 ($178) (19)% Accruing restructured loans $2,468 $2,535 ($67) (3)% Nonaccruing restructured loans 1 286 306 (20) (7) Accruing LHFI past due > 90 days (guaranteed) 1,374 1,254 120 10 Accruing LHFI past due > 90 days (non-guaranteed) 31 34 (3) (9) Accruing LHFS past due > 90 days 2 1 1 100 NPLs to period-end LHFI 0.47% 0.59% (0.12) (20)% NPAs to period-end LHFI plus OREO, and other repossessed assets 0.52 0.64 (0.12) (19) ALLL to period-end LHFI 2, 3 1.21 1.19 0.02 2 ALLL to NPLs 2, 3 2.59x 2.03x 0.56x 28 1 Nonaccruing restructured loans are included in total nonaccrual/npls. 2 This ratio is computed using the ALLL. 3 Loans measured at fair value were excluded from the calculation as no allowance is recorded for loans measured at fair value. The Company believes that this presentation more appropriately reflects the relationship between the ALLL and loans that attract an allowance. 4 "NM" - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 19
SunTrust Banks, Inc. and Subsidiaries FIVE QUARTER OTHER FINANCIAL DATA Three Months Ended Three Months Ended December 31 Septemb er 30 Increase/(Decrease) June 30 March 31 December 31 (Dollars in millions) (Unaudited) 2017 2017 Amount % 4 2017 2017 2016 CREDIT DATA Allowance for credit losses, beginning of period $1,845 $1,803 $42 2 % $1,783 $1,776 $1,811 Provision/(benefit) for unfunded commitments 6 1 5 NM 3 2 (1) Provision for loan losses: Commercial 19 5 14 NM 39 46 36 Consumer 55 114 (59) (52) 48 71 66 Total provision for loan losses 74 119 (45) (38) 87 117 102 Charge-offs: Commercial (44) (33) 11 33 (26) (63) (78) Consumer (90) (76) 14 18 (75) (83) (85) Total charge-offs (134) (109) 25 23 (101) (146) (163) Recoveries: Commercial 7 11 (4) (36) 7 13 9 Consumer 20 20 24 21 18 Total recoveries 27 31 (4) (13) 31 34 27 Net charge-offs (107) (78) 29 37 (70) (112) (136) Other (4) 4 NM Allowance for credit losses, end of period $1,814 $1,845 ($31) (2)% $1,803 $1,783 $1,776 Components: ALLL $1,735 $1,772 ($37) (2)% $1,731 $1,714 $1,709 Unfunded commitments reserve 79 73 6 8 72 69 67 Allowance for credit losses $1,814 $1,845 ($31) (2)% $1,803 $1,783 $1,776 Net charge-offs to average LHFI (annualized): Commercial 0.19% 0.11% 0.08 73 % 0.10% 0.26% 0.35% Consumer 0.41 0.33 0.08 24 0.32 0.39 0.41 Total net charge-offs to total average LHFI 0.29 0.21 0.08 38 0.20 0.32 0.38 Period Ended Nonaccrual/NPLs: Commercial $240 $298 ($58) (19)% $325 $352 $414 Consumer 434 399 35 9 429 437 431 Total nonaccrual/npls 674 697 (23) (3) 754 789 845 OREO 57 57 61 62 60 Other repossessed assets 10 7 3 43 6 7 14 Nonperforming LHFS 31 (31) (100) Total NPAs $741 $792 ($51) (6)% $821 $858 $919 Accruing restructured loans $2,468 $2,501 ($33) (1)% $2,524 $2,545 $2,535 Nonaccruing restructured loans 1 286 304 (18) (6) 321 329 306 Accruing LHFI past due > 90 days (guaranteed) 1,374 1,304 70 5 1,221 1,190 1,254 Accruing LHFI past due > 90 days (non-guaranteed) 31 39 (8) (21) 30 37 34 Accruing LHFS past due > 90 days 2 2 NM 1 1 1 NPLs to period-end LHFI 0.47% 0.48% (0.01) (2)% 0.52% 0.55% 0.59% NPAs to period-end LHFI plus OREO, and other repossessed assets 0.52 0.55 (0.03) (5) 0.57 0.60 0.64 ALLL to period-end LHFI 2, 3 1.21 1.23 (0.02) (2) 1.20 1.20 1.19 ALLL to NPLs 2, 3 2.59x 2.55x 0.04x 2 2.31x 2.18x 2.03x 1 Nonaccruing restructured loans are included in total nonaccrual/npls. 2 This ratio is computed using the ALLL. 3 Loans measured at fair value were excluded from the calculation as no allowance is recorded for loans measured at fair value. The Company believes that this presentation more appropriately reflects the relationship between the ALLL and loans that attract an allowance. 4 "NM" - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 20
SunTrust Banks, Inc. and Subsidiaries OTHER FINANCIAL DATA, continued (Dollars in millions) (Unaudited) Residential MSRs - Fair Value Three Months Ended December 31 Twelve Months Ended December 3 1 Commercial Mortgage Servicing Rights and other Total Residential MSRs - Fair Value Commercial Mortgage Servicing Rights and other Total OTHER INTANGIBLE ASSETS ROLLFORWARD Balance, beginning of period $1,119 $12 $1,131 $1,307 $18 $1,325 Amortization (3) (3) (9) (9) Servicing rights originated 114 114 312 312 Servicing rights purchased 96 96 200 200 Servicing rights acquired in Pillar acquisition 62 62 62 62 Other intangible assets acquired in Pillar acquisition 14 14 14 14 Fair value changes due to inputs and assumptions 1 315 315 (13) (13) Other changes in fair value 2 (72) (72) (232) (232) Servicing rights sold (2) (2) Balance, December 31, 2016 $1,572 $85 $1,657 $1,572 $85 $1,657 Balance, beginning of period $1,628 $78 $1,706 $1,572 $85 $1,657 Amortization (3) (3) (20) (20) Servicing rights originated 142 6 148 394 17 411 Fair value changes due to inputs and assumptions 1 5 5 (22) (22) Other changes in fair value 2 (58) (58) (226) (226) Servicing rights sold (7) (7) (8) (8) Other 3 (1) (1) Balance, December 31, 2017 $1,710 $81 $1,791 $1,710 $81 $1,791 1 Primarily reflects changes in discount rates and prepayment speed assumptions, due to changes in interest rates. 2 Represents changes due to the collection of expected cash flows, net of accretion, due to the passage of time. 3 Represents measurement period adjustment on other intangible assets previously acquired in Pillar/Cohen acquisition. Three Months Ended December 31 Septemb er 30 June 30 March 31 December 31 (Shares in thousands) (Unaudited) 2017 2017 2017 2017 2016 COMMON SHARES OUTSTANDING ROLLFORWARD Balance, beginning of period 476,001 481,644 485,712 491,188 495,936 Common shares issued for employee benefit plans 244 125 111 1,536 560 Repurchases of common stock (5,314) (5,768) (4,179) (7,012) (5,308) Balance, end of period 470,931 476,001 481,644 485,712 491,188 21
SunTrust Banks, Inc. and Subsidiaries APPENDIX A TO THE EARNINGS RELEASE - RECONCILEMENT OF NON-U.S. GAAP MEASURES 1 Three Months Ended Twelve Months End ed December 31 September 30 June 30 March 31 December 31 December 31 (Dollars in millions) (Unaudited) 2017 2017 2017 2017 2016 2017 2016 Net interest income $1,434 $1,430 $1,403 $1,366 $1,343 $5,633 $5,221 Fully taxable-equivalent ("FTE") adjustment 38 37 36 34 34 145 138 Net interest income-fte 2 1,472 1,467 1,439 1,400 1,377 5,778 5,359 Noninterest income 833 846 827 847 815 3,354 3,383 Total revenue-fte 2 $2,305 $2,313 $2,266 $2,247 $2,192 $9,132 $8,742 Return on average common shareholders equity 12.54 % 9.03 % 9.08 % 8.19 % 7.85 % 9.72 % 7.97 % Impact of removing average intangible assets and related pre-tax amortization, other than residential MSRs and other servicing rights 4.70 3.42 3.43 3.09 2.91 3.67 2.94 Return on average tangible common shareholders' equity 3 17.24% 12.45% 12.51% 11.28% 10.76% 13.39% 10.91% Net interest margin 3.09 % 3.07 % 3.06 % 3.02 % 2.93 % 3.06 % 2.92 % Impact of FTE adjustment 0.08 0.08 0.08 0.07 0.07 0.08 0.08 Net interest margin-fte 2 3.17 % 3.15 % 3.14 % 3.09 % 3.00 % 3.14 % 3.00 % Noninterest expense $1,520 $1,391 $1,388 $1,465 $1,397 $5,764 $5,468 Total revenue 2,267 2,276 2,230 2,213 2,158 8,987 8,604 Efficiency ratio 4 67.03% 61.12% 62.24% 66.20% 64.74% 64.14% 63.55% Impact of FTE adjustment (1.09) (0.98) (1.00) (1.01) (1.01) (1.02) (1.00) Efficiency ratio-fte 2, 4 65.94 60.14 61.24 65.19 63.73 63.12 62.55 Impact of excluding amortization related to intangible assets and certain tax credits (1.10) (0.93) (0.65) (0.59) (0.65) (0.82) (0.56) Tangible efficiency ratio-fte 2, 5 64.84% 59.21% 60.59% 64.60% 63.08% 62.30% 61.99% Impact of excluding Form 8-K and other tax reform-related items (4.99) (1.26) Adjusted tangible efficiency ratio-fte 2, 5, 6 59.85% 59.21% 60.59% 64.60% 63.08% 61.04% 61.99% Basel III Common Equity Tier 1 ("CET1") ratio (transitional) 7 9.75 % 9.62 % 9.68 % 9.69 % 9.59 % Impact of MSRs and other under fully phased-in approach (0.15) (0.14) (0.15) (0.15) (0.16) Basel III fully phased-in CET1 ratio 7 9.60 % 9.48 % 9.53 % 9.54 % 9.43 % 1 Certain amounts in this schedule are presented net of applicable income taxes, calculated based on each subsidiary s federal and state tax rates and are adjusted for any permanent differences. 2 The Company presents Net interest income-fte, Total revenue-fte, Net interest margin-fte, Efficiency ratio-fte, Tangible efficiency ratio-fte, and Adjusted tangible efficiency ratio-fte 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 using a federal tax rate of 35% and 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. 