Critical Factors for DrivingWorkforce Performance & Financial Results

May 29, 2014

2

SunTrust – An Overview

Assets$180

B

Loans$128

B

Deposits$133

B

2013 Revenue

$8.2 B2013 Net Income

$1.3 BAuA

$149 B

Teammates25,92

5

RelationshipsOver 5 MM

Branches1,501

Key Statistics

Mortgage Banking

15%

Corporate & Other 2%

Revenue Distribution3

Footprint• Consumer franchise concentrated in the more

densely populated, fast-growing markets within the Southeast and Mid-Atlantic regions

• National wholesale, mortgage and consumer lending businesses

Note: All metrics represent 1Q 2014 unless otherwise stated

Consumer Banking& Private Wealth Management

50%Wholesale

37%

Mortgage11%

3

SunTrust Has Delivered Significantly Improved Performance and Shareholder Returns Over Last 3 Years

$17.70

$28.35

$36.81

Dec 31, 2011 Dec 31, 2012 Dec 31, 2013

Share Price Appreciation

60%

30%

71.7%

68.9%

65.3%

2011 2012 2013 2014 Target

Efficiency Ratio

< 64%

5

In the Ongoing Debate of What is a Larger Determinant of Performance – Majority Agrees That Flawless Execution is Becoming A Key Determinant

Execution is becoming critical because of 3 factors:• In a number of industries there is minimal strategic differentiation between companies• Getting execution right is a complex exercise with widespread organizational impact• Human Capital dimensions are central to medium – long term success of the business

70%

Strategic initiatives FAILED due to poor EXECUTIONJohn Kotter, HBR, 2012

37%Companies that are

GOOD at when it comes to EXECUTION

HBR Survey 2010 of 1000 Executives

Most senior leaders spend ~75% of their time on talent management and execution planning

Research on Execution Criticality Senior Management Time Spent

University of Chicago

6

Organizational Capability is a Key Driver of Execution Excellence and Ultimately the Business Performance

Source: Bain High Performance Organization Database (n=365)

23%

62%

15%

Our organization holds us

back

Our organization is sufficient for

achieving reasonable

successOur

organization helps the business

outperform

Yet only 15% of the companies have truly high performing

organization

Organizational Capability

Performance

LOB 1

LOB 2

LOB 4

LOB 3

LOB 5

Company A

LOB 6

Company B

Company D

Company C

Company E

Company F

LOB 7

LOB 8

LOB 9

Illustrative

Source: Scott Keller & Colin Price, Beyond Performance

There is a strong correlation between organizational capability

and performance

Creates sustained

competitive advantageCause

Effec

t

7

Data Analytics as Predictive Indicator

Analysis

Why did it happen?

Monitoring

What’s happening

now?

Prediction

What can we expect to happen?

Business Value

Complexity

High

Low

Low High

Content & Technology

Acceleration

Reporting

What Happened?

Organization Capability value is well recognized – however there

are some key questions

Advancement in analytics have made it feasible to predict

performance

• What are the critical elements of organizational capability?

• How do we determine which elements matter most to specific companies?

• How do we sequence our actions?

• Are there leading signals to predict performance or take proactive corrective actions?

8

BCG(6 Factors, 20 Topics)

McKinsey (9 Dimensions, 38 Practices)

Booz Allen (4 Blocks, 19 Questions)

1. Structural Design• Org Structure• Role of the Center• Org Cost efficiency

• Spans and Layers• Shared Services

2. Roles & Collaboration Mechanisms• Role Clarity• Cross-functional Collaboration• Informal/virtual Networks

3. Processes and Tools• Process Excellence/Optimization• Project Management• Business Analytics and Information Mgmt

4. Leadership• Leadership Performance• Leadership Pipeline• Middle-Mgmt Effectiveness

5. People & Engagement• Recruitment & Retention• Employee Performance Mgmt• Employee Motivation

6. Culture and Change• Change Management Capabilities• Adaptability & Flexibility• Culture

3. Renewal

2. Execution

1. AlignmentDirection

Leadership

Culture & Climate

Accountability

Coordination & Control

Capabilities

Motivation

Innovation and Learning

External Orientation4. Structure

3. Motivators

2. Information

1. Decision Rights• Culture of the organization• Important strategic and operational decision are quickly

translated into action?• What is the primary role of corporate staff?• Do your manager get involved in operating decisions?• Once made, decisions are often “second guessed”• Everyone has a good idea of decisions/actions he/she is

