The Motley Fool's CFO recently sat down with Bill Rogers, chairman and CEO of SunTrust Banks (NYSE:STI), for a lively discussion about the performance of the bank and the future of its industry. A full transcript follows the video. 

Enjoy, and Fool on!


OLLEN DOUGLASS:

Hi. I'm Ollen Douglass and I am here with Bill Rogers, the chairman and CEO of SunTrust Bank. Bill, thanks for joining us.

BILL ROGERS:

Great. Thanks for having me.

OLLEN DOUGLASS:

I'm happy to have Bill here today. I just wanted to go through a set of questions to get us to know SunTrust a little bit better, so let's just dive in, Bill.

BILL ROGERS:

Great. I'm looking forward to it.

OLLEN DOUGLASS:

Very good. At SunTrust, you're one of the top 20 banks in the country. Super regional? National? I'm not quite sure how that goes. How would you describe SunTrust?

BILL ROGERS:

I think I'd describe us as a regional bank, but we also have a lot of businesses that are national in nature. I also like to use the term Main Street bank, because I think it sort of defines what we do. We take in deposits. We make loans. We're sort of, in that way, a traditional "serve our communities and serve our markets" kind of bank.

OLLEN DOUGLASS:

When you think about SunTrust and how you're viewed, what do you think is the most common misperception about the bank and the brand?

BILL ROGERS:

I think maybe the misconception of being just this. Just regional or just this or just that when our businesses are pretty far encompassing. We have a national, online platform. We have businesses that have offices across the country. But we also are very smart and sharp with prowess in our own market. So, when it's defined as just something, I think it's maybe a misconception.

OLLEN DOUGLASS:

You announced quarterly earnings last week. The market's responded well. I think the stock's been up about 5% in the week...

BILL ROGERS:

Right...

OLLEN DOUGLASS:

Keep that up and the stock should be around $450 a share in about a year. Thinking about that and with that in mind, when you think about the quarter, what did you do really well? What were some of the challenges for you?

BILL ROGERS:

I think what we did well was we were consistent. We did what we said we were going to do. What we told the market was we were going to be more efficient, so we were more efficient. What we told the market is we had growth potential, so on a year-on-year basis, we had real revenue growth. What we told the market is our business was going to be more diverse, and so the types of business that we conducted were more diverse. I think it's just consistent. We did what we said we were going to do.

OLLEN DOUGLASS:

Your consumer loan production was up 23% year-over-year. It seemed like a really big improvement. Is that a particular focus for SunTrust right now?

BILL ROGERS:

It is. Highly focused on the consumer and virtually lots of different places. Not only in-branch, but also online kinds of platforms. Indirect auto. Home equity. Anyplace that we interact with a consumer.

OLLEN DOUGLASS:

There's some recent news about Fannie and Freddie trying to put together plans to allow them to begin to buy back loans with a little down payment of 3%. Are we heading in the right direction? The wrong direction? And if that does play out, do you think SunTrust is going to be at the leading edge of adopting that?

BILL ROGERS:

I think the right direction is to expand the credit box. I think that is a good direction. I think the credit box, however we would define it, has been too tight. More of the risk has been the risk of repurchase. I think banks have been a little bit hesitant because the risk of repurchase is so asymmetric. I think that's put more of a lid [on it]. So, I think things that we do to expand the credit box are positive, but we can't make the same mistakes we've made before. I think we need to be very cautious and really understand the mistakes we've made before and be careful not to step into those same [00:03:27].

OLLEN DOUGLASS:

I also noticed in the quarter you did a one-time share repurchase which was almost treated like a special dividend.

BILL ROGERS:

Right.

OLLEN DOUGLASS:

Are you guys able to do more of those? And if not, when do you think you'll be in the position to do that?

BILL ROGERS:

Well, now we go through an annual process — the CCAR process or the Stress Test process. We'll go through that annually. When we went through it last year, we anticipated that we might have, in this case, a tax opportunity, and so we just took advantage of that and we had a one-time opportunity. We returned that to shareholders. That was sort of within the structure and not objected to by a regulator. But we'll go through, now, the annual process.

