SunTrust Banks, Inc. (NYSE:STI.PRE) Q3 2016 Earnings Conference Call Transcript

Oct 21, 2016 • 08:00 am ET

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SunTrust Banks, Inc. (NYSE:STI.PRE) Q3 2016 Earnings Conference Call Transcript

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Presentation
Operator
operator

Welcome to the SunTrust Third Quarter 2016 Earnings Conference Call. (Operator Instructions]) I'd like to inform you that the call is being recorded and if you have any objections, you may disconnect at this time. Now I will turn the call over to Ankur Vyas, Director of Investor Relations. Thank you, you may begin.

Executive
Ankur Vyas

Thank you, Iris. Good morning, everyone and welcome to our third quarter 2016 earnings conference call. Thank you for joining us. In addition to today's press release, we've also provided a presentation that covers the topics we plan to address during our call. The press release, presentation and detailed financial schedules can be accessed at investors.SunTrust.com. With me today, among other members of our executive management team are Bill Rogers, our Chairman and Chief Executive Officer and Aleem Gillani, our Chief Financial Officer.

(Forward-Looking Statements)

With that, I'll turn the call over to Bill.

Executive
Bill Rogers

Thanks, Ankur and good morning, everyone. I'll begin with a brief overview of the quarter and then I'll turn it over to Aleem for additional details including our results at the business segment level. I'll conclude with some perspectives on how this quarter's performance fits into our long term strategy and overall investment thesis. We reported $0.91 of earnings this quarter which represents a 2% increase relative to the core earnings of the prior quarter and prior year. Overall, I'd characterize this as a good quarter.

Revenue growth in particular was very strong, up 8% compared to the prior year and reflects the ongoing investments we've made in each of our businesses over the past few years. Noninterest income was up 10% year-over-year, driven by strength in mortgage and another record quarter in capital markets which is clear that we're increasingly becoming a preferred strategic advisor to our clients.

Net interest income was up 1% sequentially and 8% year-over-year. Our businesses remain focused on managing the balance sheet in a strategic, profitable manner which has allowed us to overcome much of the margin compression. The $1 billion auto loan sale we executed this quarter is fully consistent with our commitment to meet our clients' needs, while also optimizing the balance sheet by staying disciplined on returns.

Overall, our strong revenue growth helped offset the increase in expenses and keeps us on track to meet our goal of improving the efficiency of the Company, evidenced by the fact that our year-to-date tangible efficiency ratio is 100 basis points better relative to all of 2015. Now with that said, absolute expenses this quarter came in higher than I feel is acceptable. Some of this was related to revenue and some were anticipated increases, but overall, we did not fully demonstrate the strong expense control I think we're capable of. Asset quality improved as we made further progress in working through certain energy credits.

The net charge-off ratio declined to 35 basis points. Non-performing loans were stable and provision expense declined. I consider our overall asset quality to be strong which is a testament to the