responsible

• Shared Vision• Strategic Clarity• Employee Involvement

• Consultative Leadership

• Authoritative Leadership

• Supportive Leadership

• Challenging Leadership

• Open and Trusting• Internally Competitive• Operationally Disciplined• Creative and

Entrepreneurial

• Role Clarity• Performance Contracts• Consequence

Management• Personal Ownership

• People Performance Review

• Operational Management

• Financial Management• Professional Standards• Risk Management

• Process Based• Talent

Development• Talent Acquisition• Outsourced

Expertise

• Meaningful Values• Inspirational Leaders• Career Opportunities• Financial Incentives• Rewards &

Recognition

• Capturing External Ideas

• Top-down Innovation• Bottom-up

Innovation• Knowledge Sharing

• Customer Focus• Competitive Insights• Business Partnerships• Gov’t & Community

Relationships

• Firm deals successfully with discontinuous change in the competitive environment

• Critical information on competition gets to HQ quickly• Field employees usually have information they need to

understand bottom line impact on their daily choices• Rarely send conflicting messages to the market place• Information flows freely across org. boundaries• Line management has access to the metrics they need to

measure the key drivers of their business

• If firm has a bad year, but one division had a good year, the division head still get a bonus

• Besides pay, many other things motivate individuals to do a good job

• The individual performance appraisal process differentiates among high, adequate, and low performers

• The ability to deliver on performance commitments strongly influences career advancement and compensation

• Average number of direct reports of middle management level

• Promotions include lateral moves• “Fast track” employees here can expect promotions every 3

years or more or less?Bossidy & Charan: Execution

Building Block 1: Leadership• Align People and Business• Set Clear Goals/Priorities• Accountability & Rewards• Expand Capability• Know YourselfBuilding Block 2: Culture• Link to Bottom Line Results• Operationalize Values/Beliefs• Reward PerformanceBuilding Block 3: Talent• Commitment to People Process• Right People, Right Positions• Energy and Enthusiasm

Joyce, Norhia & Roberson: What Really WorksMake Your Strategy Clear & Focused• Clear customer value proposition • Base it outside-in• Clearly CommunicateExecute Flawlessly• Deliver new products/services • Empower front line to respond• Continuous improvementPerformance Culture• Inspire/challenge all to do best• Reward/pay for achievement• Clear company valuesFast and Flat Organization• Eliminate redundant layers• Information exchange across • Best people close to action

Morgan, Levitt, Malek: Executing Strategy

Ideation Imperative• Clarify Identity• Clarify Purpose• Clarify Long-Rang Intention• Ideation and brandVision Imperative• Translate intention into strategy, goals, and metricsNature Imperative• Align strategy, culture, structure• Tackle culture change• Performance evaluation• Allocate people to projects• Align incentives

Fast and Flat Organization• Eliminate redundant

layers• Information exchange

across • Best people close to

actionTalent Management• Promote within• Top of line

training/development• Job designed to

challenge bestLeadership• Connected to all levels• Spot opportunity early• Link pay to

performanceI

People Process• Evaluate in Depth• Identify/Develop Talent• Fill Leadership Pipeline• Link HR to ResultsStrategy Process• Focus on Customer• Capability to Execute• Financial Model• Short/Long Term

MilestonesOperations Process• Product Launches• Marketing Plan• Productivity Plan

Engagement Imperative• Engage strategy through

the project investment stream

• Critical activities & capabilities

• Resource/skill capacitySynthesis Imperative• Align and monitor

project work• Nimble proactive

processes• Manage

interdependenciesTransition Imperative• Move project outputs

into the mainstream

Consulting Companies are Shifting Energy and Resources Towards Execution

Scatterplot of Competitive Capabilities

9

Current Competitiveness

Futu

re Im

porta

nce

Scatterplot of competitive capabilities and their relative importance today and tomorrow

10

SunTrust is Exploring Predictive Execution Index as a Diagnostic as Well as Planning Tool for Organizational Capability

• There are a number of organizational variables you can focus on - getting Insights into these 3 dimensions critical to predicting performance

• Focusing on ‘Alignment’ and getting it right is 1st priority

• These 3 elements are not independent of each other. There is an interplay between them, however getting the basics right on them is critical.