OLLEN DOUGLASS:

I have a quote from a fellow Motley Fool employee. It says, "I'm a SunTrust customer and I'm reasonably happy with them. I have a checking account and they seem to not lose my money." Being able to retain deposits is not exactly the highest bar for customer service...

BILL ROGERS:

Right.

OLLEN DOUGLASS:

Can you tell me about some of your customer service initiatives?

BILL ROGERS:

Yes, I think your fellow teammate has a low standard, but I'm glad we're able to sail way above that standard. We spend a lot of time on the client service metrics. We talk to clients every night. We do lots of surveys. We have lots of metrics. Ultimately, that is the litmus test. I mean, you want to have a superior experience with your bank. If you don't have that — that's the standard. That's the table stakes for a relationship. This teammate we're going to need to blow away with a higher standard than reasonable.

OLLEN DOUGLASS:

That's why reasonable is good. And then not exactly a quote, but another comment from another Fool, a millennial, who says, "I avoid going into bank branches at all costs." How is SunTrust preparing to be relevant to the next generation of depositors and ultimately business folks?

BILL ROGERS:

Yes, lots of investment in both the online and smartphone capability. Mobile capability. We've invested significantly in that. And to not only capture millennials, but I get concerned about the demographics. There are lots of people who want to engage with us in that way. Probably 80%+ of our transactions are self-service.

OLLEN DOUGLASS:

Wow.

BILL ROGERS:

But millennials do go in branches. I recognize that this millennial doesn't go in branches, but millennials do also go in branches, so it's an omnichannel strategy. We want to make sure that we're relevant across a bunch of different channels so when people interact with us, they can select the channel that's best for them related to the transaction they want to engage in.

OLLEN DOUGLASS:

Well, the low hurdle teammate did say that there's a SunTrust in his supermarket, which he did like.

BILL ROGERS:

Right.

OLLEN DOUGLASS:

And so he liked to eat and bank at the same time.

BILL ROGERS:

Perfect.

OLLEN DOUGLASS:

I don't know about eating in the supermarket, but that can be for another time. Then another question for you. When can we expect to get more than 25 basis points on our savings accounts? I think that's more of a bigger question about the interest rate forecast and when we see rates rise.

BILL ROGERS:

I think we're in a bit of a two-steps-forward, one-step-back kind of recovery. We see a lot of positives on the recovery. Housing, I think, is in sort of a full recovery, certainly from a pricing standpoint. Consumer confidence, I think, is in a pretty good recovery. You've already talked about our loan origination. So, we're seeing some two steps forward. We've personally, in terms of our modeling, talked about seeing the first part of 2016 as being when we'll start to see some further rate increase.

OLLEN DOUGLASS:

Excellent. Then the last question. You've seen quite a few bankers come and go in your time...

BILL ROGERS:

Right...

OLLEN DOUGLASS:

Can you give me a name of one, past or present, that you personally respect and tell us why?

BILL ROGERS:

It's easy for me, because I've worked for great CEOs. I've worked for Jimmy Williams, Phil Humann, and Jim Wells, all at SunTrust, who are three that I respect and who are both around and can be counsel for me.

OLLEN DOUGLASS:

Got it.

BILL ROGERS:

And then the industry — it's always a piece of someone. It's something you look at and say, "Gosh, I really like the way they talk about the purpose of their company. I like the way they do that." So, it's always maybe not one person but different aspects of individual bankers.

Look, we have a lot of great bankers, and maybe there's a misconception about banking, but the bankers that I know and the CEOs I interact with, I think, are committed to their communities. They're committed to doing what's right and growing their businesses the right way.

OLLEN DOUGLASS:

Thank you very much for joining us...

BILL ROGERS:

Great...

OLLEN DOUGLASS:

...and I appreciate the interview with you.

BILL ROGERS:

Great. Thank you.

OLLEN DOUGLASS:

Thank you.

[End]

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