3 The Company presents Return on average tangible common shareholders' equity, which removes the after-tax impact of purchase accounting intangible assets from average common shareholders' equity and removes related intangible asset amortization from Net income available to common shareholders. The Company believes this measure is useful to investors because, by removing the amount of intangible assets and related pre-tax amortization expense (the level of which may vary from company to company), it allows investors to more easily compare the Company s return on average common shareholders' equity to other companies in the industry. The Company also believes that removing these items provides a more relevant measure of the return on the Company's common shareholders' equity. This measure is utilized by management to assess the profitability of the Company. 4 Efficiency ratio is computed by dividing Noninterest expense by Total revenue. Efficiency ratio-fte is computed by dividing Noninterest expense by Total revenue-fte. 5 The Company presents Tangible efficiency ratio-fte and Adjusted tangible efficiency ratio-fte, which remove the amortization related to intangible assets and certain tax credits from the calculation of Efficiency ratio-fte. The Company believes these measures are 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. These measures are utilized by management to assess the efficiency of the Company and its lines of business. 6 The Company presents Adjusted tangible efficiency ratio-fte, which removes the pre-tax impact of Form 8-K and other tax reform-related items from the calculation of Tangible efficiency ratio-fte. The Company believes this measure 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. Removing these items also allows investors to more easily compare the Company's tangible efficiency to other companies in the industry that may not have had similar items impacting their results. Additional detail on certain of these items can be found in the Form 8-K filed with the SEC on December 4, 2017 and on page 1 of this news release. 7 Current period Basel III capital ratios are estimated as of the earnings release date. Fully phased-in ratios consider a 250% risk-weighting for MSRs and deduction from capital of certain carryforward DTAs, the overfunded pension asset, and other intangible assets. The Company believes these measures may be useful to investors who wish to understand the Company's current compliance with future regulatory requirements. 22
SunTrust Banks, Inc. and Subsidiaries APPENDIX A TO THE EARNINGS RELEASE - RECONCILEMENT OF NON-U.S. GAAP MEASURES, continued 1 December 31 September 30 June 30 March 31 December 31 (Dollars in millions, except per share data) (Unaudited) 2017 2017 2017 2017 2016 Total shareholders' equity $25,154 $24,522 $24,477 $23,484 $23,618 Goodwill, net of deferred taxes of $163 million, $254 million, $253 million, $252 million, and $251 million, respectively (6,168) (6,084) (6,085) (6,086) (6,086) Other intangible assets (including residential MSRs and other servicing rights) (1,791) (1,706) (1,689) (1,729) (1,657) Residential MSRs and other servicing rights 1,776 1,690 1,671 1,711 1,638 Tangible equity 2 18,971 18,422 18,374 17,380 17,513 Noncontrolling interest (103) (101) (103) (101) (103) Preferred stock (2,475) (1,975) (1,975) (1,225) (1,225) Tangible common equity 2 $16,393 $16,346 $16,296 $16,054 $16,185 Total assets $205,962 $208,252 $207,223 $205,642 $204,875 Goodwill (6,331) (6,338) (6,338) (6,338) (6,337) Other intangible assets (including residential MSRs and other servicing rights) (1,791) (1,706) (1,689) (1,729) (1,657) Residential MSRs and other servicing rights 1,776 1,690 1,671 1,711 1,638 Tangible assets $199,616 $201,898 $200,867 $199,286 $198,519 Tangible equity to tangible assets 2 9.50% 9.12% 9.15% 8.72% 8.82% Tangible common equity to tangible assets 2 8.21 8.10 8.11 8.06 8.15 Tangible book value per common share 3 $34.82 $34.34 $33.83 $33.05 $32.95 1 Certain amounts in this schedule are presented net of applicable income taxes, calculated based on each subsidiary s federal and state tax rates and are adjusted for any permanent differences. 2 The Company presents certain capital information on a tangible basis, including Tangible equity, Tangible common equity, the ratio of Tangible equity to tangible assets, and the ratio of Tangible common equity to tangible assets, which remove the after-tax impact of purchase accounting intangible assets from shareholders' equity. The Company believes these measures are useful to investors because, by removing the amount of intangible assets that result from merger and acquisition activity (the level of which may vary from company to company), it allows investors to more easily compare the Company s capital adequacy to other companies in the industry. These measures are used by management to analyze capital adequacy. 3 The Company presents Tangible book value per common share, which excludes the after-tax impact of purchase accounting intangible assets and also excludes Noncontrolling interest and Preferred stock from shareholders' equity. The Company believes this measure is useful to investors because, by removing the amount of intangible assets, noncontrolling interest, and preferred stock (the levels of which may vary from company to company), it allows investors to more easily compare the Company s book value of common stock to other companies in the industry. 23
SunTrust Banks, Inc. and Subsidiaries CONSUMER BUSINESS SEGMENT 1 Three Months Ended December 31 Twelve Months Ended December 3 1 (Dollars in millions) (Unaudited) 2017 2016 % Change 2017 2016 % Change 5 Statements of Income: Net interest income $946 $886 7 % $3,698 $3,465 7 % FTE adjustment Net interest income-fte 2 946 886 7 3,698 3,465 7 Provision for credit losses 3 69 82 (16) 368 172 NM Net interest income-fte - after provision for credit losses 2 877 804 9 3,330 3,293 1 Noninterest income before net securities gains/(losses) 473 468 1 1,874 2,036 (8) Net securities gains/(losses) Total noninterest income 473 468 1 1,874 2,036 (8) Noninterest expense before amortization 1,011 951 6 3,838 3,794 1 Amortization 1 (100) 4 2 100 Total noninterest expense 1,011 952 6 3,842 3,796 1 Income-FTE - before provision for income taxes 2 339 320 6 1,362 1,533 (11) Provision for income taxes 122 114 7 491 568 (14) Tax credit adjustment FTE adjustment Net income including income attributable to noncontrolling interest 217 206 5 871 965 (10) Less: Net income attributable to noncontrolling interest Net income $217 $206 5 % $871 $965 (10)% Total revenue $1,419 $1,354 5 % $5,572 $5,501 1 % Total revenue-fte 2 1,419 1,354 5 5,572 5,501 1 Selected Average Balances: Total LHFI $73,847 $70,592 5 % $72,622 $69,455 5 % Goodwill 4,262 4,262 4,262 4,262 Other intangible assets excluding residential MSRs 4 11 (64) 7 13 (46) Total assets 83,778 81,326 3 82,507 79,118 4 Consumer and commercial deposits 102,897 101,070 2 102,820 99,424 3 Performance Ratios: Efficiency ratio 71.29 % 70.26 % 68.93 % 69.00 % Impact of FTE adjustment Efficiency ratio-fte 2 71.29 70.26 68.93 69.00 Impact of excluding amortization and associated funding cost of intangible assets (1.18) (1.16) (1.16) (1.13) Tangible efficiency ratio-fte 2, 4 70.11 % 69.10 % 67.77 % 67.87 % 1Beginning in the second quarter of 2017, the Company realigned its business segment structure from three segments to two segments based on, among other things, the manner in which financial information is evaluated by management and in conjunction with Company-wide organizational changes that were announced during the first quarter of 2017. Specifically, the Company retained the previous composition of the Wholesale Banking segment and changed the basis of presentation of the Consumer Banking and Private Wealth Management segment and Mortgage Banking segment such that those segments were combined into a single Consumer segment. Accordingly, prior period information has been revised to conform to the new business segment structure and updated internal funds transfer pricing methodology for consistent presentation. 2Net interest income-fte, Income-FTE, Total revenue-fte, Efficiency ratio-fte, and Tangible efficiency ratio-fte are presented on a fully taxable-equivalent ( FTE ) basis. The FTE basis adjusts for the tax-favored status of Net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of Net interest income and it enhances comparability of Net interest income arising from taxable and tax-exempt sources. Total revenue-fte equals Net interest income on an FTE basis plus Noninterest income. 3 Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the Allowance for loan and lease losses and Unfunded commitment reserve balances. 4A Tangible efficiency ratio is presented, which 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 this segment's efficiency to other business segments and companies in the industry. This measure is utilized by management to assess the efficiency of the Company and its lines of business. 5 NM - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 24
