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Filed by SunTrust Banks, Inc. pursuant to Rule 425 under the Securities Act of 1933, as amended and deemed filed under Rule 14a-12 under the Securities Exchange Act of 1934, as amended |
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Subject Company: National Commerce Financial Corporation Commission File Number: 333-116112 |
This filing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the benefits of the merger between SunTrust Banks, Inc. ("SunTrust") and National Commerce Financial Corporation ("NCF"), including future financial and operating results, SunTrust's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of SunTrust's and NCF's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of SunTrust and NCF stockholders to approve the merger; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer to realize than expected; disruption from the merger making it more difficult to maintain relationships with clients, employees or suppliers; increased competition and its effect on pricing, spending, third-party relationships and revenues; the risk of new and changing regulation in the U.S. and internationally. Additional factors that could cause SunTrust's and NCF's results to differ materially from those described in the forward-looking statements can be found in the 2003 Annual Reports on Form 10-K of SunTrust and NCF, and in the Quarterly Reports on Form 10-Q of SunTrust and NCF filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission's internet site (http://www.sec.gov). The forward-looking statements in this filing speak only as of the date of the filing, and neither SunTrust nor NCF assumes any obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements.
On June 3, 2004, SunTrust filed a registration statement with the SEC containing SunTrust's and NCF's preliminary joint proxy statement/prospectus regarding the proposed merger. Stockholders are urged to read the preliminary joint proxy statement/prospectus filed with the SEC on June 3, 2004 and the definitive joint proxy statement/prospectus when it becomes available because they contain, or will contain, important information. Stockholders will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about SunTrust and NCF, without charge, at the Securities and Exchange Commission's internet site (http://www.sec.gov). Copies of the definitive joint proxy statement/prospectus and the filings with the Securities and Exchange Commission that will be incorporated by reference in the definitive joint proxy statement/prospectus can also be obtained, without charge, by directing a request to SunTrust Banks, Inc., 303 Peachtree St., N.E., Atlanta, Georgia 30308; Attention: Investor Relations; or National Commerce Financial Corporation, One Commerce Square, Memphis, Tennessee, 38159; Attention: Investor Relations.
The respective directors and executive officers of SunTrust and NCF and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. Information regarding SunTrust's directors and executive officers is available in the proxy statement filed with the Securities and Exchange Commission by SunTrust on March 2, 2004, and information regarding NCF's directors and executive officers is available in the proxy statement filed with the Securities and Exchange Commission by NCF on March 17, 2004. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is available in the preliminary joint proxy statement/prospectus contained in the registration statement filed by SunTrust with the SEC on June 3, 2004.
1
Strategically Focused
…on Performance
…on Growth
…on Opportunity
Sanford C. Bernstein
Strategic Decisions Conference
June 2004
L. Phillip Humann
William R. Reed, Jr.
Gary Peacock, Jr.
This presentation
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements
include, but are not limited to,
statements about the benefits of the
merger between SunTrust Banks, Inc. (“SunTrust”)
and National
Commerce Financial Corporation (“NCF”), including future financial
and
operating results, SunTrust’s plans, objectives, expectations and
intentions and other
statements that are not historical
facts. Such statements are based upon the current
beliefs and
expectations of SunTrust’s and NCF’s management and are subject to
significant
risks and uncertainties. Actual results may differ
from those set forth in the forward-
looking statements. The
following factors, among others, could cause actual results to
differ from
those set forth in the forward-looking statements: the ability to obtain
governmental approvals of the merger on the proposed terms and schedule;
the failure of
SunTrust and NCF stockholders to approve the merger; the
risk that the businesses will not
be integrated successfully; the risk that
the cost savings and any revenue synergies from
the merger may not be fully
realized or may take longer to realize than expected;
disruption from the
merger making it more difficult to maintain relationships with clients,
employees or suppliers; increased competition and its effects on pricing,
spending, third-
party relationships and revenues; the risk of new and
changing regulation in the U.S. and
internationally. Additional
factors that could cause SunTrust’s and NCF’s results to differ
materially from those described in the forward-looking statements can be
found in the 2003
Annual Reports on Form 10-K of SunTrust and NCF, and in
the Quarterly Reports on Form
10-Q of SunTrust and NCF filed with the
Securities and Exchange Commission and available
at the Securities and
Exchange Commission’s internet site (http://www.sec.gov). The
forward-looking statements in this presentation speak only as of the date
of the filing, and
neither SunTrust nor NCF assumes any obligation to
update the forward-looking statements
or to update the reasons why actual
results could differ from those contained in the
forward-looking
statements.
