Exhibit 99.1
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 | | News Release |
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| Contact: | | |
| Investors | | Media |
| Steve Shriner | | Barry Koling |
| (404) 827-6714 | | (404) 230-5268 |
For Immediate Release
April 23, 2009
SUNTRUST REPORTS FIRST QUARTER RESULTS
Improved Core Results Impacted by Non-Cash Goodwill Impairment Charge
Company Reports Record Deposit Growth, Significantly Bolstered Loan Loss Reserves, and
Enhanced Capital Position
ATLANTA— SunTrust Banks, Inc. (NYSE: STI) today reported a net loss for the first quarter of 2009 of $815.2 million compared to net income of $290.6 million in the first quarter of 2008. Net loss per average common diluted share was $2.49 compared to net income per average common diluted share of $0.81 in the first quarter of 2008. The majority of the first quarter loss to common shareholders was attributable to a non-cash, after-tax charge of $714.8 million, or $2.03 per share, related to the impairment of goodwill. The goodwill impairment charge had no impact on the Company’s strong regulatory capital and tangible equity ratios. Excluding the impairment charge, the loss in the first quarter was $0.46 per common share compared to a loss of $1.07 per common share in the fourth quarter of 2008. The loss in the fourth quarter was primarily attributable to higher recession-related credit costs.
“There are two clear messages that emerge from our first quarter results,” said James M. Wells III, SunTrust Chairman and Chief Executive Officer. “First, SunTrust, like other financial institutions, is still working through credit and earnings challenges as the weak economy continues to take a toll on performance. Second, there are some preliminary signs of improvement in several key areas, including mortgage originations, consumer and commercial deposit growth, and early-stage delinquencies.” Mr. Wells said the first quarter loss was entirely driven by the goodwill charge and increased reserves for loan losses, while revenue improved due to growth in mortgage originations. “Given that economic challenges remain, SunTrust is sharply focused on maintaining a strong capital position and mitigating near-term recession-related risk. At the same time, we continue to implement initiatives to take advantage of post-cycle growth opportunities. We are enhancing execution, improving service quality, and executing on numerous additional tactics to augment overall client satisfaction. Our record level of deposit growth is good evidence of these efforts and, coupled with our continued focus on core expense management, has positive implications for the future.”
Non-Cash Goodwill Impairment Charge
The Company recorded a non-cash, after-tax goodwill impairment charge of $714.8 million to common shareholders due to continued deterioration in real estate-related market conditions and in the macro economic environment, which put downward pressure on the fair value of the Company’s mortgage and commercial real estate-related assets. The impairment charge has no impact on the Company’s regulatory capital and tangible equity ratios. SunTrust remains committed to the clients, products, and services of the impacted businesses and believes that the long-term growth prospects of these businesses are strong.
Loan Loss Reserves and Credit-Related Expenses
The Company recorded a provision for loan losses of $994.1 million, which exceeded net charge-offs of $610.1 million by $384.0 million and increased the allowance for loan and lease losses to $2,735.0 million, or 2.21% of total loans. Credit-related expenses, exclusive of the provision for loan losses, were $184.9 million in the first quarter, down $230.7 million compared to the fourth quarter. The provision for loan losses in the first quarter of 2009 increased $31.6 million compared to the fourth quarter, resulting in a net decline in credit-related expenses of $199.1 million compared to the fourth quarter.
Deposit and Loan Growth
The Company generated strong deposit growth in the first quarter, with average consumer and commercial deposits increasing $5.3 billion, or 5.2%, and end of period balances increasing $7.2 billion, or 6.8%, compared to the fourth quarter. This record level of growth was driven by clients seeking the security of bank deposits and the successful “Live Solid. Bank Solid.” brand advertising that attracted new clients and expanded relationships. Further, through an intense focus on improved execution, the Company has been successful in improving client satisfaction, acquisition, and retention, which it also believes is contributing to the significant level of deposit growth.
Average total loans increased $2.1 billion, or 1.7%, over the first quarter of 2008. Growth occurred in both consumer and commercial loan categories, with the most significant growth in commercial loans and the most significant decline in construction loans. Average loans held for sale decreased by $1.5 billion, or 22%, compared to the first quarter of 2008, and increased $1.4 billion or 35% compared to the fourth quarter.
Capital and Liquidity
The estimated Tier 1 capital and tangible common equity to tangible asset ratios at March 31, 2009 were 11.00% and 5.82%, an increase of 13 and 23 basis points, respectively, compared to December 31, 2008, primarily due to the decrease in tangible assets related to the December sale of securities. The Company has substantial available liquidity due to inflows of high quality deposits and longer term financing sources, although weak demand remains for loans from higher quality borrowers.
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First Quarter 2009 Consolidated Highlights:
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| | | 1st Quarter | | | 1st Quarter | | | % | |
| | | 2009 | | | 2008 | | | Change | |
| Income Statement | | | | | | | | | |
(Dollars in millions, except per share data) | | | | | | | | | | | |
Net income/(loss) | | $ | (815.2 | ) | | $ | 290.6 | | | (380.5 | )% |
Net income/(loss), excluding goodwill impairment | | | (91.3 | ) | | | 290.6 | | | (131.4 | ) |
Net income/(loss) available to common shareholders | | | (875.4 | ) | | | 281.6 | | | (410.9 | ) |
Net income/(loss) available to common shareholders, excluding goodwill impairment | | | (160.6 | ) | | | 281.6 | | | (157.0 | ) |
Net income/(loss) per average common diluted share | | | (2.49 | ) | | | 0.81 | | | (407.4 | ) |
Net income/(loss) per average common diluted share, excluding goodwill impairment | | | (0.46 | ) | | | 0.81 | | | (156.8 | ) |
Total revenue – fully taxable-equivalent | | | 2,239.5 | | | | 2,225.3 | | | 0.6 | |
Net interest income – fully taxable equivalent | | | 1,093.0 | | | | 1,167.8 | | | (6.4 | ) |
Provision for loan losses | | | 994.1 | | | | 560.0 | | | 77.5 | |
Noninterest income | | | 1,146.5 | | | | 1,057.5 | | | 8.4 | |
Noninterest expense | | | 2,177.3 | | | | 1,252.2 | | | 73.9 | |
Noninterest expense, excluding goodwill impairment | | | 1,426.2 | | | | 1,252.2 | | | 13.9 | |
Net interest margin – fully taxable equivalent | | | 2.87 | % | | | 3.07 | % | | (7.0 | ) |
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Balance Sheet | | | | | | | | | | | |
(Dollars in billions) | | | | | | | | | | | |
Average loans | | $ | 125.3 | | | $ | 123.3 | | | 1.7 | % |
Average consumer and commercial deposits | | | 107.5 | | | | 101.2 | | | 6.3 | |
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Capital | | | | | | | | | | | |
Tier 1 capital ratio(1) | | | 11.00 | % | | | 7.23 | % | | | |
Total average shareholders’ equity to total average assets | | | 12.51 | | | | 10.28 | | | | |
Tangible common equity to tangible assets | | | 5.82 | | | | 6.34 | | | | |
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Asset Quality | | | | | | | | | | | |
Net charge-offs to average loans (annualized) | | | 1.97 | % | | | 0.97 | % | | | |
Allowance for loan losses to period end loans | | | 2.21 | | | | 1.25 | | | | |
Nonperforming loans to total loans | | | 3.75 | | | | 1.65 | | | | |
(1)Current period Tier 1 capital ratio is estimated as of the earnings release date
| | • | | A net loss of $815.2 million was reported due to higher provision for loan losses and an after-tax goodwill impairment charge of $723.9 million. Net loss available to common shareholders was $875.4 million and, excluding the goodwill impairment charge, was $160.6 million, which was $214.3 million better than the fourth quarter. Net loss available to common shareholders is net of dividends paid on preferred stock held by the U.S. Treasury of $66.3 million related to SunTrust’s $4.85 billion of preferred stock issued as part of the U.S. Treasury’s Capital Purchase Plan in the fourth quarter of 2008. |
| | • | | Fully taxable-equivalent total revenue increased 0.6% compared to the first quarter of 2008 and 16.3% versus the fourth quarter of 2008, as increased noninterest income more than offset a decline in net interest income. |
| | • | | Fully taxable-equivalent net interest income declined 6.4% from the first quarter of 2008, as yields on average earning assets declined at a more rapid rate than funding costs. One less day in the quarter and a reduction in dividend income from our reduced holdings of common stock in The Coca-Cola Company also contributed to the decline. Net interest margin for the first quarter was 2.87%, a decline of 20 basis points from the first quarter of 2008 and 27 basis points from the fourth quarter. |
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| | • | | Noninterest income increased 8.4% from the first quarter of 2008, driven by an almost three-fold increase in mortgage-related income, partially offset by reductions in trust and investment management and retail investment income compared to the same period in 2008. The first quarter of 2008 also included transaction-related gains of $212.7 million compared to gains of $25.3 million in 2009. In addition, the first quarter of 2008 included net market valuation losses of $163.7 million while the first quarter of 2009 included net gains of $62.5 million. The market valuation adjustments pertain primarily to mark to market adjustments on securities, loan warehouses, as well as our public debt and related hedges carried at fair value. |
| | • | | Noninterest expense increased 73.9% from the first quarter of 2008, primarily driven by the impairment of goodwill. Excluding the goodwill charge, noninterest expense increased 13.9% primarily due to higher credit-related costs, FDIC insurance premiums, and pension costs, which collectively account for more than the entire increase. |
| | • | | Total average loans increased 1.7% from the first quarter of 2008. The increase in average loans was due to growth in certain commercial and consumer loan portfolios, partially offset by declines in construction and residential mortgage loans. |
| | • | | Consumer and commercial deposits increased 6.3% over the first quarter of 2008. The increase in average consumer and commercial deposits was driven mainly by growth in average demand deposit and money market account balances. On a sequential annualized basis, consumer and commercial deposits increased approximately 21%. |
| | • | | The estimated Tier 1 capital, total average shareholders’ equity to total average assets, and tangible common equity to tangible asset ratios were 11.00%, 12.51%, and 5.82%, respectively compared to 10.87%, 11.23%, and 5.59%, respectively, as of year end. |
| | • | | Annualized net charge-offs were 1.97% of average loans for the first quarter of 2009, up from 0.97% of average loans in the first quarter of 2008 and 1.72% of average loans in the fourth quarter of 2008. The increase in net charge-offs from the first quarter of 2008 was driven by commercial, residential mortgage, home equity, and real estate construction loans. |
| | • | | Nonperforming loans to total loans increased to 3.75% as of March 31, 2009 from 3.10% as of December 31, 2008 and 1.65% as of March 31, 2008, due mainly to increased levels of residential real estate and real estate construction loans. |
CONSOLIDATED FINANCIAL PERFORMANCE
Revenue
Fully taxable-equivalent revenue was $2,239.5 million for the first quarter of 2009, which was virtually unchanged from the first quarter of 2008. Growth in mortgage-related income exceeded declines in net interest income and other fee-based revenues. The first quarter of 2008 also included gains from the Company’s interest in Visa, the sale/leaseback of bank-owned real estate, and the sale of our remaining interest in Lighthouse Investment Partners, collectively totaling $212.7 million.
Net Interest Income
Fully taxable-equivalent net interest income was $1,093.0 million in the first quarter of 2009, a decrease of 6.4% from the first quarter of 2008 and 9.6% from the sequential quarter. First quarter of 2008 and fourth quarter of 2008 average earning assets were essentially unchanged compared to the current quarter. Consequently, the decline in net interest income was driven primarily by margin compression, as well as one less day compared to the first quarter of 2008 and two fewer days compared to the fourth quarter. Net interest margin for the first quarter of 2009 was 2.87%, a 20 basis point decline from the first quarter of 2008 and a 27 basis point decline from the fourth quarter of 2008. Average earning asset yields declined 139 basis points, while average interest-bearing liability costs declined 130 basis points compared to the first quarter of 2008. The total yield on earning assets continues to be adversely affected by the growth in nonperforming loans, as well as lower market interest rates.
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Noninterest Income
Total noninterest income was $1,146.5 million for the first quarter of 2009, up $89.0 million, or 8.4%, from the first quarter of 2008. Increases in mortgage-related income and the recognition of a $25.3 million gain on the extinguishment of long-term debt were partially offset by income recorded in the first quarter of 2008 related to i) the gain on sale of our remaining interest in Lighthouse Investment Partners of $89.4 million, ii) the gain on the sale/leaseback of corporate real estate properties of $37.0 million, and iii) the gain from the Visa initial public offering of $86.3 million.
Mortgage production income was $250.5 million in the first quarter of 2009 compared to $85.6 million in the first quarter of 2008. The increase was due to a 14.6% increase in production volume over the first quarter of 2008 to $13.4 billion, higher margins on current mortgage production and lower market valuation losses on loans carried at fair market value. Mortgage servicing income increased to $83.4 million, up $54.3 million over the first quarter of 2008. The majority of the increase was an impairment recovery of $31.3 million related to mortgage servicing rights carried at amortized cost. Additionally, in the first quarter of 2009, the Company elected to record at fair value mortgage servicing rights generated in 2008 and 2009 and has actively begun hedging the change in fair value of those servicing rights. During the first quarter, the Company recorded $19.2 million of fair value gains related to mortgage servicing with an offsetting mark to market hedging loss recorded in trading income. At quarter end, SunTrust serviced $166.4 billion in mortgage loans, up $11.0 billion, or 7.1%, from the first quarter of 2008.
During the quarter, the Company recorded $112.6 million in mark to market valuation gains on its public debt and related hedges carried at fair value compared to $240.1 million in the first quarter of 2008. The first quarter of 2008 also included $287.2 million in mark to market losses primarily related to investments in asset-backed securities that were acquired in the fourth quarter of 2007 and other trading and securitization activities compared to approximately $33.7 million for the first quarter of 2009, as our exposure to these investments has been substantially reduced through sales, maturities, and write downs. Trading income also includes the previously mentioned $19.2 million mark to market hedging loss offsetting the gain in mortgage servicing income. Capital markets-related trading income increased slightly as compared to the first quarter of 2008 and improved significantly versus the fourth quarter due to improved fixed income and equity derivatives performance. Securities gains/losses in the first quarter of 2008 included $64.1 million in market value impairment primarily related to certain asset-backed securities that were classified as available for sale and estimated to be other than temporarily impaired.
The Company elected not to early apply the recently issued FASB Staff Positions (“FSPs”) regarding measuring fair value and other than temporary impairment. The Company does not expect these FSPs to have a significant impact on its financial results upon the adoption in the second quarter of 2009.
Growth in other transaction fee-related income in the current economic environment was limited; however, the Company generated a 7.4% increase in investment banking income, on improved bond origination and direct financing revenues, and slight gains in credit card fees over the first quarter of 2008. In the first quarter of 2009, trust and investment management income and retail investment services declined 28.0% and 21.6%, respectively, compared to the same quarter of 2008, as declines in the equity markets and reduced brokerage activity adversely impacted revenue.
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Noninterest Expense
Total noninterest expense in the first quarter of 2009 was $2,177.3 million, up $925.1 million, or 73.9%, from the first quarter of 2008. Excluding the impact of the goodwill impairment charge, the growth in noninterest expense was $174.0 million, or 13.9%, driven by increased credit-related and other economically cyclical expenses. Increased credit-related expenses include credit and collection costs up $20.1 million, other real estate expense up $32.2 million, and mortgage insurance reserves up $63.0 million, partially offset by a decline of $7.6 million in operating losses. Economically cyclical pension costs increased $36.8 million and FDIC premiums increased $43.1 million. As a result, these credit and other cyclical cost increases drove 120% of the total increase in expenses excluding goodwill. In the first quarter of 2009, the Company incurred fraud-related losses associated with borrower misrepresentations on mortgage loan documentation, as well as operating losses from denied insurance claims that had been reserved for as of year end. While these operational issues may persist in 2009, the Company has determined that borrower credit-related issues are now the predominant contributor to the losses. Consequently, the provision for loan losses in the first quarter of 2009 includes losses with characteristics that were previously classified as fraud-related and would have been reflected in operating losses in prior periods. Realized losses on these loans in future periods will be reflected as charge-offs.
Total personnel expenses in the first quarter of 2009 increased $21.0 million, or 2.9%, from the same period in 2008 due to increased pension expense driven by lower returns on pension assets and a decrease in the discount rate used to measure the pension obligation. This increase was partially offset by a decrease in salaries attributable to the outsourcing of certain operations in the third quarter of 2008, which was the primary factor contributing to the increase in outside processing. Total personnel declined by approximately 2,500 full-time employees since March 31, 2008. FDIC insurance premiums increased $43.1 million from the first quarter of 2008 as a result of higher deposit balances and premium rates. The FDIC is currently contemplating a special insurance assessment of all financial institutions which, if approved by the FDIC, will likely be recognized in the second quarter. The majority of other expense categories declined as a result of the Company’s focus on efficiency and expense management. Included in the first quarter of 2008 was $11.7 million in net costs from the early retirement of debt that was carried at cost and a $39.1 million reversal of a portion of the accrued liability associated with Visa litigation.