SunTrust Banks, Inc. and Subsidiaries CONSUMER BUSINESS SEGMENT, continued 1 Three Months Ended December 31 Twelve Months Ended December 3 1 (Dollars in millions) (Unaudited) 2017 2016 % Change 2017 2016 % Change Residential Mortgage Production Data: Channel mix: Retail $2,215 $3,368 (34)% $9,637 $12,409 (22)% Correspondent 4,087 5,297 (23) 14,734 16,950 (13) Total production $6,302 $8,665 (27)% $24,371 $29,359 (17)% Channel mix - percent: Retail 35% 39% 40% 42% Correspondent 65 61 60 58 Total production 100% 100% 100% 100% Purchase and refinance mix: Refinance $2,344 $4,985 (53)% $8,817 $15,147 (42)% Purchase 3,958 3,680 8 15,554 14,212 9 Total production $6,302 $8,665 (27)% $24,371 $29,359 (17)% Purchase and refinance mix - percent: Refinance 37% 58% 36% 52% Purchase 63 42 64 48 Total production 100% 100% 100% 100% Applications $7,082 $8,264 (14)% $30,758 $40,559 (24)% Residential Mortgage Servicing Data (End of Period): Total unpaid principal balance ("UPB") of residential mortgages serviced $165,488 $160,175 3 % Total UPB of residential mortgages serviced for others 136,071 129,626 5 Net carrying value of residential MSRs 1,710 1,572 9 Ratio of net carrying value of residential MSRs to total UPB of residential mortgages serviced for others 1.257% 1.213% Assets Under Administration (End of Period): Trust and institutional managed assets $42,914 $40,370 6 % Retail brokerage managed assets 15,950 12,872 24 Total managed assets 58,864 53,242 11 Non-managed assets 97,933 91,980 6 Total assets under advisement $156,797 $145,222 8 % 1Beginning in the second quarter of 2017, the Company realigned its business segment structure from three segments to two segments based on, among other things, the manner in which financial information is evaluated by management and in conjunction with Company-wide organizational changes that were announced during the first quarter of 2017. Specifically, the Company retained the previous composition of the Wholesale Banking segment and changed the basis of presentation of the Consumer Banking and Private Wealth Management segment and Mortgage Banking segment such that those segments were combined into a single Consumer segment. Accordingly, prior period information has been revised to conform to the new business segment structure and updated internal funds transfer pricing methodology for consistent presentation. 25
SunTrust Banks, Inc. and Subsidiaries WHOLESALE BUSINESS SEGMENT Three Months Ended December 31 Twelve Months Ended December 3 1 (Dollars in millions) (Unaudited) 2017 2016 % Change 4 2017 2016 % Change 4 Statements of Income: Net interest income $580 $532 9 % $2,247 $2,018 11 % FTE adjustment 36 33 9 142 136 4 Net interest income-fte 1 616 565 9 2,389 2,154 11 Provision for credit losses 2 11 19 (42) 41 272 (85) Net interest income-fte - after provision for credit losses 1 605 546 11 2,348 1,882 25 Noninterest income before net securities gains/(losses) 516 360 43 1,710 1,356 26 Net securities gains/(losses) Total noninterest income 516 360 43 1,710 1,356 26 Noninterest expense before amortization 444 422 5 1,798 1,629 10 Amortization 25 14 79 71 47 51 Total noninterest expense 469 436 8 1,869 1,676 12 Income-FTE - before provision for income taxes 1 652 470 39 2,189 1,562 40 Provision for income taxes 149 107 39 494 317 56 Tax credit adjustment 60 35 71 180 130 38 FTE adjustment 36 33 9 142 136 4 Net income including income attributable to noncontrolling interest 407 295 38 1,373 979 40 Less: Net income attributable to noncontrolling interest Net income $407 $295 38 % $1,373 $979 40 % Total revenue $1,096 $892 23 % $3,957 $3,374 17 % Total revenue-fte 1 1,132 925 22 4,099 3,510 17 Selected Average Balances: Total LHFI $70,114 $71,922 (3)% $71,521 $71,600 % Goodwill 2,074 2,075 2,076 2,075 Other intangible assets excluding residential MSRs 75 14 NM 75 4 NM Total assets 84,071 85,833 (2) 85,227 85,494 Consumer and commercial deposits 57,806 56,900 2 56,618 54,713 3 Performance Ratios: Efficiency ratio 42.83 % 48.84 % 47.21 % 49.69 % Impact of FTE adjustment (1.38) (1.75) (1.63) (1.93) Efficiency ratio-fte 1 41.45 47.09 45.58 47.76 Impact of excluding amortization and associated funding cost of intangible assets (2.61) (2.01) (2.21) (1.89) Tangible efficiency ratio-fte 1, 3 38.84 % 45.08 % 43.37 % 45.87 % 1Net interest income-fte, Income-FTE, Total revenue-fte, Efficiency ratio-fte, and Tangible efficiency ratio-fte are presented on a fully taxable-equivalent ( FTE ) basis. The FTE basis adjusts for the tax-favored status of Net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of Net interest income and it enhances comparability of Net interest income arising from taxable and tax-exempt sources. Total revenue-fte equals Net interest income on an FTE basis plus Noninterest income. 2 Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the Allowance for loan and lease losses and Unfunded commitment reserve balances. 3A Tangible efficiency ratio is presented, which 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 this segment's efficiency to other business segments and companies in the industry. This measure is utilized by management to assess the efficiency of the Company and its lines of business. 4 NM - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 26
SunTrust Banks, Inc. and Subsidiaries TOTAL CORPORATE OTHER (including Reconciling Items) Three Months Ended December 31 Twelve Months Ended December 3 1 (Dollars in millions) (Unaudited) 2017 2016 % Change 4 2017 2016 % Change 4 Statements of Income: Net interest income/(expense) 1 ($92) ($75) (23)% ($312) ($262) (19)% FTE adjustment 2 1 100 3 2 50 Net interest income/(expense)-fte 2 (90) (74) (22) (309) (260) (19) Provision/(benefit) for credit losses 3 (1) NM Net interest income/(expense)-fte - after provision/(benefit) for credit losses 2 (89) (74) (20) (309) (260) (19) Noninterest income/(expense) before net securities (losses)/gains (47) (13) NM (122) (13) NM Net securities (losses)/gains (109) NM (108) 4 NM Total noninterest income/(expense) (156) (13) NM (230) (9) NM Noninterest expense/(income) before amortization 40 10 NM 53 (4) NM Amortization (1) 100 Total noninterest expense/(income) 40 9 NM 53 (4) NM Income/(loss)-FTE - before benefit for income taxes 2 (285) (96) NM (592) (265) NM Benefit for income taxes (345) (28) NM (453) (80) NM Tax credit adjustment (60) (35) (71) (180) (130) (38) FTE adjustment 2 1 100 3 2 50 Net income/(loss) including income attributable to noncontrolling interest 118 (34) NM 38 (57) NM Less: Net income attributable to noncontrolling interest 2 2 9 9 Net income/(loss) $116 ($36) NM $29 ($66) NM Total revenue ($248) ($88) NM ($542) ($271) (100)% Total revenue-fte 2 (246) (87) NM (539) (269) (100) Selected Average Balances: Total LHFI $78 $64 22 % $73 $63 16 % Securities available for sale 31,394 29,549 6 31,086 28,365 10 Goodwill Other intangible assets excluding residential MSRs Total assets 37,370 35,987 4 37,197 34,392 8 Consumer and commercial deposits 42 26 62 111 52 NM Other Information (End of Period): Duration of securities available for sale portfolio (in years) 4.5 4.6 Net interest income interest rate sensitivity: % Change in net interest income under: Instantaneous 200 basis point increase in rates over next 12 months 2.4 % 3.3 % Instantaneous 100 basis point increase in rates over next 12 months 1.4 % 1.9 % Instantaneous 25 basis point decrease in rates over next 12 months (0.5)% (0.6)% 1 Net interest income/(expense) is driven by matched funds transfer pricing applied for segment reporting and actual Net interest income. 2Net interest income/(expense)-fte, Income/(loss)-FTE, and Total revenue-fte are presented on a fully taxable-equivalent ( FTE ) basis. The FTE basis adjusts for the tax-favored status of Net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of Net interest income and it enhances comparability of Net interest income arising from taxable and tax-exempt sources. Total revenue-fte equals Net interest income on an FTE basis plus Noninterest income. 3 Provision/(benefit) for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision/(benefit) attributable to quarterly changes in the Allowance for loan and lease losses and Unfunded commitments reserve balances. 4 NM - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 27
