L. Phillip Humann said investors are unlikely to see a drastic change in strategy at SunTrust Banks Inc. after he gives up the chief executive reins in 2007.
Mr. Humann announced plans Tuesday to hand the post to the Atlanta company's president and chief operating officer, James Wells 3rd, on Jan. 1. In an interview Wednesday, he said he was "amused" about speculation that the change augurs a sale of SunTrust.
"The future of this company as an independent institution has little or nothing to do with which of us is the CEO," said Mr. Humann, who will remain the company's chairman. "I think it's again people speculating when it is totally unfounded."
Mr. Humann, who has been chief executive since 1998, also said analysts are reading too much into the timing of the management change.
He said that he first initiated serious discussions on succession about a year ago, and that he and Mr. Wells are almost interchangeable managers. "You wouldn't want to do it on an overnight basis, but we could have," he said.
"The strategies may evolve slightly, but I don't think you'll see any dramatic shift in strategy or tactical execution," he said. "I wouldn't anticipate him waking up on the other side of the bed wanting to change things dramatically. … And I'll be here every day, so it's not like I'm going on a reservation somewhere."
But Mr. Humann said that Mr. Wells would not be content simply to occupy his new post until the next CEO is named. "To describe him as a caretaker would be a gross miss on what he's up to," Mr. Humann said. "He has been our chief operating officer for a couple of years, and he has been intimately involved in our strategic planning."
SunTrust said Mr. Wells was unavailable for an interview Wednesday.
Analysts were divided Wednesday over whether the management change will facilitate a sale of the $183 billion-asset company, though most agreed that the incoming CEO would have a small window - possibly just a year or two - to improve performance and ensure SunTrust's independence.
Wall Street analysts said they were concerned that Mr. Wells, 60, is just a year younger than the executive he will succeed. They said they were suspicious about the timing of the announcement, which was made about six weeks before its effective date.
Jennifer A. Thompson of Oppenheimer & Co. wrote in a research note issued Wednesday that CEO transitions are typically made "well in advance of the actual event" and that perhaps a change was deemed "necessary to improve growth an profitability." She wrote that Mr. Wells might have "more latitude" when it comes to cost cutting, selling businesses, or a significant balance-sheet restructuring.
By comparison, U.S. Bancorp named Jerry A. Grundhofer's successor, Richard K. Davis, in July, five months before Mr. Davis is to become CEO. He is currently the Minneapolis company president and operations chief.
SunTrust has had internal issues and, like other banking companies, has struggled to increase revenue in the face of an inverted yield curve and rising deposit pricing.
In the third quarter SunTrust put a $200 million corporate loan on nonaccrual status, though Mr. Humann has repeatedly said the troubled credit does not reflect larger problems in its loan portfolio. In recent months analysts have also questioned the ambiguity and delayed impact of the company's cost-cutting initiative.
Mr. Humann said Wednesday that the move was needed to give younger managers more experience before he or Mr. Wells reached the company's mandatory retirement age of 65. "This was done cautiously and prudently," he said.
"I think the board ought to be given credit for being ahead of the curve and visionary, as opposed to someone making something out of this when nothing exists."
Mr. Wells has had plenty of managerial experience. He was the president of Crestar Financial Corp. in Richmond, Va., from 1988 to 1998 and its operations chief from 1997 to 1998, when SunTrust bought the company. After that he was a regional CEO for SunTrust until August 2000, when he became its vice chairman. In December 2004 he became its president and chief operating officer, overseeing SunTrust's five key business lines.
Mr. Humann said no date has been set for his retirement as chairman. He also said there are no firm plans to refill the COO post Mr. Wells will be vacating. (Mr. Wells will remain president.)
Citigroup Inc. analyst Keith Horowitz said the fact that Mr. Humann is staying on tells him it is doubtful SunTrust will be sold anytime soon. In a note to clients Wednesday he reminded them that the long-time CEO "is a staunch proponent" of independence.
Though SunTrust's board has not named a new chief operating officer, it did assign several operational duties to other members of the management team. For instance, Mark Chancy, 42, its chief financial officer, will oversee corporate development and mergers and acquisitions; and David F. Dierker, 49, its chief administrative officer, will oversee efficiency and quality-related efforts; and Timothy Sullivan, 56, its chief information officer, will oversee payments strategy.