Immediate Attention is required

Qualified Zone

Disqualified Zone

• Leadership Competence

• Team Collaboration• Talent Capacity

• Strategy• Shared Purpose & Goals• Shared Accountability

• Structure• Shared Values / Behavior• Process

Alignment

ArchitectureAbility

11

Mark A. ChancyCorporate Executive Vice PresidentWholesale Banking Executive

12

SunTrust – An Overview

Note: All metrics represent 1Q 2014 unless otherwise stated

Full-service financial solutions and advice to businesses, institutions, not-for-profit organizations, and government entities

National offices with large corporate client base

2013 Revenue: $3.0 B Total Loans: $58.9 B Total Deposits: $42.1 B

Full-service banking for Retail clients in Southeast and Mid-Atlantic markets and national consumer lending business

Premier provider of wealth management advice and solutions to high net worth individuals and families

2013 Revenue: $4.1 B Total Loans: $41.3 B Total Deposits: $84.6 B

Loan originations in SunTrust retail footprint and adjacent states

Correspondent and broker relationships in 49 states

Top 10 servicer of loans from 49 states and District of Columbia

2013 Total Revenue: $941 MM

Total Loans: $28.3 B Total Deposits: $1.9 B

SunTrust Banks, Inc.

Bill Rogers, CEO

Wholesale Banking

Consumer Banking &

Private Wealth Management

Mortgage Banking

Wholesale Business Overview

13

Corporate and

Investment Banking

Commercial and

Business Banking

Commercial Real

Estate

Treasury and

Payment Solutions

Wholesale Risk

Organization

Wholesale Operations

Wholesale Business

Information Office

Support Partners(Fin, HR,

Legal, Mktg etc.)

Wholesale OrganizationWholesale Revenue and Net

Income

Net Income Distribution ($s Millions)

Revenue Distribution ($s Millions)

14

The SunTrust Story – Wholesale Key

Dimension Actions Taken

Purpose

Performance

Engagement

Alignment

Architecture

Ability

• Focused effort on creating Wholesale culture • Created and articulated new focus on the middle

market • Built shared vision of leveraging Wholesale platform

to win in the marketplace • Changed the delivery and fulfillment model for better

effectiveness and efficiency (E.g. End to End)• Identified various levers of performance across Revenue

and Cost side• Focused on Pay for Performance

• Aggressively pursued “Top Talent in Top Boxes” approach

• Focused on leadership collaboration and developing talent deeper in the organization

• Linked teammate engagement to increasing client needs met

15

Mayank GuptaHR Business Partner Lead Commercial and Business Banking

16

Key Organizational Measures That Led to Success Achieved At CIB

CIB - Revenue CIB - Net Income CIB - Revenue / FTE

13% CAGR

45% CAGR

Alignment • Getting ‘Top Talent’ in ‘Top Boxes’

• Getting teammates with right ‘aptitude’ and ‘attitude’

• Creating environment that rewarded ‘A’ players

Ability Architecture

7% CAGR

• Clearly establishing ‘What game we are playing’ and ‘How do we win that game’

• Linking behavior expectations to above vision

• Establishing and enforcing robust processes. E.g.

• Pay for Performance• Talent calibration • Perf. Management• Client planning

2008 2012 2008 20122008 2012

17

▪ Our growth has been on the back of a rising economy in the core footprint (growth of ~3% vs. economy at 2%)

▪ Projected growth is more aspirational at ~3x economic growth

• Consistent and clear definition of winning

• Clarifying roles and expectations

• Focus on P4P

Alignment

Ability

Architecture

• Putting top talent in top boxes • Building new capabilities

• Realigning roles to support the ‘RM’

• Building new ‘expertise’ structure

• Simplifying processes

SunTrust Commercial Banking Revenue

+3% p.a.+8% p.a.

