SunTrust Experiences Overall ‘Solid’ Q2 Amid Planned BB&T Merger


SunTrust Banks Inc. reported results Thursday (July 18) that surpassed revenue expectations but fell slightly under earnings estimates for the second quarter.

But beyond the quarterly numbers, management said the company is satisfied with the movement toward a planned merger with BB&T Corp.

Drilling down into the numbers, the financial firm reported revenue of $2.6 billion and adjusted earnings per share (EPS) of $1.44 compared to expectations of $2.4 billion and $1.45 per share.

Overall loan growth was up 6 percent, which was driven by digital lending investments (point of sale partnerships as well as LightStream), indirect auto and mortgage.

During a conference call with analysts on Thursday (July 18), SunTrust Chairman and CEO William H. Rogers Jr. touched on the merger with BB&T. He said that the bank is overall “very pleased” with the progress and that the teams of the two institutions are working together. Rogers said that the companies have developed strong levels of partnership and alignment, while there’s a strong sense of excitement for future opportunities. He also noted that the executive management team continues to meet weekly to plan for the merger and that those conversations are coming along “extremely well.”

From an integration standpoint, Rogers pointed out that SunTrust has identified thousands of applications between the two companies. It has grouped them into some 100 ecosystems — and the system selection process is now beginning. That effort requires great thoughtfulness, and the company is “focused on selecting the best of the best while also mitigating integration risk.”

Rogers said he would characterize Q2 as an overall “solid quarter” in which the company had “continued good loan growth and improvement in fee income trends, good expense management and strong credit quality.” He also pointed out that loan growth stays healthy as evidenced by the 1 percent sequential growth that the company delivered, which was “generally broad-based across most businesses.” The company also saw healthy growth in indirect auto, reflecting pullback from some competitors in addition to strong consumer confidence.

In reference to digital efforts, management said on the call that SmartGUIDE, its digital mortgage application, has achieved an almost 90 percent adoption. “We’re now working to streamline aspects of the back-end origination process as well,” said Allison Dukes, chief financial officer.

Rogers also pointed out that the company’s overall momentum continues to validate his view that SunTrust on a standalone basis is “approaching the proposed merger with BB&T from a position of strength.” Rogers noted, “individually, we’re two strong companies” and “together we’re creating the premier financial institution.”