Income Taxes
For the first quarter of 2009, the Company recognized a benefit for income taxes of $150.8 million as a result of the pre-tax loss, compared to a provision for income taxes of $91.6 million in the first quarter of 2008. The effective tax rate of (15.6)% compared to (47.1)% in the fourth quarter, was significantly impacted by a $677.4 million non-deductible portion of the goodwill impairment charge.
U.S. Treasury Preferred Dividends
The Company recorded $66.3 million in preferred dividends related to the $4.85 billion in preferred securities issued to the U.S. Treasury under the Capital Purchase Program. The 5.5% effective yield reflects the 5.0% dividend rate and the amortization of the discount recorded on the preferred stock at issuance.
Balance Sheet
As of March 31, 2009, SunTrust had total assets of $179.1 billion. Shareholders’ equity of $21.6 billion as of March 31, 2009, represented 12.1% of total assets. Book value and tangible book value per common share were $46.03 and $28.15 respectively, as of March 31, 2009.
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Loans
Average loans for the first quarter of 2009 were $125.3 billion, up $2.1 billion, or 1.7%, from the first quarter of 2008. The increase was due to growth in certain commercial and consumer loan portfolios, partially offset by declines in construction and residential mortgage loans. Compared to the fourth quarter of 2008, average loans declined $2.3 billion, or 1.8%, primarily driven by declines in construction lending, due to lower demand, commercial loans, due to a decline in utilization by commercial clients, and residential mortgages, due to higher prepayments. SunTrust continues to be an active lender and, despite lower client demand, home equity lines of credit, consumer direct, and commercial real estate categories have grown as compared to both the first quarter and the fourth quarter of 2008. Average loans held for sale increased $1.4 billion, or 34.8%, as mortgage production increased 86.0% to $13.4 billion. Total loan production in the first quarter increased to almost $23 billion, up over 20% from the fourth quarter. Strong mortgage originations drove the growth with weak loan demand from commercial clients for working capital and real estate needs partially offsetting the mortgage growth.
Deposits
Average consumer and commercial deposits for the first quarter of 2009 were $107.5 billion, up 6.3%, from the first quarter of 2008, and 5.2% versus last quarter, displaying accelerated growth in the first quarter. End of period balances increased to $112.4 billion, up $7.2 billion, or 6.8%, compared to the fourth quarter. Growth is occurring in all products with the exception of savings. Deposit growth is the result of marketing campaigns, competitive pricing, and client’s increased preference for the security of insured deposit products. Further, through an intense focus on improved execution, the Company has been successful in improving client satisfaction, acquisition, and retention, which the Company also believes is contributing to the record level of deposit growth. During the first quarter, growth was led by noninterest-bearing deposits, which increased $1.9 billion, or 8.9%. Strong growth also occurred in money market and NOW accounts. Due to the increased deposit-related liquidity, the Company reduced average total brokered and foreign deposits by 52.1% from the first quarter of 2008.
Capital and Liquidity
The estimated Tier 1 capital and tangible common equity to tangible asset ratios at March 31, 2009, were 11.00% and 5.82%, an increase of 13 and 23 basis points, respectively, compared to December 31, 2008, due to the anticipated decrease in tangible assets. The Company has substantial available liquidity as the inflows of high quality deposits and longer term financing sources have largely been retained in cash and invested in high quality government-backed securities. Weak demand remains for loans from higher quality borrowers. Further, the Company has chosen not to deploy excess liquidity in higher risk business activities or securities.
Asset Quality
The allowance for loan and lease losses increased to $2,735.0 million as of March 31, 2009, an increase of $384.0 million from December 31, 2008. The increase in the allowance for loan and lease losses was primarily attributable to higher expected losses in corporate banking, commercial real estate, and home equity loans. In addition, beginning in 2009, the Company began recording estimated incurred losses that were previously related to fraud and denied insurance claims in the allowance for loan losses, as borrower nonperformance due to the deteriorating economic environment became the predominant cause for the expected loss. The allowance was increased by $173.0 million in the first quarter reflecting this change. The allowance for loan and lease losses as of March 31, 2009, represented 2.21% of period-end total loans compared to 1.86% as of December 31, 2008, and 1.25% as of March 31, 2008.
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Annualized net charge-offs in the first quarter of 2009 were 1.97% of average loans, up from 0.97% in the first quarter of 2008 and 1.72% in the fourth quarter of 2008. Net charge-offs were $610.1 million in the first quarter of 2009, as compared to $297.2 million in the first quarter of 2008 and $552.5 million in the fourth quarter of 2008. The provision for loan losses was $994.1 million in the first quarter of 2009 compared to $962.5 million and $560.0 million in the fourth and first quarters of 2008, respectively.
Nonperforming loans were $4,641.0 million, or 3.75% of total loans as of March 31, 2009, compared to $3,940.0 million, or 3.10% of total loans as of December 31, 2008, and $2,038.0 million, or 1.65% of total loans as of March 31, 2008. Overall, early stage delinquency trends moderated in the first quarter, declining 5 basis points to 1.76% after increasing 29 basis points during the fourth quarter. Credit metrics within the portfolios were mixed. Residential real estate-related portfolio charge-off rates increased in the first quarter, while early stage delinquencies moderated somewhat in the consumer home equity and residential mortgage portfolios. The consumer direct and indirect portfolios experienced a decline in charge-offs, while early stage delinquencies were roughly stable compared to the fourth quarter of 2008. Commercial charge-offs increased in the quarter driven by relatively fewer, but larger credits in unrelated, economically sensitive industries, while portfolio delinquency rates remained stable. Commercial real estate charge-offs decreased, as the fourth quarter 2008 level was primarily attributable to one commercial purpose credit secured by real estate.
Line of Business Results
The Company has included line of business financial tables as part of this release on their Web site at www.suntrust.com in the Investor Relations section located under “About SunTrust.” All revenue in the line of business tables is reported on a fully taxable-equivalent basis. For the lines of business, results include net interest income, which is computed using matched-maturity funds transfer pricing. Further, provision for loan losses is represented by net charge-offs. SunTrust also reports results for Corporate Other and Treasury, which includes the Treasury department as well as the residual expense associated with operational and support expense allocations. This segment also includes differences created between internal management accounting practices and generally accepted accounting principles, certain matched-maturity funds transfer pricing credits and charges, differences in provision expense compared to net charge-offs, as well as equity and its related impact. A detailed discussion of the line of business results will be included in the Company’s forthcoming quarterly report on Form 10-Q.
The Company has four lines of business used to measure business activities: Retail and Commercial, Corporate and Investment Banking, Household Lending, and Wealth and Investment Management with the remainder in Corporate Other and Treasury. The lines of business recently changed and the prior period has been restated for consistency. The management of Consumer Lending was combined with Mortgage to create Household Lending. Consumer Lending, which includes student lending, indirect auto, and other specialty consumer lending units, was previously a part of Retail and Commercial. This change will enable the Company to provide a strategic framework for all consumer lending products and will also create operational efficiencies. Also, Commercial Real Estate has been moved from Wholesale to Retail and Commercial as the management structure and client needs are similar. Previously, Commercial Real Estate had been combined with Corporate and Investment Banking in Wholesale Banking.
Corresponding Financial Tables and Information
Investors are encouraged to review the foregoing summary and discussion of SunTrust’s earnings and financial condition in conjunction with the detailed financial tables and information which SunTrust has also published today and SunTrust’s forthcoming quarterly report on Form 10-Q. Detailed financial tables and other information are also available on the Company’s Web site at www.suntrust.com in the Investor Relations section located under “About SunTrust.” This information is also included in a current report on Form 8-K furnished with the Securities Exchange Commission today.
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This news release contains certain non-US GAAP financial measures to describe the Company’s performance. The reconciliation of those measures to the most directly comparable U.S. GAAP financial measures, and the reasons why SunTrust believes such financial measures may be useful to investors, can be found in the financial information contained in the appendices of this news release.
Conference Call
SunTrust management will host a conference call April 23, 2009, at 8:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals may call beginning at 7:45 a.m. (Eastern Time) by dialing 1-888-972-7805 (Passcode: 1Q09). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 1Q09). A replay of the call will be available one hour after the call ends on April 23, 2009, and will remain available until May 7, 2009, dialing 1-866-447-7296 (domestic) or 1-203-369-1154 (international).
Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust Web site at www.suntrust.com. The webcast will be hosted under “Investor Relations,” located under “About SunTrust,” or may be accessed directly from the SunTrust home page by clicking on the earnings-related link, “1st Quarter Earnings Release.” Beginning the afternoon of April 23, 2009, listeners may access an archived version of the webcast in the “Webcasts and Presentations” subsection found under “Investor Relations.” A link to the Investor Relations page is also found in the footer of the SunTrust home page.
SunTrust Banks, Inc., headquartered in Atlanta, is one of the nation’s largest banking organizations, serving a broad range of consumer, commercial, corporate and institutional clients. The Company operates an extensive branch and ATM network throughout the high-growth Southeast and Mid-Atlantic states and a full array of technology-based, 24-hour delivery channels. The Company also serves clients in selected markets nationally. Its primary businesses include deposit, credit, trust and investment services. Through various subsidiaries the Company provides mortgage banking, insurance, brokerage, investment management, equipment leasing and capital markets services. SunTrust’s Internet address is www.suntrust.com.
Important Cautionary Statement About Forward-Looking Statements
This news release may contain forward-looking statements. Statements regarding FDIC insurance premiums, net margin, future levels of charge-offs, provision expense, and income are forward-looking statements. Also, any statement that does not describe historical or current facts, including statements about beliefs and expectations, is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Such statements are based upon the current beliefs and expectations of management and on information currently available to management. Such statements speak as of the date hereof, and we do not assume any obligation to update the statements made herein or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.
Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements can be found at Item 1A of our annual report on Form 10-K filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov). Those factors include: difficult market conditions have adversely affected our industry; current levels of market volatility are unprecedented; the soundness of
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other financial institutions could adversely affect us; there can be no assurance that recently enacted legislation, or any proposed federal programs, will stabilize the U.S. financial system, and such legislation and programs may adversely affect us; the impact on us of recently enacted legislation, in particular the EESA and its implementing regulations, and actions by the FDIC, cannot be predicted at this time; credit risk; weakness in the economy and in the real estate market, including specific weakness within our geographic footprint, has adversely affected us and may continue to adversely affect us; weakness in the real estate market, including the secondary residential mortgage loan markets, has adversely affected us and may continue to adversely affect us; weakness in the real estate market may adversely affect our reinsurance subsidiary; as a financial services company, adverse changes in general business or economic conditions could have a material adverse effect on our financial condition and results of operations; changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital or liquidity; the fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our earnings; we may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could harm our liquidity, results of operations, and financial condition; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; consumers may decide not to use banks to complete their financial transactions, which could affect net income; we have businesses other than banking which subject us to a variety of risks; hurricanes and other natural disasters may adversely affect loan portfolios and operations and increase the cost of doing business; negative public opinion could damage our reputation and adversely impact our business and revenues; we rely on other companies to provide key components of our business infrastructure; we rely on our systems, employees, and certain counterparties, and certain failures could materially adversely affect our operations; we depend on the accuracy and completeness of information about clients and counterparties; regulation by federal and state agencies could adversely affect our business, revenue, and profit margins; competition in the financial services industry is intense and could result in losing business or reducing margins; future legislation could harm our competitive position; maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services; we may not pay dividends on our common stock; our ability to receive dividends from our subsidiaries accounts for most of our revenue and could affect our liquidity and ability to pay dividends; significant legal actions could subject us to substantial uninsured liabilities; recently declining values of residential real estate, increases in unemployment, and the related effects on local economics may increase our credit losses, which would negatively affect our financial results; deteriorating credit quality, particularly in real estate loans, has adversely impacted us and may continue to adversely impact us; disruptions in our ability to access global capital markets may negatively affect our capital resources and liquidity; any reduction in our credit rating could increase the cost of our funding from the capital markets; we have in the past and may in the future pursue acquisitions, which could affect costs and from which we may not be able to realize anticipated benefits; we depend on the expertise of key personnel. If these individuals leave or change their roles without effective replacements, operations may suffer; we may not be able to hire or retain additional qualified personnel and recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact our ability to implement our business strategy; our accounting policies and processes are critical to how we report our financial condition and results of operations, and these require us to make estimates about matters that are uncertain; changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition; our stock price can be volatile; our disclosure controls and procedures may not prevent or detect all errors or acts of fraud; our financial instruments carried at fair value expose us to certain market risks; our revenues derived from our investment securities may be volatile and subject to a variety of risks; we may enter into transactions with off-balance sheet affiliates or our subsidiaries; and we are subject to market risk associated with our asset management and commercial paper conduit businesses.
