STI 2018 Annual Report

37 assets accounting standard on January 1, 2018, as well as mark- to-market gains on our CDS hedge portfolio. See Note 1, "SignificantAccounting Policies," to the Consolidated Financial Statements in this Form 10-K for additional information regarding our adoption of this accounting standard. NONINTEREST EXPENSE Components of Noninterest Expense Table 4 Year Ended December 31 (Dollars in millions) 2018 2017 2016 Employee compensation $2,878 $2,854 $2,698 Employee benefits 430 403 373 Total personnel expenses 3,308 3,257 3,071 Outside processing and software 909 826 834 Net occupancy expense 372 377 349 Marketing and customer development 175 232 172 Equipment expense 166 164 170 Regulatory assessments 126 187 173 Operating losses 79 40 108 Amortization 73 75 49 Consulting and legal fees 62 71 93 Other staff expense 52 121 67 Other noninterest expense 351 414 382 Total noninterest expense $5,673 $5,764 $5,468 Noninterest expense decreased $91 million, or 2%, compared to 2017, driven primarily by the $111 million of net Form 8-K and tax reform-related items recognized during the fourth quarter of 2017, offset partially by higher outside processing and software expense, personnel expenses, and increased operating losses. Personnel expenses increased $51million, or 2%, compared to 2017. This increase was due primarily to the $60 million pre- tax NCF Retirement Plan settlement charge recognized in the fourth quarter of 2018. Looking to the first quarter of 2019, we expect core personnel expenses—which excludes the fourth quarter of 2018 NCF Retirement Plan settlement charge of $60 million—to increase by approximately $60 million to $75 million from the fourth quarter of 2018 due primarily to seasonal increases in 401(k) and FICA expenses. Outside processing and software expense increased $83 million, or 10%, compared to 2017, driven primarily by higher software-related costs resulting from the implementation and amortization of new and upgraded technology assets. Net occupancy expense decreased $5 million, or 1%, compared to 2017, driven by lease termination gains recognized in the second and third quarters of 2018. Separately, we adopted ASC Topic 842, Leases , on January 1, 2019, which resulted in the remaining deferred gain on sale-leaseback transactions being recognized in retained earnings through a cumulative effect adjustment. Accordingly, this line item will no longer include amortization of deferred gains subsequent to 2018. Amortization of deferred gains on sale-leaseback transactions recognized in Net occupancy expense for the years ended December 31, 2018, 2017, and 2016 totaled $6 million, $17 million, and $43 million, respectively. See Note 1, “Significant Accounting Policies,” to the Consolidated Financial Statements in this Form 10-K for additional information. Marketing and customer development expense decreased $57 million, or 25%, compared to 2017, driven primarily by the $50 million tax reform-related charitable contribution in the fourth quarter of 2017 to support financial well-being initiatives. Regulatory assessments expense decreased $61 million, or 33%, compared to 2017, driven by lower FDIC insurance premiums, cessation of the FDIC surcharge, and a $9 million regulatory assessment credit in the fourth quarter of 2018. Operating losses increased $39 million, or 98%, compared to 2017, due primarily to the favorable resolution of several legal matters in 2017. Consulting and legal fees decreased $9 million, or 13%, compared to 2017, due to the resolution of prior legal matters. Other staff expense decreased $69 million, or 57%, compared to 2017, driven primarily by higher severance costs recognized during 2017, largely in connectionwith the voluntary early retirement program announced in our December 4, 2017 Form 8-K (as part of our net charge related to efficiency actions). Other noninterest expense decreased $63 million, or 15%, compared to 2017, driven primarily by lower branch and corporate real estate closure costs and lower software writedowns in 2018.