2009 2013 2016E

SunTrust Commercial Banking Net Income

2009 2013 2016E

+3% p.a.~15% p.a.

Commercial and Business Banking Business is at Similar Inflection Point as CIB was 5 Years Back

18

Predictive Execution IndexPEI captures subjective and objective data points to evaluate the level of accomplishment in each element.

Talent Capacity Do you have top talent in top boxes and have robust pipeline for all critical roles ?

% of TMD Spend

in HR % of People in Top

4 Boxes in 9 Box % of Involuntary

Leave

Subjective Objective

Process Conducts systematic reviewing of processes to ensure their effectiveness and outcome?

Structure Are individuals/teams designated with clear authority to make decisions with critical information required to do so?

Strategy Is a specific and clear strategic direction defined throughout the organization?

EPS

TRS

ROIC

Leadership Competency

Team Collaboration

Do teammates focus on larger organizational outcomes rather than narrow departmental goals ?

Do you have senior leadership that drives strategy and execution effectively and develops strong talent ?

Shared Accountability

Is your team defined with clear rewards and accountability for achieving goals?

Shared Values/Behaviors

Do you share the value of organization and adhere to behavior that is defined by the organization?

Shared Purpose/Goals

Is the adherence to common vision and goals at all levels within the organization?

HC ROI

Revenue / FTE

VOT

AR

CH

ITEC

TUR

EA

LIG

NM

ENT

AB

ILIT

Y

Elements

Subjective Q’s Score+

Objective Data Score

=Alignment Score

Subjective Q’s Score+

Objective Data Score

=Architecture Score

Subjective Q’s Score+

Objective Data Score

=Ability Score

19

Extrapolating CIB experience to BB / CML Banking Gives An Early Insight Into Future BB / CML Banking Performance

Dimension

CIB BB / CML Banking

Pre - 2009 2013 Pre-2013 2016+

Alignment 0.6 0.9 0.9

Architecture

0.6 0.9 0.9

Ability 0.7 1.0 1.0

Total Score 0.25 0.80 0.8•Strong improvement on all 3 dimensions already•Performance followed the improvement •Need to continually examine the standing on these dimension

•Improvements underway on 3 dimensions •Early positive momentum •Still a journey. Work to do

XX=

0.6 – 1.0 = Strong Enabler 0.4 – 0.6 = Neutral <0.4 = Hindrance

Predictive Execution IndexPEI enables leaders to identify latent issues and prioritize intervention plans by focusing only on vital signs of organizational health

Talent CapacityTeam Collaboration

Leadership Competence

AbQualified ZoneDisqualified ZoneImmediate Attention is needed

AlShared AccountabilityShared Purpose/Goals

Strategy

Ar

ProcessShared Values / Behaviors

Structure

Qualified

Disqualified

Talent Capacity Has your organization identified critical positions, competencies required?

% of TMD Spend in HR

% of People in Top 4 Boxes in 9 Box

% of Involuntary Leave

ProcessConducts systematic reviewing of processes to ensure their effectiveness and outcome?

StructureAre individuals/teams designated with clear authority to make decisions with critical information required to do so?

Strategy Is a specific and clear strategic direction defined throughout the organization?

EPS

TRS

ROIC

Leadership Competence

Team Collaboration

Collaborate with others/other LOBs to engage in projects?

Have a clear idea of leadership competencies that are specific built for the organization?

Shared Accountability

Is your team defined with clear rewards and accountability for achieving goals?

Shared Values/Behaviors

Do you share the value of organization and adhere to behavior that is defined by the organization?

Shared Purpose/Goals

Do you adhere to organization’s vision and goals?

HC ROI Revenue / FTE

VOT

ARCHITECTURE

ALIGNMENT

ABILITY

Elements Subjective Objective

Radar Chart to Evaluate Organizational Capabilities Methodology to Identify Latent Issues

21

Q & A