Suntrust at Barclays Notes

Aleem Gillani – Chief Financial Officer

Rates moving up is a double edged sword

“Thank you. Well, one of those indicators actually is higher rates. As rates move up naturally, it will start to put some people or companies under stress. So higher rates is a little bit of a double-edged sword. It’s clearly going to benefit us, given the fact that we are asset sensitive and we will benefit from higher rates. But that’s an indicator that we’re watching from – we’re watching for.”

Some indicators that would usually point to the cycle turning have been false positives

“Some of the other indicators that we’re looking at actually look like they maybe giving false positives in a couple of instances. We’ve been certainly watching the auto market. We’ve been watching the CRE markets and looking for areas of overbuilding or overheating there. And that has caused us in a couple of instances to be more cautious in certain areas. And again, perversely from the double-edged sword perspective, the effect of both Harvey and Irma may help in all those markets.”

Miscellaneous Earnings Call Notes 10.28.16

SunTrust Banks’ (STI) CEO Bill Rogers on Q3 2016 Results

Regulatory and compliance costs are not likely to abate

“But in terms of overall regulatory and compliance costs, if I look forward, John, I don’t think that in the short- to medium term I would think of regulatory costs in general abating or declining. I think we’re in an environment, where we would expect regulatory and compliance costs to be generally stable or increasing over time. And just the environment that we’re in, I don’t see realistically that anybody in the industry is going to see regulatory and compliance costs fall off.”

Potlatch Corporation’s (PCH) CEO Michael Covey on Q3 2016 Results

Eric Cremers

No rollover in land pricing

” Pricing remains firm. There is a lot of money on the sidelines looking to invest in the asset class. People have an expectation that prices will move higher over the next several years as we continue with this housing recovery that generally gets built into the models that are used to value timberland. And in a low interest rate environment high timberland prices are supported. So we’ve not seen a rollover in timberland pricing at all.”

Lumber prices well supported here. Moving from mid to upper 80s capacity utilization”

” As I think Jerry mentioned in his opening remarks, we might see a real slight rollover in lumber pricing in Q4, and that’s consistent with what the external pundits are forecasting maybe 1% or 2% rollover in pricing. You know generally speaking markets are well balanced, our order book is solid. As you know we sell forward our lumber production. So we’re out into the first or second week of November at this stage. And so we feel very good about where lumber markets are at, at this stage of the game. Just the general backdrop here, if you think about it, we’ve got demand, which has remained strong. Of course the housing market data, there is starts data is volatile from month-to-month. But generally we’re seeing starts increase, we’re seeing strong R&R repair in the model activity, and we’re seeing strong commercial and industrial activity as well. And with industry wide capacity utilization now moving up from the mid to the upper 80s and supply-chain inventories as Mike had mentioned remained very well, we think, lumber prices are well supported here.”

Brown & Brown’s (BRO) CEO Powell Brown on Q3 2016 Results

Hurricane Matthew will have little impact on rates

“We believe Hurricane Matthew will have limited impact on rates, if any. There will be more discussions around flood and wind deductibles, rate for cat property continued downward affecting retail, wholesale, and national programs, and that will continue into Q4 and into 2017.”

Honeywell International’s (HON) CEO Dave Cote on Q3 2016 Results

A favorable setup for 2017

” Darius and Tom will provide more details about 2017 during our annual outlook call in December, but we have a favorable setup. The fourth quarter momentum continues, our long cycle businesses are improving and our inflections start to kick in.”

Tom Szlosek/Dave Cote

A salesperson isn’t productive in his first year on the job

“A salesperson really isn’t productive enough in his first year on the job, so we have to ensure we have enough sales employees in place today to support tomorrow’s business… when you hire salespeople there’s training and familiarization that has to go on. So they’re not immediately productive. It’s the sort of thing that shows up in the future.”

