SunTrust 2008 Annual Report Download - page 4

in their homes. Finally, it should be noted that funds
received through the Capital Purchase Program come
with interest costs, certain conditions, and a
commitment to repay. Additional information regarding
our participation in this program is available under
the investor relations section of our website at
www.suntrust.com.
Let me be very clear that managing responsibly through
this crisis — controlling what we can control — is
our most immediate priority. We are focused on the
fundamentals: serving clients, making sound credit
decisions, managing our risk profile, and operating
as efficiently as possible. Doing all this does not mean
that we can not, and should not, also be looking beyond
the current turmoil to market stabilization and the
ultimate resumption of economic growth that history
tells us will, at some point, be forthcoming.
Our performance on the other side of this tough cycle will
in large part be driven by initiatives we are pursuing today
to increase efficiency, expand our revenue generation
capability, improve the profitability of the balance sheet,
and prudently manage credit.
Focus on Efciency
Today, SunTrust is a leaner, more efficient, and more
productive organization than was the case just a short
time ago. This improvement is the direct result of the
ongoing success of a program initiated in 2007 called
“E2” (for “Excellence in Execution”). The overall program
goal is to achieve $600 million in run-rate savings
during 2009, which is over 11% of our 2006 noninterest
expense base. Steady progress toward that goal was
achieved in 2008.
It was financially advantageous to have the E2 program
in place and yielding results well before economic
conditions soured and pressure on revenue growth
increased. Further, a real cultural shift has taken place
within in our organization around efficiency and
productivity that augurs well for the future. In the
meantime, in response to the difficult operating
climate, we undertook additional and meaningful
actions to rein in expenses. For instance, management
recommended to the Board that no annual cash bonuses
be paid to select members of the executive leadership
group for 2008. Furthermore, we will not provide
merit increases during 2009 for SunTrust’s broader
leadership group comprising over 4,000 individuals.
We are committed to producing ongoing and sustainable
savings that will result in a more efficient organization.
Investing for Future Growth
Success in reducing the growth rate of expenses is
permitting increased investment to improve the future
revenue-generating capacity of the organization. Examples
include several small acquisitions that augment existing
capabilities and expand our product offerings. For
example, SunTrust’s position in the higher-growth metro
Atlanta market was strengthened with the acquisition of
a small bank, GB&T Bancshares, while in central Florida
we were pleased to support the FDIC by acquiring the
deposits of a community bank that had been closed
by banking authorities. The capabilities of our wealth
management family office affiliate, GenSpring, and our
RidgeWorth Capital Management arm were also expanded
during the year. Meanwhile, the value of investments in
branch and other retail delivery channels was reflected in
solid deposit growth in 2008.
The investment most visible in the marketplace was in a
reinvigorated brand identity — “Live Solid. Bank Solid.”
— designed to speak to what is important to current
and prospective clients in today’s environment. Research
confirms that what clients want is a solid banking
experience, one that is free of unnecessary barriers
and confusion and that gets the basics right every time,
thus helping them “Live Solid.” As for “Bank Solid,”
that reflects the importance of being financially strong
and delivering exceptional service consistently through
capable and engaged employees.
Specific actions are under way to deliver on the “Bank
Solid” promise. The already high bar on client service
was raised in 2008 by setting new client experience
standards across the organization. Leveraging client
segmentation is creating a better understanding of client
needs. Products, policies, and procedures are being
simplified, and channel access expanded.
Improving Protability while Managing Risk
To improve profitability, higher margin, higher risk-adjusted
return products and services are targeted for growth,
while lower-return assets and higher-cost deposits are
being reduced. Increasing commercial loans, for example,
is a priority while it is prudent in the current economy to
reduce our exposure to certain other loan categories such
as residential construction loans.
Even though loan demand typically softens in a
recessionary environment, the lending business — our
cornerstone business — is of critical importance. It is not
just a source of revenue but also is central to supporting
SunTrust 2008 Annual Report
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