STI
#<UNK>, if you're asking about sort of core expenses ---+.
And revenues relative to what we pointed out, no, I think what we tried to do here is be very, very transparent with you, as to all of the non-core items that affected us this quarter.
You saw them on ---+ the major items on the first page of the deck.
As you say, I talked about a couple of the minor items that we see coming up.
So I think you've got all the information that we can provide on what the core earnings power of the Company is likely to be, over the course of the next little while.
And I think the one point I would reiterate is from a provision expense, with everything that we're seeing today, I do expect that to decline, as we go forward from today.
We set out on a course similar to the efficiency ratio to say we want to continue to improve our return to shareholders, and we've done that, done that consistently.
We've gone from the 60s to the 80s in terms of total return, and we've said, long term, that's in the zone that we want to be in.
All that against a backdrop of a really good, strong capital level.
So I think just on a net basis, we would continue the same story as efficiency ratio, continue to improve our return to shareholders.
That return probably improvement will be at a smaller slope, but I still think we have an opportunity to increase the return.
<UNK>, we had a pretty clear choice in our planned submission this year, as to how we could choose to improve dividends ---+ or payouts overall.
We chose to do it in a balanced way, with some dividend increase, and some repurchase increase.
But, as you point out, we did lean more toward repurchase, and that made a lot of sense to us in the context of a stock price that was only around 1.3 times tangible book.
So, at that kind of level, it makes sense for us to increase the repurchase more than the dividend.
And every year as we submit our plan, we'll be looking at what those numbers look like.
And we also took feedback from many of our largest shareholders, as to what their preferences were.
So we incorporated that within our plan, and we intend to continue to do that.
<UNK>, you're right.
We didn't make an adjustment for these items.
They weren't really very substantial.
They weren't material enough, for example, for us to go out and release an 8-K on them.
But we just wanted to be very transparent with everybody on ---+ here's our core items, here's our non-core items, you can choose to make whatever calculation you want.
We tried to show you everything that was core and non-core so that you got a sense of what the real underlying earnings power of SunTrust is, and how it can grow, and then you can make adjustments as you see fit.
We tried to give you the adjustments we thought made sense.
Thank you, <UNK>.
That's a very insightful question on the bones of our portfolio, and I think you nailed it.
We had a couple of charge-offs in the energy book that perhaps raised our charge-off level a little bit higher this quarter.
But when you peel it back, you see energy charge-offs ---+ or you see our total charge-off level including energy, only at 39 basis points, still within what we expect to achieve for our full-year guidance, even including these couple of items.
And ex-energy, as I said, we've got a charge-off level in the whole rest of the book of only 19 basis points.
So the rest of our book has a credit profile that, frankly, looks terrific.
And as we work our way through the energy issues in the short term, I think you'll see the power of the rest of the portfolio coming through relatively quickly.
<UNK>, I think rather than continuing to say we're cresting, as it relates to the energy portfolio, we were very diligent and very focused and we've assembled a tight group focused on this portfolio, because we really wanted to come out of this quarter saying that we've crested, that we've got most of this behind us from a charge-off standpoint, as <UNK> said, I think we're clearly more than halfway through.
And then that will have a positive impact on the provision going forward.
So we put a lot of shoulder to the wheel on this quarter to be able to say we are crested.
Thanks, <UNK>.
I think the effect of the securities portfolio is two effects.
One is growth in the book at lower coming-on yields than the portfolio overall.
And then, second, is the effect on mortgage-backed amortization.
So the combined effects of both of those things in this last quarter was around 1 basis point or so, the increase in the MBS amortization.
So, it's about 1 basis point or so.
As we look forward, it is already incorporated in our guidance.
Think of it in the context of around 1 basis point a quarter.
As a point of history, we've done it every opportunity, so that maybe ought to give you a little perspective.
<UNK>, we've done it each of the last two years.
One of the things that we're doing and you're seeing is our portfolio mix, and over time, what you're seeing is that we're growing our direct consumer lending portfolio at a very rapid pace, as I said, 26%.
And that's helping our overall portfolio mix and portfolio yield, and that is indeed helping to mitigate the effect of NIM overall.
The other thing that we're doing is we're very actively managing, as I said to <UNK> just a minute ago, our securities book and our swaps book.
And as we manage that over time, that will also continue to, I think, help mitigate the effect of lower long-term rates on our book overall.
And then the portions that are dilutive to NIM, we're putting a lot of intensive pressure on relationship return, and the good news is we've got the capacity and we've built the capability to be very demanding of our teams to get a lot of fee income, and you've seen that manifest itself in that fee income level.
If we're putting out capital that's dilutive to NIM, we expect to get return that's accretive to non-interest income.
As we said, we really try not to manage to a loan growth number, so we look at production, and then we look at paydowns, and then we look at things that we may do, to <UNK>'s point, to continue to diversify the balance sheet and get us in a positive position.
Based on the things that we see now, relative to all of those pluses and minuses that come in, a 1% to 2% range is probably not out of the realm of possibility.
It's probably the right zone.
But, again, we don't manage to that kind of number.
We really look at, are we continuing to get positive production.