SunTrust Banks, Inc. and Subsidiaries CONSOLIDATED SEGMENT TOTALS Three Months Ended December 31 Twelve Months Ended December 3 1 (Dollars in millions) (Unaudited) 2017 2016 % Change 2 2017 2016 % Change 2 Statements of Income: Net interest income $1,434 $1,343 7 % $5,633 $5,221 8 % FTE adjustment 38 34 12 145 138 5 Net interest income-fte 1 1,472 1,377 7 5,778 5,359 8 Provision for credit losses 79 101 (22) 409 444 (8) Net interest income-fte - after provision for credit losses 1 1,393 1,276 9 5,369 4,915 9 Noninterest income before net securities (losses)/gains 942 815 16 3,462 3,379 2 Net securities (losses)/gains (109) NM (108) 4 NM Total noninterest income 833 815 2 3,354 3,383 (1) Noninterest expense before amortization 1,495 1,383 8 5,689 5,419 5 Amortization 25 14 79 75 49 53 Total noninterest expense 1,520 1,397 9 5,764 5,468 5 Income-FTE - before (benefit)/provision for income taxes 1 706 694 2 2,959 2,830 5 (Benefit)/provision for income taxes (74) 193 NM 532 805 (34) Tax credit adjustment FTE adjustment 38 34 12 145 138 5 Net income including income attributable to noncontrolling interest 742 467 59 2,282 1,887 21 Less: Net income attributable to noncontrolling interest 2 2 9 9 Net income $740 $465 59 % $2,273 $1,878 21 % Total revenue $2,267 $2,158 5 % $8,987 $8,604 4 % Total revenue-fte 1 2,305 2,192 5 9,132 8,742 4 Selected Average Balances: Total LHFI $144,039 $142,578 1 % $144,216 $141,118 2 % Goodwill 6,336 6,337 6,338 6,337 Other intangible assets excluding residential MSRs 79 25 NM 82 17 NM Total assets 205,219 203,146 1 204,931 199,004 3 Consumer and commercial deposits 160,745 157,996 2 159,549 154,189 3 Performance Ratios: Efficiency ratio 67.03 % 64.74 % 64.14 % 63.55 % Impact of FTE adjustment (1.09) (1.01) (1.02) (1.00) Efficiency ratio-fte 1 65.94 63.73 63.12 62.55 Impact of excluding amortization and associated funding cost of intangible assets (1.10) (0.65) (0.82) (0.56) Tangible efficiency ratio-fte 1 64.84 % 63.08 % 62.30 % 61.99 % 1 Net interest income-fte, Income-FTE, Total revenue-fte, Efficiency ratio-fte, and Tangible efficiency ratio-fte 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. See Appendix A for additional information and reconcilements of non-u.s. GAAP performance measures. 2 NM - Not meaningful. Those changes over 100 percent were not considered to be meaningful. 28
4Q 17 EARNINGS PRESENTATION January 19, 2018 2018 SunTrust Banks, Inc. SunTrust is a federally registered trademark of SunTrust Banks, Inc.
2 This presentation should be read in conjunction with the financial statements, notes and other information contained in the Company s forthcoming Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Non-GAAP Financial Measures This presentation includes non-gaap financial measures to describe SunTrust s performance. The reconciliations of those measures to GAAP measures are provided within or in the appendix of this presentation beginning on slide 24. In this presentation, consistent with Securities and Exchange Commission Industry Guide 3, the Company presents total revenue, net interest income, net interest margin, and efficiency ratios on a fully taxable equivalent ( FTE ) and 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 35% and 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 common equity, the ratio of tangible common equity to tangible assets, tangible book value per share, and return on average tangible common equity. These measures exclude the after-tax impact of purchase accounting intangible assets. The Company believes these measures are useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity (the level of which may vary from company to company), it allows investors to more easily compare the Company s capital adequacy to other companies in the industry. These measures are used by management to analyze capital adequacy 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 Form 8-K items announced on December 4, 2017 and the impacts of tax reform-related items from the calculation of Tangible efficiency ratio-fte. The Company believes this measure 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. These measures are utilized by management to assess the efficiency of the Company and its lines of business. The Company presents adjusted EPS which excludes the impact of Form 8-K items announced on December 4, 2017 and the impacts of tax reform-related items. The Company believes this measure 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. These measures are utilized by management to assess the earnings of the Company and its lines of business. The Company presents the Basel III Common Equity Tier 1 (CET1) ratio, on a fully phased-in basis. The fully phased-in ratio considers a 250% risk-weighting for MSRs and deduction from capital of certain carryforward DTAs, the overfunded pension asset, and other intangible assets. The Company believes this measure is useful to investors who wish to understand the Company's current compliance with future regulatory requirements. Important Cautionary Statement about Forward-Looking Statements This presentation contains forward-looking statements. Statements regarding future levels of the net interest margin, tangible efficiency ratio, charge-offs and net charge-off ratio, loan loss provision expense, ALLL ratio, commercial real estate-related income, personnel expenses, the impact of tax reform on investments and growth, future capital returns, capital markets-related income, earnings per share, and the effective tax rate and its impacts on FTE adjustments 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, forecast, goals, plans, targets, initiatives, opportunity, focus, potentially, probably, projects, outlook, or similar expressions or future conditional verbs such as may, will, should, would, and could"; such statements are based upon the current beliefs and expectations of management and on information currently available to management. Such statements speak as of the date hereof, and we do not assume any obligation to update the statements made herein or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, Item 1A., Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2016 and in other periodic reports that we file with the SEC. Those factors include: current and future legislation and regulation could require us to change our business practices, reduce revenue, impose additional costs, or otherwise adversely affect business operations or competitiveness; we are subject to stringent capital adequacy and liquidity requirements and our failure to meet these would adversely affect our financial condition; the monetary and fiscal policies of the federal government and its agencies could have a material adverse effect on our earnings; our financial results have been, and may continue to be, materially affected by general economic conditions, and a deterioration of economic conditions or of the financial markets may materially adversely affect our lending and other businesses and our financial results and condition; changes in market interest rates or capital markets could adversely affect our revenue and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; our earnings may be affected by volatility in mortgage production and servicing revenues, and by changes in carrying values of our servicing assets and mortgages held for sale due to changes in interest rates; disruptions in our ability to access global capital markets may adversely affect our capital resources and liquidity; we are subject to credit risk; we may have more credit risk and higher credit losses to the extent that our loans are concentrated by loan type, industry segment, borrower type, or location of the borrower or collateral; we rely on the mortgage secondary market and GSEs for some of our liquidity; loss of customer deposits could increase our funding costs; any reduction in our credit rating could increase the cost of our funding from the capital markets, we are subject to litigation, and our expenses related to this litigation may adversely affect our results; we may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations; we are subject to certain risks related to originating and selling mortgages, and may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, or borrower fraud, and this could harm our liquidity, results of operations, and financial condition; we face risks as a servicer of loans; we