###
10
SunTrust Banks, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(Dollars in millions, except per share data) (Unaudited)
| | | | | | | | | |
| | | Three Months Ended
March 31 | | | % Change 4 | |
| | | 2009 | | | 2008 | | |
| | | |
EARNINGS & DIVIDENDS | | | | | | | | | |
Net income/(loss) | | ($815.2 | ) | | $290.6 | | | NM | % |
Net income/(loss) available to common shareholders | | (875.4 | ) | | 281.6 | | | NM | |
Net income/(loss) available to common shareholders excluding
goodwill/intangible impairment charges other than MSRs1 | | (160.6 | ) | | 281.6 | | | NM | |
Total revenue - FTE2 | | 2,239.5 | | | 2,225.3 | | | 0.6 | |
Total revenue - FTE excluding securities (gains)/losses, net1 | | 2,236.1 | | | 2,285.9 | | | (2.2 | ) |
Net income/(loss) per average common share | | | | | | | | | |
Diluted | | (2.49 | ) | | 0.81 | | | NM | |
Diluted excluding goodwill/intangible impairment charges other than MSRs1 | | (0.46 | ) | | 0.81 | | | NM | |
Basic | | (2.49 | ) | | 0.81 | | | NM | |
Dividends paid per average common share | | 0.10 | | | 0.77 | | | (87.0 | ) |
| | | |
CONDENSED BALANCE SHEETS | | | | | | | | | |
Selected Average Balances | | | | | | | | | |
Total assets | | $178,871 | | | $176,917 | | | 1.1 | % |
Earning assets | | 154,390 | | | 153,004 | | | 0.9 | |
Loans | | 125,333 | | | 123,263 | | | 1.7 | |
Consumer and commercial deposits | | 107,515 | | | 101,168 | | | 6.3 | |
Brokered and foreign deposits | | 7,417 | | | 15,469 | | | (52.1 | ) |
Total shareholders’ equity | | 22,368 | | | 18,179 | | | 23.0 | |
| | | |
As of | | | | | | | | | |
Total assets | | 179,116 | | | 178,987 | | | 0.1 | |
Earning assets | | 153,290 | | | 152,715 | | | 0.4 | |
Loans | | 123,893 | | | 123,713 | | | 0.1 | |
Allowance for loan and lease losses | | 2,735 | | | 1,545 | | | 77.0 | |
Consumer and commercial deposits | | 112,449 | | | 103,432 | | | 8.7 | |
Brokered and foreign deposits | | 6,523 | | | 12,747 | | | (48.8 | ) |
Total shareholders’ equity | | 21,646 | | | 18,549 | | | 16.7 | |
| | | |
FINANCIAL RATIOS & OTHER DATA | | | | | | | | | |
Return on average total assets | | (1.85 | ) % | | 0.66 | % | | NM | % |
Return on average assets less net unrealized securities gains1 | | (1.89 | ) | | 0.72 | | | NM | |
Return on average common shareholders’ equity | | (20.71 | ) | | 6.41 | | | NM | |
Return on average realized common shareholders’ equity1 | | (22.08 | ) | | 7.58 | | | NM | |
Net interest margin2 | | 2.87 | | | 3.07 | | | (6.5 | ) |
Efficiency ratio2 | | 97.22 | | | 56.27 | | | 72.8 | |
Tangible efficiency ratio1 | | 62.97 | | | 55.34 | | | 13.8 | |
Effective tax rate/(benefit) | | (15.61 | ) | | 23.98 | | | NM | |
Tier 1 capital ratio | | 11.00 | 3 | | 7.23 | | | 52.1 | |
Total capital ratio | | 14.15 | 3 | | 10.97 | | | 29.0 | |
Tier 1 leverage ratio | | 10.14 | 3 | | 7.22 | | | 40.4 | |
Total average shareholders’ equity to total average assets | | 12.51 | | | 10.28 | | | 21.7 | |
Tangible equity to tangible assets1 | | 8.85 | 5 | | 6.63 | | | 33.5 | |
Tangible common equity to tangible assets1 | | 5.82 | 5 | | 6.34 | | | (8.2 | ) |
| | | |
Book value per common share | | $46.03 | | | $51.59 | | | (10.8 | ) |
Tangible book value per common share1 | | 28.15 | | | 31.13 | | | (9.6 | ) |
Market price: | | | | | | | | | |
High | | 30.18 | | | 70.00 | | | (56.9 | ) |
Low | | 6.00 | | | 52.94 | | | (88.7 | ) |
Close | | 11.74 | | | 55.14 | | | (78.7 | ) |
Market capitalization | | 4,188 | | | 19,290 | | | (78.3 | ) |
| | | |
Average common shares outstanding (000s) | | | | | | | | | |
Diluted | | 351,897 | | | 348,072 | | | 1.1 | |
Basic | | 351,352 | | | 346,581 | | | 1.4 | |
| | | |
Full-time equivalent employees | | 29,279 | | | 31,745 | | | (7.8 | ) |
Number of ATMs | | 2,673 | | | 2,509 | | | 6.5 | |
Full service banking offices | | 1,694 | | | 1,678 | | | 1.0 | |
1 | See Appendix A and Appendix B for reconcilements of non-GAAP performance measures. |
2 | Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent (“FTE”) basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. Total revenue - FTE equals net interest income on a FTE basis plus noninterest income. |
3 | Current period tier 1 capital, total capital and tier 1 leverage ratios are estimated as of the earnings release date. |
4 | “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful. |
5 | Current period calculation excludes deferred tax amount associated with goodwill in conjunction with Federal Reserve guidance issued in the fourth quarter of 2008. |
Page 1
SunTrust Banks, Inc. and Subsidiaries
FIVE QUARTER FINANCIAL HIGHLIGHTS
(Dollars in millions, except per share data) (Unaudited)
| | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31
2009 | | | December 31
2008 | | | September 30
2008 | | | June 30
2008 | | | March 31
2008 | |
| | | | | |
EARNINGS & DIVIDENDS | | | | | | | | | | | | | | | |
Net income/(loss) | | ($815.2) | | | ($347.6) | | | $312.4 | | | $540.4 | | | $290.6 | |
Net income/(loss) available to common shareholders | | (875.4) | | | (374.9) | | | 304.4 | | | 530.0 | | | 281.6 | |
Net income/(loss) available to common shareholders excluding goodwill/intangible impairment charges other than MSRs1 | | (160.6) | | | (374.9) | | | 304.4 | | | 557.0 | | | 281.6 | |
Total revenue - FTE2 | | 2,239.5 | | | 1,926.5 | | | 2,460.9 | | | 2,598.0 | | | 2,225.3 | |
Total revenue - FTE excluding securities (gains)/losses, net1 | | 2,236.1 | | | 1,515.4 | | | 2,287.9 | | | 2,048.2 | | | 2,285.9 | |
Net income/(loss) per average common share | | | | | | | | | | | | | | | |
Diluted | | (2.49) | | | (1.07) | | | 0.87 | | | 1.52 | | | 0.81 | |
Diluted excluding goodwill/intangible impairment charges other
than MSRs1 | | (0.46) | | | (1.07) | | | 0.87 | | | 1.59 | | | 0.81 | |
Basic | | (2.49) | | | (1.07) | | | 0.87 | | | 1.52 | | | 0.81 | |
Dividends paid per average common share | | 0.10 | | | 0.54 | | | 0.77 | | | 0.77 | | | 0.77 | |
| | | | | |
CONDENSED BALANCE SHEETS | | | | | | | | | | | | | | | |
Selected Average Balances | | | | | | | | | | | | | | | |
Total assets | | $178,871 | | | $177,047 | | | $173,888 | | | $175,549 | | | $176,917 | |
Earning assets | | 154,390 | | | 153,188 | | | 152,320 | | | 152,483 | | | 153,004 | |
Loans | | 125,333 | | | 127,608 | | | 125,642 | | | 125,192 | | | 123,263 | |
Consumer and commercial deposits | | 107,515 | | | 102,238 | | | 100,200 | | | 101,727 | | | 101,168 | |
Brokered and foreign deposits | | 7,417 | | | 12,649 | | | 15,800 | | | 15,068 | | | 15,469 | |
Total shareholders’ equity | | 22,368 | | | 19,891 | | | 18,097 | | | 18,209 | | | 18,179 | |
As of | | | | | | | | | | | | | | | |
Total assets | | 179,116 | | | 189,138 | | | 174,777 | | | 177,233 | | | 178,987 | |
Earning assets | | 153,290 | | | 156,016 | | | 152,904 | | | 154,716 | | | 152,715 | |
Loans | | 123,893 | | | 126,998 | | | 126,718 | | | 125,825 | | | 123,713 | |
Allowance for loan and lease losses | | 2,735 | | | 2,351 | | | 1,941 | | | 1,829 | | | 1,545 | |
Consumer and commercial deposits | | 112,449 | | | 105,276 | | | 101,829 | | | 102,434 | | | 103,432 | |
Brokered and foreign deposits | | 6,523 | | | 8,053 | | | 14,083 | | | 17,146 | | | 12,747 | |
Total shareholders’ equity | | 21,646 | | | 22,501 | | | 18,069 | | | 18,023 | | | 18,549 | |
| | | | | |
FINANCIAL RATIOS & OTHER DATA | | | | | | | | | | | | | | | |
Return on average total assets | | (1.85) | % | | (0.78) | % | | 0.71 | % | | 1.24 | % | | 0.66 | % |
Return on average assets less net unrealized securities gains1 | | (1.89) | | | (1.39) | | | 0.45 | | | 0.42 | | | 0.72 | |
Return on average common shareholders’ equity | | (20.71) | | | (8.47) | | | 6.88 | | | 12.04 | | | 6.41 | |
Return on average realized common shareholders’ equity1 | | (22.08) | | | (15.33) | | | 4.45 | | | 4.32 | | | 7.58 | |
Net interest margin2 | | 2.87 | | | 3.14 | | | 3.07 | | | 3.13 | | | 3.07 | |
Efficiency ratio2 | | 97.22 | | | 82.34 | | | 67.67 | | | 52.94 | | | 56.27 | |
Tangible efficiency ratio1 | | 62.97 | | | 81.44 | | | 66.92 | | | 50.45 | | | 55.34 | |
Effective tax rate/(benefit) | | (15.61) | | | (47.06) | | | (20.32) | | | 27.29 | | | 23.98 | |
Tier 1 capital ratio | | 11.00 | 3 | | 10.87 | | | 8.15 | | | 7.47 | | | 7.23 | |
Total capital ratio | | 14.15 | 3 | | 14.04 | | | 11.16 | | | 10.85 | | | 10.97 | |
Tier 1 leverage ratio | | 10.14 | 3 | | 10.45 | | | 7.98 | | | 7.54 | | | 7.22 | |
Total average shareholders’ equity to total average assets | | 12.51 | | | 11.23 | | | 10.41 | | | 10.37 | | | 10.28 | |
Tangible equity to tangible assets1 | | 8.85 | 4 | | 8.46 | 4 | | 6.47 | | | 6.34 | | | 6.63 | |
Tangible common equity to tangible assets1 | | 5.82 | 4 | | 5.59 | 4 | | 6.17 | | | 6.04 | | | 6.34 | |
| | | | | |
Book value per common share | | $46.03 | | | $48.74 | | | $49.64 | | | $49.56 | | | $51.59 | |
Tangible book value per common share1 | | 28.15 | | | 28.69 | | | 29.18 | | | 29.04 | | | 31.13 | |
Market price: | | | | | | | | | | | | | | | |
High | | 30.18 | | | 57.75 | | | 64.00 | | | 60.80 | | | 70.00 | |
Low | | 6.00 | | | 19.75 | | | 25.60 | | | 32.34 | | | 52.94 | |
Close | | 11.74 | | | 29.54 | | | 44.99 | | | 36.22 | | | 55.14 | |
Market capitalization | | 4,188 | | | 10,472 | | | 15,925 | | | 12,805 | | | 19,290 | |
| | | | | |
Average common shares outstanding (000s) | | | | | | | | | | | | | | | |
Diluted | | 351,897 | | | 351,882 | | | 350,970 | | | 349,783 | | | 348,072 | |
Basic | | 351,352 | | | 350,439 | �� | | 349,916 | | | 348,714 | | | 346,581 | |
| | | | | |
Full-time equivalent employees | | 29,279 | | | 29,333 | | | 29,447 | | | 31,602 | | | 31,745 | |
Number of ATMs | | 2,673 | | | 2,582 | | | 2,506 | | | 2,506 | | | 2,509 | |
Full service banking offices | | 1,694 | | | 1,692 | | | 1,692 | | | 1,699 | | | 1,678 | |
1 | See Appendix A and Appendix B for reconcilements of non-GAAP performance measures. |
2 | Total revenue, net interest margin, and efficiency ratios are presented on a fully taxable-equivalent (“FTE”) basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. Total revenue - FTE equals net interest income on a FTE basis plus noninterest income. |
3 | Current period tier 1 capital, total capital and tier 1 leverage ratios are estimated as of the earnings release date. |
4 | Calculation excludes deferred tax amount associated with goodwill in conjunction with Federal Reserve guidance issued in the fourth quarter of 2008. |
Page 2
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data) (Unaudited)
| | | | | | | | | |
| | | Three Months Ended | |
| | | March 31 | | Increase/(Decrease)2 | |
| | | 2009 | | 2008 | | Amount | | % | |
Interest income | | $1,729,335 | | $2,258,332 | | ($528,997) | | (23.4) | % |
Interest expense | | 667,237 | | 1,118,465 | | (451,228) | | (40.3) | |
| | | | | | | | | |
NET INTEREST INCOME | | 1,062,098 | | 1,139,867 | | (77,769) | | (6.8) | |
Provision for loan losses3 | | 994,098 | | 560,022 | | 434,076 | | 77.5 | |
| | | | | | | | | |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | | 68,000 | | 579,845 | | (511,845) | | (88.3) | |
| | | | | | | | | |
| | | | |
NONINTEREST INCOME | | | | | | | | | |
Service charges on deposit accounts | | 206,394 | | 211,839 | | (5,445) | | (2.6) | |
Trust and investment management income | | 116,010 | | 161,102 | | (45,092) | | (28.0) | |
Retail investment services | | 56,713 | | 72,300 | | (15,587) | | (21.6) | |
Other charges and fees | | 124,321 | | 127,231 | | (2,910) | | (2.3) | |
Investment banking income | | 59,534 | | 55,420 | | 4,114 | | 7.4 | |
Trading account profits and commissions | | 107,293 | | 28,218 | | 79,075 | | NM | |
Card fees | | 75,660 | | 73,761 | | 1,899 | | 2.6 | |
Mortgage production related income | | 250,470 | | 85,549 | | 164,921 | | NM | |
Mortgage servicing related income | | 83,352 | | 29,098 | | 54,254 | | NM | |
Net gain on extinguishment of debt | | 25,304 | | - | | - | | - | |
Net gain on sale of business | | - | | 89,390 | | (89,390) | | (100.0) | |
Gain on Visa IPO | | - | | 86,305 | | - | | - | |
Net gain on sale/leaseback of premises | | - | | 37,039 | | (37,039) | | (100.0) | |
Other noninterest income | | 38,114 | | 60,836 | | (22,722) | | (37.3) | |
Securities gains/(losses), net | | 3,377 | | (60,586) | | 63,963 | | NM | |
| | | | | | | | | |
Total noninterest income | | 1,146,542 | | 1,057,502 | | 89,040 | | 8.4 | |
| | | | | | | | | |
| | | | |
NONINTEREST EXPENSE | | | | | | | | | |
Employee compensation and benefits | | 736,052 | | 715,083 | | 20,969 | | 2.9 | |
Net occupancy expense | | 87,417 | | 86,441 | | 976 | | 1.1 | |
Outside processing and software | | 138,361 | | 109,165 | | 29,196 | | 26.7 | |
Equipment expense | | 43,540 | | 52,395 | | (8,855) | | (16.9) | |
Marketing and customer development | | 34,725 | | 55,703 | | (20,978) | | (37.7) | |
Amortization/impairment of goodwill/intangible assets | | 767,016 | | 20,715 | | 746,301 | | NM | |
Net loss on extinguishment of debt | | - | | 11,723 | | (11,723) | | - | |
Visa litigation | | - | | (39,124) | | 39,124 | | (100.0) | |
Operating losses3 | | 22,621 | | 30,263 | | (7,642) | | (25.3) | |
Mortgage reinsurance | | 70,039 | | 7,011 | | 63,028 | | NM | |
Other noninterest expense | | 277,556 | | 202,858 | | 74,698 | | 36.8 | |
| | | | | | | | | |
Total noninterest expense | | 2,177,327 | | 1,252,233 | | 925,094 | | 73.9 | |
| | | | | | | | | |
| | | | |
INCOME/(LOSS) BEFORE PROVISION/(BENEFIT) FORINCOME TAXES AND NET INCOME ATTRIBUTABLETO NONCONTROLLING INTEREST | | (962,785) | | 385,114 | | (1,347,899) | | NM | |
Less: pre-tax income attributable to noncontrolling interest | | 3,159 | | 2,911 | | 248 | | 8.5 | |
Provision/(benefit) for income taxes | | (150,777) | | 91,648 | | (242,425) | | NM | |
| | | | | | | | | |
NET INCOME/(LOSS) | | (815,167) | | 290,555 | | (1,105,722) | | NM | |
Series A preferred dividends | | 5,000 | | 6,977 | | (1,977) | | (28.3) | |
U.S. Treasury preferred dividends | | 66,279 | | - | | 66,279 | | NM | |
Dividends and undistributed earnings allocated to unvested shares | | (11,065) | | 2,023 | | (13,088) | | (647.0) | |
| | | | | | | | | |
NET INCOME/(LOSS) AVAILABLE TO COMMONSHAREHOLDERS | | ($875,381) | | $281,555 | | ($1,156,936) | | NM | |
| | | | | | | | | |
| | | | |
Net interest income - FTE1 | | $1,092,957 | | $1,167,842 | | ($74,885) | | (6.4) | |
| | | | |
Net income/(loss) per average common share | | | | | | | | | |
Diluted | | (2.49) | | 0.81 | | (3.30) | | NM | |
Basic | | (2.49) | | 0.81 | | (3.30) | | NM | |
| | | | |