Heidrick & Struggles International’s (HSII) CEO Tracy Wolstencroft on Q3 2016 Results

Rich Pehlke

Improvement in September/October

“we can’t really point to one thing because as we saw July and August kind of soft we really did worry a little bit about was it a sign of some kind of a cyclical trend or a movement but you know September bounced back pretty well and so – and as we talk to our folks and see what’s out there and see how October is progressing. You know there is nothing we can really point to that says that you know there is one – there is one driving factor. So whether or not it could have been client decision caused by things like Brexit et cetera certainly is certainly one of the factors that would have fallen into play but there isn’t any one thing that we can put to, and I don’t know if you want to leverage.”

Zions Bancorp. (ZION) Q3 2016 Results

Harris Simmons

It was a softer quarter for C&I loan demand than we would have hoped for

“I think that’s consistent with what we saw during the third quarter. The third quarter has generally been a softer quarter. You get kind of the summer vacations and everything else baked into it, but this was softer than I think we would have expected. And so we’ll see what happens through the remainder of the year. But it was a softer quarter in C&I than we would have hoped for.”

Brinker International (EAT) Q1 2017 Results Wyman T. Roberts – Brinker International, Inc.

Challenging times across casual dining

“Just as we said last quarter, these continue to be challenging times across casual dining. We’re already seeing some of the weaker players struggle with their viability in this choppy environment. ”

There are some examples of concepts that are shrinking

“We don’t have great metrics around capital spending in the category. But there are some examples of concepts that are shrinking. And in some numbers that are reasonable, we’re talking now in tens and hundreds. So that does make a difference. We’re also hearing from some competitors a dial back, which I think is again encouraging that people are starting to say, hey, listen let’s address the overcapacity and slow things down a little bit. And I heard something recently from a competitor that the expectation was that would also maybe take some of the steam off some of the real estate market, which has not really come back in our opinion kind of represented the softer overall economic situations out there. Still paying a pretty good premium in this environment we think for real estate. So all of those things I think bode well for getting the economics right and getting the supply and demand situation more in line”

United Technologies (UTX) Q3 2016 Results Gregory J. Hayes

China Otis sales down 10%

“We also continue to make good progress at Otis. Our China new equipment orders and units were up 2% in the third quarter and 3% year-to-date. This is in the face of an overall market, which is down more than 5%. I would remind you though, the pricing pressure remains intense, so despite unit orders being up, new equipment orders on a sales basis in China were actually down 10% in the quarter. A tough market right now, but we remain focused on increasing our installed base and converting those units into our service portfolio, which will deliver recurring revenue for decades to come.”

Have seen a slowdown in construction activity in UK

“In Europe, we have seen a slowdown in construction activity in the U.K., we think as a result of the Brexit vote, but the rest of Europe appears to be improving slowly, more than compensating for the slowdown in the U.K.”

Freeport-McMoRan (FCX) Q3 2016 Results
Richard C. Adkerson

It’s clear there’s going to be a need for copper

“Is just, unless you see the world really turning upside down economically, it’s clear that there is going to be a need for copper that’s going to require a significant price increase to justify the spending, and that’s why we feel very good about our long-term strategy.”]

C.H. Robinson Worldwide (CHRW) Q3 2016 Results Andrew Clarke

Carriers raised rates when Hanjin filed for bankruptcy

“Hanjin filed on August 31 and what happened shortly thereafter is the other carriers that remained in the Trans-Pacific eastbound lane began to raise rates. I think what happened then shortly thereafter was that they doubled them. They were up as high as $750 as I mentioned earlier, $750 to $900 a box. Now, we weren’t able to immediately pass those rate increases along to our customers. As I mentioned, our account managers are out there right now having those discussions with our customers to reflect the rates that are now in place in that trade lane. We would expect the impact to trickle into the fourth quarter, but not much beyond that.”

Applied Industrial Technologies (AIT) Q1 2017 Results
Neil A. Schrimsher

October a little softer than September

” I’d say on our sales per day trends – did include expected seasonal softness in July with improvements then in August and even stronger in September. Order trends for October, as expected, developing a little softer than September. However, we still have a handful of days to go. And I’d say year-over-year October is just kind of down low single-digits, which, again, is what we expected looking at the comparables. And, again, that’s got still a handful of days for us to positively impact it.”

