Welcome to the SunTrust Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode, until the question-and-answer session of this conference. [Operator Instructions] This call is being recorded, if you have any objections, you may disconnect. Now, I will turn the call over to Ankur Vyas, Director of Investor Relations. Thank you. You may begin.

Thank you, Christine. Good morning and welcome to SunTrust’s second quarter 2016 earnings conference call. Thanks for joining us. In addition to today’s press release, we’ve also provided a presentation that covers the topics we plan to address during our call. The press release, presentation and detailed financial schedules can be accessed at investors.suntrust.com. With me today, among other members of our Executive Management team are Bill Rogers, our Chairman and Chief Executive Officer and Aleem Gillani, our Chief Financial Officer. Before we get started, I need to remind you that our comments today may include forward-looking statements. These statements are subject to risks and uncertainty and actual results could differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website. During the call, we will discuss non-GAAP financial measures when talking about the Company’s performance. You can find the reconciliations of these measures to GAAP financial measures in our press release and on our website, investors.suntrust.com. Finally, SunTrust is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third-parties. The only authorized live and archived webcast are located on our website. With that, I’ll turn the call over to Bill.

Great. Thanks, Ankur and good morning, everyone. I’m going to begin with a brief overview of the quarter and then I’m going to turn it over to Aleem for some additional details including our results at the business segment level. I’ll conclude with some perspectives on how this quarter’s performance fits into our long-term strategy and overall investment thesis. To start I'm pleased with the results we delivered this quarter. For several years we've been on a path to grow and diversify the business, improved profitability and increase our capital return to shareholders. This quarter you saw our continued progress in each of these areas. Specifically our ongoing commitment to invest in revenue growth opportunities while also tightly managing expenses resulted in solid improvements and efficiency. Additionally, as most of you are aware, the Federal Reserve did not object to our 2016 capital plan which calls for a 23% increase in total capital return relative to our 2015 plan. This is a result of our strong capital position and improved financial performance and demonstrates our commitment to returning capital to our shareholders. Now getting into the specifics, we reported $0.94 of earnings per share this quarter which included certain discrete items that netted to a $0.05 benefit to the bottom line, but which did not meaningfully impact the current quarter's efficiency ratio. Aleem will provide some more detail on these items later, but thematically, they help better position our Company for the future, particularly as it relates to optimizing our branch delivery network. Excluding these items and the $0.03 of discrete tax benefits from a year ago EPS increased 3% a solid performance, particularly given the $120 million year-over-year increase in loan loss provision. This performance was supported by a strong revenue growth as total revenues grew 6% sequentially, and…

Thanks, Bill. Good morning, everybody. Thank you for joining us this morning, particularly if you were up last night watching the convention. Let's move on to Slide 4 and taking a look at that slide you'll see that our net interest margin declined five basis points primarily due to lower earning asset yields. As the decline in long-term rates increased premium amortization expense and the low level of absolute rates lowered reinvestment rates across multiple asset classes. In addition increased long-term debt combined with slightly higher deposit costs contributed to two basis points of the sequential decline. However, net interest income increased $6 million from the prior quarter as solid 2% average loan growth counteracted the reduction in NIM. Assuming a static rate environment, we expect the net interest margin to decline a further three to five basis points next quarter. This potential decline is more than we previously anticipated largely due to the significant flattening of the yield curve over the past few months. We're continuing to carefully manage the duration of the balance sheet given the prolonged low rate environment while also being cognizant of controlling interest rate risk. Moving to Slide 5, non-interest income increased $117 million sequentially driven by mortgage which benefited from lower rates other non-interest income and capital markets. Mortgage production income increased $51 million benefiting from strong increases in both purchase and refinancing activity. In addition we simplified our product offering to include upfront origination fees, and the all-in loan yield, rather than as a separate fee. This change modestly impacts the timing of revenue recognition and increased this quarter's mortgage production income by approximately $10 million. Other non-interest income increased $37 million primarily due to a gain associated with the sale leaseback of one of our office buildings, which further supports our…