are subject to risks related to delays in the foreclosure process; consumers and small businesses may decide not to use banks to complete their financial transactions, which could affect net income; we have businesses other than banking which subject us to a variety of risks; negative public opinion could damage our reputation and adversely impact business and revenues; we may face more intense scrutiny of our sales training, and incentive compensation practices; we rely on other companies to provide key components of our business infrastructure; competition in the financial services industry is intense and we could lose business or suffer margin declines as a result; we continually encounter technological change and must effectively develop and implement new technology; maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services; we have in the past and may in the future pursue acquisitions, which could affect costs and from which we may not be able to realize anticipated benefits; we depend on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, operations may suffer; we may not be able to hire or retain additional qualified personnel and recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact our ability to implement our business strategies; our framework for managing risks may not be effective in mitigating risk and loss to us; our controls and procedures may not prevent or detect all errors or acts of fraud; we are at risk of increased losses from fraud; a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors and other service providers, including as a result of cyber- attacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses; the soundness of other financial institutions could adversely affect us; we depend on the accuracy and completeness of information about clients and counterparties; our accounting policies and processes are critical to how we report our financial condition and results of operation, and they require management to make estimates about matters that are uncertain; depressed market values for our stock and adverse economic conditions sustained over a period of time may require us to write down some portion of our goodwill; our financial instruments measured at fair value expose us to certain market risks; our stock price can be volatile; our ability to receive dividends from our subsidiaries or other investments could affect our liquidity and ability to pay dividends; we might not pay dividends on our stock; certain banking laws and certain provisions of our articles of incorporation may have an anti-takeover effect; and the interest rates of our outstanding floating rate indebtedness and assets might be subject to change based on recent regulatory changes. IMPORTANT CAUTIONARY STATEMENT
3 $0.90 $0.91 $1.03 $1.06 $1.09 $1.48 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 1. The efficiency ratio and tangible efficiency ratios are reported on fully taxable-equivalent ( FTE ) basis. Please refer to slide 24 for GAAP reconciliations 2. Please refer to slide 25 for Basel III CET1 (transitional) to Basel III CET1 (fully phased-in) reconciliation 4Q 17 AND 2017 EPS OVERVIEW $3.60 $4.09 $4.47 2016 2017 Reported EPS Adjusted EPS Quarterly & Annual Trends Continued Earnings Momentum Reported EPS of $1.48 includes $0.39 of discrete benefits (see slide 5) 4Q 17 adjusted EPS up 3%, driven by lower provision expense 2017 reported EPS of $4.47, up 24% 2017 adjusted EPS up 14%, driven by higher revenue (up 4%), improved profitability, and reduced share count Continued Efficiency Progress Achieved 2017 efficiency goal 2017 reported efficiency ratio: 63.1%; tangible efficiency ratio (FTE): 62.3%1 2017 adjusted tangible efficiency ratio (FTE): 61.0%1, down 100 bps relative to 2016 Asset Quality & Capital Remain Strengths 2017 NCO ratio: 0.25% NPL ratio of 0.47% Capital ratios remain strong, even after 47% increase in capital returns relative to 2016 9.8% Basel III CET1 ratio (transitional); 9.6% Basel III CET1 ratio (fully phased-in)2
4 62.0% 61.0% 62.6% 61.9% 2016 2017 2017 HIGHLIGHTS 2017 Highlights: Good Progress Across All Fronts Earnings Per Share1 Total Revenue (FTE) Tangible Efficiency Ratio (FTE)2 Total Capital Returns ($ in millions) $3.60 $4.09 2016 2017 2016 2017 2016 2017 $8,742 $9,132 $1,328 $1,948 Total Shareholder Return: 20% (~700 bps above peer median)3 1. 2017 represents adjusted earnings per share. Reported earnings per share were $4.47 for 2017 which includes $0.39 of discrete benefits. Please refer to slide 5 for more details 2. 2017 represents the adjusted efficiency ratio and tangible efficiency ratio. The reported efficiency ratio was 63.1% and reported tangible efficiency ratio was 62.3%. Please refer to slide 9 for more details and slide 24 for GAAP reconciliations 3. Source: Bloomberg. Reflects 12/31/2016 12/31/2017. Peers include BAC, BBT, CFG, FITB, HBAN, KEY, MTB, PNC, RF, USB, WFC. Dividends assumed to be reinvested in same security Efficiency Ratio (FTE) Tangible Efficiency Ratio (FTE) 73% Payout Ratio 89% Payout Ratio
5 4Q 17 DISCRETE ITEMS 1. The efficiency ratio and tangible efficiency ratios are reported on fully taxable-equivalent ( FTE ) basis. Please refer to slide 24 for GAAP reconciliations Pre-Tax After-Tax Line Item Impacted Segment Gain on sale of Premium Assignment Corporation (PAC) subsidiary $107 $65 Other noninterest income Wholesale SunTrust Mortgage state NOL valuation allowance adjustment - ($27) Provision for income taxes Corporate Other Net charge related to efficiency actions ($36) ($22) Other noninterest expense All Sub-Total $16 EPS Impact $0.03 Revaluation of the net DTL & other discrete tax items - $291 Provision for income taxes Corporate Other Securities AFS portfolio restructuring losses ($109) ($69) Securities gains/(losses) Corporate Other Charitable contribution to SunTrust Foundation ($50) ($31) Marketing & customer development Corporate Other Discretionary 401(k) contribution and other employee benefits ($25) ($16) Employee compensation & benefits All Loss on sale of servicing rights ($5) ($3) Mortgage servicing related income Consumer Sub-Total $172 EPS Impact $0.36 Reported Adjusted Earnings Per Share $1.48 $1.09 Efficiency Ratio (FTE)¹ 65.9% 60.9% Tangible Efficiency Ratio (FTE)¹ 64.8% 59.9% Earnings Per Share $4.47 $4.09 Efficiency Ratio (FTE)¹ 63.1% 61.9% Tangible Efficiency Ratio (FTE)¹ 62.3% 61.0% Items Announced in 12/4 8-K Tax Reform Impacts & Related Actions 4Q 17 2017
6 $1,343 $1,366 $1,403 $1,430 $1,434 $1,377 $1,400 $1,439 $1,467 $1,472 3.00% 3.09% 3.14% 3.15% 3.17% 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Net Interest Income Net Interest Income (FTE) NIM (FTE) NET INTEREST INCOME1 NII growth and NIM expansion continues; NIM up 2 bp QoQ and 17 bps YoY Prior Quarter Variance Net interest margin (FTE) increased 2 bps, driven by: Above average benefits from certain loan-related fees and nonaccrual recoveries Higher securities yields Net interest income (FTE) up slightly as higher margins offset lower loan balances (which were partially impacted by the sale of PAC) Prior Year Variance Net interest margin (FTE) increased 17 bps, driven by: Higher loan yields as a result of the increases in short-term rates Improved loan mix (faster growing consumer portfolio) Lower premium amortization on the securities portfolio Net interest income (FTE) increased $95 million, or 7%, driven by NIM expansion and earning asset growth 1. On this slide, net interest income is reported on an unadjusted and fully taxable-equivalent ( FTE ) basis. The FTE basis adjusts for the tax-favored status of income from certain loans and investments. SunTrust believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. Net interest margin (FTE) is calculated as net interest income (FTE) divided by average earning assets (on an annualized basis) 2. Please refer to slide 24 for a reconciliation of net interest income to net interest income (FTE) 2 ($ in millions)
7 NONINTEREST INCOME Prior Quarter Variance Noninterest income decreased $13 million, or 2% driven by: $57 million decrease in capital markets-related income, given strong 3Q 17 performance FY 17 investment banking income up 21% (10th consecutive record year) $7 million net discrete charges in 4Q 17 (see slide 5) Partially offset by $45 million increase in commercial real estate-related income given increased structured real estate activity and seasonality Prior Year Variance Noninterest income increased $18 million, or 2% driven by: $29 million increase in commercial real estate- related income $8 million increase in wealth management- related income $815 $847 $827 $846 $833 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Noninterest income up 2% YoY ($ in millions) Reported Noninterest Income 4Q 17 Adjusted Noninterest Income $840