Mark Eisele

Foreign exchange rate impact down to zero

” That’s exactly the expectation. If you look at foreign exchange rates, let’s say, for September and if those would stay relatively stable through December, when we look at our overall sales, we would expect to have a 0% impact of currency translation in the December quarter. Then if you keep going on through the rest of the fiscal year, you’d actually see a small positive impact probably in the March quarter and then more flattish in the June quarter. So, our view is, for the entire year, we may end up at virtually zero on FX. Obviously, it depends upon how the rates move from today forward, but that’s our perspective. We’re seeing some stability.”

Range Resources (RRC) Q3 2016 Results
Jeff Ventura

Supply and demand for gas could be more balanced into 2017

“On a macro level, there are signs that later this year and into 2017, supply and demand will be more balanced and pricing could improve. We expect natural gas production in the U.S. to continue declining for the remainder of the year. Based on available data, it appears 2016 will be the first time that natural gas production will decline on the year-over-year basis since 2005. This supply decline is happening while demand for natural gas is increasing, driven by Mexican exports, power generation and LNG exports. Looking towards 2017, the NYMEX Strip has moved above $3 and we think it can continue to climb. Based on where strip pricing is today, we believe that we can grow the combined company at 33% to 35% for 2017. This equates to an organic growth rate of 11% to 13% for 2017, coupled with the full year of the North Louisiana division versus roughly a quarter in 2016. Importantly, this preliminary plan for 2017 also results in strong growth for 2018, assuming a $3.25 per mcf and $60 per barrel, we are projecting that we should achieve organic growth for 2018 of approximately 20%

Miscellaneous Earnings Call Notes 10.22.15

Advanced Micro Devices’ (AMD) CEO Lisa T. Su on Q3 2015 Results

Not anticipating that Windows 10 will drive PC refresh

“While we are not anticipating Windows 10 will drive a dramatic near-term PC refresh cycle the continued adoption of Windows 10 which has already been installed on more than 110 million PCs to date, provides a great opportunity for AMD over the coming year based on a semi-consumer and commercial refresh cycle environment”

Suntrust Banks’ (STI) CEO Bill Rogers on Q3 2015 Results

We’ve been in the lower for longer camp for a long time and think it stays that way in ’16

” We, as you know in our case, we have sort have been in the lower for longer camp for some time and set ourselves up appropriately for that type of an approach. As we look forward into ‘16, I think also lower for longer stays, I think if there are Fed increases, they will be very deliberate and the pace of rate rise will probably be slower now than the market had been thinking six months ago.”

Capital Markets activity should be better this quarter

“M&A had another really good quarter and pipelines are still good there. The volatility numbers are in sort of high yield bonds and the equity sales and trading and that’s better. Spreads have come in. I think things will get done more this quarter than they did last quarter if things stay stable. And based upon what I see in terms of our pipeline, I feel good about our pipeline”

CCAR has changed the way that the whole banking industry is thinking about risk

“I think one of the other benefits also that you see for SunTrust and perhaps for the industry overall is the benefit of CCAR. The CCAR has changed the way that companies think about their overall risk. They apply a stress test to all their portfolios now and think about how portfolios would behave during a stress test.”

Kansas City Southern’s (KSU) CEO David Starling on Q3 2015 Results

Volume continues to improve in October

“volume so far in October continue to improve. And subject to ongoing uncertainty in energy markets, we feel good about the trajectory of demand as we head into the end of 2015. Through the close of business, Wednesday, average daily carloads for October were running about 1% higher than September and 1% higher than October of last year as well.”

Business demand still feels very good to us

“business demand still feels very good to us, with the obvious caveat about the uncertainty in energy markets, which you have seen across the entire rail sector, have made it more difficult to forecast demand and provide guidance.”

Mexico is probably linked to the US, but they’ve done a good job managing their inflation and unemployment rates

“I think, Mexico ends up being fairly tightly linked with the U.S. economy, given the amount of goods that end up going north into the U.S. But they’ve done a really good job managing their overall inflation rate, which is now running below 2%, unemployment is below 5%.”