Okay. Great, thanks Aleem. So to conclude, I'm going to point to Slide 15, which highlights how this quarter's performance aligns with our overall investment thesis and the strategies we have in place. So first, the diversity of our business model helped us mitigate risk and achieve 7% year-over-year revenue growth. We have delivered good revenue momentum across both net interest income and non-interest income and across all three major business segments. In addition, our businesses are working better to deliver the entire bank to our clients. Second, our probability continues to improve as a result of our commitment to tightly manage expenses and drive positive operating leverage. We’ve improved the year-to-date efficiency ratio relative to 2015, putting us well on track to meet our commitment to improve efficiency on an annual basis for the fifth consecutive year. Third, we've been using many of these efficiency gains to fund growth investments in the Company. There is an example; this quarter was our second best quarter ever for investment banking. We are particularly encouraged by the growth of our core advisory businesses, which take a long-time to develop and are the product of over 10 years of investment. Today, equity and M&A related revenue account for 39% of investment banking income which was our highest percentage ever. In mortgage, we've been making targeted investments in both people and technology which has resulted in solid growth and allows us to capitalize on the current market conditions. Similarly, consumer lending has been another key area of investment over the last few years, and is demonstrating strong consistent momentum. Also our investments in consumer banking, private wealth management, and treasury and payment solutions are yielding strong results with more clients and trusting their deposits and wealth with SunTrust. And lastly, our strong capital position has afforded us the opportunity to grow capital returns and reduce our share count, giving our long-term shareholders a higher ownership stake each quarter. Now, I'd be remiss not to acknowledge the continued low rate environment, which will place pressure on net interest income and profitability trajectory, even though in the near-term it should be a tailwind to mortgage production and capital markets revenue, and we are well positioned there. However, the low interest rate pressure is applicable to the entire industry, and I am confident if we continue to execute our strategy, fulfill our purpose of lighting the way to financial well-being for our clients SunTrust will continue to sustain our outperformance. Now with that, I’ll turn the call back over to Ankur, and I believe we’ll begin the Q&A.

Thanks, Bill. Christine, we're now ready to begin the Q&A portion of the call. As we do that, I'd like to ask the participants to please limit yourself to one primary question and one follow-up, so that we can accommodate as many of you as possible today.

Thank you. At this time, we'll begin the Q&A session. [Operator Instructions] First question is from John McDonald of Bernstein. Your line is now open.

Hi, good morning guys. Bill just mentioned the challenge at a low rate environment, Aleem can you give a little more color on the NIM outlook, you mentioned three to five basis points next quarter in a flat rate environment? Just walk us through the drivers of that and do you still think you could grow net interest income dollars from the 2Q level, what’s the degree of difficulty on growing and NII from here?

Thanks, John. Yes, if you recall at the start of the year, our view on rates overall was that we were only expecting one interest rate hike in 2016 and we expected that in the latter part of the year. Now with the impact of the vote in the UK, obviously that rate hike looks like it's going to be less probable than we had originally anticipated. As a result, if we think about the drivers of NIM from here, we are expecting NIM to grind down a little bit in Q3 perhaps a little bit more in Q4. The main drivers of that would be new production yields across many of our portfolios are still a little bit lower than current portfolio levels. Another driver would be that we continue to build our securities portfolio to prepare for 2017 LCR requirements. So for those two reasons, NIM may continue to decline a little bit. But if you think about the last few years on net interest income, what you've seen with us John is that we've been able to use growth and loans and deposits to offset the declines in NIM over the last several years. Even though, our NIM has dropped about 30, 35 basis points over the last few years. Net interest income for us has been until last year very flat. In the last year with the growth in NIM, we were able to achieve net interest income really took off and we were on a very steep upward sloping trajectory. From here on with NIM starting to decline, again we do think that with the loan and deposit growth we've got, we will be able to grow net interest income again. However, I'd say that it's going to be at a relatively low pace.