Cash dividends paid per common share | | 0.10 | | 0.77 | | (0.67) | | (87.0) | |
Average common shares outstanding (000s) | | | | | | | | | |
Diluted | | 351,897 | | 348,072 | | 3,825 | | 1.1 | |
Basic | | 351,352 | | 346,581 | | 4,771 | | 1.4 | |
1 | Net interest income includes the effects of FTE adjustments using a federal tax rate of 35% and state income taxes where applicable to increase tax-exempt interest income to a taxable-equivalent basis. |
2 | “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful. |
3 | During the first quarter of 2009, the Company began incorporating certain types of loan-related losses in the allowance for loan and lease losses. These losses, representing borrower misrepresentation and insurance claim denials, were previously recorded within noninterest expense. |
Page 3
SunTrust Banks, Inc. and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data) (Unaudited)
| | | | | | | | | | |
| | | Three Months Ended |
| | | March 31
2009 | | December 31
2008 | | September 30
2008 | | June 30
2008 | | March 31
2008 |
| | | | | |
Interest income | | $1,729,335 | | $1,985,371 | | $2,017,314 | | $2,066,365 | | $2,258,332 |
Interest expense | | 667,237 | | 808,511 | | 871,101 | | 909,649 | | 1,118,465 |
| | | | | | | | | | |
NET INTEREST INCOME | | 1,062,098 | | 1,176,860 | | 1,146,213 | | 1,156,716 | | 1,139,867 |
Provision for loan losses2 | | 994,098 | | 962,494 | | 503,672 | | 448,027 | | 560,022 |
| | | | | | | | | | |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | | 68,000 | | 214,366 | | 642,541 | | 708,689 | | 579,845 |
| | | | | | | | | | |
| | | | | |
NONINTEREST INCOME | | | | | | | | | | |
Service charges on deposit accounts | | 206,394 | | 221,751 | | 240,241 | | 230,296 | | 211,839 |
Trust and investment management income | | 116,010 | | 126,426 | | 147,477 | | 157,319 | | 161,102 |
Retail investment services | | 56,713 | | 70,238 | | 72,791 | | 73,764 | | 72,300 |
Other charges and fees | | 124,321 | | 125,206 | | 128,776 | | 129,581 | | 127,231 |
Investment banking income | | 59,534 | | 57,962 | | 62,164 | | 60,987 | | 55,420 |
Trading account profits/(losses) and commissions | | 107,293 | | (61,879) | | 121,136 | | (49,306) | | 28,218 |
Card fees | | 75,660 | | 77,909 | | 78,138 | | 78,566 | | 73,761 |
Mortgage production related income/(loss) | | 250,470 | | (27,717) | | 50,028 | | 63,508 | | 85,549 |
Mortgage servicing related income/(loss) | | 83,352 | | (336,129) | | 62,654 | | 32,548 | | 29,098 |
Net gain on extinguishment of debt | | 25,304 | | - | | - | | - | | - |
Net gain/(loss) on sale of businesses | | - | | (2,711) | | 81,813 | | 29,648 | | 89,390 |
Gain on Visa IPO | | - | | - | | - | | - | | 86,305 |
Net gain on sale/leaseback of premises | | - | | - | | - | | - | | 37,039 |
Other noninterest income | | 38,114 | | 55,620 | | 66,958 | | 56,312 | | 60,836 |
Securities gains/(losses), net | | 3,377 | | 411,053 | | 173,046 | | 549,787 | | (60,586) |
| | | | | | | | | | |
Total noninterest income | | 1,146,542 | | 717,729 | | 1,285,222 | | 1,413,010 | | 1,057,502 |
| | | | | | | | | | |
| | | | | |
NONINTEREST EXPENSE | | | | | | | | | | |
Employee compensation and benefits | | 736,052 | | 638,014 | | 696,210 | | 711,957 | | 715,083 |
Net occupancy expense | | 87,417 | | 86,620 | | 88,745 | | 85,483 | | 86,441 |
Outside processing and software | | 138,361 | | 143,880 | | 132,361 | | 107,205 | | 109,165 |
Equipment expense | | 43,540 | | 47,892 | | 51,931 | | 50,991 | | 52,395 |
Marketing and customer development | | 34,725 | | 51,636 | | 217,693 | | 47,203 | | 55,703 |
Amortization/impairment of goodwill/intangible assets | | 767,016 | | 17,259 | | 18,551 | | 64,735 | | 20,715 |
Net loss on extinguishment of debt | | - | | - | | - | | - | | 11,723 |
Visa litigation | | - | | (14,345) | | 20,000 | | - | | (39,124) |
Operating losses2 | | 22,621 | | 236,078 | | 135,183 | | 44,654 | | 30,263 |
Mortgage reinsurance | | 70,039 | | 99,999 | | 47,956 | | 24,961 | | 7,011 |
Other noninterest expense | | 277,556 | | 279,120 | | 256,665 | | 238,153 | | 202,858 |
| | | | | | | | | | |
Total noninterest expense | | 2,177,327 | | 1,586,153 | | 1,665,295 | | 1,375,342 | | 1,252,233 |
| | | | | | | | | | |
| | | | | |
INCOME/(LOSS) BEFORE PROVISION/(BENEFIT) FOR INCOME TAXES AND NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | | (962,785) | | (654,058) | | 262,468 | | 746,357 | | 385,114 |
Less: pre-tax income attributable to noncontrolling interest | | 3,159 | | 2,485 | | 2,791 | | 3,191 | | 2,911 |
Provision/(benefit) for income taxes | | (150,777) | | (308,956) | | (52,767) | | 202,804 | | 91,648 |
| | | | | | | | | | |
NET INCOME/(LOSS) | | (815,167) | | (347,587) | | 312,444 | | 540,362 | | 290,555 |
Series A preferred dividends | | 5,000 | | 5,055 | | 5,111 | | 5,112 | | 6,977 |
U.S. Treasury preferred dividends | | 66,279 | | 26,579 | | - | | - | | - |
Dividends and undistributed earnings allocated to unvested shares | | (11,065) | | (4,283) | | 2,936 | | 5,282 | | 2,023 |
| | | | | | | | | | |
NET INCOME/(LOSS) AVAILABLE TO COMMON SHAREHOLDERS | | ($875,381) | | ($374,938) | | $304,397 | | $529,968 | | $281,555 |
| | | | | | | | | | |
| | | | | |
Net interest income - FTE1 | | $1,092,957 | | $1,208,650 | | $1,175,679 | | $1,184,972 | | $1,167,842 |
| | | | | |
Net income/(loss) per average common share | | | | | | | | | | |
Diluted | | (2.49) | | (1.07) | | 0.87 | | 1.52 | | 0.81 |
Basic | | (2.49) | | (1.07) | | 0.87 | | 1.52 | | 0.81 |
| | | | | |
Cash dividends paid per common share | | 0.10 | | 0.54 | | 0.77 | | 0.77 | | 0.77 |
Average common shares outstanding (000s) | | | | | | | | | | |
Diluted | | 351,897 | | 351,882 | | 350,970 | | 349,783 | | 348,072 |
Basic | | 351,352 | | 350,439 | | 349,916 | | 348,714 | | 346,581 |
1 | Net interest income includes the effects of FTE adjustments using a federal tax rate of 35% and state income taxes where applicable to increase tax-exempt interest income to a taxable-equivalent basis. |
2 | During the first quarter of 2009, the Company began incorporating certain types of loan-related losses in the allowance for loan and lease losses. These losses, representing borrower misrepresentation and insurance claim denials, were previously recorded within noninterest expense. |
Page 4
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (Unaudited)
| | | | | | | | |
| | | As of March 31 | | Increase/(Decrease) 3 |
| | | 2009 | | 2008 | | Amount | | % |
ASSETS | | | | | | | | |
Cash and due from banks | | $5,825,730 | | $3,994,267 | | $1,831,463 | | 45.9 % |
Interest-bearing deposits in other banks | | 25,282 | | 21,283 | | 3,999 | | 18.8 |
Funds sold and securities purchased under agreements to resell | | 1,209,987 | | 1,247,495 | | (37,508) | | (3.0) |
Trading assets | | 7,397,338 | | 10,932,251 | | (3,534,913) | | (32.3) |
Securities available for sale1 | | 19,485,406 | | 15,882,088 | | 3,603,318 | | 22.7 |
Loans held for sale | | 6,954,038 | | 6,977,289 | | (23,251) | | (0.3) |
Loans: | | | | | | | | |
Commercial | | 38,616,338 | | 37,306,872 | | 1,309,466 | | 3.5 |
Real estate: | | | | | | | | |
Home equity lines | | 16,455,007 | | 15,134,297 | | 1,320,710 | | 8.7 |
Construction | | 9,046,475 | | 12,980,917 | | (3,934,442) | | (30.3) |
Residential mortgages | | 32,180,888 | | 33,092,433 | | (911,545) | | (2.8) |
Commercial real estate - owner occupied | | 8,858,393 | | 8,084,010 | | 774,383 | | 9.6 |
Commercial real estate - investor owned | | 6,235,754 | | 4,809,698 | | 1,426,056 | | 29.6 |
Consumer: | | | | | | | | |
Direct | | 5,173,380 | | 4,192,168 | | 981,212 | | 23.4 |
Indirect | | 6,351,255 | | 7,305,213 | | (953,958) | | (13.1) |
Credit card | | 975,476 | | 807,587 | | 167,889 | | 20.8 |
| | | | | | | | |
Total loans | | 123,892,966 | | 123,713,195 | | 179,771 | | 0.1 |
Allowance for loan and lease losses | | (2,735,000) | | (1,545,340) | | 1,189,660 | | 77.0 |
| | | | | | | | |
Net loans | | 121,157,966 | | 122,167,855 | | (1,009,889) | | (0.8) |
Goodwill | | 6,309,431 | | 6,923,033 | | (613,602) | | (8.9) |
Other intangible assets | | 1,103,333 | | 1,430,268 | | (326,935) | | (22.9) |
Other real estate owned | | 593,579 | | 244,906 | | 348,673 | | NM |
Other assets | | 9,054,312 | | 9,166,212 | | (111,900) | | (1.2) |
| | | | | | | | |
Total assets 2 | | $179,116,402 | | $178,986,947 | | $129,455 | | 0.1 |
| | | | | | | | |
| | | | |
LIABILITIES | | | | | | | | |
Noninterest-bearing consumer and commercial deposits | | $24,371,518 | | $22,325,750 | | $2,045,768 | | 9.2 % |
Interest-bearing consumer and commercial deposits: | | | | | | | | |
NOW accounts | | 22,420,789 | | 22,292,330 | | 128,459 | | 0.6 |
Money market accounts | | 30,350,351 | | 25,843,396 | | 4,506,955 | | 17.4 |
Savings | | 3,598,754 | | 3,990,007 | | (391,253) | | (9.8) |
Consumer time | | 17,555,203 | | 16,876,836 | | 678,367 | | 4.0 |
Other time | | 14,152,098 | | 12,104,125 | | 2,047,973 | | 16.9 |
| | | | | | | | |
Total consumer and commercial deposits | | 112,448,713 | | 103,432,444 | | 9,016,269 | | 8.7 |
Brokered deposits | | 6,373,500 | | 11,034,332 | | (4,660,832) | | (42.2) |
Foreign deposits | | 149,962 | | 1,712,504 | | (1,562,542) | | (91.2) |
| | | | | | | | |
Total deposits | | 118,972,175 | | 116,179,280 | | 2,792,895 | | 2.4 |
Funds purchased | | 1,567,406 | | 3,795,641 | | (2,228,235) | | (58.7) |
Securities sold under agreements to repurchase | | 3,165,644 | | 5,446,204 | | (2,280,560) | | (41.9) |
Other short-term borrowings | | 2,883,384 | | 3,061,003 | | (177,619) | | (5.8) |
Long-term debt | | 23,029,842 | | 23,602,919 | | (573,077) | | (2.4) |
Trading liabilities | | 3,050,628 | | 2,356,037 | | 694,591 | | 29.5 |
Other liabilities | | 4,801,697 | | 5,997,260 | | (1,195,563) | | (19.9) |
| | | | | | | | |
Total liabilities | | 157,470,776 | | 160,438,344 | | (2,967,568) | | (1.8) |
| | | | | | | | |
| | | | |
SHAREHOLDERS’ EQUITY | | | | | | | | |
Preferred stock, no par value | | 5,227,357 | | 500,000 | | 4,727,357 | | NM |
Common stock, $1.00 par value | | 372,799 | | 370,578 | | 2,221 | | 0.6 |
Additional paid in capital | | 6,713,536 | | 6,682,828 | | 30,708 | | 0.5 |
Retained earnings | | 9,466,914 | | 10,661,250 | | (1,194,336) | | (11.2) |
Treasury stock, at cost, and other | | (1,168,995) | | (1,574,962) | | (405,967) | | (25.8) |
Accumulated other comprehensive income, net of tax | | 1,034,015 | | 1,908,909 | | (874,894) | | (45.8) |
| | | | | | | | |
Total shareholders’ equity | | 21,645,626 | | 18,548,603 | | 3,097,023 | | 16.7 |
| | | | | | | | |
| | | | |
Total liabilities and shareholders’ equity | | $179,116,402 | | $178,986,947 | | $129,455 | | 0.1 |
| | | | | | | | |
| | | | |
Common shares outstanding | | 356,693,099 | | 349,832,264 | | 6,860,835 | | 2.0 |
Common shares authorized | | 750,000,000 | | 750,000,000 | | - | | - |
Preferred shares outstanding | | 53,500 | | 5,000 | | 48,500 | | NM |
Preferred shares authorized | | 50,000,000 | | 50,000,000 | | - | | - |
Treasury shares of common stock | | 16,106,270 | | 20,746,134 | | (4,639,864) | | (22.4) |
1Includes net unrealized gains of | | $1,492,517 | | $2,835,823 | | ($1,343,306) | | (47.4) % |
2Includes earning assets of | | 153,289,712 | | 152,714,700 | | 575,012 | | 0.4 |
3“NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful.
Page 5
SunTrust Banks, Inc. and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (Unaudited)
| | | | | | | | | | | | | | | |
| | | As of | |
| | | March 31
2009 | | | December 31
2008 | | | September 30
2008 | | | June 30
2008 | | | March 31
2008 | |
ASSETS | | | | | | | | | | | | | | | |
Cash and due from banks | | $5,825,730 | | | $5,622,789 | | | $3,065,268 | | | $3,564,824 | | | $3,994,267 | |
Interest-bearing deposits in other banks | | 25,282 | | | 23,999 | | | 65,025 | | | 22,566 | | | 21,283 | |
Funds sold and securities purchased under agreements to resell | | 1,209,987 | | | 990,614 | | | 1,440,234 | | | 1,920,276 | | | 1,247,495 | |
Trading assets | | 7,397,338 | | | 10,396,269 | | | 8,936,540 | | | 10,147,021 | | | 10,932,251 | |
Securities available for sale1 | | 19,485,406 | | | 19,696,537 | | | 14,533,075 | | | 15,118,073 | | | 15,882,088 | |
Loans held for sale | | 6,954,038 | | | 4,032,128 | | | 4,759,761 | | | 5,260,892 | | | 6,977,289 | |
Loans: | | | | | | | | | | | | | | | |
Commercial | | 38,616,338 | | | 41,039,945 | | | 40,084,729 | | | 38,800,537 | | | 37,306,872 | |
Real estate: | | | | | | | | | | | | | | | |
Home equity lines | | 16,455,007 | | | 16,454,382 | | | 16,159,053 | | | 15,726,998 | | | 15,134,297 | |
Construction | | 9,046,475 | | | 9,863,961 | | | 11,519,497 | | | 12,542,775 | | | 12,980,917 | |
Residential mortgages | | 32,180,888 | | | 32,065,839 | | | 32,382,111 | | | 32,509,029 | | | 33,092,433 | |
Commercial real estate - owner occupied | | 8,858,393 | | | 8,758,052 | | | 8,365,212 | | | 8,116,577 | | | 8,084,010 | |
Commercial real estate - investor owned | | 6,235,754 | | | 6,199,030 | | | 5,476,783 | | | 5,577,356 | | | 4,809,698 | |
Consumer: | | | | | | | | | | | | | | | |
Direct | | 5,173,380 | | | 5,139,335 | | | 4,930,531 | | | 4,528,576 | | | 4,192,168 | |
Indirect | | 6,351,255 | | | 6,507,622 | | | 6,796,898 | | | 7,077,510 | | | 7,305,213 | |
Credit card | | 975,476 | | | 970,277 | | | 1,003,581 | | | 945,446 | | | 807,587 | |
| | | | | | | | | | | | | | | |
Total loans | | 123,892,966 | | | 126,998,443 | | | 126,718,395 | | | 125,824,804 | | | 123,713,195 | |
Allowance for loan and lease losses | | (2,735,000 | ) | | (2,350,996 | ) | | (1,941,000 | ) | | (1,829,400 | ) | | (1,545,340 | ) |
| | | | | | | | | | | | | | | |
Net loans | | 121,157,966 | | | 124,647,447 | | | 124,777,395 | | | 123,995,404 | | | 122,167,855 | |
Goodwill | | 6,309,431 | | | 7,043,503 | | | 7,062,869 | | | 7,056,015 | | | 6,923,033 | |
Other intangible assets | | 1,103,333 | | | 1,035,427 | | | 1,389,965 | | | 1,442,056 | | | 1,430,268 | |
Other real estate owned | | 593,579 | | | 500,481 | | | 387,037 | | | 334,519 | | | 244,906 | |
Other assets | | 9,054,311 | | | 15,148,767 | | | 8,359,591 | | | 8,371,081 | | | 9,166,212 | |
| | | | | | | | | | | | | | | |
Total assets2 | | $179,116,401 | | | $189,137,961 | | | $174,776,760 | | | $177,232,727 | | | $178,986,947 | |
| | | | | | | | | | | | | | | |
| | | | | |
LIABILITIES | | | | | | | | | | | | | | | |
Noninterest-bearing consumer and commercial deposits | | $24,371,518 | | | $21,522,021 | | | $21,487,853 | | | $22,184,774 | | | $22,325,750 | |
Interest-bearing consumer and commercial deposits: | | | | | | | | | | | | | | | |
