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SunTrust Banks' (STI) CEO Bill Rogers on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 22, 2016 08:00 AM ET

Executives

Ankur Vyas - Director, IR

Bill Rogers - Chairman & CEO

Aleem Gillani - CFO

Analysts

Ken Usdin - Jefferies

Gerard Cassidy - RBC

Matt O’Connor - Deutsche Bank

Michael Rose - Raymond James

John McDonald - Bernstein

Kevin Barker - Piper Jaffray

Matt Burnell - Wells Fargo Securities

Vivek Juneja - JPMorgan

Marty Mosby - Vining Sparks

Operator

Welcome to the SunTrust First Quarter 2016 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] This call is being recorded, if you have any objections, please disconnect at this time. Now, I will turn the call over to Ankur Vyas, Director of Investor Relations. Thank you. You may begin.

Ankur Vyas

Thanks, Jay. Good morning and welcome to SunTrust’s First quarter 2016 earnings conference call. Thank you for joining us. In addition to today’s press release, we have 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.

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. We list the factors that might cause actual results to differ materially in our SEC filings, which are also available on our Web site. During the call, we will discuss non-GAAP financial measures when talking about the Company’s performance. You may find the reconciliations of these measures to GAAP financial measures in our press release and on our Web site, 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 webcast are located on our Web site.

With that, I will turn the call over to Bill.

Bill Rogers

Thanks, Ankur and good morning everyone. I will begin with a brief overview of the quarter and then 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 investment thesis.

This quarter we saw the benefits of our consistent strategic focus and improving execution, a combination of which resulted in revenue growth that exceeded expense growth. As we communicated during the last earnings call, delivering positive operating leverage in 2016 was going to be necessary to overcome our expectation of our credit cost and to achieve our financial objectives. Our performance in the first quarter was a good start towards meeting those objectives for the year.

Specifically, we reported $0.84 per share slightly lower than the fourth quarter given typical seasonal patterns in our business and more importantly up a solid 8% compared to a year ago. Total revenue was up 3% sequentially and 5% year-over-year. The sequential improvement was driven by an increase in net interest income and non-interest income where we benefitted from good performance across both, mortgage and capital markets, a lot of which was notable given market conditions in January and February. Out net interest margin improved 6 basis points sequentially and is up 21 basis points over the past year, reflecting our continued efforts to optimize the balance sheet, including improving our loan mix, growing deposits and reducing long-term debt all while carefully managing duration.