Got it. That's very helpful. Thank you.

Thank you. Next question is from Matt O’Connor of Deutsche Bank. Sir, your line is open. Matt O’Connor: Good morning.

Hi, Matt. Matt O’Connor: I think about half of the net charge-offs this quarter for the firm overall related to energy and you did talk about them moderating going forward, but any estimate on how much energy loss in total is left, if oil prices stay around here?

Yes. Matt, if I take a look at what our energy charge-offs have been over the last three quarters, they've been about $90 million so far over three quarters. If I take a look at the profile that we've got in the book now, how good that looks and of course as you know the majority of our energy book is actually downstream and midstream as opposed to upstream and oilfield services. I think we're about halfway through or perhaps more than halfway through in terms of energy charge-offs. And what comes in terms of new energy charge-offs from here might come over the course of the next three or four quarters. So that's why I expect to see declining energy charge-offs from here and therefore a decline in our provision expense from Q2. Matt O’Connor: And then as a follow-up, just across the consumer portfolios I think the delinquencies were stable there, but how are the auto portfolio, the online lending subsidiary you have, how are those businesses performing?

Yes. Matt, I think remember our portfolio as a prime to super prime portfolio both in the auto as well as in the - particularly in the online portfolio. So the auto book is continued to perform well, 40 basis points charge-offs in early stage below 90 and those are low points, I mean they're low relative to historical numbers, but we've stressed this portfolio, we've looked at it hard, we looked at used car values and all the things that could happen to the portfolio and feel good about where we're positioned again. We don't do sub-prime autos, so we sort to stay at a different place as it relates to that and then as it relates to the LightStream business and Greensky I mean remember again super prime business, FICO scores 750/770 kind of you know on the high end of the range and similarly there we’re seeing continued strong credit performance. Consumer’s in good shape I mean particularly if the prime and the super prime level you know all throughout our portfolio, Consumer’s in good shape. Matt O’Connor: Great. Thank you.

Thank you. Next question is from Mr. Ken Usdin with Jefferies. Your line is now open.

Thanks. Good morning.

Good morning, Ken.

Good morning.

I believe you talked about that, the second half efficiency ratio might not stay down around the 60% level, the strong performance you had this quarter. Typically, you guys tend to have lower expenses in the second half. So I'm just wondering, why can’t it stay down here? And I'll throw my just follow-up in there. Is there something about your expected fees that perhaps you'll see a drip up from the current quarter performance? Thanks.

Thanks Ken. I think you've partially answered your question. Yes, I think there are several things why the efficiency ratio may be a little bit higher in the second half than it was in this quarter. One obviously the NIM decline is going to put - is going to have some downward pressure on net interest income and we're going to be working hard to grow net interest income from here. But we know we've got some increased expenses coming up in the second half. FDIC assessment fees will go up $10 million a quarter starting in Q3. Remember, we've got our posting order change coming in Q4, which will probably reduce our fee income by about $10 million a quarter starting in Q4. And then typically for us outside processing and software is on a normal seasonal basis is normally a little bit higher in the second half then it is in the first half as new applications come online over the course of the year and we start amortizing some of that cost. So for those reasons I think the overall efficiency ratio you know maybe a little bit higher in the second half then in Q2. But year-over-year I think is the big key. We know and we've always targeted over the last four years, targeted improved efficiency year-over-year. We’ve not actually focused on that much on an individual quarter basis. Our intent is to continue to make this Company more effective and more efficient in the current years than it was in the past year and more effective and more efficient in the next year than it was this year. So this year we still do expect to beat our efficiency ratio from last year and then we're going to be looking to see how it can continue to improve next year.

Ken this is Bill. I want to be clear on a couple of things I mean obviously we don’t annualize any one quarter from an efficiency ratio even if it's high or if it’s low, we look at sort of that annualized run rate and as Aleem said I mean we're committed to continue to make improvements, but we did get a taste of it, and we sort of like it. So I want to be clear that our intensity is at a very, very high level related to our efficiency ratio and we're not slacken off one single bit.