NOW accounts | | 22,420,789 | | | 21,349,609 | | | 20,313,035 | | | 21,612,407 | | | 22,292,330 | |
Money market accounts | | 30,350,351 | | | 28,744,308 | | | 27,654,355 | | | 26,016,859 | | | 25,843,396 | |
Savings | | 3,598,754 | | | 3,345,187 | | | 3,568,831 | | | 3,990,277 | | | 3,990,007 | |
Consumer time | | 17,555,203 | | | 17,239,725 | | | 16,566,225 | | | 16,582,510 | | | 16,876,836 | |
Other time | | 14,152,098 | | | 13,074,857 | | | 12,238,642 | | | 12,046,718 | | | 12,104,125 | |
| | | | | | | | | | | | | | | |
Total consumer and commercial deposits | | 112,448,713 | | | 105,275,707 | | | 101,828,941 | | | 102,433,545 | | | 103,432,444 | |
Brokered deposits | | 6,373,500 | | | 7,667,167 | | | 9,141,001 | | | 12,607,183 | | | 11,034,332 | |
Foreign deposits | | 149,962 | | | 385,510 | | | 4,941,939 | | | 4,538,435 | | | 1,712,504 | |
| | | | | | | | | | | | | | | |
Total deposits | | 118,972,175 | | | 113,328,384 | | | 115,911,881 | | | 119,579,163 | | | 116,179,280 | |
Funds purchased | | 1,567,406 | | | 1,120,079 | | | 2,388,629 | | | 3,063,696 | | | 3,795,641 | |
Securities sold under agreements to repurchase | | 3,165,644 | | | 3,193,311 | | | 4,090,085 | | | 5,156,986 | | | 5,446,204 | |
Other short-term borrowings | | 2,883,384 | | | 5,166,360 | | | 2,728,307 | | | 2,682,808 | | | 3,061,003 | |
Long-term debt | | 23,029,842 | | | 26,812,381 | | | 23,857,828 | | | 21,327,576 | | | 23,602,919 | |
Trading liabilities | | 3,050,628 | | | 3,240,784 | | | 1,924,013 | | | 2,430,521 | | | 2,356,037 | |
Other liabilities | | 4,801,697 | | | 13,775,857 | | | 5,806,639 | | | 4,968,882 | | | 5,997,260 | |
| | | | | | | | | | | | | | | |
Total liabilities | | 157,470,776 | | | 166,637,156 | | | 156,707,382 | | | 159,209,632 | | | 160,438,344 | |
| | | | | | | | | | | | | | | |
| | | | | |
SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | |
Preferred stock, no par value | | 5,227,357 | | | 5,221,703 | | | 500,000 | | | 500,000 | | | 500,000 | |
Common stock, $1.00 par value | | 372,799 | | | 372,799 | | | 372,799 | | | 372,799 | | | 370,578 | |
Additional paid in capital | | 6,713,536 | | | 6,904,644 | | | 6,783,976 | | | 6,799,935 | | | 6,682,828 | |
Retained earnings | | 9,466,914 | | | 10,388,984 | | | 10,959,830 | | | 10,924,650 | | | 10,661,250 | |
Treasury stock, at cost, and other | | (1,168,995 | ) | | (1,368,450 | ) | | (1,435,517 | ) | | (1,496,224 | ) | | (1,574,962 | ) |
Accumulated other comprehensive income, net of tax | | 1,034,015 | | | 981,125 | | | 888,290 | | | 921,935 | | | 1,908,909 | |
| | | | | | | | | | | | | | | |
Total shareholders’ equity | | 21,645,626 | | | 22,500,805 | | | 18,069,378 | | | 18,023,095 | | | 18,548,603 | |
| | | | | | | | | | | | | | | |
| | | | | |
Total liabilities and shareholders’ equity | | $179,116,402 | | | $189,137,961 | | | $174,776,760 | | | $177,232,727 | | | $178,986,947 | |
| | | | | | | | | | | | | | | |
| | | | | |
Common shares outstanding | | 356,693,099 | | | 354,515,013 | | | 353,962,785 | | | 353,542,105 | | | 349,832,264 | |
Common shares authorized | | 750,000,000 | | | 750,000,000 | | | 750,000,000 | | | 750,000,000 | | | 750,000,000 | |
Preferred shares outstanding | | 53,500 | | | 53,500 | | | 5,000 | | | 5,000 | | | 5,000 | |
Preferred shares authorized | | 50,000,000 | | | 50,000,000 | | | 50,000,000 | | | 50,000,000 | | | 50,000,000 | |
Treasury shares of common stock | | 16,106,270 | | | 18,284,356 | | | 18,836,584 | | | 19,257,264 | | | 20,746,134 | |
|
| |
1Includes net unrealized gains of | | $1,492,517 | | | $1,413,330 | | | $1,519,449 | | | $1,655,504 | | | $2,835,823 | |
2Includes earning assets of | | 153,289,712 | | | 156,016,463 | | | 152,903,782 | | | 154,716,384 | | | 152,714,700 | |
Page 6
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED DAILY AVERAGE BALANCES,
AVERAGE YIELDS EARNED AND RATES PAID
(Dollars in millions; yields on taxable-equivalent basis) (Unaudited)
| | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31, 2009 | | | December 31, 2008 | |
| | | | | | |
| | | Average
Balances | | Interest
Income/
Expense | | Yields/
Rates | | | Average
Balances | | Interest
Income/
Expense | | Yields/
Rates | |
ASSETS | | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | |
Real estate 1-4 family | | $29,945.3 | | $451.5 | | 6.03 | % | | $31,006.9 | | $482.4 | | 6.22 | % |
Real estate construction | | 7,376.5 | | 59.9 | | 3.29 | | | 8,914.8 | | 106.5 | | 4.75 | |
Real estate home equity lines | | 15,906.7 | | 132.7 | | 3.38 | | | 15,803.1 | | 173.8 | | 4.38 | |
Real estate commercial | | 15,338.8 | | 158.3 | | 4.18 | | | 14,736.8 | | 202.2 | | 5.46 | |
Commercial - FTE1 | | 39,198.6 | | 453.4 | | 4.69 | | | 40,463.8 | | 540.5 | | 5.31 | |
Credit card | | 972.2 | | 18.1 | | 7.45 | | | 999.0 | | 16.9 | | 6.76 | |
Consumer - direct | | 5,164.6 | | 56.3 | | 4.42 | | | 5,009.4 | | 65.3 | | 5.18 | |
Consumer - indirect | | 6,624.1 | | 105.1 | | 6.44 | | | 6,820.9 | | 109.6 | | 6.39 | |
Nonaccrual and restructured | | 4,806.7 | | 4.3 | | 0.36 | | | 3,853.2 | | 5.1 | | 0.53 | |
| | | | | | | | | | | | | | |
Total loans | | 125,333.5 | | 1,439.6 | | 4.66 | | | 127,607.9 | | 1,702.3 | | 5.31 | |
Securities available for sale: | | | | | | | | | | | | | | |
Taxable | | 16,371.0 | | 199.4 | | 4.87 | | | 13,071.2 | | 183.8 | | 5.63 | |
Tax-exempt - FTE1 | | 1,071.9 | | 14.7 | | 5.50 | | | 1,007.9 | | 15.2 | | 6.04 | |
| | | | | | | | | | | | | | |
Total securities available for sale - FTE1 | | 17,442.9 | | 214.1 | | 4.91 | | | 14,079.1 | | 199.0 | | 5.65 | |
Funds sold and securities purchased under agreements to resell | | 963.7 | | 0.9 | | 0.39 | | | 963.2 | | 1.9 | | 0.77 | |
Loans held for sale | | 5,348.8 | | 61.8 | | 4.62 | | | 3,968.3 | | 53.5 | | 5.39 | |
Interest-bearing deposits | | 26.1 | | 0.1 | | 1.76 | | | 30.9 | | 0.2 | | 2.14 | |
Interest earning trading assets | | 5,275.0 | | 43.7 | | 3.35 | | | 6,538.5 | | 60.3 | | 3.67 | |
| | | | | | | | | | | | | | |
Total earning assets | | 154,390.0 | | 1,760.2 | | 4.62 | | | 153,187.9 | | 2,017.2 | | 5.24 | |
Allowance for loan and lease losses | | (2,350.9) | | | | | | | (1,997.9) | | | | | |
Cash and due from banks | | 3,995.4 | | | | | | | 3,218.6 | | | | | |
Other assets | | 17,415.5 | | | | | | | 17,695.3 | | | | | |
Noninterest earning trading assets | | 4,080.2 | | | | | | | 3,571.8 | | | | | |
Unrealized gains on securities available for sale, net | | 1,341.1 | | | | | | | 1,371.6 | | | | | |
| | | | | | | | | | | | | | |
Total assets | | $178,871.3 | | | | | | | $177,047.3 | | | | | |
| | | | | | | | | | | | | | |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | |
NOW accounts | | $21,243.5 | | $26.1 | | 0.50 | % | | $20,095.0 | | $32.6 | | 0.65 | % |
Money market accounts | | 29,316.9 | | 96.3 | | 1.33 | | | 27,968.7 | | 126.3 | | 1.80 | |
Savings | | 3,443.1 | | 2.3 | | 0.27 | | | 3,460.0 | | 2.8 | | 0.32 | |
Consumer time | | 17,240.2 | | 137.0 | | 3.22 | | | 17,043.5 | | 141.9 | | 3.31 | |
Other time | | 13,444.0 | | 107.4 | | 3.24 | | | 12,716.6 | | 112.0 | | 3.50 | |
| | | | | | | | | | | | | | |
Total interest-bearing consumer and commercial deposits | | 84,687.7 | | 369.1 | | 1.77 | | | 81,283.8 | | 415.6 | | 2.03 | |
Brokered deposits | | 7,004.9 | | 54.6 | | 3.12 | | | 8,942.3 | | 84.3 | | 3.69 | |
Foreign deposits | | 412.4 | | 0.2 | | 0.17 | | | 3,706.4 | | 4.0 | | 0.42 | |
| | | | | | | | | | | | | | |
Total interest-bearing deposits | | 92,105.0 | | 423.9 | | 1.87 | | | 93,932.5 | | 503.9 | | 2.13 | |
Funds purchased | | 1,533.3 | | 0.9 | | 0.24 | | | 2,156.1 | | 3.8 | | 0.69 | |
Securities sold under agreements to repurchase | | 3,245.5 | | 1.8 | | 0.22 | | | 3,609.4 | | 3.1 | | 0.33 | |
Interest-bearing trading liabilities | | 658.6 | | 6.2 | | 3.79 | | | 585.9 | | 5.7 | | 3.87 | |
Other short-term borrowings | | 4,967.4 | | 5.1 | | 0.42 | | | 4,163.5 | | 8.0 | | 0.77 | |
Long-term debt | | 24,437.7 | | 229.3 | | 3.81 | | | 24,037.8 | | 284.0 | | 4.70 | |
| | | | | | | | | | | | | | |
Total interest-bearing liabilities | | 126,947.5 | | 667.2 | | 2.13 | | | 128,485.2 | | 808.5 | | 2.50 | |
Noninterest-bearing deposits | | 22,827.2 | | | | | | | 20,954.6 | | | | | |
Other liabilities | | 4,354.2 | | | | | | | 5,124.7 | | | | | |
Noninterest-bearing trading liabilities | | 2,374.5 | | | | | | | 2,591.8 | | | | | |
Shareholders’ equity | | 22,367.9 | | | | | | | 19,891.0 | | | | | |
| | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $178,871.3 | | | | | | | $177,047.3 | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Interest Rate Spread | | | | | | 2.49 | % | | | | | | 2.74 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net Interest Income - FTE1 | | | | $1,093.0 | | | | | | | $1,208.7 | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net Interest Margin2 | | | | | | 2.87 | % | | | | | | 3.14 | % |
| | | | | | | | | | | | | | |
1 | The fully taxable-equivalent (“FTE”) basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. |
2 | The net interest margin is calculated by dividing annualized net interest income - FTE by average total earning assets. |
Page 7
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED DAILY AVERAGE BALANCES,
AVERAGE YIELDS EARNED AND RATES PAID
(Dollars in millions; yields on taxable-equivalent basis) (Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | |
| | | September 30, 2008 | | | June 30, 2008 | | | March 31, 2008 | |
| | | | | | | | | |
| | | Average
Balances | | | Interest
Income/
Expense | | Yields/
Rates | | | Average
Balances | | | Interest
Income/
Expense | | Yields/
Rates | | | Average
Balances | | | Interest
Income/
Expense | | Yields/
Rates | |
| | | | | | | | | | | | | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family | | $31,486.5 | | | $494.0 | | 6.28 | % | | $32,113.4 | | | $507.0 | | 6.32 | % | | $32,440.0 | | | $521.3 | | 6.43 | % |
Real estate construction | | 10,501.9 | | | 130.0 | | 4.92 | | | 11,471.9 | | | 149.5 | | 5.24 | | | 12,450.2 | | | 189.8 | | 6.13 | |
Real estate home equity lines | | 15,424.4 | | | 193.0 | | 4.98 | | | 14,980.1 | | | 195.8 | | 5.26 | | | 14,603.0 | | | 234.3 | | 6.45 | |
Real estate commercial | | 14,138.6 | | | 193.4 | | 5.44 | | | 13,876.7 | | | 192.8 | | 5.59 | | | 13,113.1 | | | 201.3 | | 6.17 | |
Commercial - FTE1 | | 38,064.4 | | | 508.5 | | 5.32 | | | 37,600.1 | | | 501.4 | | 5.36 | | | 36,374.6 | | | 539.2 | | 5.96 | |
Credit card | | 859.7 | | | 9.4 | | 4.36 | | | 816.0 | | | 5.4 | | 2.62 | | | 774.4 | | | 2.9 | | 1.52 | |
Consumer - direct | | 4,705.0 | | | 62.9 | | 5.32 | | | 4,382.4 | | | 63.4 | | 5.82 | | | 4,063.4 | | | 62.5 | | 6.19 | |
Consumer - indirect | | 7,152.3 | | | 114.0 | | 6.34 | | | 7,437.2 | | | 115.9 | | 6.27 | | | 7,645.3 | | | 120.2 | | 6.32 | |
Nonaccrual and restructured | | 3,309.2 | | | 7.4 | | 0.88 | | | 2,514.1 | | | 7.5 | | 1.20 | | | 1,799.0 | | | 5.4 | | 1.21 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | 125,642.0 | | | 1,712.6 | | 5.42 | | | 125,191.9 | | | 1,738.7 | | 5.59 | | | 123,263.0 | | | 1,876.9 | | 6.12 | |
Securities available for sale: | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | 11,944.2 | | | 174.4 | | 5.84 | | | 11,769.6 | | | 186.0 | | 6.32 | | | 12,087.1 | | | 186.8 | | 6.18 | |
Tax-exempt - FTE1 | | 1,017.2 | | | 15.5 | | 6.07 | | | 1,057.5 | | | 16.0 | | 6.05 | | | 1,071.4 | | | 16.5 | | 6.13 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total securities available for sale - FTE1 | | 12,961.4 | | | 189.9 | | 5.86 | | | 12,827.1 | | | 202.0 | | 6.30 | | | 13,158.5 | | | 203.3 | | 6.18 | |
Funds sold and securities purchased under agreements to resell | | 1,649.7 | | | 7.5 | | 1.79 | | | 1,331.1 | | | 6.7 | | 2.00 | | | 1,326.9 | | | 8.9 | | 2.67 | |
Loans held for sale | | 4,459.3 | | | 65.0 | | 5.82 | | | 5,148.5 | | | 72.5 | | 5.63 | | | 6,865.7 | | | 99.0 | | 5.77 | |
Interest-bearing deposits | | 28.0 | | | 0.2 | | 2.81 | | | 21.4 | | | 0.2 | | 3.77 | | | 21.9 | | | 0.2 | | 4.54 | |
Interest earning trading assets | | 7,579.4 | | | 71.6 | | 3.76 | | | 7,963.0 | | | 74.5 | | 3.76 | | | 8,367.6 | | | 98.0 | | 4.71 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total earning assets | | 152,319.8 | | | 2,046.8 | | 5.35 | | | 152,483.0 | | | 2,094.6 | | 5.52 | | | 153,003.6 | | | 2,286.3 | | 6.01 | |
Allowance for loan and lease losses | | (2,035.8 | ) | | | | | | | (1,828.7 | ) | | | | | | | (1,393.1 | ) | | | | | |
Cash and due from banks | | 2,918.1 | | | | | | | | 3,070.1 | | | | | | | | 3,166.5 | | | | | | |
Other assets | | 17,120.7 | | | | | | | | 17,186.1 | | | | | | | | 17,076.4 | | | | | | |
Noninterest earning trading assets | | 2,039.3 | | | | | | | | 2,342.4 | | | | | | | | 2,609.5 | | | | | | |
Unrealized gains on securities available for sale, net | | 1,526.4 | | | | | | | | 2,295.9 | | | | | | | | 2,454.0 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $173,888.5 | | | | | | | | $175,548.8 | | | | | | | | $176,916.9 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | $20,501.5 | | | $55.9 | | 1.08 | % | | $21,762.4 | | | $62.5 | | 1.15 | % | | $21,981.1 | | | $101.9 | | 1.87 | % |
Money market accounts | | 26,897.1 | | | 122.5 | | 1.81 | | | 26,031.8 | | | 116.7 | | 1.80 | | | 25,342.7 | | | 154.7 | | 2.46 | |
Savings | | 3,770.9 | | | 3.8 | | 0.40 | | | 3,939.1 | | | 3.9 | | 0.40 | | | 3,917.0 | | | 5.7 | | 0.59 | |
Consumer time | | 16,282.1 | | | 144.2 | | 3.52 | | | 16,726.7 | | | 165.2 | | 3.97 | | | 17,030.8 | | | 187.8 | | 4.43 | |
Other time | | 11,868.3 | | | 106.8 | | 3.58 | | | 11,921.1 | | | 118.8 | | 4.01 | | | 12,280.5 | | | 141.1 | | 4.62 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing consumer and commercial deposits | | 79,319.9 | | | 433.2 | | 2.17 | | | 80,381.1 | | | 467.1 | | 2.34 | | | 80,552.1 | | | 591.2 | | 2.95 | |
Brokered deposits | | 10,693.5 | | | 90.8 | | 3.32 | | | 11,135.4 | | | 93.4 | | 3.32 | | | 11,216.4 | | | 123.0 | | 4.34 | |
Foreign deposits | | 5,106.3 | | | 21.9 | | 1.68 | | | 3,932.9 | | | 19.3 | | 1.95 | | | 4,252.2 | | | 33.6 | | 3.13 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing deposits | | 95,119.7 | | | 545.9 | | 2.28 | | | 95,449.4 | | | 579.8 | | 2.44 | | | 96,020.7 | | | 747.8 | | 3.13 | |
Funds purchased | | 2,658.5 | | | 12.3 | | 1.80 | | | 2,792.5 | | | 13.5 | | 1.92 | | | 2,885.7 | | | 21.9 | | 3.00 | |
Securities sold under agreements to repurchase | | 4,971.7 | | | 19.1 | | 1.50 | | | 5,388.4 | | | 21.8 | | 1.60 | | | 5,889.4 | | | 35.1 | | 2.36 | |