This presentation
could include some non-GAAP measures to describe SunTrust’s
performance. The reconciliation of those measures to GAAP
measures can be found in
SunTrust’s earnings press release, on
SunTrust’s website in the press release section of
the Investor
Relations pages and in the appendix of this presentation.
Stockholders are
urged to read the joint proxy statement/prospectus regarding the
proposed
transaction when it becomes available because it will contain important
information. Stockholders will be able to obtain a free copy of
the joint proxy
statement/prospectus, as well as other filings containing
information about SunTrust and
NCF, without charge, at the Securities and
Exchange Commission’s internet site
(http://www.sec.gov). Copies of the joint proxy
statement/prospectus and the filings with
the Securities and Exchange
Commission that will be incorporated by reference in the joint
proxy
statement/prospectus can also be obtained, without charge, by directing a
request to
SunTrust Banks, Inc., 303 Peachtree St., N.E., Atlanta,
Georgia 30308, Attention: Investor
Relations; or
National Commerce Financial Corporation, One Commerce Square, Memphis,
Tennessee 38159, Attention: Investor Relations.
The respective
directors and executive officers of SunTrust and NCF and other persons may
be deemed to be participants in the solicitation of proxies in respect of
the proposed
merger. Information regarding SunTrust’s
directors and executive officers is available in
the proxy statement filed
with the Securities and Exchange Commission by SunTrust on
March 2, 2004,
and information regarding NCF’s directors and executive officers is
available
in the proxy statement filed with the Securities and Exchange
Commission by NCF on March
17, 2004. Other information regarding
the participants in the proxy solicitation and a
description of their
direct and indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other relevant
materials to be filed
with the Securities and Exchange Commission when they
become available.
why SunTrust?
Strategically
focused on
performance, growth and
opportunity
Our focus is showing results
NCF merger provides new opportunities
performance perspective
Pre 2000
2001 - 2003
2004 & beyond
Experienced double digit earnings per share growth
Strong economy in the Southeast
Solid equity markets
Investments in
capital markets and growth in large corporate
loans paid off as credit
losses remained low
Southeast economy not immune to economic slowdown
Record corporate
charge offs, created negative impact to many
financial institutions
including SunTrust
Shift in portfolio
toward asset sensitivity, coupled with a shorter-
term duration &
assuming a rising rate environment, resulted in
margin pressures
Economic rebound,
stock market improvement and rising
rates augur well for future performance
Focus is on execution
of our model and strategies;
momentum evident
NCF merger enhances geographic reach, retail capabilities
Strategic Focus
Enhanced
Franchise
One
Bank
Take
the Lead
Profit
Acceleration
1999
Focused
on
efficiency,
ability
to
deliver
common
customer
experience
Implemented
series
of
operational
initiatives
Placed
highest
priority on sales
and client
retention
Established high
performance as
the standard
Focused
on
achieving
breakthrough
results
Introduced
new
geographic
structure and
operating
model
Aligned top
talent to key
leadership
positions
Intensified
local market,
client and
sales focus
Extended
footprint into
key growth
markets with
Mid Atlantic
acquisition
Collapsed 28
bank charters
Streamlined
administrative
structure
S3 and E2
Implemented
new revenue
initiatives in
key
businesses
Created