8 Increase in expenses driven by discrete costs recognized in 4Q 17; adjusted expenses relatively stable NONINTEREST EXPENSE Prior Quarter Variance $129 million increase in noninterest expense driven by discrete items including: $75 million contribution to communities and teammates in response to tax reform $36 million discrete charges associated with efficiency initiatives (other noninterest expense) Voluntary early retirement program Branch and corporate real estate closures Software write-downs $14 million net discrete benefits recognized in 3Q 17 ($58 million legal accrual reversals partially offset by $44 million of costs associated with efficiency initiatives) Prior Year Variance Noninterest expense increased $123 million, driven primarily by the $111 million in discrete expenses recognized in 4Q 17 Overall, solid expense management resulted in stable adjusted expenses despite 5% increase in revenue ($ in millions) Reported Noninterest Expense 4Q 17 Adjusted Noninterest Expense $1,397 $1,465 $1,388 $1,391 $1,409 $111 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 $1,520
9 71.5% 66.9% 65.3% 63.3% 62.6% 62.0% 61.0% 60%- 61% <60% 72.0% 67.4% 65.6% 63.7% 63.1% 62.6% 61.9% 2011 2012 2013 2014 2015 2016 2017 2018 TER Goal 2019 TER Goal 63.1% 64.6% 60.6% 59.2% 59.9% 63.7% 65.2% 61.2% 60.1% 60.9% 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Efficiency progress continues; delivered 100 bps improvement in 2017 Expect further progress in 2018, even after ~50 bp FTE calculation headwind 1. The efficiency ratio and tangible efficiency ratios are reported on fully taxable-equivalent ( FTE ) basis. The FTE basis adjusts net interest income for the tax-favored status of income from certain loans and investments. Unadjusted net interest income can be found on slide 6 2. 2012, 2013, 2014, 4Q 17, and 2017 values represent the adjusted efficiency ratio and adjusted tangible efficiency ratio. Adjusted figures are intended to provide management and investors information on trends that are more comparable across periods and potentially more comparable across institutions. Please refer to slide 24 for reconciliations related to the GAAP efficiency ratio 3. The FTE adjustment (which grosses up reported net interest income) was $145 million in 2017. The adjustment will decline by approximately half in 2018 and beyond given lower corporate tax rates EFFICIENCY RATIO & TANGIBLE EFFICIENCY RATIO1 Efficiency Ratio (FTE) Tangible Efficiency Ratio (FTE) 2 2 2 Annual Trend 5-Quarter Trend 2 2 3 3 Prior to tax reform (and resulting impact to FTE calculation), expected ~60% TER
10 CREDIT QUALITY Overall asset quality continues to be very strong ($ in millions) NPLs decline further, driven by C&I NCO ratio well below historical averages; 25 bps NCO for FY 17 Nonperforming Loans Net Charge-offs $845 $789 $754 $697 $674 0.59% 0.55% 0.52% 0.48% 0.47% 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 NPLs Total NPL Ratio $136 $112 $70 $78 $107 0.38% 0.32% 0.20% 0.21% 0.29% 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 NCOs Total NCO Ratio (annualized) Allowance for Loan and Lease Losses $1,709 $1,714 $1,731 $1,772 $1,735 1.19% 1.20% 1.20% 1.23% 1.21% 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 ALLL ALLL Ratio Provision for Credit Losses $101 $119 $90 $120 $79 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Provision declined sequentially given hurricane-related provision in 3Q 17 Continued asset quality improvements drive decline in ALLL ratio
11 $77.4 $78.2 $78.4 $77.4 $76.4 $38.8 $38.3 $38.1 $38.3 $38.2 $25.5 $26.3 $27.2 $28.2 $28.7 $141.7 $142.8 $143.7 $144.0 $143.4 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Commercial Residential Consumer LOANS Average performing loans stable sequentially and up 1% YoY ($ in billions, average balances) Note: Totals may not foot due to rounding Prior Quarter Variance Average performing loans stable as 2% consumer loan growth was offset by a decline in C&I loans PAC sale closed on December 1st and included $1.3 billion of C&I loan balances (impacted average balances by ~$400 million) Prior Year Variance Average performing loans increased $1.7 billion, or 1% Strategic investments drove strong growth in consumer lending and further balance sheet optimization Consumer other direct up 14% (primarily driven by LightStream and partnership with GreenSky) Credit card up 14% Offset by 2% decline in C&I loans
12 DEPOSITS Average client deposits up 1% sequentially and 2% YoY ($ in billions, average balances) Prior Quarter Variance Average client deposits up 1%, driven by seasonal growth in NOW accounts Interest-bearing deposit costs up 2 bps Prior Year Variance Average client deposits up 2%, reflects continued success in deepening client relationships across the Company Consumer average deposits up 2% Wholesale average deposits up 2% Interest-bearing deposit costs up 16 bps $54.4 $54.9 $54.2 $53.3 $52.0 $44.8 $43.1 $43.6 $43.8 $44.1 $42.9 $44.7 $44.4 $44.6 $46.2 $9.6 $9.7 $10.2 $11.2 $11.9 $6.3 $6.4 $6.6 $6.5 $6.5 $158.0 $158.9 $159.1 $159.4 $160.7 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Money Market DDA (Nonint bearing) NOW Time Savings Note: Totals may not foot due to rounding
13 CAPITAL POSITION ($ in billions, except per-share data) Total Equity & Tangible Common Equity Ratios2 Basel III Common Equity Tier 1 (fully phased-in)1 Book Value / Tangible Book Value Per Share3 1. Current quarter amounts are estimated at the time of the earnings release and subject to revision. Please refer to slide 25 for additional details on the current quarter s calculation 2. Please refer to slide 26 for a reconcilement of total equity to tangible common equity and total assets to tangible assets 3. Please refer to slide 26 for a reconcilement of book value per share to tangible book value per share 11.8% 11.6% 11.8% 11.9% 12.1% 8.2% 8.1% 8.1% 8.1% 8.2% 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Avg. Equity/Avg. Assets Tangible Common Equity/Tangible Assets $45.38 $45.62 $46.51 $47.16 $47.94 $32.95 $33.05 $33.83 $34.34 $34.82 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Book Value Per Share Tangible Book Value Per Share $16.9 $16.8 $17.0 $17.0 $17.1 9.6% 9.7% 9.7% 9.6% 9.8% 9.4% 9.5% 9.5% 9.5% 9.6% 0 0 0 0 0 0 0 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Basel III CET1 ratio Basel III fully phased-in CET1 ratio Capital ratios up YoY, even after 89% total payout ratio in 2017
14 ($ in millions) 4Q 16 3Q 17 4Q17 FY 16 FY 17 %Δ Prior Yr Net Interest Income $886 $942 $946 $3,465 $3,698 7 % Noninterest Income 468 473 473 2,036 1,874 (8)% Total Revenue 1,354 1,415 1,419 5,501 5,572 1 % Provision for Credit Losses 82 136 69 172 368 NM Noninterest Expense 952 894 1,011 3,796 3,842 1 % Net Income $206 $245 $217 $965 $871 (10)% Key Statistics ($ in billions) Total Loans (average) $70.6 $73.4 $73.8 $69.5 $72.6 5 % Client Deposits (average) $101.1 $103.2 $102.9 $99.4 $102.8 3 % Managed Assets (EOP) $53.2 $57.8 $58.9 $53.2 $58.9 11 % Full-Service Branches 1,367 1,275 1,268 1,367 1,268 (7)% Efficiency Ratio 70.3% 63.1% 71.3% 69.0% 68.9% Tangible Efficiency Ratio¹ 69.1% 62.0% 70.1% 67.9% 67.8% Mortgage Data: Servicing Portfolio for Others (EOP) $129.6 $135.4 $136.1 $129.6 $136.1 5 % Production Volume $8.7 $6.2 $6.3 $29.4 $24.4 (17)% Application Volume $8.3 $7.7 $7.1 $40.6 $30.8 (24)% CONSUMER SEGMENT HIGHLIGHTS Full Year Highlights Prior Quarter Variance Solid loan and deposit growth, improved loan mix Net interest income increased 7% Wealth management momentum improving Managed assets up 11% Making core efficiency progress Branches down 7% Mobile deposits up 20% Integrated Mortgage into broader Consumer segment Creates increased alignment and opportunity 4Q 17 net income, excluding discrete items on slide 5, of $233mm Revenues stable sequentially Expenses up $117 million due to discrete items 4Q 17 includes efficiency-related charges and discretionary 401(k) contribution 3Q 17 includes $58 million benefit from legal accrual reversals Provision expense down $67 million due to prior quarter reserve build for anticipated hurricane losses Note: NM = not meaningful 1. Please refer to page 24 of the earnings press release for a reconciliation of efficiency ratio to tangible efficiency ratio