Are we continuing to expand what we're doing with relationships, and are they meeting all the hurdles.
So for a loan to come on the book, it's got to get through a big gate, in terms of overall hurdle rates.
And, Steve, to connect your questions, we have the great flexibility here at SunTrust to be able to be opportunistic.
We've been able to buy portfolios, where we see the ability to connect those clients with the rest of our offerings.
And we have the ability to sell portfolios that we think are non-core or not going to be accretive to value over the long term.
So we've got, as you said, decent organic growth.
We've got hard-working teammates.
In addition to that, we've got great flexibility to be opportunistic, to find ways to add value by both buying and selling portfolios.
I wouldn't say that we've got an improving credit cycle from here, <UNK>.
I think we're actually in a terrific part of the cycle overall, and you can see that in our numbers ---+ 19 basis points of net charge-offs, ex-energy.
Spectacularly good.
We do think, over the long term, over a cycle that, with the credit profile that we've got, we should be expecting net charge-offs of between 40 and 70.
That's what's built into our strategic plans and that's what we've talked about, is what you should expect over the medium term.
So we're in a very, very good part of the cycle.
But, to your point ---+ and I think this is where you're completely correct ---+ this part has lasted a long time.
We've been well under our 40-basis-point expectation for many quarters, and we continue to stay there.
And when I take a look at the credit profile of the new loans that are coming on our books, across all three segments, those credit profiles continue to be very, very strong.
Consumer FICOs ---+ consumer lending FICOs continue to come on at well north of 750, in many cases we're talking about 770, 780.
And, as you know, we're not a subprime lender.
The credit profile of what we're putting on continues to be very strong.
I like what we're seeing in Wholesale Banking and what's coming on there.
So it is lasting longer than we had perhaps thought it would a couple of years ago.
That's the way I was going to answer.
I think it's really no change in intensity.
It's just change in time.
And, every quarter, it continues to be good.
Everyone will talk about, that's a quarter more in this cycle.
I'd say it's not just a market-specific comment, but it certainly is a market- and product-specific comment.
So, absolutely, there are places where we have less intensity related to a product that might be overbuilt in a certain market, and we're seeing pockets of that.
As I said earlier, our production in CRE will go down.
Now, the things that we are doing and the things that we see are positive, but it is not an overall health metric.
It is that proverbial heat map.
<UNK>, you know as well, the way that we're organized now allows us to really manage that heat map so much better than the way we were organized before.
So we can really pull back from one market and one product and emphasize another product in another market relative to the health of those clients, the support of those clients, and what might be going on in any particular area.
It's interesting, because a lot of the parts of Florida continue to be really good.
We've not been a big player in the condo market in Miami all the way through, and we continue not to be a big player.
Multi-family there, we're keeping an eye on.
That would be a good example.
The other markets in Florida, from an industrial standpoint, are much better.
Job creation in Florida ---+ remember, Florida's one of the top job-creating states in the country.
The port business in Florida is good.
We see a lot of the East Coast ---+ the West-Coast-to-East-Coast migration happening, and the building that goes along with all the increased port activity in Florida.
So there are a couple of pockets that would be a good example.
And then maybe talk about housing in general.
We keep a close eye on housing in general overall in Florida, as you might imagine.
We have probably the most heightened sensitivity to that of anybody.
We continue to be with really good developers.
We continue to see pockets of opportunity.
There's not a lot of crazy stuff going on.
There's not a lot of land accumulation.
There's not a lot of two guys and a truck.
All the things that we get worried about.
But our relative exposure is well managed within that geography.
And, <UNK>, when you step back and look at our CRE book overall, it's very well diversified by geography and asset class.
As you know, we've gotten zero delinquencies in our CRE book today, and a criticized loan exposure level of only about 2%.
<UNK>, I think our view is indeed similar to the one you just espoused.
At 9.7%, that is more capital than we need to fundamentally run the operations of this Company, and it is more capital than we need when you look at the very strong risk profile across all of our books.
What you have seen with us is that we have been looking for ways, and finding ways, to allow that ratio to drift down a little bit.
The increase in dividend, the increase in buyback, what you should see with us over time is that 9.7% should continue to drift down a little bit, a tenth here, a tenth there, and come down to something that, over time ---+ I wouldn't expect a one-time massive repayment, but that over time we'd be able to bring it to something that is value-added for all of our shareholders, rather than retaining as much excess as we have today.
It has been until now, and as we look at what next year brings to CCAR, once we get some clarity on what the rules are going to look like for banks in our position, we'll evaluate whether that continues to be so.
I think there are a couple of reasons.
One is, I think, as an industry we've been more demanding on structure.
So there's just a lot more equity in this part of the cycle.
There are bigger players in this part of the cycle.
If I think particularly about the single-family part, it's dominated now by bigger players with a lot more capital and a lot more staying power.
There's been a lot of equity available.
They're accepting returns that are perhaps lower, so that allows them to have more equity in the deals.
I just think there's been a ---+ we tend to have short memories, and I think maybe in the case of commercial real estate, our memory's a little longer this cycle than it has been in the past.
But it's something, in fairness, for all of us to be watching.