Hasbro’s (HAS) CEO Brian Goldner on Q3 2015 Results

Toy industry growth is strong ytd

“The trends that we see and the data that we have would indicate that the Toy industry year-to-date is up high-single digits, and we see that as boding well as we get into the holiday season and continues our trends.”

Labor is the biggest cost input to our COGS and it’s up in the double digit range

“The single biggest cost input to our cost of goods is labor. And we continue to see labor inflation rates in the double-digit range. We have seen a slight decrease in the cost of certain types of resins over the period since the end of 2014. But they tend to be more nominal and they run in arrears to whatever the petroleum or gasoline costs prices are out there as you know.”

Flextronics International’s (FLEX) Mike McNamara on Q2 2016 Results

Partnering with Nike for connected products

“Last week, during NIKE’s Investor Day, NIKE announced a partnership with Flex to accelerate the introduction of advanced innovation to NIKE’s manufacturing supply chain. Working together, NIKE and Flex will deliver innovation that enables product to reach consumers more quickly with customized solutions and increased performance innovations.”

There’s an electrification of the world going on and we can help mechanical companies adopt that

“the amount of electrification in the world, the amount of smart products in the world that are going into what’s not typically electronic products that are now moving forward, whether it’s anything from a shoe to a shirt to a door lock is tremendous. So you’re getting a tremendous amount of this electrification of the business. And as we look forward, the value to us is if we can create more value for these customers whether it’s automation or engineering or making a non-connected product connected or providing electrification where they’re more traditionally a mechanical type company”

Zions Bancorporation’s (ZION) CEO Harris Simmons on Q3 2015 Results

Energy chargeoffs are from borrowers that were already weak in the last cycle

“the charge-offs have fundamentally been borrowers that were weak in the last cycle, they’ve been kind of limping along, and for whatever reason, you know, we have not been able to get totally out, and this recent downturn was just kind of another very difficult blow to them.”

Restraining loan growth because concerned that we may find ourselves in another downturn before things get better

“I think that, you know, I for one have a concern that we may find ourselves set [ph] into another downturn before we see the economy strengthen a great deal again, I mean. So we’re trying to be very careful.”

Hawaiian Holdings’ (HA) CEO Mark Dunkerley on Q3 2015 Results

Hawaiian airlines has had a tough time getting flights in on schedule

“It’s been a poor summer operationally as reflected in our having recently posted our worst monthly punctuality in over a decade. The culprits have been several; the combination of a burgeoning flight schedule of Honolulu and airport construction has meant that during the peak hours of the day there have been insufficient gates. This has been exacerbated by congestion in customs, resulting in our not being permitted to de-plane arriving international passengers promptly. And lastly, an abrupt change in the traffic control procedures at Honolulu gave us no opportunity to make schedule changes to address the lengthen block times that have resulted.”

Yahoo! (YHOO) Marissa A. Mayer on Q3 2015 Results

Experiencing continued revenue headwinds

“our Q4 outlook, which Ken will return to later, is not indicative of the performance we want. While there are some well-known headwinds, year over year and even quarter over quarter like the loss of the Alibaba TIPLA, we are also experiencing continued revenue headwinds in our core business, especially in the legacy portions”

ACE’s (ACE) CEO Evan Greenberg on Q3 2015 Results

Underwriting environment continued to grow more competitive

“I want to now say a few words about current commercial P&C market conditions. The underwriting environment continued to grow more competitive in the quarter for our commercial P&C business globally. With some exceptions, price declines accelerated modestly. They were varied by class of business and geography.’

Large account more competitive, wholesale and property

“Large account business, particularly shared and layered is more competitive than midsized. Wholesale is more competitive than retail and property more so than casualty related”

Kimberly-Clark’s (KMB) CEO Tom Falk on Q3 2015 Results

The rate of currency deterioration hasn’t been as severe as it was

“The rate of currency deterioration hasn’t been as severe as it was, say, a year ago. On the other hand, there’s still some opportunity for price in some markets.”

Not seeing trade down in EM

“so far we are not seeing as much as a trade down as you would think. And we are still seeing — we launched boy/girl diaper pants in some of the super premium kind of tiers. We are seeing good response and growth there… particularly the economies that are in recession like Brazil and Russia, we are watching that see how the consumer performs and make sure we got the right offer, but we are also seeing really good innovation. Mom still wants the best for her baby.”