Understood. Thanks guys.

Thank you. Next question is from John Pancari with Evercore. Your line is open.

Good morning, guys.

Good morning.

Good morning, John.

First on the loan front, just want to see if you can give a little bit of color into the C&I growth, or the C&I trends in the quarter and the period basis looks like your C&I loans were down. So not sure if that's energy or whatnot. So, if you could just talk about that a little bit, and then also your appetite to grow commercial real estate here, just want to get your thoughts there? Thanks.

Yes, let me - as we've said many times we're careful not to manage to loan growth. So what I look at as I look at production and then I look at loan sales and pay downs and then I look at utilization. So utilization was actually up just to give a little data point. And generally, I don’t talk a lot about utilization because it goes quarter-to-quarter but this was the highest point in the last several - almost eight quarters. So it's worth noting now it's not a lot, but it's worth noting that’s up. Our production numbers for the quarter were actually really good. As a matter of fact, it was one of our higher quarters from a production standpoint, but we also got a little bit of increase in pay downs. So that sort of got the net-net part of that. The C&I portfolio year-over-year has got great room. Again, quarter-to-quarter we’re sort of careful about that, but year-over-year is good solid double-digit growth in C&I loans. As it relates to CRE, I think we've said this before, on the production side we're back. I mean that’s somewhat market driven and somewhat driven by our own desires, but outstandings are going to go up a little bit and I think that will trend that way for several quarters as the velocity of construction loans sort of staying on the books a little bit longer by the way which we're happy with high quality, well underwritten. We're happy with, but the velocity of getting those off the books was going to slow a little bit. And part of that you saw in those production numbers I talked about.

Got it. That's helpful. And then one last thing Bill to flip over to the capital front. I heard you discussed your deployment plans, in terms of M&A just want to get your updated thoughts there I mean you are one of the few larger banks that can actually do some deals here, but I wanted to get your thoughts on your interest in whole bank M&A and even non-bank? Thanks.

Yes. We've been really clear that the bank we like the most is SunTrust and you can see the investments we've been making in our Company and I would include in fairness that the last several years, that’s the equivalent of a lot of small bank acquisitions in terms of investment in our own Company and we like that best. So whole bank M&A really is not a primary focus for us at this particular juncture. On the non-bank side, I mean we continue to be interested, we continue to think that there are opportunities there. Generally things that would be fee-income oriented things that would be accretive to our strategies and accretive to our KPI's fast would be the type of priorities.

John, you’ve seen this in the last couple of years, we've done a couple of small transactions, small fill-in businesses that help us grow our service level to our clients and we continue to look at those and look for those.

Got it. Thank you.

Thank you. Next question is from Erika Najarian with Bank of America. Your line is now open.

Yes. Good morning.

Good morning, Erika.

Good morning.

Just wanted to follow-up a few of your peers had given guidance beyond 2016 given the changed outlook for interest rates. And I'm wondering if you could give us some insight on how much progress you think you can achieve on efficiency improvement beyond 2016 without any assist from rates? And I guess here is my follow-up question is the 69% efficiency ratio at CPWM a potential opportunity? Thanks.

Erika, overall as you know we continue to try to grow or improve the efficiency of the Company overall. We are working on several ways to continue to do this. We don't really focus on sort of specific expense control programs. It’s sporadic, intermittent programs don't tend we think to build a culture of continuous improvement. And I think what we like about our teammates at SunTrust is that we do have a culture of continuous improvement to try to manage expenses and improve efficiency of the Company overall in every segment. And we continue to look at several ways to continue to do that. We are looking at operations costs, at improving our use of technology overall, we’re continuing to look to optimize our real estate footprint, you saw a little bit of that this quarter with sale leaseback of one particular asset. We are being very disciplined in how we manage rules and responsibilities, staffing, and we're looking at that across, we’re looking at these things as well as supplier management, the number of vendors we have across every one of our segments including CPWM. And within consumer banking and private wealth, we’re looking at several ways. We can continue to grow and improve our efficiency there including adding revenue and adding frontline facing teammates who can improve our efficiency ratio actually by growing revenue. So we've got several initiatives underway as part of an overall continuous improvement approach.