Interest-bearing trading liabilities | | 994.5 | | | 8.8 | | 3.53 | | | 849.2 | | | 6.6 | | 3.12 | | | 713.0 | | | 6.0 | | 3.41 | |
Other short-term borrowings | | 2,521.0 | | | 11.2 | | 1.77 | | | 2,650.6 | | | 13.1 | | 1.99 | | | 2,887.6 | | | 22.8 | | 3.17 | |
Long-term debt | | 22,419.4 | | | 273.8 | | 4.86 | | | 22,298.6 | | | 274.8 | | 4.96 | | | 22,808.3 | | | 284.9 | | 5.02 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | 128,684.8 | | | 871.1 | | 2.69 | | | 129,428.7 | | | 909.6 | | 2.83 | | | 131,204.7 | | | 1,118.5 | | 3.43 | |
Noninterest-bearing deposits | | 20,879.9 | | | | | | | | 21,345.9 | | | | | | | | 20,616.3 | | | | | | |
Other liabilities | | 4,845.6 | | | | | | | | 5,046.4 | | | | | | | | 5,230.4 | | | | | | |
Noninterest-bearing trading liabilities | | 1,380.8 | | | | | | | | 1,518.6 | | | | | | | | 1,686.8 | | | | | | |
Shareholders’ equity | | 18,097.4 | | | | | | | | 18,209.2 | | | | | | | | 18,178.7 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $173,888.5 | | | | | | | | $175,548.8 | | | | | | | | $176,916.9 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Interest Rate Spread | | | | | | | 2.66 | % | | | | | | | 2.69 | % | | | | | | | 2.58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Net Interest Income - FTE1 | | | | | $1,175.7 | | | | | | | | $1,185.0 | | | | | | | | $1,167.8 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Net Interest Margin2 | | | | | | | 3.07 | % | | | | | | | 3.13 | % | | | | | | | 3.07 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
1 | The fully taxable-equivalent (“FTE”) basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. |
2 | The net interest margin is calculated by dividing annualized net interest income - FTE by average total earning assets. |
Page 8
SunTrust Banks, Inc. and Subsidiaries
OTHER FINANCIAL DATA
(Dollars in thousands) (Unaudited)
| | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31 | | | Increase/(Decrease) | |
| | | 2009 | | | 2008 | | | Amount | | | %1 | |
| | | | |
CREDIT DATA | | | | | | | | | | | | |
Allowance for loan and lease losses - beginning | | $2,350,996 | | | $1,282,504 | | | $1,068,492 | | | 83.3 | % |
Provision for loan losses | | 994,098 | | | 560,022 | | | 434,076 | | | 77.5 | |
Charge-offs | | | | | | | | | | | | |
Commercial | | (140,952) | | | (33,583) | | | 107,369 | | | NM | |
Real estate: | | | | | | | | | | | | |
Home equity lines | | (160,860) | | | (98,602) | | | 62,258 | | | 63.1 | |
Construction | | (82,381) | | | (23,182) | | | 59,199 | | | NM | |
Residential mortgages | | (185,121) | | | (109,186) | | | 75,935 | | | 69.5 | |
Commercial real estate | | (2,085) | | | (233) | | | 1,852 | | | NM | |
Consumer: | | | | | | | | | | | | |
Direct | | (9,055) | | | (10,315) | | | (1,260) | | | (12.2) | |
Indirect | | (49,334) | | | (42,889) | | | 6,445 | | | 15.0 | |
Credit cards | | (17,128) | | | (4,706) | | | 12,422 | | | NM | |
| | | | | | | | | | | | |
Total charge-offs | | (646,916) | | | (322,696) | | | 324,220 | | | NM | |
| | | | | | | | | | | | |
| | | | |
Recoveries | | | | | | | | | | | | |
Commercial | | 9,182 | | | 5,403 | | | 3,779 | | | 69.9 | |
Real estate: | | | | | | | | | | | | |
Home equity lines | | 3,812 | | | 2,368 | | | 1,444 | | | 61.0 | |
Construction | | 1,183 | | | 78 | | | 1,105 | | | NM | |
Residential mortgages | | 3,299 | | | 1,223 | | | 2,076 | | | NM | |
Commercial real estate | | 141 | | | 162 | | | (21) | | | (13.0) | |
Consumer: | | | | | | | | | | | | |
Direct | | 2,130 | | | 2,381 | | | (251) | | | (10.5) | |
Indirect | | 16,590 | | | 13,562 | | | 3,028 | | | 22.3 | |
Credit cards | | 485 | | | 333 | | | 152 | | | 45.6 | |
| | | | | | | | | | | | |
Total recoveries | | 36,822 | | | 25,510 | | | 11,312 | | | 44.3 | |
| | | | | | | | | | | | |
Net charge-offs | | (610,094) | | | (297,186) | | | 312,908 | | | NM | |
| | | | | | | | | | | | |
Allowance for loan and lease losses - ending | | $2,735,000 | | | $1,545,340 | | | $1,189,660 | | | 77.0 | |
| | | | | | | | | | | | |
| | | | |
Net charge-offs to average loans (annualized) | | | | | | | | | | | | |
Commercial | | 1.35 | % | | 0.31 | % | | 1.04 | % | | NM | % |
Real estate: | | | | | | | | | | | | |
Home equity lines | | 4.00 | | | 2.65 | | | 1.35 | | | 50.9 | |
Construction | | 3.76 | | | 0.72 | | | 3.04 | | | NM | |
Residential mortgages | | 2.28 | | | 1.29 | | | 0.99 | | | 76.4 | |
Commercial real estate | | 0.05 | | | - | | | 0.05 | | | NM | |
Consumer: | | | | | | | | | | | | |
Direct | | 0.54 | | | 0.79 | | | (0.24) | | | (30.8) | |
Indirect | | 2.00 | | | 1.53 | | | 0.47 | | | 30.7 | |
Credit cards | | 6.94 | | | 2.27 | | | 4.67 | | | NM | |
Total net charge-offs to total average loans | | 1.97 | | | 0.97 | | | 1.00 | | | NM | |
| | | | |
Period Ended | | | | | | | | | | | | |
Nonaccrual/nonperforming loans | | | | | | | | | | | | |
Commercial | | $400,076 | | | $97,930 | | | $302,146 | | | NM | % |
Real estate: | | | | | | | | | | | | |
Home equity lines | | 323,226 | | | 193,153 | | | 130,073 | | | 67.3 | |
Construction | | 1,468,108 | | | 520,704 | | | 947,404 | | | NM | |
Residential mortgages | | 2,177,946 | | | 1,115,071 | | | 1,062,875 | | | 95.3 | |
Commercial real estate | | 221,790 | | | 64,251 | | | 157,539 | | | NM | |
Consumer loans | | 49,842 | | | 46,851 | | | 2,991 | | | 6.4 | |
| | | | | | | | | | | | |
Total nonaccrual/nonperforming loans | | 4,640,988 | | | 2,037,960 | | | 2,603,028 | | | NM | |
Other real estate owned (OREO) | | 593,579 | | | 244,906 | | | 348,673 | | | NM | |
Other repossessed assets | | 11,807 | | | 6,340 | | | 5,467 | | | 86.2 | |
| | | | | | | | | | | | |
Total nonperforming assets | | $5,246,374 | | | $2,289,206 | | | $2,957,168 | | | NM | |
| | | | | | | | | | | | |
Restructured loans (accruing)4 | | $651,068 | | | $30,787 | | | $620,281 | | | NM | |
| | | | | | | | | | | | |
Total accruing loans past due 90 days or more | | $1,341,567 | | | $743,969 | | | $597,598 | | | 80.3 | % |
| | | | | | | | | | | | |
| | | | |
Total nonperforming loans to total loans | | 3.75 | % | | 1.65 | % | | 2.10 | % | | NM | % |
Total nonperforming assets to total loans plus OREO and other repossessed assets | | 4.21 | | | 1.85 | | | 2.36 | | | NM | |
Allowance to period-end loans2 | | 2.21 | | | 1.25 | | | 0.96 | | | 76.8 | |
Allowance to nonperforming loans3 | | 60.4 | | | 82.9 | | | (22.50) | | | (27.1) | |
Allowance to annualized net charge-offs | | 1.11 | x | | 1.28 | x | | (0.17) | x | | (13.3) | |
1“NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful.
2During the second quarter of 2008, the Company revised its method of calculating this ratio to include, within the period-end loan amount, only loans measured at amortized cost. Previously, period-end loans included loans measured at fair value or the lower of cost or market. The Company believes this is an improved method of calculation due to the fact that the allowance for loan losses relates solely to the loans measured at amortized cost. Loans measured at fair value or the lower of cost or market that have been excluded from the prior period calculation were $450,662 which did not change the calculation by more than one basis point as of March 31, 2008.
3During the second quarter of 2008, the Company revised its method of calculating this ratio to include, within the nonperforming loan amount, only loans measured at amortized cost. Previously, this calculation included nonperforming loans measured at fair value or the lower of cost or market. The Company believes this is an improved method of calculation due to the fact that the allowance for loan losses relates solely to the loans measured at amortized cost. Nonperforming loans measured at fair value or the lower of cost or market that have been excluded from the prior period calculation were $173,752 which increased the calculation approximately 7 basis points as of March 31, 2008.
4During the third quarter of 2008, the Company revised its definition of nonperforming to exclude loans that have been restructured and remain on accruing status. These loans are not considered to be nonperforming because they are performing in accordance with the restructured terms. This change better aligns the Company’s definition of nonperforming loans with the one used by peer institutions and therefore improves comparability of this measure across the industry.
Page 9
SunTrust Banks, Inc. and Subsidiaries
FIVE QUARTER OTHER FINANCIAL DATA
(Dollars in thousands) (Unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31
2009 | | | December 31
2008 | | | Increase/(Decrease) | | | September 30
2008 | | | June 30
2008 | | | March 31
2008 | |
| | | | | Amount | | | %1 | | | | |
CREDIT DATA | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses - beginning | | $2,350,996 | | | $1,941,000 | | | $409,996 | | | 21.1 | % | | $1,829,400 | | | $1,545,340 | | | $1,282,504 | |
Provision for loan losses | | 994,098 | | | 962,494 | | | 31,604 | | | 3.3 | | | 503,672 | | | 448,027 | | | 560,022 | |
Allowance from GB&T acquisition | | - | | | - | | | - | | | - | | | - | | | 158,705 | | | - | |
Charge-offs | | | | | | | | | | | | | | | | | | | | | |
Commercial | | (140,952) | | | (89,675) | | | 51,277 | | | 57.2 | | | (54,103) | | | (41,366) | | | (33,583) | |
Real estate: | | | | | | | | | | | | | | | | | | | | | |
Home equity lines | | (160,860) | | | (136,949) | | | 23,911 | | | 17.5 | | | (119,162) | | | (94,857) | | | (98,602) | |
Construction | | (82,381) | | | (84,194) | | | (1,813) | | | (2.2) | | | (51,719) | | | (35,399) | | | (23,182) | |
Residential mortgages | | (185,121) | | | (156,397) | | | 28,724 | | | 18.4 | | | (133,510) | | | (126,055) | | | (109,186) | |
Commercial real estate | | (2,085) | | | (23,548) | | | (21,463) | | | (91.1) | | | (400) | | | (563) | | | (233) | |
Consumer: | | | | | | | | | | | | | | | | | | | | | |
Direct | | (9,055) | | | (13,295) | | | (4,240) | | | (31.9) | | | (10,406) | | | (7,852) | | | (10,315) | |
Indirect | | (49,334) | | | (65,666) | | | (16,332) | | | (24.9) | | | (41,249) | | | (43,101) | | | (42,889) | |
Credit cards | | (17,128) | | | (12,843) | | | 4,285 | | | 33.4 | | | (9,175) | | | (6,372) | | | (4,706) | |
| | | | | | | | | | | | | | | | | | | | | |
Total charge-offs | | (646,916) | | | (582,567) | | | 64,349 | | | 11.0 | | | (419,724) | | | (355,565) | | | (322,696) | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Recoveries | | | | | | | | | | | | | | | | | | | | | |
Commercial | | 9,182 | | | 6,724 | | | 2,458 | | | 36.6 | | | 5,147 | | | 6,865 | | | 5,403 | |
Real estate: | | | | | | | | | | | | | | | | | | | | | |
Home equity lines | | 3,812 | | | 4,480 | | | (668) | | | (14.9) | | | 3,903 | | | 5,650 | | | 2,368 | |
Construction | | 1,183 | | | 802 | | | 381 | | | 47.5 | | | 1,786 | | | 182 | | | 78 | |
Residential mortgages | | 3,299 | | | 2,816 | | | 483 | | | 17.2 | | | 2,083 | | | 1,644 | | | 1,223 | |
Commercial real estate | | 141 | | | 700 | | | (559) | | | (79.9) | | | 257 | | | 35 | | | 162 | |
Consumer: | | | | | | | | | | | | | | | | | | | | | |
Direct | | 2,130 | | | 1,964 | | | 166 | | | 8.5 | | | 1,700 | | | 2,119 | | | 2,381 | |
Indirect | | 16,590 | | | 12,102 | | | 4,488 | | | 37.1 | | | 12,491 | | | 16,008 | | | 13,562 | |
Credit cards | | 485 | | | 481 | | | 4 | | | 0.8 | | | 285 | | | 390 | | | 333 | |
| | | | | | | | | | | | | | | | | | | | | |
Total recoveries | | 36,822 | | | 30,069 | | | 6,753 | | | 22.5 | | | 27,652 | | | 32,893 | | | 25,510 | |
| | | | | | | | | | | | | | | | | | | | | |
Net charge-offs | | (610,094) | | | (552,498) | | | 57,596 | | | 10.4 | | | (392,072) | | | (322,672) | | | (297,186) | |
| | | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses - ending | | $2,735,000 | | | $2,350,996 | | | $384,004 | | | 16.3 | | | $1,941,000 | | | $1,829,400 | | | $1,545,340 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net charge-offs to average loans (annualized) | | | | | | | | | | | | | | | | | | | | | |
Commercial | | 1.35 | % | | 0.81 | % | | 0.54 | % | | 66.7 | % | | 0.57 | % | | 0.37 | % | | 0.31 | % |
Real estate: | | | | | | | | | | | | | | | | | | | | | |
Home equity lines | | 4.00 | | | 3.33 | | | 0.67 | | | 20.1 | | | 2.97 | | | 2.40 | | | 2.65 | |
Construction | | 3.76 | | | 3.29 | | | 0.47 | | | 14.3 | | | 1.73 | | | 1.16 | | | 0.72 | |
Residential mortgages | | 2.28 | | | 1.86 | | | 0.42 | | | 22.6 | | | 1.57 | | | 1.49 | | | 1.29 | |
Commercial real estate | | 0.05 | | | 0.61 | | | (0.56) | | | (91.8) | | | - | | | 0.02 | | | - | |
Consumer: | | | | | | | | | | | | | | | | | | | | | |
Direct | | 0.54 | | | 0.90 | | | (0.36) | | | (40.0) | | | 0.74 | | | 0.53 | | | 0.79 | |
Indirect | | 2.00 | | | 3.12 | | | (1.12) | | | (35.9) | | | 1.56 | | | 1.46 | | | 1.53 | |
Credit cards | | 6.94 | | | 4.92 | | | 2.02 | | | 41.1 | | | 4.11 | | | 2.95 | | | 2.27 | |
Total net charge-offs to total average loans | | 1.97 | | | 1.72 | | | 0.25 | | | 14.5 | | | 1.24 | | | 1.04 | | | 0.97 | |
| | | | | | | |
Period Ended | | | | | | | | | | | | | | | | | | | | | |
Nonaccrual/nonperforming loans | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $400,076 | | | $321,980 | | | $78,096 | | | 24.3 | % | | $257,343 | | | $117,168 | | | $97,930 | |
Real estate: | | | | | | | | | | | | | | | | | | | | | |
Home equity lines | | 323,226 | | | 272,577 | | | 50,649 | | | 18.6 | | | 232,904 | | | 216,839 | | | 193,153 | |
Construction | | 1,468,108 | | | 1,276,847 | | | 191,261 | | | 15.0 | | | 1,040,678 | | | 772,353 | | | 520,704 | |
Residential mortgages | | 2,177,946 | | | 1,846,999 | | | 330,947 | | | 17.9 | | | 1,548,955 | | | 1,356,710 | | | 1,115,071 | |
Commercial real estate | | 221,790 | | | 176,578 | | | 45,212 | | | 25.6 | | | 164,906 | | | 124,523 | | | 64,251 | |
Consumer loans | | 49,842 | | | 45,045 | | | 4,797 | | | 10.6 | | | 44,732 | | | 37,735 | | | 46,851 | |
| | | | | | | | | | | | | | | | | | | | | |
Total nonaccrual/nonperforming loans | | 4,640,988 | | | 3,940,026 | | | 700,962 | | | 17.8 | | | 3,289,518 | | | 2,625,328 | | | 2,037,960 | |
Other real estate owned (OREO) | | 593,579 | | | 500,481 | | | 93,098 | | | 18.6 | | | 387,037 | | | 334,519 | | | 244,906 | |
Other repossessed assets | | 11,807 | | | 15,866 | | | (4,059) | | | (25.6) | | | 13,714 | | | 13,203 | | | 6,340 | |
| | | | | | | | | | | | | | | | | | | | | |
Total nonperforming assets | | $5,246,374 | | | $4,456,373 | | | $790,001 | | | 17.7 | | | $3,690,269 | | | $2,973,050 | | | $2,289,206 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Restructured loans (accruing)4 | | $651,068 | | | $462,648 | | | $188,420 | | | 40.7 | % | | $381,040 | | | $163,358 | | | $30,787 | |