process
efficiencies
and
consistency
in key
business
lines
building for growth
2004
Strategic Focus
defining breakthrough results
Double-digit revenue growth
A leading
market share in the
highest growth markets
Continued increase in
sales per
FTE per day and
cross-LOB sales
Continued
expense
discipline –
operating leverage and
efficiency
ratio improvement
Consistent,
best-in-class credit
quality
Investments for future growth
Strong
earnings
growth
Premium P/E
Solid
stock
performance
leads to
Strategic Focus
our geographic approach differentiates
Delivery Scale/
Multiple Channels
Product Array
and Expertise
Ability to Serve
All Segments
True
Client Management
Personalized,
Quality Service
Decisions Close
to Customer
Deliver “Big
Bank”
Capabilities
Local Decisions
and
Responsiveness
with
Strategic Focus
our operating model
Five Primary LOBs
Commercial
(including
Real Estate)
Corporate and
Investment Banking
(including Capital
Markets)
Mortgage
Retail (including
Business Banking,
Private Banking and De
Novo Banking)
Private Client Services
Centralized Support areas
HR
Finance
Technology
Marketing
Credit
Efficiency and Quality
Four Groups
Central (primarily
Georgia and
Tennessee)
Carolina Group
(North
and South Carolina)
Florida
Mid-Atlantic
(primarily
DC, Maryland and
Virginia)
20+ Regions with a
local
executive and dedicated
management team
50+ local banking markets
Run the business
“Strategy
direction and
installation design”
Drive customer
sales,
service and relationship
acquisition, expansion
and
retention
“Excellence in
execution”
Provide expertise
in their
respective disciplines
“Industry
leading
competence”
STI LOBs
Geographies
STI Functions
Strategic Focus
Our business model
brings advantages
to the customer, to STI and to our shareholders
operating model advantages
Clear vision and focus on corporate priorities
Better, quicker execution with more consistency
Lower cost of delivery through standardization
Ability to specialize in product development and delivery
Effective risk management on a consolidated basis
Broad view of talent and bench strength
Advantages
to
the Customer
Advantages
to
STI and Our Shareholders
Quality interactions and service
Personalized relationship management
Appropriate
customization based on unique client
needs
Sophisticated products and services
Expertise from centrally managed operation
Consistency in the SunTrust experience
Strategic Focus
Sell
Serve
Sustain
Managing
Change
Continuous
Improvement
S3
E2
World class
sales organization with
industry
leading results
Differentiated by
high quality
service
Committed to
retaining customers
and building relationships
Improving results, how we operate
and
how we interact with each other
Installing new initiatives, adopting
new behaviors and aligning to our
operating model
sales priority
“Excellence in Execution”
Strategic Focus
earnings momentum
Earnings growth accelerating
Net Income
Earnings per Share
Return on Avg. Assets
Return on Avg.
Assets less net
unrealized gains on
securities portfolio (1)
Return on Avg. Equity
Return on
Avg.
Realized Equity (1)
1Q 2004
1Q 2003
Change
$342.5
1.21
1.09
1.11
14.40
17.13
$327.8
1.17
1.12
1.15
15.13
18.16
9%
8%
4 b.p.
4 b.p.
(48) b.p.
(57) b.p.
(1)
Excludes net gains in
Company’s security portfolio due to its ownership of 48.3 million shares
of The Coca-Cola Company.
The Company believes this is a more
indicative performance measure when being compared to other companies.
(2)
Annualized.
4Q 2003
Sequential
Change
1Q04 : 1Q03
1Q04 : 4Q03
19%
17%
7 b.p.
8 b.p.
25 b.p.
46 b.p.
$358.5
1.26
1.16
1.19
14.65
17.59
(2)
(2)
Results
fee income growth
Fee income growth momentum continuing
Trust and Investment Mgmt.