Yes. I’d say not much more guidance than we would expect the efficiency to continue to improve irrespective of the rates long-term that slope may change, but we would expect to continue to improve.

Got it. Thank you.

Thank you. Next question is from Vivek Juneja of JPMC. Line is now open.

Hi, couple of clarifications Bill and Aleem. One thing so - just looking at the absolute level of expenses for the past you’ve given some guidance on it, the $10 million increase in the FDIC assessment fees and obviously up and down based on incentive driven revenues. Other than that anything else on the and obviously we take out the non-core items you highlighted this quarter, taking all that out anything else we should be mindful off as we think about that line?

Vivek, if you are asking about sort of core expenses and then revenues relative to what we pointed out. Now, I think what we try to do here is be very, very transparent with you as to all of the non-core items that affected us this quarter. You saw them on the - the major items on the first page of the deck as you say I talked about a couple of the minor items that we see coming up. So I think you've got all the information that we can provide on what the core earnings power of the Company is likely to be over the course of the next little while. And I think the one point I would reiterate is from provision expense with everything that we're seeing today, I do expect that to decline as we go forward from today.

Great. One more different topic dividend payout, Bill and if you can give us some - so how are you thinking about that, you got a dividend increase, but you are still the lowest some of your regional peers are any thoughts on that?

Yes. We set on the course similar to the efficiency ratio to say we want to continue to improve our return to shareholders and we've done that consistently, we've gone from the 60's to the 80's in terms of total return and we've said long-term that sort of that in the zone that we want to be and all that against the backdrop of a really good strong capital level. So I think just on a net basis, we would continue to the same story of efficiency ratio, we continue to improve our return to shareholders, that return probably improvement will be at a smaller slop, but I still think we have an opportunity to increase the return.

And Vivek, we had a pretty clear choice in our planned submission this year as to how we could choose to improve dividends or payouts overall. We chose to do it in a balanced way with some dividend increase and some repurchase increase, but as you point out we did lean more toward repurchase and that made a lot of sense to us in the context of stock price that was only around 1.3 times tangible book. So that kind of level it makes sense for us to increase the repurchase more than the dividend and every year as we submit our plan, we'll be looking at what those numbers look like. And we also took feedback from many of our largest shareholders as to what their preferences were. So we incorporated that within our plan and we intend to continue to do that.

Thank you.

Thank you. Next question is from Marty Mosby of Vining Sparks. Line is now open.

Thanks. Aleem, I wanted to - this is more just a calculation, but when you did your efficiency ratio I believe the way that you did if I look back in the appendix was you left in the gains in the charges. I don't know that you excluded those, if you included them which it looks like you did they had actually a positive effect on your efficiency ratio this particular quarter, so just those unusual items rolling off what actually round you from 60 up to 61. Just want to make sure that was - look at that right?

Marty, you're right, we didn't make an adjustment for these items, they weren’t really very substantial, they weren’t material enough, for example for us to go out and release an 8-K on them, but we just wanted to be very transparent with everybody on. Here is our core items, here is our non-core items you can choose to make whatever calculation you want, but we try to show you everything that was core and non-core so that you got a sense of what the real underlying earnings power of SunTrust is and how it can grow. And then you can make adjustments as you see fit we try to give you the adjustments we thought make sense.

No, I was just trying to highlight that that has a 1% rounding up so not really an operational or a pressure just you know as you move forward you don't have those unusual gains still left in the numbers. The other thing I want to ask you was if you look at the asset quality, the charge-offs and the back in the fourth quarter was the non-performers going up and then now you're charging of these energy loans. Your exposure looks on the surface to be better positioned, but it looks like you had a couple of larger loans that you were dealing with and have been dealing with through this process. Do you feel like you're getting through the process of dealing with those particular loans and that the underlying strength of the portfolio will eventually start to show through here?

