The chief executive who steered SunTrust Banks through the fallout of the Great Recession is stepping down in a planned leadership shuffle.
The announcement of Chairman and Chief Executive James Wells III's retirement came as SunTrust posted its third straight quarterly profit following nearly two years of losses.
Wells will move into the role of executive chairman by June 1. William Rogers Jr., currently president and chief operating officer, will succeed him as CEO by that date, while retaining the president's title. Wells will retire as executive chairman and from the board Dec. 31.
Wells, who turns 65 in May, was named CEO in 2007 and became chairman in 2009. He joined SunTrust through the company’s 1998 acquisition of Crestar Bank, where he served as president.
Chris Marinac, bank analyst with FIG Partners, said Wells’ retirement “wasn’t a surprise.” SunTrust chief executives traditionally retire by their 65th birthday.
Last month, SunTrust paid off nearly $5 billion in government aid from the financial crisis. Marinac called it “a watershed moment,” one Wells wanted completed before leaving.
Some in the industry criticized SunTrust for being slow to pay off the government, but Wells insisted he wanted to wait for the economy, and SunTrust’s stock price, to rebound to protect shareholders from the effects of issuing new shares to fund the payback.
Wells described Rogers as “the driving force” behind the company’s strategy, which has seen it move to more traditional business lending and away from construction and commercial real estate, sectors hard hit during and after the recession.
“[Rogers] has my respect as a leader and as a person," Wells said during a conference all with analysts. "So not only due to the calendar, but also due to the fact that the financial services industry is now in the midst of a meaningful inflection point, we believe it’s the appropriate time for this change.”
Rogers became president in 2008 and COO in November.
“I think [Rogers] is a very logical person to come in,” Marinac said.
Rogers, 53, started with SunTrust 31 years ago as a management trainee and has worked in most areas of the company.
Marinac said although SunTrust has suffered painful losses in construction and development loans, under Wells it was not as heavily dependent on the segment as some regional peers. But the bank took heavier losses than others in its mortgage division, a growth engine under Wells' direction.
SunTrust reported first quarter profit of $38 million, or 8 cents per share, compared to a loss of $229 million, or 46 cents per share, in the first quarter a year ago. The profit included a $74 million non-cash charge tied to its recent payoff of bailout funds.
Revenue was $2.16 billion, up 13.7 percent from a year ago. SunTrust said net charge-offs and nonperforming loans all improved. Deposits grew 5.6 percent from a year ago to $120.7 billion.
Average loans increased slightly to $115.2 billion. Though it grew its traditional commercial and industrial business lending, the bank continued to shrink riskier segments like commercial real estate and construction.
Mortgage sales fees from mortgage refinances declined because of rising interest rates.
The bank charged off $571 million in bad loans, down 30 percent from a year ago and a slight improvement from fourth quarter 2010.
Nonperforming loans, those no longer paying interest, were $4 billion, down 23 percent from the first quarter a year ago. Foreclosed real estate stood at $534 million, down 15 percent from a year ago.
SunTrust’s profit was aided by reserving less for future loan losses. The bank’s allowance for loan losses was $2.9 billion, down $120 million from fourth quarter 2010.
The company, which like many other major mortgage companies reached a settlement with federal regulators last week over faulty foreclosure proceedings, also said it has started its evaluation process of foreclosure proceedings.
SunTrust's new CEO
Name: William Rogers Jr.
Age: 53
College: MBA from Georgia State University and a Bachelor of Science in business administration from the University of North Carolina
Miscellaneous: On the board and executive committee of the Boys & Girls Clubs of Metro Atlanta; trustee emeritus of The
Lovett School. He is also a director and serves on the audit committee and compensation committee of Books-a-Million Inc.
Source: SunTrust Banks
About the Author