Retail Investment
Deposit Charges
Mortgage Fees
Corp & Invst. Banking
Credit Card Fees
Other Charges & Fees
Other Non-interest income
Total Fees(1)
($ in millions)
$130
44
165
(1)
77
29
79
42
565
$136
46
163
7
74
32
93
39
590
13%
22%
3%
NM
15%
11%
18%
48%
17%
$121
37
158
(8)
65
29
78
26
506
20%
19%
(5)%
NM
(12)%
39%
67%
(29)%
18%
1Q 2003
1Q 2004
1Q2004:
1Q2003
4Q 2003
1Q04:4Q03
(Annualized)
(1)
Fees without Securities’ net gains.
Results
net interest income potential
Securities Portfolio Margin Profile – “Dry Powder”
(1)
Yields on investment securities available for sale. Does not include held-to-maturity securities or trading securities unless breakout is unavailable.
(2)
Assumes $25bn security portfolio, 35% tax rate, 280mm shares outstanding and 63 b.p. improvement in yield.
Source: Company Reports
One of the lowest
securities yields
among top 50
banks
Very short
duration
compared to
peers
Normalizing
securities yield to
historical relative
position adds
approximately
$102mm after-tax
or $0.36 per
share 2
Yield Change (b.p.)
4Q 2001
1Q 2004
1Q2004:4Q2001
Wells Fargo
7.25
6.24
(101)
National City
5.10
5.26
16
Wachovia
6.49
4.97
(152)
Bank One
5.41
4.93
(48)
Bank of America
6.10
4.91
(119)
Fifth Third
7.39
4.40
(299)
KeyCorp
6.78
4.36
(242)
U.S. Bancorp
5.88
4.14
(174)
BB&T
6.77
4.04
(273)
PNC Financial
5.25
3.56
(169)
Average w/o SunTrust
6.24
4.68
(156)
SunTrust
6.02
3.83
(219)
STI Yield vs. Average
(22)
(85)
(63)
National Commerce
6.97
4.82
(215)
Securities Yields
1
Results
net interest margin trends
Margin has rebounded from lows experienced in 2003
Adjusted for impact of Three Pillars and the consolidation of certain Affordable Housing partnerships
Results
significant business momentum – loan growth
Note: All loan data reflects average balances over stated time period.
Results
Retail
Commercial
CIB
PCS
Mortgage
Total STI
Total (ex. CIB)
$25
22
15
2
16
80
65
$23
20
16
2
12
73
57
10.9%
6.5
(5.9)
22.6
29.5
9.4
13.6
Three Months
Ended March 31,
2004
2003
Y-o-Y
$ in billions
significant business momentum – deposit shift
Note: All deposit data reflects average balances over stated time period.
(1) Total of DDA, NOW and Savings
($ in billions)
2003
2002
2001
CAGR
2004
2003
Y-o-Y
DDA
$
18
$
15
$
13
15.0
%
$
19
$
16
16.7
%
NOW
12
10
8
17.5
12
11
8.9
MMA
22
20
16
18.5
22
22
1.3
Savings
6
6
6
1.6
6
6
1.9
CDs
11
13
13
(5.9)
11
12
(10.2)
Total
69
65
57
10.6
70
67
4.3
Total Low Cost
(1)
36
32
28
13.0
38
34
11.4
Year Ended December 31,
Three Months
Ended March 31,
Results
first quarter 2004 sales highlights
Most Key Product Sales Are Up Double Digit Over Last Year
Retail
Equity Line/Loan
Products up 25 %
Indirect Lending sales
up
20%
Private Banking
consumer loan sales up
39%
Business Banking loan
production up 30% ; Visa
sales up 37%
Consumer credit cards
up 31%
New personal checking
up 8% and closings down
3% vs. 4Q03
Retail Investment
referrals to PCS up 27%
Commercial
Deposits up
14%-- Loans
up almost 7%
Treasury Management
sales up 8%
STRH – Capital
Markets /
Foreign Exchange fees up
34% over last year
CIB
Equity Fees up 59%
Number of TM deals up
41%,
dollars
up 23%
Total Capital Markets
revenue up 7%
Product penetration
up
30%
PCS
Group Trust new
business
up 56%
Retail Investment
sales up
24%
Improvement in New to
Lost Business Ratio for
Personal Trust improved
by 76% - - 12%
improvement in lost
Trust
Business
Wealth Strategist
productivity up 19%
Referrals to Retail up
133%
Mortgage
$12.5 billion in
applications, 47% over
plan
$6.5 billion in
closings,
10% over plan
Cross-sold over 33,000
target banking products –
up over 180% over ‘03
STOLI
SunTrust Online
Loans/Lines up 41%
Credit card sales up 20%
Deposit accounts up
15%
Core sales per FTE/day
up
14%
Results
sti and ncf combination…makes best footprint better
Financial scale
$25+bn market cap
$148bn assets
$97bn deposits
1,723 full-service
offices
in 11 states plus D.C.