Thank you, Marty. That’s a very insightful question on the bones of our portfolio and I think you nailed it. We had a couple of charge-offs in the energy book that perhaps raised our charge-off level a little bit higher this quarter. But when you peel it back you see energy charge-offs or you see our total charge-off level including energy only a 39 basis points deal within what we expect to achieve for a full-year guidance even including these couple of items. And ex-energy as I said we've got a charge-off level in the whole rest of the book up only 19 basis points. So, the rest of our book has a credit profile that frankly looks terrific. And as we work our way through the energy issues in the short-term. I think you'll see the power of the rest of the portfolio coming through relatively quickly.

Yes, Marty. I think rather than continuing to say we're pristine as it relates to the energy portfolio, we were very diligent and very focused and we've assembled a tight group focused on this portfolio because we really want to come out of this quarter saying that we’ve crested that we've got most of this behind us from a charge-off standpoint as Aleem said I think we're clearly more than halfway through. And then that will have the positive impact on the provision going forward. So we put a lot of shoulder to the wheel on this quarter to be able to say we're crested.

Thanks.

Your next question is from Matt Burnell of Wells Fargo. Your line is now open.

Good morning. Thanks for taking my question. Aleem may be my first question is for you. You mentioned the pace of growth of the securities portfolio will continue to be upward and I notice the yield on the securities portfolio was down about 10 basis points quarter-over-quarter. How much of a headwind is that given your outlook for lower margin in third quarter and further still in the fourth quarter?

Thanks, Matt. I think the effect of the securities portfolio is sort of two effects. One is growth in the book at lower coming on yield than the portfolio overall. And then second is the effect on mortgage back amortization. So the combined effects of both of those things in this last quarter was a round up basis point or so. The increase in MBS amortization. So it’s about a basis point or so it may be - as we look forward it is already incorporated in our guidance, but think of it in the context of around a basis point a quarter.

Okay. That's helpful. And then Bill maybe a question for you. You noted your very good CCAR or stress test results and the positive trend in capital returns. I'm curious as to how you and the Board potentially think about considering a mid cycle de minimus exception request to increase your capital returns over the course of the current capital cycle?

Just as a point of history, we've done in every opportunity. So that maybe I ought to give you a little perspective.

Matt, we've done that each of the last two years.

Right. Okay thank you very much.

Thank you. Next question is from Stephen Scouten with Sandler O'Neill. Your line is now open.

Thanks. Good morning. Question for you guys, I guess first maybe to follow-up on some of the NIM questions. Anything that you guys can do assuming that maybe rates stay even lower for longer than we might have previously assumed, any additional strategies that you might pursue or implement moving forward to mitigate further compression here?

I think one of the things that we're doing and you're seeing is our portfolio mix and over time what you're seeing is that we're growing our direct consumer lending portfolio at a very rapid pace, as I said 26%. And that's helping our overall portfolio mix and portfolio yield and that is indeed helping to mitigate the effect of NIM overall. The other thing that we're doing is we're very actively managing as I said to Matt just a minute ago, our securities book and our swaps book. And as we manage that over time that will also continue to I think help mitigate the effect of lower long-term rates on our book overall.

And then the portions that are dilutive to NIM, we're putting a lot of intensive pressure on relationship return and the good news is we've got the capacity and we've built the capability to be very demanding of our teams to get a lot of fee income and you're seeing that manifest itself in that fee income level. So if we're putting out capital that's dilutive to NIM, we expect to get return that's accretive to non-interest income.

Yes. Okay. Makes sense. And then from a loan growth perspective, obviously after some intentional kind of run-off of some portfolios the last three quarters had just been I mean the growth been phenomenal. Is that at all a sustainable rate, I mean average loan growth call it 8% on average over the last three quarters? Is that in any way sustainable or should we see that come down somewhere 1.5 times kind of GDP growth rate like that?

