Below is the transcript of the SunTrust Banks Inc (NYSE:STI)’s Q4 2014 Earnings conference call, held on January 16th, 2015 at 8:00 a.m. EST.
SunTrust Banks Inc (NYSE:STI), with total assets of $183 billion as of June 30, 2014, is one of the nation’s largest and strongest financial holding companies. Through its banking subsidiaries, the company provides deposit, credit, trust, and investment services to a broad range of retail, business, and institutional clients. Other subsidiaries provide mortgage banking, brokerage, investment management, equipment leasing, and capital market services. Atlanta-based SunTrust enjoys leading market positions in some of the highest growth markets in the United States and also serves clients in selected markets nationally.
Ankur Vyas – Director of Investor Relations.
Bill Rogers – Chairman and Chief Executive Officer
Aleem Gillani – Chief Financial Officer
Matt O’Connor – Deutsche Bank
Ryan Nash – Goldman Sacks
John Pancari – Evercore ISI
Mike Mayo – CLSA
Ken Usdin – Jeffries
John McDonald – Sanford Bernstein
Terry McEvoy – Stern Agee
Matt Burnell – Wells Fargo Securities.
Welcome to the Sun Trust Fourth Quarter Earnings conference call and thank you for standing by. At this time, all participant lines are in listen-only mode until the question and answer portion of today’s conference. During that time to ask questions, you may press star then 1 to ask a question. Today’s conference call is being recorded. If you have any objections, please disconnect at this time. And now, I will turn the call over to Ankur Vyas, Director of Investor Relations. Thank you. You may begin.
Ankur Vyas, Director of Investor Relations
Thank you, Brad. Good morning and welcome to Sun Trust Fourth Quarter 2014 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.
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 available on our website.
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 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 turn the call over to Bill.
Bill Rogers, Chairman and Chief Executive Officer, Sun Trust
Thanks, Ankur. I’ll begin this morning with a high-level overview of the quarter and then I’ll turn over to Aleem to discuss the results in more details. Following Aleem’s comments, I’ll review our performance at the segment level and wrap up with my perspectives on 2014 as a whole.
Throughout the year we made significant progress on several props. Continued expense discipline and further improvement in credit quality, helped offset the impact of the sustained low-rate environment on revenues and translated in the core earnings growth and lower adjusted tangible efficiency ratio. Our performance in the Fourth Quarter continued that momentum.
Reported earnings per share for the quarter was 0.72 on net income of common of 378 million. This quarter’s results included $145 million legal provision to both resolve and reserve for legacy mortgage matters. We remain focused on resolving these matters in a prudent fashion and this quarter’s accrual was another step in the right direction.
Excluding the legal provision, adjusted earnings per share were $0.88, up 9% sequentially and 14% year-over-year. Total revenue was up modestly relative to the prior quarter. Net interest income was essentially flat as it has been in prior quarters with solid loan and deposit growth offset by continued margin compression. Non-interest income was up 2% sequentially driven primarily by higher mortgage related income and good performance in investment banking.
Adjusted expenses were generally stable to the prior quarter, however, down a full 7% compared to the prior year, driven by continued expense reduction efforts, lower cyclical cost, and the sale of Ridge Worth. Importantly for the full year, we reduced our expense base from 2013 as adjusted expenses were down nearly $200 million or 4% year-over-year.