#3 in market share in
Southeast
Top 5 rank in 20 of
25
largest high growth
markets in Southeast
Adds meaningful
presence in some of
the highest growth
North Carolina and
South
Carolina
markets
Solidifies positions
in
Virginia and
Tennessee
Opportunity
“Best
Footprint in
Banking”… just got
better”
“Best Footprint
in
Banking”
Enhanced
overall
growth rate
Expanded product
offering to be overlaid
across expanded
customer bases/
distribution systems
SunTrust
National Commerce
Pro Forma Result
The acquisition of
National Commerce represents much more than a logical
geographic extension
of SunTrust’s franchise
Large, high growth,
MSA–focused franchise
Entry into attractive
new markets—North
Carolina
Strong retail
franchise
with leading de novo /
in-store expertise
Small business
Commercial RE
Mortgage
Large corporate/
middle market
Cash management/
trust
Asset management
Investment
banking/brokerage
Mortgage
Large retail franchise
Proven de novo growth
strategy
Entrepreneurial,
high–
growth, revenue-based
culture
Focus on efficiency
Established/leader
ship positions
in
high growth
markets
Greater capital
resources
compelling strategic combination
Opportunity
create “best of breed” retail model
National Commerce Expertise
Customized pricing
strategy
based on market maturity
Industry leading
in-store strategy
Proven de novo
expertise
into new markets
SunTrust’s Large Retail Franchise
Households Served 3.8mm
Deposit Accounts 4.3mm
Loan Accounts 2.3mm
Retail Branches 1,207
In-store 153
ATMs 2,235
Retail Deposits $53.4bn
Opportunity
National
Commerce’s in-store model represents
strength for combined
enterprise
8
4
Employees
2,000
400-500
Square feet
1
2.3
Visits per week
3 thousand
16 – 24 thousand
Traffic per week
36 Months
18 Months
Breakeven
$400,000
$225,000
Operating
Expenses
$1-2 million
$200,000
Capex
In a stand-alone
bank branch
With an In-store
Partner
De novo in-store
branch meets 8,000 of our competitor’s
customers within 1 week
Opportunity
Target high-population, high growth MSAs
Partner with the store
that has leading market
share (#1 or #2), high weekly traffic volume and an
excellent reputation for service and quality
Identify locations
where “hub” branches will be
easy to add
Train and incentivize the employees to sell
87% of total assets,
excluding CCB merger,
obtained via de novo growth equating to a 15%
annualized de novo total asset growth
Strategy
Timeline
Start-up
phase
Years 1—2
Deposits priced 50-100
bps above
local competition
Loan volumes are low
and
deposits are reinvested in lower
yielding investment securities
ROA of 40-50 bps
ROE of 5-10%
Stage 1
High growth
phase
Years 3—6
Deposit costs begin to decline
Loan volume increases
NIM expansion and
improvement
in efficiency ratio
ROA of 1.00%-1.20%
ROE of 14%-17%
Stage 2
Mature phase
Years
7+
Deposit rates at market
Loan demand matches
deposit
growth
Branch has reached a
steady-
state growth
ROA of 1.50+%
ROE of 20+%
Stage 3
Source: National Commerce investor presentations
National Commerce Expansion History
Assets ($ millions)
18 Years
3 Years
National
Commerce’s retail engine:
de novo branching
expertise
