SunTrust Banks Inc STI
Q2 2012 Earnings Call Transcript

Operator: John Pancari, Evercore Partners.

John Pancari - Evercore Partners: Can you give us some more color on your decision to not request deployment as part of the CCAR resubmission and was it influenced by the Basel III NPR? I know you didn't give us the basis point impact well that would be helpful as well on Tier 12 common.

William H. Rogers, Jr. - Chairman and CEO: John this is Bill. I will take the first crack at that. First of all, it was not influenced by Basel III, I think sort of in its simplest form. I mean the resubmission gave us two more quarters of better performance, waiting till 2013 gives us four quarters of continued performance and you have seen we are on the steady trend. That might, ought to give some indication of our confidence. So it was more of just continuing to wait for the Company's performance to improve both on the income side and the credit metrics side. Not actually more complicated than that.

John Pancari - Evercore Partners: So do you have what the basis point impact from the Basel III NPR changes?

William H. Rogers, Jr. - Chairman and CEO: I will let Aleem take a swing at that.

Aleem Gillani - CFO: John, let me take a crack at that. First of all I think I have got to say we were pleased to see the NPR. Having that out I think is going to provide more clarity to the industry as to what the capital expected capital ratios are going to look like going forward. Having said that, parts of the NPR, I think came as a little bit of a surprise, on the numerator side, it came out pretty well as much of the industry expected, but on the denominator side some of the changes to RWA, for example, were not expected and aren't actually part of the Basel proposal. These are U.S. regulatory proposals. We are along with the rest of the industry responding to that proposal now and I think the industry has a deadline of sometime in September to respond back to that. At that point the regulators will take a look at all of the response letters and come out with final rules at some point probably next year. As we try to estimate what we might look like under this proposal, I think you've seen a lot of banks over the last few days estimate that their final numbers are going to be in that 8% range using these proposals on our current portfolios and prior to any management mitigation. I think it would be fair as you look at our portfolio to say we will come in around that same kind of level as most other banks are estimating.

Operator: Josh Levin, Citigroup.

Josh Levin - Citigroup: Given how challenging the rate environment is for all the banks, one of your peers yesterday said, it was going to close up to 5% of its branches. As you think about the environment, rates and regulatory costs, and how you want to drive costs down, are you considering branch closings or some kind of infrastructure reduction in order to save costs?

William H. Rogers, Jr. - Chairman and CEO: I'd put it more in the category of just general efficiencies and particularly in the consumer banking area. I mean if you look at what we've done, expenses being down 7% there, that's a combination of just being efficient. Clearly, transaction volume and branches are down, I mean nobody is sort of missing that. I'm a believer in that branch is a sales center as much as it is a service center. So, physically having people there on the sales side is a benefit. Whether we close a few branches or open a few branches, I mean we'll sort of be netting around that number. We'll look at that as a consideration long-term, but the real efficiency just is in what we do within the branches and you're already starting to see that from us. I mean I think we're sort of ahead of the game on that front.