IMPORTANT CAUTIONARY STATEMENT
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 21.
In this presentation, consistent with Securities and Exchange Commission Industry
Guide 3, (he 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 applicable federal and state income tax rates 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, 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 the capital adequacy and profitability of the Company.
Similarly, the Company
presents Efficiency ratio-FTE, Tangible efficiency ratlo-FTE, Adjusted 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 CO intangible assets and certain tax credits. The Company believes this measure is useful to investors because, by
removing Che 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 efficiency ratio-FTE and adjusted
tangible efficiency ratio-FTE remove the impacts of income or expense items that are material and potentially non-recurring from the calculation of Efficiency ratio-FTE and Tangible efficiency ratio-FTE, respectively. The Company believes these
measures are useful to investors because they are more reflective of normalized operations as they reflect 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-m basis on slide 15.
For December 11, 2017 and prior, fully-phased-in ratios considered a 250% risk-weighting for MSRs and deduction from capital of certain carryforward DTas, the overfunded pension asset, and other intangible assets. For March 31, 2018 and later, the
fully-phased-in ratio considers a 250% risk-weighting for MSRs, as contemplated in the FRB’s ‘Simplifications’ NPR. The Company believes this measure is useful to investors who wish to understand the impact of potential future
regulatory requirements.
important. Cavnonary. Forw<HQpk.ing Statements
This presentation contains forward-looking statements. Statements regarding (I) future levels of net Interest margin, deposit betas, mortgage-related fee income,
merger-related costs, effective income tax rates, efficiency ratios (including after the proposed merger with BBEtTi, net charge-off ratio, ALU. ratio, provision expense, deposit costs and capital ratios, (ii) the income statement impact of
thesaleof certain TOR portfolios in April 2019 and repositioning of a portion of the Company’s securities portfolio, (iii| the benefits and effects of our proposed merger with BB&T, including the future earning; potential of the combined
company, the cost synergies to be achieved, the capacity to invest in technology, talent, innovation and communities, and the profile and stature of the combined company’s retail and private wealth businesses, (1v) the financial performance of
SunTrust over the next 1 -2 quarters, (vj Increases in our common share dividend, (vi) future economic conditions, and (viil the optimism of clients about the economy and their commitments to malting ongoing investments are forward-looking
statements. 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.’1 “will,’1 “should,” “would,” and “could-. Forward-looking statements are based on the current beliefs and expectations of management and on information currently available to management. Such
statements speak as of the date of this presentation, and we do not assume any obligation to update such statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or
future events.
Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such
statements- Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, item
1A.. “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2013 and 1n other periodic reports that we file with the SEC. Those factors include: failure to complete the merger with BB&T (the
“Merger”} could negatively impact our stock price and our future business and financial results; we will be subject to uncertainties while the Merger is pending, which could adversely affect our business; the Merger Agreement may be
terminated In accordance with its terms and the Merger may not be completed; because the market price of BB&T Common Stock may fluctuate, our shareholders cannot be certain of the precise value of the merger consideration they may receive in the
Merger; our ability to complete the Merger is subject to the receipt of approval from various federal and state regulatory agencies, which may impose conditions that could adversely affect us or cause the Merger to be abandoned; shareholder
litlgaLion could prevent or delay the dosing of the proposed Merger or otherwise negatively impact our business and operations; current or future legislation or 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 federat 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 activity and other businesses, as well as our financial condition and results; changes in market interest rates or capital markets could
adversely affect our revenue and expenses, the value of assets and obligations, as well as the availability and cost of capital and liquidity; interest rates on our outstanding and future financial instruments might be subject to change based on
regulatory developments, which could adversely affect our revenue, expenses, and the value of those financial instruments; 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 and other sources of wholesale funding may adversely affect our capital resources and liquidity; we are
subject to credit risk; we may have more credit risk and higher credil 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 G5Es 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: consumers and small businesses may decide not to use banks to complete their financial transactions, which could affect our revenue; 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 resutt af changes in the marketplace, 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 toss 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; our operational or communications systems or infrastructure may fail or may be the subject of a breach or cyber-attack that, If successful, could adversely affect our business or disrupt business continuity; a disruption, breach, or failure
in the operational systems or infrastructure of our third party vendors or other service providers, including as a result of cyber-attacks, could adversely affect our business; natural disasters and other catastrophic events could have a material
adverse impact on our operations or our financial condition and results; 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 all or some portion of our goodwill; our stock price can be volatile; we might not pay dividends on our stock: our ability to receive dividends from our subsidiaries or
other investments could affect our liquidity and ability to pay dividends: and certain banking laws and certain provisions of our articles of incorporation may have an anti takeover effect.