15 WHOLESALE SEGMENT HIGHLIGHTS ($ in millions) 4Q 16 3Q 17 4Q 17 FY 16 FY 17 %Δ Prior Yr Net Interest Income (FTE) $565 $606 $616 $2,154 $2,389 11 % Noninterest Income 360 406 516 1,356 1,710 26 % Total Revenue (FTE) 925 1,012 1,132 3,510 4,099 17 % Provision/(Benefit) for Credit Losses 19 (16) 11 272 41 NM Noninterest Expense 436 459 469 1,676 1,869 12 % Net Income $295 $358 $407 $979 $1,373 40 % Key Statistics ($ in billions) Total Loans (average) $71.9 $71.2 $70.1 $71.6 $71.5 (0)% Client Deposits (average) $56.9 $56.1 $57.8 $54.7 $56.6 3 % Efficiency Ratio (FTE)¹ 47.1% 45.3% 41.5% 47.8% 45.6% Tangible Efficiency Ratio (FTE)¹ 45.1% 42.9% 38.8% 45.9% 43.4% Prior Quarter Variance Note: NM = not meaningful 1. Please refer to page 26 of the earnings press release for a reconciliation of efficiency ratio to tangible efficiency ratio 2. Pillar/Cohen refers to the businesses purchased in December 2016 from Pillar Financial, LLC and its wholly owned subsidiaries (including Cohen Financial Services (DE), LLC) Record revenue and net income Revenue up 14% (excluding PAC gain) 10th consecutive record year for investment banking Strong net interest income growth even after modest balance sheet growth; maintaining strong return discipline Continued efficiency progress Optimizing business mix and opportunity set First full year of Pillar/Cohen2 (revenues in line with initial expectations) Expanded Commercial Banking into Ohio and Texas Sold PAC Continued momentum results in another record revenue quarter (excluding PAC gain) Net interest income (FTE) up 1%, due to NIM expansion Excluding PAC gain, noninterest income stable Net income increased $49 million driven by the sale of PAC Full Year Highlights
16 $0.94 $3.59 $2.41 $3.23 $3.58 $3.60 $4.47 GAAP EPS Strong & Diverse Franchise; Investing in Growth Improving Efficiency & Returns Strong Capital Position Supports Growth (Dividends & share buybacks as a % of net income) (Tangible efficiency ratio (FTE)2) (Adjusted earnings per share1) $0.94 $2.19 $2.74 $3.23 $3.58 $3.60 $4.09 2011 2012 2013 2014 2015 2016 2017 71.5% 66.9% 65.3% 63.3% 62.6% 62.0% 61.0% 2011 2012 2013 2014 2015 2016 2017 8% 11% 26% 48% 62% 73% 89% 2011 2012 2013 2014 2015 2016 2017 LONG-TERM TRENDS 2017 adjusted tangible efficiency ratio (FTE): 61.0%2; reflects 100 bps improvement Committed to further progress in 2018 even after impact from tax reform 14 bp increase in NIM (FTE) ROE: 9.7% adjusted ROTCE: 12.2%3 6th consecutive year of improved efficiency 6th consecutive year of higher capital returns 47% increase in capital returns 27% increase in dividends 58% increase in share repurchases 3% decline in average shares outstanding 9.6% Basel III CET1 ratio (fully phased- in)3 Up relative to 2016, even after 89% total payout ratio 14% adjusted EPS growth despite 37% decline in mortgage production income; reflects franchise diversity Record revenue and net income for Wholesale segment Strong growth in consumer lending Avg. consumer direct balances up 20% Investing in technology: mobile deposits up 20% 6th consecutive year of EPS growth 1. 2012, 2013, and 2017 values represent adjusted earnings per share. The impact of excluding discrete items was ($1.40), $0.33, and ($0.39) for 2012, 2013, and 2017, respectively. For the reconciliation to GAAP EPS for 2012 and 2013, please refer to page 36 of the 2013 Form 10-K. For the 2017 reconciliation to GAAP EPS, please refer to slide 5 2. 2012, 2013, 2014, and 2017 values represent the adjusted efficiency ratio and adjusted tangible efficiency ratio. Adjusted figures are intended to provide management and investors information on trends that are more comparable across periods and potentially more comparable across institutions. Please refer to slide 24 for reconciliations related to the GAAP efficiency ratio 3. Reported ROTCE: 13.4%, impact of excluding discrete items outlined on slide 5 is (1.2%)
APPENDIX
18 5-QUARTER & 2-YEAR FINANCIAL HIGHLIGHTS 1. Please refer to slide 24 for the GAAP reconciliations 2. Please refer to page 23 of the earnings press release for GAAP reconciliations 3. Please refer to slide 25 for the reconciliation of Basel III CET1 (transitional) to Basel III CET1 (fully phased-in) 4. Please refer to slide 26 for a reconcilement to book value per share 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 2016 2017 EPS (diluted) $0.90 $0.91 $1.03 $1.06 $1.48 $3.60 $4.47 ` Adjusted EPS (diluted) $0.90 $0.91 $1.03 $1.06 $1.09 $3.60 $4.09 Efficiency Ratio (FTE) 63.7% 65.2% 61.2% 60.1% 65.9% 62.6% 63.1% Tangible Efficiency Ratio (FTE)1 63.1% 64.6% 60.6% 59.2% 64.8% 62.0% 62.3% Adjusted Tangible Efficiency Ratio (FTE)1 63.1% 64.6% 60.6% 59.2% 59.9% 62.0% 61.0% Net Interest Margin (FTE) 3.00% 3.09% 3.14% 3.15% 3.17% 3.00% 3.14% Return on Average Assets 0.91% 0.93% 1.03% 1.04% 1.43% 0.94% 1.11% Return on Average Common Equity 7.9% 8.2% 9.1% 9.0% 12.5% 8.0% 9.7% Return on Average Tangible Common Equity2 10.8% 11.3% 12.5% 12.5% 17.2% 10.9% 13.4% Average Performing Loans ($ in billions) $141.7 $142.8 $143.7 $144.0 $143.4 $140.2 $143.5 Average Client Deposits ($ in billions) $158.0 $158.9 $159.1 $159.4 $160.7 $154.2 $159.5 NPL Ratio 0.59% 0.55% 0.52% 0.48% 0.47% 0.59% 0.47% NCO Ratio 0.38% 0.32% 0.20% 0.21% 0.29% 0.34% 0.25% ALLL Ratio 1.19% 1.20% 1.20% 1.23% 1.21% 1.19% 1.21% Basel III Common Equity Tier 1 Ratio (transitional) 9.6% 9.7% 9.7% 9.6% 9.8% 9.6% 9.8% Basel III Common Equity Tier 1 Ratio (fully phased-in)3 9.4% 9.5% 9.5% 9.5% 9.6% 9.4% 9.6% Book Value Per Share $45.38 $45.62 $46.51 $47.16 $47.94 $45.38 $47.94 Tangible Book Value Per Share4 $32.95 $33.05 $33.83 $34.34 $34.82 $32.95 $34.82 Balance Sheet Credit & Capital Profitability
19 MORTGAGE SERVICING INCOME: SUPPLEMENTAL INFORMATION 1. Includes contractually specified servicing fees, late charges, interest curtailment expense, and other ancillary revenues 2. Due primarily to the receipt of monthly servicing fees and from prepayments 3. Includes both the fair value mark-to-market of the MSR asset from changes in market rates and other assumption updates, exclusive of the decay, and the impact of using derivatives to hedge the risk of changes in the fair value of the MSR asset Note: Totals may not foot due to rounding ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Servicing Fees1 $93 $100 $100 $99 $101 ($69) ($50) ($57) ($58) ($58) Net MSR Fair Value and Hedge Activity3 $1 $7 $1 $5 ($1) Mortgage Servicing Income $25 $58 $44 $46 $43 Memo: Total Loans Serviced for Others (average balance) $126,765 $134,444 $136,376 $135,898 $135,626 Annualized Servicing Fees / Average Loans Serviced for Others (bps) 29 30 30 29 30 Changes in MSR Value from Collection/Realization of Cash Flow (Decay)2
20 Memo: 30-89 Accruing Delinquencies 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 4Q 17 Loan Balance Commercial & industrial 0.05% 0.05% 0.05% 0.08% 0.06% $66,356 Commercial real estate 0.02% 0.03% 0.04% 0.02% 0.00% $5,317 Commercial construction 0.00% 0.00% 0.00% 0.00% 0.00% $3,804 Total Commercial Loans 0.05% 0.04% 0.05% 0.07% 0.06% $75,477 Residential mortgages guaranteed $560 Residential mortgages nonguaranteed 0.32% 0.26% 0.21% 0.27% 0.55% $27,136 Home equity products 0.68% 0.63% 0.66% 0.85% 0.71% $10,626 Residential construction 0.64% 0.33% 0.30% 0.28% 2.33% $298 Guaranteed student loans - - - - - $6,633 Other direct 0.43% 0.39% 0.36% 0.44% 0.42% $8,729 Indirect 1.18% 0.83% 0.83% 1.09% 0.91% $12,140 Credit cards 0.83% 0.74% 0.75% 0.89% 0.83% $1,582 Total Consumer Loans¹ ² 0.58% 0.47% 0.45% 0.58% 0.65% $67,704 Total SunTrust - excl. gov.-guaranteed delinquencies³ 0.27% 0.22% 0.22% 0.29% 0.32% $135,988 Impact of excluding gov.-guaranteed delinquencies 0.45% 0.50% 0.44% 0.42% 0.48% $7,193 Total SunTrust - incl. gov.-guaranteed delinquencies4 0.72% 0.72% 0.66% 0.71% 0.80% $143,181 30-89 DAY DELINQUENCIES BY LOAN CLASS 1. Excludes delinquencies on all federally guaranteed mortgages 2. Excludes delinquencies on federally guaranteed student loans 3. Excludes delinquencies on federally guaranteed mortgages and student loans 4. Excludes mortgage loans guaranteed by GNMA that SunTrust has the option, but not the obligation, to repurchase Note: Totals may not foot due to rounding ($ in millions)
21 NONPERFORMING LOANS BY LOAN CLASS Note: Totals may not foot due to rounding Memo: Nonperforming Loans ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 4Q 17 Loan Balance Commercial & industrial $390 $328 $304 $292 $215 $66,356 Commercial real estate 7 6 5 5 24 $5,317 Commercial construction 17 18 16 1 1 $3,804 Total Commercial Loans $414 $352 $325 $298 $240 $75,477 Residential mortgages guaranteed - - - - - $560 Residential mortgages nonguaranteed 177 179 181 161 206 $27,136 Home equity products 235 237 226 214 203 $10,626 Residential construction 12 12 12 11 11 $298 Guaranteed student loans - - - - - $6,633 Other direct 6 5 5 6 7 $8,729 Indirect 1 4 5 7 7 $12,140 Credit cards - - - - - $1,582 Total Consumer Loans $431 $437 $429 $399 $434 $67,704 Total SunTrust $845 $789 $754 $697 $674 $143,181 NPLs / Total Loans 0.59% 0.55% 0.52% 0.48% 0.47%