| | | | | | | | | | | | | | | | | | | | | |
Total accruing loans past due 90 days or more | | $1,341,567 | | | $1,032,260 | | | $309,307 | | | 30.0 | % | | $772,132 | | | $753,558 | | | $743,969 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Total nonperforming loans to total loans | | 3.75 | % | | 3.10 | % | | 0.65 | % | | 21.0 | % | | 2.60 | % | | 2.09 | % | | 1.65 | % |
Total nonperforming assets to total loans plus OREO and other repossessed assets | | 4.21 | | | 3.49 | | | 0.72 | | | 20.6 | | | 2.90 | | | 2.36 | | | 1.85 | |
Allowance to period-end loans2 | | 2.21 | | | 1.86 | | | 0.35 | | | 18.8 | | | 1.54 | | | 1.46 | | | 1.25 | |
Allowance to nonperforming loans3 | | 60.4 | | | 61.7 | | | (1.30) | | | (2.1) | | | 62.1 | | | 77.0 | | | 82.9 | |
Allowance to annualized net charge-offs | | 1.11 | x | | 1.07 | x | | 0.04 | x | | 3.3 | | | 1.24 | x | | 1.41 | x | | 1.28 | x |
1 | “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful. |
2 | During the second quarter of 2008, the Company revised its method of calculating this ratio to include, within the period-end loan amount, only loans measured at amortized cost. Previously, period-end loans included loans measured at fair value or the lower of cost or market. The Company believes this is an improved method of calculation due to the fact that the allowance for loan losses relates solely to the loans measured at amortized cost. Loans measured at fair value or the lower of cost or market that have been excluded from the prior period calculation were $450,662 as of March 31, 2008, which did not change the calculation by more than one basis point. |
3 | During the second quarter of 2008, the Company revised its method of calculating this ratio to include, within the nonperforming loan amount, only loans measured at amortized cost. Previously, this calculation included nonperforming loans measured at fair value or the lower of cost or market. The Company believes this is an improved method of calculation due to the fact that the allowance for loan losses relates solely to the loans measured at amortized cost. Nonperforming loans measured at fair value or the lower of cost or market that have been excluded from the prior period calculation were $173,752 as of March 31, 2008, which increased the calculation approximately 7 basis points as of March 31, 2008. |
4 | During the third quarter of 2008, the Company revised its definition of nonperforming to exclude loans that have been restructured and remain on accruing status. These loans are not considered to be nonperforming because they are performing in accordance with the restructured terms. This change better aligns the Company’s definition of nonperforming loans with the one used by peer institutions and therefore improves comparability of this measure across the industry. |
Page 10
SunTrust Banks, Inc. and Subsidiaries
OTHER FINANCIAL DATA (continued)
(Dollars and shares in thousands, except per share data) (Unaudited)
| | | | | | | | | | | | | | | |
| |
| | | Three Months Ended | |
| | | March 31 | |
| | | Core Deposit
Intangible | | | Mortgage
Servicing Rights-
Amortized Cost | | | Mortgage
Servicing Rights-
Fair Value | | | Other | | | Total | |
OTHER INTANGIBLE ASSET ROLLFORWARD | | | | | | | | | | | | | | | |
Balance, beginning of period | | $172,655 | | | $1,049,425 | | | $- | | | $140,915 | | | $1,362,995 | |
Amortization | | (14,952 | ) | | (56,442 | ) | | - | | | (5,763 | ) | | (77,157 | ) |
Mortgage Servicing Rights (“MSRs”) originated | | - | | | 152,303 | | | - | | | - | | | 152,303 | |
Sale of interest in Lighthouse Partners | | - | | | - | | | - | | | (5,992 | ) | | (5,992 | ) |
MSRs impairment reserve | | - | | | (1,881 | ) | | - | | | - | | | (1,881 | ) |
| | | | | | | | | | | | | | | |
Balance, March 31, 2008 | | $157,703 | | | $1,143,405 | | | $- | | | $129,160 | | | $1,430,268 | |
| | | | | | | | | | | | | | | |
| | | | | |
Balance, beginning of period | | $145,311 | | | $810,474 | | | $- | | | $79,642 | | | $1,035,427 | |
Designated at fair value (transfers from amortized cost) | | - | | | (187,804 | ) | | 187,804 | | | - | | | - | |
Amortization | | (11,881 | ) | | (67,467 | ) | | - | | | (4,108 | ) | | (83,456 | ) |
MSRs originated | | - | | | - | | | 146,290 | | | - | | | 146,290 | |
MSRs impairment recovery | | - | | | 31,298 | | | - | | | - | | | 31,298 | |
Fair value changes due to inputs and assumptions | | - | | | - | | | (25,798 | ) | | - | | | (25,798 | ) |
Cymric purchase price adjustment | | - | | | - | | | - | | | (428 | ) | | (428 | ) |
| | | | | | | | | | | | | | | |
Balance, March 31, 2009 | | $133,430 | | | $586,501 | | | $308,296 | | | $75,106 | | | $1,103,333 | |
| | | | | | | | | | | | | | | |
| |
| | | Three Months Ended | |
| | | March 31
2009 | | | December 31
2008 | | | September 30
2008 | | | June 30
2008 | | | March 31
2008 | |
| | | | | |
COMMON SHARE ROLLFORWARD | | | | | | | | | | | | | | | |
Beginning balance | | 354,515 | | | 353,963 | | | 353,542 | | | 349,832 | | | 348,411 | |
Common shares issued/exchanged for employee benefit plans, stock option, performance and restricted stock activity | | 2,178 | | | 552 | | | 421 | | | 1,489 | | | 1,421 | |
Common shares issued for acquisition of GB&T | | - | | | - | | | - | | | 2,221 | | | - | |
| | | | | | | | | | | | | | | |
Ending balance | | 356,693 | | | 354,515 | | | 353,963 | | | 353,542 | | | 349,832 | |
| | | | | | | | | | | | | | | |
| | | | | |
COMMON STOCK REPURCHASE ACTIVITY | | | | | | | | | | | | | | | |
Number of common shares repurchased1 | | - | | | - | | | - | | | 2 | | | 17 | |
Average price per share of repurchased common shares | | $- | | | $- | | | $- | | | $57.76 | | | $62.38 | |
Maximum number of common shares that may yet be purchased under repurchase plans or programs | | 30,000 | | | 30,000 | | | 30,000 | | | 30,000 | | | 30,000 | |
1 | This figure includes shares repurchased pursuant to SunTrust’s employee stock option plans, pursuant to which participants may pay the exercise price upon exercise of SunTrust stock options by surrendering shares of SunTrust common stock which the participant already owns. |
Page 11
SunTrust Banks, Inc. and Subsidiaries
RECONCILEMENT OF NON-GAAP MEASURES
APPENDIX A TO THE EARNINGS RELEASE
(Dollars in thousands) (Unaudited)
| | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31
2009 | | | December 31
2008 | | | September 30
2008 | | | June 30
2008 | | | March 31
2008 | |
NON-GAAP MEASURES PRESENTED IN THE EARNINGS RELEASE | | | | | | | | | | | | | | | |
Net income/(loss) | | ($815,167) | | | ($347,587) | | | $312,444 | | | $540,362 | | | $290,555 | |
Securities (gains)/losses, net of tax | | (2,094) | | | (254,853) | | | (107,289) | | | (345,807) | | | 37,563 | |
| | | | | | | | | | | | | | | |
Net income/(loss) excluding net securities (gains)/losses, net of tax | | (817,261) | | | (602,440) | | | 205,155 | | | 194,555 | | | 328,118 | |
The Coca-Cola Company stock dividend, net of tax | | (10,947) | | | (10,146) | | | (10,146) | | | (14,738) | | | (14,738) | |
| | | | | | | | | | | | | | | |
Net income/(loss) excluding net securities (gains)/losses and The
Coca-Cola Company stock dividend, net of tax | | (828,208) | | | (612,586) | | | 195,009 | | | 179,817 | | | 313,380 | |
Less: Preferred dividends, Series A | | 5,000 | | | 5,055 | | | 5,111 | | | 5,112 | | | 6,977 | |
Less: U.S. Treasury preferred dividends | | 66,279 | | | 26,579 | | | - | | | - | | | - | |
Less: Dividends and undistributed earnings allocated to unvested shares | | (11,065) | | | (4,283) | | | 2,937 | | | 5,282 | | | 2,023 | |
| | | | | | | | | | | | | | | |
Net income/(loss) available to common shareholders excluding net securities (gains)/losses and The Coca-Cola Company stock dividend | | ($888,422) | | | ($639,937) | | | $186,961 | | | $169,423 | | | $304,380 | |
| | | | | | | | | | | | | | | |
Total average assets | | $178,871,285 | | | $177,047,258 | | | $173,888,490 | | | $175,548,768 | | | $176,916,901 | |
Average net unrealized securities gains | | (1,341,146) | | | (1,371,624) | | | (1,526,431) | | | (2,295,932) | | | (2,453,981) | |
| | | | | | | | | | | | | | | |
Average assets less net unrealized securities gains | | $177,530,139 | | | $175,675,634 | | | $172,362,059 | | | $173,252,836 | | | $174,462,920 | |
| | | | | | | | | | | | | | | |
Total average common shareholders’ equity | | $17,144,179 | | | $17,600,105 | | | $17,597,380 | | | $17,709,264 | | | $17,678,719 | |
Average accumulated other comprehensive income | | (824,314) | | | (996,955) | | | (871,413) | | | (1,488,305) | | | (1,533,427) | |
| | | | | | | | | | | | | | | |
Total average realized common shareholders’ equity | | $16,319,865 | | | $16,603,150 | | | $16,725,967 | | | $16,220,959 | | | $16,145,292 | |
| | | | | | | | | | | | | | | |
Return on average total assets | | (1.85) | % | | (0.78) | % | | 0.71 | % | | 1.24 | % | | 0.66 | % |
Impact of excluding net realized and unrealized securities
(gains)/losses and The Coca-Cola Company stock dividend | | (0.04) | | | (0.61) | | | (0.26) | | | (0.82) | | | 0.06 | |
| | | | | | | | | | | | | | | |
Return on average total assets less net unrealized
securities gains1 | | (1.89) | % | | (1.39) | % | | 0.45 | % | | 0.42 | % | | 0.72 | % |
| | | | | | | | | | | | | | | |
Return on average common shareholders’ equity | | (20.71) | % | | (8.47) | % | | 6.88 | % | | 12.04 | % | | 6.41 | % |
Impact of excluding net realized and unrealized securities (gains)/losses and The Coca-Cola Company stock dividend | | (1.37) | | | (6.86) | | | (2.43) | | | (7.72) | | | 1.17 | |
| | | | | | | | | | | | | | | |
Return on average realized common shareholders’ equity2 | | (22.08) | % | | (15.33) | % | | 4.45 | % | | 4.32 | % | | 7.58 | % |
| | | | | | | | | | | | | | | |
Efficiency ratio3 | | 97.22 | % | | 82.34 | % | | 67.67 | % | | 52.94 | % | | 56.27 | % |
Impact of excluding amortization/impairment of goodwill/intangible assets
other than MSRs | | (34.25) | | | (0.90) | | | (0.75) | | | (2.49) | | | (0.93) | |
| | | | | | | | | | | | | | | |
Tangible efficiency ratio4 | | 62.97 | % | | 81.44 | % | | 66.92 | % | | 50.45 | % | | 55.34 | % |
| | | | | | | | | | | | | | | |
Total shareholders’ equity | | $21,645,626 | | | $22,500,805 | | | $18,069,378 | | | $18,023,095 | | | $18,548,603 | |
Goodwill | | (6,224,610) | | | (6,941,104) | | | (7,062,869) | | | (7,056,015) | | | (6,923,033) | |
Other intangible assets including MSRs | | (1,049,155) | | | (978,211) | | | (1,328,055) | | | (1,394,941) | | | (1,379,522) | |
MSRs | | 894,797 | | | 810,474 | | | 1,150,013 | | | 1,193,450 | | | 1,143,405 | |
| | | | | | | | | | | | | | | |
Tangible equity | | 15,266,658 | | | 15,391,964 | | | 10,828,467 | | | 10,765,589 | | | 11,389,453 | |
Preferred stock | | (5,227,357) | | | (5,221,703) | | | (500,000) | | | (500,000) | | | (500,000) | |
| | | | | | | | | | | | | | | |
Tangible common equity | | $10,039,301 | | | $10,170,261 | | | $10,328,467 | | | $10,265,589 | | | $10,889,453 | |
| | | | | | | | | | | | | | | |
Total assets | | $179,116,402 | | | $189,137,961 | | | $174,776,760 | | | $177,232,727 | | | $178,986,947 | |
Goodwill | | (6,309,431) | | | (7,043,503) | | | (7,062,869) | | | (7,056,015) | | | (6,923,033) | |
Other intangible assets including MSRs | | (1,103,333) | | | (1,035,427) | | | (1,389,965) | | | (1,442,056) | | | (1,430,268) | |
MSRs | | 894,797 | | | 810,474 | | | 1,150,013 | | | 1,193,450 | | | 1,143,405 | |
| | | | | | | | | | | | | | | |
Tangible assets | | $172,598,435 | | | $181,869,505 | | | $167,473,939 | | | $169,928,106 | | | $171,777,051 | |
| | | | | | | | | | | | | | | |
Tangible equity to tangible assets5 | | 8.85 | % | | 8.46 | % | | 6.47 | % | | 6.34 | % | | 6.63 | % |
Tangible common equity to tangible assets6 | | 5.82 | % | | 5.59 | % | | 6.17 | % | | 6.04 | % | | 6.34 | % |
Tangible book value per common share8 | | $28.15 | | | $28.69 | | | $29.18 | | | $29.04 | | | $31.13 | |
Net interest income | | $1,062,098 | | | $1,176,860 | | | $1,146,213 | | | $1,156,716 | | | $1,139,867 | |
Taxable-equivalent adjustment | | 30,859 | | | 31,790 | | | 29,466 | | | 28,256 | | | 27,975 | |
| | | | | | | | | | | | | | | |
Net interest income - FTE | | 1,092,957 | | | 1,208,650 | | | 1,175,679 | | | 1,184,972 | | | 1,167,842 | |
Noninterest income | | 1,146,542 | | | 717,729 | | | 1,285,222 | | | 1,413,010 | | | 1,057,502 | |
| | | | | | | | | | | | | | | |
Total revenue - FTE | | 2,239,499 | | | 1,926,379 | | | 2,460,901 | | | 2,597,982 | | | 2,225,344 | |
Securities (gains)/losses, net | | (3,377) | | | (411,053) | | | (173,046) | | | (549,787) | | | 60,586 | |
| | | | | | | | | | | | | | | |
Total revenue - FTE excluding net securities (gains)/losses7 | | $2,236,122 | | | $1,515,326 | | | $2,287,855 | | | $2,048,195 | | | $2,285,930 | |
| | | | | | | | | | | | | | | |
1 | SunTrust presents a return on average assets less net unrealized gains on securities. The foregoing numbers primarily reflect adjustments to remove the effects of the securities portfolio which includes the ownership by the Company of common shares of The Coca-Cola Company. The Company uses this information internally to gauge its actual performance in the industry. The Company believes that the return on average assets less the net unrealized securities gains is more indicative of the Company’s return on assets because it more accurately reflects the return on the assets that are related to the Company’s core businesses which are primarily customer relationship and customer transaction driven. The return on average assets less net unrealized gains on securities is computed by dividing annualized net income, excluding securities gains/losses and The Coca-Cola Company dividend, net of tax, by average assets less net unrealized securities gains. |
2 | SunTrust believes that the return on average realized common shareholders’ equity is more indicative of the Company’s return on equity because the excluded equity relates primarily to the holding of a specific security. The return on average realized common shareholders’ equity is computed by dividing annualized net income available to common shareholders, excluding securities gains/losses and The Coca -Cola Company dividend, net of tax, by average realized common shareholders’ equity. |