As we said, I mean we really try not to manage to a loan growth numbers, so we look at production and then we look at pay downs and then we look at things that we may do to Aleem’s point to continue to diversify the balance sheet and get us in a - get a positive position. Based on the things that we see now relative to all of those pluses and minuses that come in I mean 1% to 2% kind of range is probably not out of the realm of possibility, it’s probably the right sort of zone, but again we don't manage that kind of number. I mean we really look at are we continuing to get positive production or we continuing to expand what we're doing with relationships and are they meeting all the hurdles. So we've got - for a loan to come on the book, it's got to get through a big gate in terms of overall hurdle rates.

Steve to connect to your questions, we have the great flexibility here at SunTrust to be able to be opportunistic, we've been able to buy portfolios where we see the ability to connect those clients with the rest of our offerings and we have the ability to sell portfolios that we think are non-core or not going to be accretive to value over the long term. So we've got - as you said decent organic growth, we've got hardworking teammates, but in addition to that we've got great flexibility to be opportunistic to find ways to add value by both buying and selling portfolios.

Great. Thanks guys. That’s really helpful. Appreciate it.

Thank you. Next question is from Nancy Bush of NAB Research. Your line is now open.

Good morning.

Hi, Nancy.

If I could just ask a question about the credit cycle sort of an overall question about it, you guys have made rather positive remarks here and as have a number of your regional and larger peers. Has there been a change in the outlook for the credit cycle right now? Because it looked like in the fourth and the first quarters, the commentary was a little bit more down beat and everybody seems to be looking at sort of a new improving credit cycle at this point. Is that a correct observation?

I wouldn't say that we've got sort of an improving credit cycle from here, Nancy. I think we're actually in a terrific part of the cycle overall and you can see that in our numbers and 19 basis points of net charge-offs ex-energy, spectacularly good.

We do think, over the long-term over a cycle that with the credit profile that we've got we should be expecting net charge-offs of between 40 and 70.

Right.

That's what's built into our strategic plans and that's what we've talked about is what you should expect over the medium-term. So we're in a very, very good part of the cycle, but to your point and I think this is where you're completely correct. This part has lasted a long time. We've been well under our 40 basis point expectation for many quarters and we continue to stay there. And when I take a look at the credit profile of the new loans that are coming on our books across all three segments, those credit profiles continue to be very, very strong. Consumer FICO’s, consumer lending FICO’s continue to come on at well north of 750 and in many cases we're talking about 770, 780. And as you know, we're not a sub-prime lender. So the credit profile of what we're putting on continues to be very strong like what we're seeing in wholesale banking and what's coming on there. So it is lasting longer than we had perhaps thought it would a couple of years ago.

Yes, that’s what I was going to answer. I think it's really no change in intensity is just change in time and every quarter it continues to be good, everyone will talk about - that's a quarter more in the cycle.

Okay. And if I could just ask as an add on, the OCC has warned about CRE conditions in some markets. I know you guys are not - no longer in OCC Bank, but that's a regulatory warning. I think that sort of cuts across regulatory agencies? Are you backing out of any markets right now or downplaying any markets that you're concerned about CRE?

Well, I say it's not just a market specific kind of comment, but it certainly is a market and product specific comment. So absolutely there are places where we have less intensity related to a product that might be overbuilt in a certain market and we're seeing pockets of that. As I said earlier, I mean our production in CRE will go down now the things that we are doing and the things that we see I mean are positive, but it is not an overall health kind of metric. It's that proverbial heat map. And Nancy you know as well I mean the way that we're organized now allows us to really manage that heat map so much better than the way we organized before. So we can really holdback one market and one product and emphasize another product in another market relative to the help of those clients, the support of those clients and what might be going on in any particular area.

Yes. Could you just speak to that heat map in Florida if you would?

