State Street Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the SunTrust third quarter 2019 earnings results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. If you should require assistance during the call, please press star, then zero. As a reminder, this conference is being recorded. At this time, we'll turn the conference call over to your host, Director of Investor Relations, Mr. Ankur Vyas. Please go ahead, sir.

Thank you, Tony. Good morning and welcome to SunTrust's third quarter 2019 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 Allison Dukes, our Chief Financial Officer. Before we get started, I need to remind you that our comments today may include forward-looking statements. These statements are subject to risks and uncertainty, and actual results could differ materially. Please refer to the cautionary statements on page two of our presentation regarding forward-looking information, including some of the factors that might cause actual results to differ materially. During the call, we will discuss non-GAAP financial measures when talking about the company's performance. You can find the reconciliation of these measures to GAAP financial measures in our press release or in our presentation and on our website, investors.suntrust.com. Finally, SunTrust is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized live and archived webcasts are located on our website. With that, I'll now turn the call over to Bill.

Thanks, Ankur. Good morning, everyone. I'll begin with an overview of the third quarter, which we highlight on slide three, and then I'll turn it over to Allison for some additional details. Reported earnings per share was $1.34, and when excluding merger-related impacts in the quarter, earnings per share was $1.40. Overall, we had a good quarter, particularly as it relates to the strength in a number of our fee-income-oriented businesses and continued balance sheet growth, both of which are reflective of our successful execution against the strategic initiatives of our consumer and wholesale segments. We also continue to benefit from strong asset quality performance as a result of our consistent underwriting discipline and a favorable economic environment. However, as we got of last quarter, the lower rate environment drove further pressure on our net interest margin, offsetting much of the core growth we delivered in loans, deposits, and non-interest income. With that as an overview, let me highlight some of the specifics for SunTrust earnings in the third quarter. Loan growth remains healthy, evidenced by the 1% sequential growth we delivered, which was generally broad-based across most businesses. The investments we've made in delivering product and industry expertise to our corporate, commercial, and CRE clients, in addition to our ongoing investments in digital consumer lending, continue to drive good loan growth. We're also seeing healthy growth in indirect auto, reflecting strong consumer confidence. Bigger picture, our clients remain relatively optimistic about the economy and are committed to making ongoing investments in their personal lives and in their businesses. So the level of uncertainty has increased, leading to some caution. We also saw strong deposit growth in the quarter, which was largely driven by good results from our corporate liquidity products team, in addition to solid growth in consumer deposits. Offsetting the balance sheet growth we delivered was pressure on the net interest margin, given rate dynamics, which Allison will discuss in more detail. Excluding certain discrete items, non-interest income increased by 2% sequentially and 7% year-over-year, reflecting increased client activity levels in mortgage, investment banking, commercial real estate, and private wealth, most of which is reflective of the successful execution against our strategies and is also a good representation of the diversity of our business mix. Overall, revenue was stable sequentially as this diversity helped to offset the 10 basis point decline in our net interest margin. Importantly, our continued execution against expense initiatives across the company has allowed us to keep our efficiency ratios stable year to date in spite of the challenging interest rate environment. This base performance puts us on good footing heading into the merger where efficiency opportunities are significantly amplified. And finally, credit quality remains a strength with charge-offs and non-performing loans remaining below their historical averages. When excluding the impacts of the interest rate environment, I continue to be pleased with the core performance of both our consumer and wholesale businesses. We've developed and continue to enhance our competitive advantage in certain differentiated businesses like Centros Robinson Humphrey and Lightstream. We continue to make good progress in enhancing the digital experience we're providing for our clients and remain focused on leading with an advice-driven model for our clients, particularly in our wholesale and private wealth businesses. These are just a few of the reasons why we entered into our proposed merger of equals with BB&T from a position of underlying strength with an offensive mindset. The ability to bring together two highly complementary business models with different areas of relative strength and opportunity I think is unique to this particular combination. At the same time, the overall revenue environment has changed, which also underscores some of the defensive merits of our merger, including the synergy opportunities in our balance sheet positioning. As we all know, championship teams have great offenses and great defenses. In this regard, I think Truist is uniquely well-positioned. Momentum for Truist continues to build, and I'll conclude with further details on the progress we're making in our integration planning efforts, in addition to some of the key items we hope to accomplish in the first 100 days as Truist. Before I turn it over to Allison, I want to highlight the announcement we made last week that Lynnie Hainsworth was appointed to the Centros Board of Directors, and she'll also serve on the Truist Board of Directors. Lynnie was the leader of the Cyber and Intelligence Mission Solutions Divisions for Northrop Grumman, and she'll bring a wealth of knowledge to our board as it relates to cybersecurity, technology, and innovation, all critical skill sets in creating a strong foundation for Truist and financial security and confidence for our clients. So with that, let me turn it over to Allison.