22 NET CHARGE-OFF RATIOS BY LOAN CLASS Note: Totals may not foot due to rounding Memo: Net Charge-off Ratio (annualized) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 4Q 17 Loan Balance Commercial & industrial 0.35 % 0.29 % 0.10 % 0.09 % 0.22 % $66,356 Commercial real estate (0.01)% (0.02)% 0.00 % 0.44 % (0.01)% $5,317 Commercial construction 0.88 % (0.02)% 0.10 % (0.01)% (0.01)% $3,804 Total Commercial Loans 0.35 % 0.26 % 0.10 % 0.11 % 0.19 % $75,477 Residential mortgages guaranteed - - - - - $560 Residential mortgages nonguaranteed 0.23 % 0.17 % 0.14 % 0.14 % 0.20 % $27,136 Home equity products 0.37 % 0.35 % 0.20 % 0.15 % 0.19 % $10,626 Residential construction (0.50)% (0.34)% 0.84 % 1.63 % 3.39 % $298 Guaranteed student loans - - - - - $6,633 Other direct 0.61 % 0.61 % 0.70 % 0.70 % 0.81 % $8,729 Indirect 0.81 % 0.78 % 0.45 % 0.59 % 0.66 % $12,140 Credit cards 2.32 % 2.61 % 2.77 % 2.55 % 2.77 % $1,582 Total Consumer Loans 0.41 % 0.39 % 0.32 % 0.33 % 0.41 % $67,704 Total SunTrust 0.38 % 0.32 % 0.20 % 0.21 % 0.29 % $143,181 ($ in millions)
23 NET CHARGE-OFFS BY LOAN CLASS Note: Totals may not foot due to rounding Memo: Net Charge-offs ($ in millions) 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 4Q 17 Loan Balance Commercial & industrial $60 $50 $18 $16 $37 $66,356 Commercial real estate - - - 6 - $5,317 Commercial construction 9-1 - - $3,804 Total Commercial Loans $69 $50 $19 $22 $37 $75,477 Residential mortgages guaranteed - - - - - $560 Residential mortgages nonguaranteed 15 10 9 9 14 $27,136 Home equity products 11 10 5 5 5 $10,626 Residential construction - - 1 1 3 $298 Guaranteed student loans - - - - - $6,633 Other direct 12 12 14 15 18 $8,729 Indirect 21 21 13 18 20 $12,140 Credit cards 8 9 9 8 10 $1,582 Total Consumer Loans $67 $62 $51 $56 $70 $67,704 Total SunTrust $136 $112 $70 $78 $107 $143,181
24 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 2011 2012 2013 2014 2015 2016 2017 Reported (GAAP) Basis Net Interest Income 1,343 1,366 1,403 1,430 1,434 5,065 5,102 4,853 4,840 4,764 5,221 5,633 Noninterest Income 815 847 827 846 833 3,421 5,373 3,214 3,323 3,268 3,383 3,354 Revenue 2,158 2,213 2,230 2,276 2,267 8,486 10,475 8,067 8,163 8,032 8,604 8,987 Noninterest Expense¹ 1,397 1,465 1,388 1,391 1,520 6,194 6,284 5,831 5,543 5,160 5,468 5,764 Efficiency Ratio 64.7% 66.2% 62.2% 61.1% 67.0% 73.0% 60.0% 72.3% 67.9% 64.2% 63.6% 64.1% Reconciliation: Net Interest Income 1,343 1,366 1,403 1,430 1,434 5,065 5,102 4,853 4,840 4,764 5,221 5,633 FTE Adjustment 34 34 36 37 38 114 123 127 142 142 138 145 Net Interest Income-FTE 1,377 1,400 1,439 1,467 1,472 5,179 5,225 4,980 4,982 4,906 5,359 5,778 Noninterest Income 815 847 827 846 833 3,421 5,373 3,214 3,323 3,268 3,383 3,354 Revenue-FTE 2,192 2,247 2,266 2,313 2,305 8,600 10,598 8,194 8,305 8,174 8,742 9,132 Efficiency Ratio-FTE 63.7% 65.2% 61.2% 60.1% 65.9% 72.0% 59.3% 71.2% 66.7% 63.1% 62.6% 63.1% Adjustment Items (Noninterest Income): 3Q-4Q 12 student / Ginnie Mae loan sale (losses) (92) Securities gain related to the sale of Coca Cola stock 1,938 Pre-tax mortgage repurchase provision related to loans sold to GSEs prior to 2009 (371) GSE mortgage repurchase settlements (63) RidgeWorth sale 105 Premium Assignment Corporation sale 107 107 Securities & MSR losses in connection with tax reform-related actions (114) (114) Adjusted Noninterest Income 815 847 827 846 840 3,421 3,898 3,277 3,218 3,268 3,383 3,361 Adjusted Revenue-FTE² 2,192 2,247 2,266 2,313 2,313 8,600 9,123 8,257 8,200 8,174 8,742 9,139 Noninterest Expense¹ 1,397 1,465 1,388 1,391 1,520 6,194 6,284 5,831 5,543 5,160 5,468 5,764 Adjustment Items (Noninterest Expense): Legacy affordable housing impairment 96 Charitable contribution of KO shares 38 Impact of certain legacy mortgage legal matters 323 324 Mortgage servicing advances allowance increase 96 Potential mortgage servicing settlement & claims expense Efficiency related charges as outlined in 12/4/17 8-K 36 36 Contribution to communities / teammates in connection with tax-reform 75 75 Adjusted Noninterest Expense² 1,397 1,465 1,388 1,391 1,409 6,194 6,150 5,412 5,219 5,160 5,468 5,653 Amortization Expense 14 13 15 22 25 43 46 23 25 40 49 75 Adjusted Tangible Expenses² 1,383 1,452 1,373 1,369 1,384 6,151 6,104 5,389 5,194 5,120 5,419 5,578 Adjusted Efficiency Ratio-FTE³ 63.7% 65.2% 61.2% 60.1% 60.9% 72.0% 67.4% 65.6% 63.7% 63.1% 62.6% 61.9% Adjusted Tangible Efficiency Ratio-FTE³ 63.1% 64.6% 60.6% 59.2% 59.9% 71.5% 66.9% 65.3% 63.3% 62.6% 62.0% 61.0%0 0 0 RECONCILIATION: ADJUSTED EFFICIENCY RATIO (FTE) & ADJUSTED TANGIBLE EFFICIENCY RATIO (FTE) 1. In accordance with updated GAAP, amortization of affordable housing investments of $40 million, $39 million, and $49 million were reclassified and are now presented in provision for income taxes for 2011, 2012, and 2013, respectively. Previously, the amortization was presented in other noninterest expense 2. Adjusted revenue and expenses are provided as they remove certain items that are material and potentially non-recurring. Adjusted figures are intended to provide management and investors information on trends that are more comparable across periods and potentially more comparable across institutions 3. Represents adjusted noninterest expense / adjusted revenue FTE. Adjusted tangible efficiency ratio excludes amortization expense, the impact of which is (0.65%), (0.59%), (0.65%), (0.95%), (1.08%), (0.50%), (0.50%), (0.28%), (0.30%), (0.49%), (0.56%), and (0.82%) for 4Q 16, 1Q 17, 2Q 17, 3Q 17, 4Q 17, 2011, 2012, 2013, 2014, 2015, 2016, and 2017, respectively Note: 2012, 2013, 2014, 4Q 17, and 2017 values represent the adjusted efficiency ratio and adjusted tangible efficiency ratio. 4Q 16, 1Q 17, 2Q 17, 3Q 17, 2011, 2015, and 2016 represent reported efficiency ratio and reported tangible efficiency ratio
25 RECONCILIATION: COMMON EQUITY TIER 1 RATIO1 1. The Common Equity Tier 1 ratio is subject to certain phase-in requirements under Basel III beginning in 2015, and as such we have presented a reconciliation of the Common Equity Tier 1 ratio as calculated considering the phase-in requirements (Common Equity Tier 1 Transitional) to the fully phased-in ratio. All figures are estimated at the time of the earnings release, subject to revision, and based on current capital rules 2. Primarily includes the phase-out from capital of certain DTAs, the overfunded pension asset, and other intangible assets 3. Primarily relates to the increased risk weight to be applied to mortgage servicing assets on a fully phased-in basis Note: Totals may not foot due to rounding 4Q 17 Common Equity Tier 1 Transitional $17.1 Adjustments2 (0.0) Common Equity Tier 1 Fully phased-in $17.1 Risk-weighted Assets: Common Equity Tier 1 Transitional $176.0 Adjustments3 2.7 Risk-weighted Assets: Common Equity Tier 1 Fully phased-in $178.6 Common Equity Tier 1 Transitional 9.8% Common Equity Tier 1 Fully phased-in 9.6% ($ in billions)
26 RECONCILIATION: OTHER NON-GAAP MEASURES Note: Totals may not foot due to rounding 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 Total Shareholders' Equity $23.6 $23.5 $24.5 $24.5 $25.2 Goodwill, Net of Deferred Taxes (6.1) (6.1) (6.1) (6.1) (6.2) Other Intangible Assets Including MSRs, Net of Deferred Taxes (1.7) (1.7) (1.7) (1.7) (1.8) MSRs 1.6 1.7 1.7 1.7 1.8 Tangible Equity $17.5 $17.4 $18.4 $18.4 $19.0 Noncontrolling Interest (0.1) (0.1) (0.1) (0.1) (0.1) Preferred Stock (1.2) (1.2) (2.0) (2.0) (2.5) Tangible Common Equity $16.2 $16.1 $16.3 $16.3 $16.4 Total Assets 204.9 205.6 207.2 208.3 206.0 Goodwill (6.3) (6.3) (6.3) (6.3) (6.3) Other Intangible Assets Including MSRs, Net of Deferred Taxes (1.7) (1.7) (1.7) (1.7) (1.8) MSRs 1.6 1.7 1.7 1.7 1.8 Tangible Assets $198.5 $199.3 $200.9 $201.9 $199.6 Average Equity / Average Assets 11.8% 11.6% 11.8% 11.9% 12.1% Total Equity / Total Assets 11.5% 11.4% 11.8% 11.8% 12.2% Tangible Equity / Tangible Assets 8.8% 8.7% 9.2% 9.1% 9.5% Tangible Common Equity / Tangible Assets 8.2% 8.1% 8.1% 8.1% 8.2% Book Value Per Common Share $45.38 $45.62 $46.51 $47.16 $47.94 Tangible Book Value Per Common Share $32.95 $33.05 $33.83 $34.34 $34.82 ($ in billions, except per-share data)