Yes. It's interesting because there is a lot of the parts of Florida continue to be really good. We've not been a big player in the condo market in Miami all the way through and we continue not to be a big player. Multifamily there were so to keep an eye on that would be a good example. The other markets in Florida from an industrial standpoint are much better. Job creation in Florida, remember Florida is one of the top job creating states in the country. The port business in Florida is good. We see a lot of the east coast - the west coast to east coast migration happening and the building that goes along with all the increased ford activity in Florida. So there are a couple of pockets that would be a good example and then maybe talk about sort of housing in general. We keep a close eye on housing in general overall in Florida. As you might imagine, we have probably the most heightened sensitivity of that of anybody. And we continue to be with really good developers. We continue to see pockets of opportunity. There's not a lot of crazy stuff going on. There's not a lot of land accumulation. There is not a lot of two guys in a truck. All the things that we got worried about, but relative exposure is well managed within that geography.

Thank you very much.

Nancy, would you step back and look at our CRE book overall. It's very well diversified by geography and asset class. And as you know, we've got zero delinquencies in our CRE book today and a criticized loan exposure level of only about 2%.

Okay. Great. Thank you very much.

Christine, we have time for one more question.

Last question is from Gerard Cassidy of RBC. Line is now open.

Thank you. Good morning, guys.

Good morning.

Good morning, Gerard.

Coming back to your capital, you guys are obviously very well capitalized, Aleem you pointed to the success that you had during CCAR is being one of the lowest reductions in your CET1 ratio. I think you came in over 7% with the bogey being 4.5%. You also pointed out that acquisitions are really not what you're interested in doing at this time. So the question is your CET1 ratio of 9.7%, do you consider that to be too high and if it is too high would you - the change that we expect in next year's CCAR of not having the qualitative part of the test being applicable to Banks with under $250 billion in assets? Is than an opportunity for SunTrust to really give back much more in a one-time kind of special dividend or buyback to bring those capital levels down to drive the profitability higher?

Well Gerard, I think our view is indeed similar to the one you just espoused at 9.7%. That is more capital than we need to fundamentally run the operations of this Company and it is more capital and we need when you look at the very strong risk profile across all of our books. What you have seen with us is that we have been looking for ways and finding ways to allow that ratio to drift down a little bit, the increase in dividend, the increase in buyback. What you should see with us over time is that that 9.7 should continue to drift down a little bit attempt here, attempt there and come down to something but over time I wouldn't say, I wouldn’t expect a one-time massive repayment but that over time we'd be able to bring it to something that is value added for all of our shareholders rather than retaining as much excess as we have today.

Okay. And would you guys could consider the CCAR capital requirements you’re binding constraint on capital?

It has been until now and as we look at what next year brings to CCAR once we get some clarity on what the rules are going to look like for Banks in our position. We'll evaluate whether that continues to be so.

Great. And then just as a follow-up on the quality of the commercial real estate book that you guys have pointed out in the underwriting part of the cycle? Can you give us some color obviously you've been through cycles? Why this is one so far been so much better in terms of lasting longer was that the severity of the downturn that’s still fresh in all of our minds or why is that so good for so long?

I think there are a couple of reasons one is I think as an industry we’ve been more demanding on structure so there's just a lot more equity in this part of the cycle, they are bigger players in this part of the cycle. I think particularly about the single family part you know it's dominated now by bigger players, lot more capital and lot more staying power. There’s been a lot of equity available, they're accepting returns that are perhaps lower so that allows them to have more equity in the deals. So I just think there is been a - we tend to have short memories and I think maybe in the case of commercial real estate our memories are little longer this cycle than it has been in the past. But it’s something in fairness for all of us to be watching.

Sure. Bill, Aleem thank you so much.

Thanks.

Okay, Christine. This concludes our call. Thank you to everyone for joining us today. If you have any further questions, please feel free to contact the Investor Relations department. Thank you.

And that concludes today's conference. Thank you for your participation. You may now disconnect.