STI 2018 Annual Report

Adjusted Earnings Per Share 2 2011 2012 2013 2014 2015 2016 2017 2018 $0.94 $2.19 $2.74 $3.24 $3.58 $3.60 $4.09 $5.74 Adjusted Tangible Efficiency Ratio 3 2011 2012 2013 2014 2015 2016 2017 2018 71.5% 66.9% 65.3% 63.3% 62.6% 62.0% 61.0% 59.6% Dividends & Share Buybacks as a % of Net Income 2011 2012 2013 2014 2015 2016 2017 2018 8% 11% 26% 48% 62% 73% 89% 103% In order for us to successfully execute our technology strategy, we recognize that we must leverage partnerships and APIs to connect our digital platforms to the broader financial services ecosystem and expand our products, solutions, and capabilities beyond the traditional banking channels. Given this, we feel partnerships are an essential driver of our ability to execute against the first two pillars of our strategy. We are also working to change the way we design and produce new and upgraded technologies. We recognize that change is constant, and continuous improvement is a must. Across the Company, we are focused on creating cross-functional agile delivery teams; this allows us to create, deploy, and enhance client-centric solutions better, faster, and more frequently. In 2018 alone, we assembled 75 agile teams to deploy new projects and upgrades. And finally, we are making significant investments in our back- end infrastructure. Our goal is to enhance the architecture of the Company with a cloud-based, open architecture framework. By building an open-architecture framework, we maximize our ability to design the optimal client experience by leveraging cloud-based platforms and APIs to more easily integrate apps, services, and digital experiences across the ecosystem. The cloud also enhances our efficiency and stability as it lowers our cost to serve and enables continuous deployment of upgrades without interrupting our service to clients. Going forward, our merger with BB&T accelerates our capacity to invest in transformational digital innovation and also gives us the opportunity to choose the best of both company’s technology and systems. Individually, SunTrust and BB&T are both coming from positions of strength—we have both made great progress in investing in client-friendly technology and modernizing our infrastructure. Together, we will lead with an innovative mindset, relentlessly focused on the client experience, in order to create a truly differentiated and sustainable competitive advantage. Investment Thesis Another question I have received is, ‘Why did you deviate from your core investment thesis, which seemed to be more focused on organic growth?’ I actually would argue the merger with BB&T doubles down on our core investment thesis. Our owners have invested in SunTrust for three primary reasons: (i) we remain focused on investing in growth and technology, (ii) we have demonstrated success in improving our efficiency and returns, but still have potential for further improvements, and (iii) we have a strong capital position and risk profile, which has enabled us to return increasing amounts of capital to our owners. Every single one of these opportunities is meaningfully enhanced by our combination with BB&T. Importantly, our financial performance directly supports our investment thesis; 2018 marked the seventh consecutive year of higher adjusted earnings per share (up 40%), improved efficiency (down 150 basis points 4 ), and higher capital returns (up 41%). This progress, which builds upon a higher base each year, is just one indicator of the culture of continuous improvement and high performance we have instilled across the Company. While our investment thesis has remained consistent, our execution and performance intensity has improved each year. Another notable evolution is the increasing relevance of technology. While we have maintained a consistent focus on investing in growth, today, more than ever, much of that growth is dependent upon the investments we have made and continue to make in technology. Relatedly, technology is a critical driver of our ability to enhance our efficiency and effectiveness. Investing in Growth & Technology As a bank CEO, I cannot help but get excited about the pace of change we have seen within the banking industry. As an industry, “Our increased capacity for investments, when combined with our revenue synergy opportunities, creates a compelling growth story which is one of the many reasons we believe this is the beginning of something epic.” “Our goal is to invest in digital platforms that enable clients to do business when, where, and how they choose. We want to put more capabilities at our clients’ fingertips and provide a superior, differentiated experience.” 2 2012, 2013, 2014, and 2017 values represent adjusted earnings per share. The impact of excluding discrete items was ($1.04), $0.33, $0.01, and ($0.39) for 2012, 2013, 2014, and 2017, respectively. For the reconciliation to GAAP EPS for 2012, 2013, and 2014, please refer to page 22 of the 2016 Form 10-K. For the reconciliation to GAAP EPS for 2017, please refer to slide 23 of the 4Q18 earnings presentation. 3 2012, 2013, 2014, 2017, and 2018 values represent the adjusted efficiency ratio and adjusted tangible efficiency ratio. Adjusted figures are intended to provide management and investors information on trends that are more comparable across periods and potentially more comparable across institutions. For reconciliation to GAAP, please refer to slide 21 of the 4Q 18 earnings presentation. 4 The reported efficiency ratio (FTE) for 2017 and 2018 was 63.1% and 61.0%, respectively. The adjusted efficiency ratio (FTE) for 2017 and 2018 was 61.9% and 60.3%, respectively. The adjusted tangible efficiency ratio (FTE) for 2017 and 2018 was 61.0% and 59.6%, respectively. Please refer to slide 21 of the 4Q 18 earnings presentation for GAAP reconciliation. we have come a long way in terms of how we interact with our clients, the services we provide them, and the role technology plays within. In fairness, it can also be challenging because in many ways, it is hard to predict what the industry will look like 10 years from now. In 2018, I asked each of our line of business leaders to enhance their strategic planning process by assembling a diverse set of teammates to attend day-long sessions in our innovation lab to discuss the future of banking and map out what their specific business could look like in 2028 under a number of different scenarios. Much of our long-range strategic planning work in 2018 helped shape my thinking that a combination with BB&T would give us the requisite scale, capacity, and capabilities to significantly and quickly enhance our competitive position. At the same time, I have been and continue to be very optimistic about SunTrust’s standalone medium-term organic growth opportunities. Importantly, a significant amount of our growth and investment opportunities today are the result of the consistent, successful investments we made in prior years. While this is admittedly over simplified, our ‘go to market strategy’ is to deliver thoughtful advice to our clients and provide them with a superior client experience. To that end, we feel there are two primary growth levers for us—technology and talent. These two levers are not mutually exclusive; in each of our lines of business, we need both to win. Big picture, across the Company, our technology strategy is tied to three primary objectives: (1) Experience: our goal is to invest in digital platforms that enable clients to do business when, where, and how they choose. We want to put more capabilities at our clients’ fingertips and provide a superior, differentiated experience. (2) Efficiency: we must make the requisite investments to modernize our architecture and maximize agility. In many ways, the investments we make in technology are self-funded by the efficiencies that technology produces. (3) Security: we must leverage technology as a defense to provide cyber security, ensure we have adequate stability, and protect our clients’ information. Page 6