Texas Instruments, Incorporated. (TXN) Q3 2015 Results

It’s a weak environment but some segments were stronger than we expected

“our revenue declined 2% from a year ago, and we obviously would describe that as a weak demand. That’s actually similar to what we saw last quarter. But, inside of that, certainly it was stronger than what we had expected. There were a couple of areas that were stronger than we had expected. Wireless infrastructure and industrial were both stronger than what we had expected. ”

Kinder Morgan’s (KMI) CEO Steve Kean on Q3 2015 Results

By 2030 gas should be 39% of electric generation mix

“Its projected increase from today’s level of 76 Bcf a day to about 110 Bcf a day by 2025, that’s an increase of 40%.”

” If you look at the 15 mix of generating output and this is according to the EIA, 32% is gas and 33% coal. For those of you who have been in this industry a long time or followed it you know that that represents a dramatic shift to the positive for natural gas. If you flash ahead again these are EIA numbers to 2030 their projection of the mix of generation is 39% gas, 18% coal’

Renewable energy will need natural gas facilities as backup

” reliable flexible natural gas facilities are absolutely necessary to back up wind and solar. So to sum up the idea that we could move directly from coal to renewables without increasing natural gas usage for electronic generation is an unrealistic pipe dream with the substance and the pipe being legal only in Colorado and Washington State.”

Danaher (DHR) Thomas Patrick Joyce on Q3 2015 Results

Seen some incremental slowing, but in pockets

“Overall, we have seen some incremental slowing in the macro. That being said, it’s in pockets. There’s some pockets regionally where we’ve seen some of that slowing, clearly, and in some of the more industrially oriented markets.”

China is still one of our better markets

“we’ve actually seen China, while slowing incrementally, it’s still one of the better markets where we play today. Our growth rates continue to be very good in a number of our businesses. ”

Suntrust 1Q15 Earnings Call Notes

No meaningful delinquencies or defaults in energy

“With respect to our energy portfolio, we have not seen any meaningful delinquencies or defaults. During the quarter, we updated credit ratings, resulting in some migration, and we expect that to be ongoing, which is why we have proactively built reserves for this portfolio.”

Wholesale banking a key growth engine

“Turning to whole sale, whole sale banking continues to be a key growth engine for the company. Looking at the numbers on an adjusted basis, net income was up 18% year-over-year, driven by solid revenue growth and further asset quality improvement.”

Not focused on M&A right now

“Well, I think the continued investment right now is in our business. The bank that we like the most is SunTrust. We’ve got third biggest retail operation in our markets, the fourth largest mortgage company. We’ve got great momentum in our investment banking operations. So we are going to continue to invest in those things, funded by some of the expense savings and opportunities that we are creating.

I presume without the green light if we wanted to do something on the M&A side, where we think about things that are potentially accretive to a really strong franchise, yes, but those are not a lot of them. So, 12 and 18 months is a long time. Our focus right now continues to be highly and mostly focused on SunTrust.”

Hopefully regulators ease capital requirements at some point

“I would hope that over the course of the medium term, that the regulators would allow the industry to be able to shrink capital level overall. If I think about where we could end up in that type of environment, I think that we would likely end up as some kind of ratio below nine; something that starts with an eight probably seems like it would be certainly adequate for the need that we have as a company to support our client needs, and be able to withstand the rigorous CCAR stress test.”

Suntrust 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Energy hasn’t been that much of our loan growth

“From a capital markets perspective and really also loan growth perspective, I mean energy has been an important part of what we do, we don’t want to under mine that, but it’s been sort of less than 10% of our loan growth. And the fee part of the business has been pretty consistent over the last several years. So this is not something that’s been disproportionately part of the fee income business.”

Our consumers are going to see a benefit about the size of a tax refund

“As it relates to the consumer side I mean I think you sort of hit it accurately I mean relative to given the fact that we’re not in a lot of the geographic markets that are going to be impacted more by a fall in oil prices well our consumers will see sort of that increase in tax refund equivalent of fall in oil prices.”

