SunTrust 2006 Annual Report Download - page 6

4SUNTRUST 2006 ANNUAL REPORT
Delivering Growth – Our entire range of client experience-related
initiatives, most visibly our company-wide “S3” sales and
retention program and our “Thinking 360°” cross-sell efforts,
are focused squarely on adding new clients and expanding
our relationships with current clients. It adds up to a relentless
focus on driving growth in market share, sales and revenues,
but always with appropriate risk-adjusted returns. Said another
way, we are not interested in just getting bigger. We look
very carefully at the profitability characteristics of each
client relationship to ensure it meets acceptable financial
performance standards.
Central to our focus on profitable growth is our formal business
mix management process. It provides a longer term blueprint of
which client segments we should serve, and in which lines of
business we should invest, based on an analysis of factors such
as projected risk-adjusted returns and future growth potential.
As a result of this process, we have identified specific areas
within our lines of business, such as Business Banking, Debt
Capital Markets, Consumer and Mortgage Lending, and Wealth
Management, which offer especially strong growth opportunities.
We are focusing management attention, and additional investment
dollars, on those areas. At the same time, we’ve de-emphasized
several businesses where analysis indicated limited growth
potential as a result of changing market dynamics. In a few
cases, we’ve elected to exit certain businesses which we felt
were not strategically critical to SunTrust’s future. Separately,
we have undertaken several balance sheet management initiatives
that will help us build a foundation for growth in 2007 and beyond.
Increasing Productivity and Efficiency – Complementing our
emphasis on revenue growth is a comprehensive, enterprise-wide
commitment to enhance productivity and efficiency, slow the
rate of growth of operating expenses and provide funds for
continued investment in future growth opportunities. We do all
this under a programmatic umbrella called “E2,” for “Excellence
in Execution.” With E2, we are bringing to productivity and
efficiency the same degree of concentrated focus that made
us an industry leader in credit quality and, in recent years, a
successful sales organization.
The E2program has several dimensions. One is cultural: a concerted
effort to further instill a productivity culture at SunTrust by
emphasizing internally the importance of expense discipline to
our long-term success, and the key role of all employees in the
effort. The other dimensions are where measurable financial
impact comes in as we look to achieve positive operating leverage;
that is, revenues growing faster than expenses. Included under
E2are both current and planned initiatives designed to identify
and realize productivity and efficiency opportunities related to
corporate real estate, supplier management, offshoring and
outsourcing, a series of process reengineering efforts and,
finally, an organization review.
Improving Performance – Where it all comes together is in our
ultimate strategic priority, the one that speaks directly to the
interest of our shareholders: improving financial performance.
At the end of the day, everything we do at SunTrust is aimed
at increasing returns to our shareholders. As we see it, SunTrust
has the capacity to rank consistently among the financial
performance leaders in our industry. That is an ambitious vision,
but we believe a realistic one, given our franchise, our competitive
positioning, our strategies, and the proven execution capabilities
of our people.
Historically, SunTrust has enjoyed a well-deserved reputation as
a leader among large U.S. banks in credit quality. In recent years,
we significantly expanded our business capabilities and built a
powerful competitive, sales and revenue-generation engine. Now,
with our intensified focus on productivity and efficiency, the final
element in the performance equation is being put into place.
As we saw in 2006, bank performance is directly affected by the
state of the economy, the direction of interest rates, and other
market forces. At this writing, indications are that 2007 will be
another challenging year for our industry. That may be, but we
are confident that SunTrust is positioned to meet the needs and
expectations of our clients, our employees, our communities and,
especially, our shareholders. We take seriously the interests of
each of our constituencies. And we work diligently to serve
those interests with professionalism, integrity, and pride.
Thank you for your investment in SunTrust – and for permitting
us to serve your banking and financial needs.
L. Phillip Humann
Executive Chairman of the Board
James M. Wells III
President and Chief Executive Officer
March 1, 2007