Opportunity
National
Commerce’s de novo success story
Opportunity
Partnered with America’s #1 Retailer
Wal-Mart’s sales on one day last fall - $1.42 billion – were larger than the GDPs of 36 countries
Store traffic of 35,000 - 50,000 customers per week
National
Commerce’s de novo success story
Wal-Mart
Original 16 North Georgia Wal-Marts
Deposits $491,086; largest $68,760
Loans $78,275; largest $10,182
Average deposits – 30,700,000
Average loans – 4,900,000
Average pretax – April 2004 YTD annualized - $571,000
$0.03 per share annually for NCF
Opportunities for growth
16 new Wal-Mart Money
Centers in North Georgia; 8 opened in
last sixty days
77 new Wal-Mart Super
Centers; 55 in Florida; 22 in Southern
Georgia – will open starting in
August 2004 through 2Q 2006
Evaluating additional locations for growth
Opportunity
core commercial opportunities
SunTrust has leading
products and capabilities: #1 bank in
primary bank relationship in existing
footprint
Overlapping SunTrust
expertise within National Commerce
banking footprint results in highly
significant middle market
opportunity
Estimated Number of Middle Market Companies in NCI Footprint
North Carolina 4,500+
South Carolina 900+
Opportunity
SunTrust’s
wealth management model represents
strength for combined
enterprise
Registered Representatives
Trusco AUM Growth
Investment Management Income
Superb New Customer Sales and Retention
Financial metrics
strong given performance of overall equity
markets and when compared to
peers
Opportunity
why SunTrust?
We are uniquely
positioned to
provide big bank resources through a
locally empowered management team
Our size enables us to take advantage of economies of scale
We have the best
people –
and we have a highly effective approach to
managing these top performers
Our people work
effectively across business and product lines to build
lasting client
relationships
We have the
best
footprint
– we are in some of the fastest growing
markets in the country
We consistently maintain best-in-class credit quality
We have a firm
commitment to shareholders demonstrated through
decades of consistent
earnings and dividend growth
Bright prospect; positioned for the future
reconciliations appendix
Return on Avg.
Assets
Impact of excluding net unrealized
securities gains
Return on Avg. Assets less net unrealized
gains on securities portfolio
Return on Avg. Equity
Impact of excluding net unrealized
securities gains on securities portfolio
Return on Avg. Realized Equity
1.16%
0.03
1.19%
14.65%
2.94
17.59%
1Q 04
1.09%
0.02
1.11%
14.40%
2.73
17.13%
7
b.p.
1 b.p.
8 b.p.
25 b.p.
21 b.p.
46 b.p.
1.12
0.03
1.15%
15.13%
3.03
18.16%
4
b.p.
-
4 b.p.
(48) b.p.
(9) b.p.
(57) b.p.
4Q 03
Sequential
Change
1Q 04 vs 4Q 03
Change
1Q 04 vs 1Q 03
1Q 03
reconciliations appendix
Net Interest
Margin
Net Interest Margin Impact of
Three Pillars Consolidation
Net Interest Margin Impact of
Consolidation
of certain Affordable
Housing partnerships
Net Interest Margin
Adjusted for the Impact
of Three Pillars and Affordable Housing
1Q 04
3.13%
0.04%
0.01%
3.18%
4Q 03
3Q 03
3.09%
0.06%
0.01%
3.16%
2.98%
0.06%
0.02%
3.06%