It may be a little early but we’ll probably see a small positive

“Have we seen it yet, I mean it might be too early I mean I’ve looked closely at spending numbers and a credit card numbers and those kinds of things while they’re marginally up its might be a little bit early to sort of see the total impact of that, but I have to believe that over the course of the year we’ll see the most positive side for us arching much more towards the consumer side than the risk on the energy side”

There are pockets where multifamily has gotten a little spottier

“On the multifamily side it’s a little spottier and fairness I mean there is some markets that we do a lot of work with some markets where the absorption balance is just right. Globally it’s still okay, but their pockets were, we’ve gone from green to yellow in our map. And we are probably pulling back in a couple of places in multifamily.”

Haven’t seen any stress among our energy clients, but it seemed prudent to increase our provision

“So the increase in provision is in that context, we haven’t seen any stress amongst any of our clients in that portfolio so far, it’s still early, but we haven’t seen any yet, but we’re just trying to do the prudent thing and get ahead of what looks to be like a big move globally.”

Suntrust 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

credit quality performance continues to be strong

“Our credit quality performance continues to be strong, and in the quarter we were able to further improve the overall asset quality of the balance sheet through targeted non-performing asset reductions. As a result, NPLs declined 15% sequentially and net charge-offs ticked up slightly to 39 basis points.’

NIM dropped as loan yields compressed

“The drivers of our loan yield compression are mix shift as wholesale is growing at a faster rate than the rest of the portfolio, and continued competition in our markets and businesses. While loan yields in the wholesale segment are typically lower, C&I business often brings with it additional non-interest income and deposit revenue. Our intent is to meet the full suite of our clients’ needs and maintain a disciplined focus on entire relationship returns.”

Expect further declines in NPAs though moderating

“Over the near term, we expect further though moderating declines in non-performing loans primarily driven by the residential portfolio. We also expect our loan loss provision expense to be fairly stable over the next few quarters, in line with our results for the past five quarters as continued strong asset quality may offset positive loan growth.”

Credit quality is determined by the economy though

“However, as you all are well aware, the ultimate level of reserves and provision expense will be determined by future economic conditions and our rigorous quarterly review processing/”

S&P upgraded credit quality

“Lastly, I’d like to highlight the credit rating upgrade we received from Standard & Poor’s this week, which acknowledged the actions we have taken as an organization to substantially improve our asset quality position, increase our capital ratios, and enhance our profitability profile over the last several years.”

Bought the naming rights to the Braves new stadium

“I’d like to give a brief mention of our announcement last month regarding the naming of the new ballpark for the Atlanta Braves, which is set to open in 2017. ”

We’re watching energy very closely

“The good news is that energy has been a good part of our growth but it’s not sort of the only part of our growth. This quarter actually was quite good on the energy side, but it’s one that we’re going to watch and be careful about and the pundits are sort of all over the place on how much additional capital will be there, but our portfolio is good so I feel positive about that where we are. Might it have slower growth in the next several quarters relative to last few quarters possibly, but that’s not sort of the only driver for us.”

Mortgage refi volume up significantly as interest rates have fallen

“The last two days have been really good. Our locked volume and app volume was up 80% in two days, so very significant. I don’t know if that’s going to continue. I think we’ll have to sort of see things settle out a little bit”

One quarter isn’t telling of overall trends

“One quarter really isn’t – any one quarter no matter whether it’s good or bad, really isn’t telling about sort of overall trends.’

Suntrust 2Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Probably no more reserve releases

“Going forward, we would expect continued, but modest improvements in non-performing loans, primarily driven by the residential portfolio. We would also expect net charge-offs in the residential portfolio to drift modestly lower in the near term. However, commercial and consumer net charge-offs are already at or below normal levels and will at some point revert to the mean. Over the near term, we would expect the allowance to remain generally stable as any asset quality improvements may be counterbalanced by loan growth. And as a result, the loan loss provision should roughly approximate net charge-offs.”

Low cost deposits replacing time deposits

“as solid growth in low-cost deposits was partially offset by timed deposit run-off, in particular maturities of our higher-cost CDs. This continued favorable shift in deposit mix helped move interest-bearing deposit costs down by 2 basis points and 6 basis points respectively compared to the prior quarter and prior year.”

Deposit rates could lag interest rate increases because there’s so much liquidity in the system

“it seems to me that we’re going to see deposit betas mostly for the industry in that sort of 40% to 70%. To your 60% number I think is dead on. But I would also say that given the enormous amount of liquidity there is in the system that deposits rates probably lag somewhat as overall rates go up, that there’s probably no need for deposit rates to move up quickly as overall rates move up. And so I think this time could be a little bit different as we think about what betas look like, just because there is so much more liquidity overall in the system this time.’

This was a very, very good quarter for loan growth

“this was a very good loan growth quarter. We indicated that we’re optimistic about pipeline and things that we see. But I want to be careful about sort of taking this quarter and extrapolating it long term, because it was a very, very particularly good quarter.”

Could see NIM stabilization next year

“I think there is a continued drip in the NIM for now. But if you assume that rates don’t fall anymore from where they are today, I do think NIMs will start to stabilize in 2015. They will grind down between now and then. But assuming overall rates don’t fall anymore between now and then, I think we will see stabilization next year.”

We’ve been diversifying our loan mix

“our overall portfolio mix is changing. You’ll recall that going into the financial crisis, we were very much oriented toward residential mortgage, but perhaps overly concentrated in that product line. And over the last several years, we’ve been working hard to optimize the mix within our balance sheet, become more diversified.”

There’s so much competition in C&I space

“he other thing is just the sheer amount of competition in the C&I space overall. And as overall margins decline in that space, that’s affecting us too.”

BBB Spreads are a good approximation of loan spreads

“One thing you might want to look at that might help you is if you look for example that BBB bond spreads and look at how they’ve changed over time, you’ll see that quarter-over-quarter, BBB bond spreads dropped 18 basis points Q1 to Q2. That’s kind of the space in which a lot of regional banks play in when it comes to meeting corporate client needs.’

Florida doing great

“All the data we see on Florida and the time I spent there is positive. Tourism industry is sort of going gang busters. Net in migration back in to the state at a pretty high clip. Very good business environment, you’ve seen some corporate headquarters move to Florida. So I think we’re actually seeing the other side of that beta right now.”

SunTrust 1Q14 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Credit quality healthy

“Credit quality continues to improve; non-performing loans were down 5% from the prior quarter and 37% from last year; the net charge-off ratio declined five basis points from the prior quarter to 35 basis points.”

More asset sensitive like everyone else

“You will recall that as our commercial loan swaps mature, we become more asset sensitive, which is a conscious design of our balance sheet management strategy over the medium term.”

Consumer credit quality can improve a little but commercial already great

“Going forward, we would expect continued, but modest improvements in non-performing loans, primarily driven by the residential portfolio. We also would expect net charge-offs in the residential portfolio to drift modestly lower in the near-term. However, commercial and consumer net charge-offs are already at or below normal levels.”

Closing branches but still important for new account client acquisition

“Going forward, you can expect continued rationalization with additional net reductions in our branch network; however, at a slower rate than what we accomplished over the past couple of years, particularly given the importance of a branch and client acquisition and account opening.”

CRE recovering in all categories

“We’re starting to see some of that recovery in virtually all categories multifamily, industrial, little less office, retail, clearly, on the bottom of that food group in terms of recovery. So it’s pretty broad-based.”

Retail lagging more than other segments of CRE

“while we may be investing in multifamily in some of our markets, and other of our markets, we wouldn’t be. Office sort of very similar, industrial very similar, and as I mentioned earlier, probably the one that’s lagging probably more universally is retail and we’ll be cautious about that coming out of the cycle.”

ROA on lending is low because of all the liquidity

“when I think about our ROEs and — well, perhaps I should start with ROAs in that business. ROAs overall I think are a little bit lower than we would like them to be now. And that’s a function of all of the liquidity and all of the competition that exists for that business.”

Trying to supplement ROA by expanding relationships

“when I talk about ROAs, I’m talking about that in the context of just the loan — just on balance sheet business. What we’re trying to do is supplement ROEs overall by doing other business with those clients and trying to make those relationships not just lending relationships, but doing some of the other business that they need and having SunTrust become one of their financial services suppliers across a broad variety of products.”

Frustrated by CRE pricing, but structures have stayed ok

“on the commercial real estate side, Aleem’s comment was right, I mean we’re frustrated by some of the pricing that’s out there, but the structure stayed okay. And similarly, we haven’t seen sort of massive change in LTV in that portfolio.”

Suntrust 4Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

Commercial Real Estate turned the corner

“we’ve been talking now for several quarters that we sort of turned that inflection point in commercial real estate, where now we’re really starting to see core growth. And as you said, albeit on a small basis, the growth is actually pretty significant and an appreciable part of our total growth. And it’s — the good news is it’s very diverse.”

Letting the CRE team have a long leash

“what I tell the teams is, “Keep growing, and I’ll tell you when to stop.” Because right now, I don’t think we’re going to run up short-term against the limit. And the way that we’re growing the business from diversity in both the size, geography, types of business, I’m not worried about the kind of things that you see in terms of concentration. So I think we’re going to let it run a little bit here the next couple of years, and then we’ll sort of see where we get to from a total portfolio size.”

Balance sheet positioned to benefit when short term rates rise

“If the curve continues to steepen from here or we get the rate rises that we may get as a result of the Fed’s easing coming off in ’15, that’s certainly going to help the margin from thereon. As you know, the way we’re structured is we’ll benefit much more as a company, given our balance sheet structure, if short rates start to go up. And if the Fed does start to bring short rates up in ’15, that will really help us from a net interest income perspective”

No change in short term rates in 2014

“I don’t expect, Marty, that short-term rates are going to move up in 2014 at all. So we’re not preparing ourselves to get significantly asset-sensitive this year. If it happens, that’s great. We’re slightly positioned and we will benefit from that”

Suntrust 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“The credit quality story continues to be a good one, with nonperforming loans and net charge-offs hitting their lowest levels in over 5 years. Nonperforming loans declined by over 50% from last year and this quarter’s net charge-off ratio improved to 59 basis points.”

“Lastly, our capital position continue to improve, with our Tier 1 common ratio reaching new all-time high at an estimated 10.15%.”

“As you’re all aware, a steeper curve is beneficial to spread income for the banking industry. Of course, higher short-term rates in conjunction with a steeper curve would be even better”

“We remain committed to achieving an approximate 65% efficiency ratio in 2013, and to our long-term target of below 60%.”

“In the quarter, about 20% of our refi was HARP. What you’ll see is, applications of HARP are down, down fairly substantially, which wouldn’t be a surprise.”

“I think the rate move that we saw was certainly nice, that the industry certainly needed it. So thank you, Mr. Bernanke. However, what the industry really needs is move up in short-term rates to take us back to the profitability levels that we enjoyed before the crisis.”

“when you think about where the industry’s net exposure is along the curve, it’s generally much shorter as an industry than 10 years. So this is going to help somewhat. It’s not going to be what we need to take us back to much higher net interest margin levels.”

“I think what you ought to see is, across of the industry, you want to see regional banks do better as a result of the new rule than money center banks. You ought to see regional banks do better than investment banks. And you want to see banks that have mortgage exposures do better than banks that don’t have mortgage exposures.”

“one of the things that I’m concerned about in general is, as a country, as an industry, have we trained consumers that it’s okay to not repay debt? And is there going to be a higher incidence of default over time in the future than there has been in the past?”

“there just really is embedded increased different cost of compliance that didn’t exist before.”

“Never say never for acquisitions, I guess, but we’ve got so much opportunity, Brian, to run our company better and become more efficient, to focus on our clients and just do more business. That’s really what we’re focused on.”

“Our commercial pipeline was about equal to what it was at the end of the first quarter. But that’s about 60% ahead of where it was at the end of 2012. So we’re built — so we’re building a pipeline that’s positive. “