3 | Computed by dividing noninterest expense by total revenue - FTE. The efficiency ratios are presented on an FTE basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. |
4 | SunTrust presents a tangible efficiency ratio which excludes the amortization/impairment of intangible assets other than MSRs. The Company believes this measure is useful to investors because, by removing the effect of these intangible asset costs (the level of which may vary from company to company), it allows investors to more easily compare the Company’s efficiency to other companies in the industry. This measure is utilized by management to assess the efficiency of the Company and its lines of business. |
5 | SunTrust presents a tangible equity to tangible assets ratio that excludes the after-tax impact of purchase accounting intangible assets. The Company believes this measure is useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity (the level of which may vary from company to company), it allows investors to more easily compare the Company’s capital adequacy to other companies in the industry. This measure is used by management to analyze capital adequacy. |
6 | SunTrust presents a tangible common equity to tangible assets ratio that excludes preferred stock from tangible equity. The Company believes this measure is useful to investors because, by removing the preferred stock (the level of which may vary from company to company), it allows investors to more easily compare the Company’s capital adequacy to other companies in the industry who also use this measure. This measure is also used by management to analyze capital adequacy. |
7 | SunTrust presents total revenue- FTE excluding net realized securities (gains)/losses. The Company believes noninterest income without net securities (gains)/losses is more indicative of the Company’s performance because it isolates income that is primarily customer relationship and customer transaction driven and is more indicative of normalized operations. |
8 | SunTrust presents a tangible book value per common share that excludes the after-tax impact of purchase accounting intangible assets and also excludes preferred stock from tangible equity. The Company believes this measure is useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity as well as preferred stock (the level of which may vary from company to company), it allows investors to more easily compare the Company’s book value on common stock to other companies in the industry. This measure is also used by management to analyze capital adequacy. |
Page 12
SunTrust Banks, Inc. and Subsidiaries
RECONCILEMENT OF NON-GAAP MEASURES
APPENDIX A TO THE EARNINGS RELEASE, continued
(Dollars in thousands, except per share data) (Unaudited)
| | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31
2009 | | | December 31
2008 | | | September 30
2008 | | June 30 2008 | | March 31
2008 |
| | | | | | | | | | | | |
NON-GAAP MEASURES PRESENTED IN THE EARNINGS RELEASE | | | | | | | | | | | | |
| | | | | |
Total noninterest expense | | $2,177,327 | | | $1,586,153 | | | $1,665,295 | | $1,375,342 | | $1,252,233 |
| | | | | |
Goodwill/intangible impairment charges other than MSRs | | 751,156 | | | - | | | - | | 45,000 | | - |
| | | | | | | | | | | | |
Total noninterest expense excluding goodwill/intangible impairment charges other than MSRs1 | | $1,426,171 | | | $1,586,153 | | | $1,665,295 | | $1,330,342 | | $1,252,233 |
| | | | | | | | | | | | |
| | | | | |
Net income/(loss) | | ($815,167 | ) | | ($347,587 | ) | | $312,444 | | $540,362 | | $290,555 |
Goodwill/intangible impairment charges other than MSRs, after tax | | 723,853 | | | - | | | - | | 27,281 | | - |
| | | | | | | | | | | | |
Net income/(loss) excluding goodwill/intangible
impairment charges other than MSRs, after tax1 | | ($91,314 | ) | | ($347,587 | ) | | $312,444 | | $567,643 | | $290,555 |
| | | | | | | | | | | | |
| | | | | |
Net income/(loss) available to common shareholders | | ($875,381 | ) | | ($374,938 | ) | | $304,397 | | $529,968 | | $281,555 |
Goodwill/intangible impairment charges other than MSRs attributable to common shareholders, after tax | | 714,824 | | | - | | | - | | 27,006 | | - |
| | | | | | | | | | | | |
Net income/(loss) available to common shareholders excluding goodwill/intangible
impairment charges other than MSRs, after tax1 | | ($160,557 | ) | | ($374,938 | ) | | $304,397 | | $556,974 | | $281,555 |
| | | | | | | | | | | | |
| | | | | |
Net income/(loss) per average common share, diluted | | ($2.49 | ) | | ($1.07 | ) | | $0.87 | | $1.52 | | $0.81 |
Impact of excluding goodwill/intangible impairment charges other than MSRs attributable to common shareholders, after tax | | 2.03 | | | - | | | - | | 0.07 | | - |
| | | | | | | | | | | | |
Net income/(loss) per average diluted common share, excluding goodwill/intangible
impairment charges other than MSRs, after tax1 | | ($0.46 | ) | | ($1.07 | ) | | $0.87 | | $1.59 | | $0.81 |
| | | | | | | | | | | | |
1 SunTrust presents noninterest expense, net income/(loss), net income/(loss) available to common shareholders, and net income/(loss) per average common diluted share that excludes the portion of the impairment charges on goodwill and intangible assets other than MSRs allocated to the common shareholders. The Company believes this measure is useful to investors, because removing the non-cash impairment charges provides a more representative view of normalized operations and the measure also allows better comparability with peers in the industry who also provide a similar presentation when applicable. In addition, management uses this measure internally to analyze performance.
Page 13
SunTrust Banks, Inc. and Subsidiaries
QUARTER-TO-QUARTER COMPARISON - ACTUAL
APPENDIX B TO THE EARNINGS RELEASE
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | | | | | |
| | | March 31
2009 | | December 31
2008 | | Increase/(Decrease)2 | | | Sequential
Annualized1 % | | | March 31
2009 | | March 31
2008 | | Increase/(Decrease)2 | |
| | | | | Amount | | % | | | | | | Amount | | % | |
STATEMENTS OF INCOME (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | |
NET INTEREST INCOME | | $1,062,098 | | $1,176,860 | | ($114,762) | | (9.8) | % | | (39.0) | % | | $1,062,098 | | $1,139,867 | | ($77,769) | | (6.8) | % |
Provision for loan losses3 | | 994,098 | | 962,494 | | 31,604 | | 3.3 | | | 13.1 | | | 994,098 | | 560,022 | | 434,076 | | 77.5 | |
| | | | | | | | | | | | | | | | | | | | | |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | | 68,000 | | 214,366 | | (146,366) | | (68.3) | | | NM | | | 68,000 | | 579,845 | | (511,845) | | (88.3) | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
NONINTEREST INCOME | | | | | | | | | | | | | | | | | | | | | |
Service charges on deposit accounts | | 206,394 | | 221,751 | | (15,357) | | (6.9) | | | (27.7) | | | 206,394 | | 211,839 | | (5,445) | | (2.6) | |
Trust and investment management income | | 116,010 | | 126,426 | | (10,416) | | (8.2) | | | (33.0) | | | 116,010 | | 161,102 | | (45,092) | | (28.0) | |
Retail investment services | | 56,713 | | 70,238 | | (13,525) | | (19.3) | | | (77.0) | | | 56,713 | | 72,300 | | (15,587) | | (21.6) | |
Other charges and fees | | 124,321 | | 125,206 | | (885) | | (0.7) | | | (2.8) | | | 124,321 | | 127,231 | | (2,910) | | (2.3) | |
Investment banking income | | 59,534 | | 57,962 | | 1,572 | | 2.7 | | | 10.8 | | | 59,534 | | 55,420 | | 4,114 | | 7.4 | |
Trading account profits/(losses) and commissions | | 107,293 | | (61,879) | | 169,172 | | NM | | | NM | | | 107,293 | | 28,218 | | 79,075 | | NM | |
Card fees | | 75,660 | | 77,909 | | (2,249) | | (2.9) | | | (11.5) | | | 75,660 | | 73,761 | | 1,899 | | 2.6 | |
Mortgage production related income/(loss) | | 250,470 | | (27,717) | | 278,187 | | NM | | | NM | | | 250,470 | | 85,549 | | 164,921 | | NM | |
Mortgage servicing related income/(loss) | | 83,352 | | (336,129) | | 419,481 | | NM | | | NM | | | 83,352 | | 29,098 | | 54,254 | | NM | |
Gain/(loss) on sale of businesses | | - | | (2,711) | | 2,711 | | 100.0 | | | NM | | | - | | 89,390 | | (89,390) | | (100.0) | |
Gain on Visa IPO | | - | | - | | - | | - | | | - | | | - | | 86,305 | | (86,305) | | (100.0) | |
Net gain on sale/leaseback of premises | | - | | - | | - | | - | | | - | | | - | | 37,039 | | (37,039) | | (100.0) | |
Net gain on extinguishment of debt | | 25,304 | | - | | 25,304 | | NM | | | NM | | | 25,304 | | - | | 25,304 | | NM | |
Other noninterest income | | 38,114 | | 55,620 | | (17,506) | | (31.5) | | | NM | | | 38,114 | | 60,836 | | (22,722) | | (37.4) | |
Securities gains/(losses), net | | 3,377 | | 411,053 | | (407,676) | | (99.2) | | | NM | | | 3,377 | | (60,586) | | 63,963 | | NM | |
| | | | | | | | | | | | | | | | | | | | | |
Total noninterest income | | 1,146,542 | | 717,729 | | 428,813 | | 59.7 | | | NM | | | 1,146,542 | | 1,057,502 | | 89,040 | | 8.4 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
NONINTEREST EXPENSE | | | | | | | | | | | | | | | | | | | | | |
Employee compensation and benefits | | 736,052 | | 638,014 | | 98,038 | | 15.4 | | | 61.5 | | | 736,052 | | 715,083 | | 20,969 | | 2.9 | |
Net occupancy expense | | 87,417 | | 86,620 | | 797 | | 0.9 | | | 3.7 | | | 87,417 | | 86,441 | | 976 | | 1.1 | |
Outside processing and software | | 138,361 | | 143,880 | | (5,519) | | (3.8) | | | (15.3) | | | 138,361 | | 109,165 | | 29,196 | | 26.7 | |
Equipment expense | | 43,540 | | 47,892 | | (4,352) | | (9.1) | | | (36.3) | | | 43,540 | | 52,395 | | (8,855) | | (16.9) | |
Marketing and customer development | | 34,725 | | 51,636 | | (16,911) | | (32.8) | | | NM | | | 34,725 | | 55,703 | | (20,978) | | (37.7) | |
Amortization/impairment of goodwill/intangible assets | | 767,016 | | 17,259 | | 749,757 | | NM | | | NM | | | 767,016 | | 20,715 | | 746,301 | | NM | |
Visa litigation | | - | | (14,345) | | 14,345 | | 100.0 | | | NM | | | - | | (39,124) | | 39,124 | | 100.0 | |
Net loss on extinguishment of debt | | - | | - | | - | | - | | | - | | | - | | 11,723 | | (11,723) | | (100.0) | |
Operating losses3 | | 22,621 | | 236,078 | | (213,457) | | (90.4) | | | NM | | | 22,621 | | 30,263 | | (7,642) | | (25.3) | |
Mortgage reinsurance | | - | | 99,999 | | (99,999) | | (100.0) | | | NM | | | - | | 7,011 | | (7,011) | | (100.0) | |
Other noninterest expense | | 347,595 | | 279,120 | | 68,475 | | 24.5 | | | 98.1 | | | 347,595 | | 202,858 | | 144,737 | | 71.3 | |
| | | | | | | | | | | | | | | | | | | | | |
Total noninterest expense | | 2,177,327 | | 1,586,153 | | 591,174 | | 37.3 | | | NM | | | 2,177,327 | | 1,252,233 | | 925,094 | | 73.9 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
INCOME/(LOSS) BEFORE PROVISION/(BENEFIT) FOR INCOME TAXES AND NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | | (962,785) | | (654,058) | | (308,727) | | (47.2) | | | NM | | | (962,785) | | 385,114 | | (1,347,899) | | NM | |
Less: Pre-tax income attributable to noncontrolling interest | | 3,159 | | 2,485 | | 674 | | 27.1 | | | NM | | | 3,159 | | 2,911 | | 248 | | 8.5 | |
Provision/(benefit) for income taxes | | (150,777) | | (308,956) | | 158,179 | | 51.2 | | | NM | | | (150,777) | | 91,648 | | (242,425) | | NM | |
| | | | | | | | | | | | | | | | | | | | | |
NET INCOME/(LOSS) | | (815,167) | | (347,587) | | (467,580) | | NM | | | NM | | | (815,167) | | 290,555 | | (1,105,722) | | NM | |
Preferred dividends, Series A | | 5,000 | | 5,055 | | (55) | | (1.1) | | | (4.4) | | | 5,000 | | 6,977 | | (1,977) | | (28.3) | |
U.S. Treasury preferred dividends | | 66,279 | | 26,579 | | 39,700 | | NM | | | NM | | | 66,279 | | - | | 66,279 | | NM | |
Dividends and undistributed earnings allocated to unvested shares | | (11,065) | | (4,283) | | (6,782) | | NM | | | NM | | | (11,065) | | 2,023 | | (13,088) | | NM | |
| | | | | | | | | | | | | | | | | | | | | |
NET INCOME/(LOSS) AVAILABLE TO COMMON SHAREHOLDERS | | ($875,381) | | ($374,938) | | ($500,443) | | NM | % | | NM | % | | ($875,381) | | $281,555 | | ($1,156,936) | | NM | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
REVENUE (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | $1,062,098 | | $1,176,860 | | ($114,762) | | (9.8) | % | | (39.0) | % | | $1,062,098 | | $1,139,867 | | ($77,769) | | (6.8) | % |
Taxable-equivalent adjustment | | 30,859 | | 31,790 | | (931) | | (2.9) | | | (11.7) | | | 30,859 | | 27,975 | | 2,884 | | 10.3 | |
| | | | | | | | | | | | | | | | | | | | | |
Net interest income - FTE | | 1,092,957 | | 1,208,650 | | (115,693) | | (9.6) | | | (38.3) | | | 1,092,957 | | 1,167,842 | | (74,885) | | (6.4) | |
Noninterest income | | 1,146,542 | | 717,729 | | 428,813 | | 59.7 | | | NM | | | 1,146,542 | | 1,057,502 | | 89,040 | | 8.4 | |
| | | | | | | | | | | | | | | | | | | | | |
Total revenue - FTE | | $2,239,499 | | $1,926,379 | | $313,120 | | 16.3 | | | 65.0 | | | $2,239,499 | | $2,225,344 | | $14,155 | | 0.6 | |
| | | | | | | | | | | | | | | | | | | | | |
SELECTED AVERAGE BALANCES (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Average loans | | | | | | | | | | | | | | | | | | | | | |
Commercial-FTE | | $39,199 | | $40,464 | | ($1,265) | | (3.1) | % | | (12.5) | % | | $39,199 | | $36,375 | | $2,824 | | 7.8 | % |
Real estate home equity lines | | 15,907 | | 15,803 | | 104 | | 0.7 | | | 2.6 | | | 15,907 | | 14,603 | | 1,304 | | 8.9 | |
Real estate construction | | 7,376 | | 8,915 | | (1,539) | | (17.3) | | | (69.1) | | | 7,376 | | 12,450 | | (5,074) | | (40.8) | |
Real estate 1-4 family | | 29,945 | | 31,007 | | (1,062) | | (3.4) | | | (13.7) | | | 29,945 | | 32,440 | | (2,495) | | (7.7) | |
Real estate commercial | | 15,339 | | 14,737 | | 602 | | 4.1 | | | 16.3 | | | 15,339 | | 13,113 | | 2,226 | | 17.0 | |
Credit card | | 972 | | 999 | | (27) | | (2.7) | | | (10.7) | | | 972 | | 774 | | 198 | | 25.6 | |
Consumer - direct | | 5,165 | | 5,009 | | 156 | | 3.1 | | | 12.5 | | | 5,165 | | 4,063 | | 1,102 | | 27.1 | |
Consumer - indirect | | 6,624 | | 6,821 | | (197) | | (2.9) | | | (11.5) | | | 6,624 | | 7,646 | | (1,022) | | (13.4) | |
Nonaccrual and restructured | | 4,807 | | 3,853 | | 954 | | 24.7 | | | 99.0 | | | 4,807 | | 1,799 | | 3,008 | | NM | |
| | | | | | | | | | | | | | | | | | | | | |
Total loans | | $125,334 | | $127,608 | | ($2,273) | | (1.8) | % | | (7.1) | % | | $125,334 | | $123,263 | | $2,071 | | 1.7 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Average deposits | | | | | | | | | | | | | | | | | | | | | |
Noninterest bearing deposits | | $22,827 | | $20,955 | | $1,872 | | 8.9 | % | | 35.7 | % | | $22,827 | | $20,616 | | $2,211 | | 10.7 | % |
NOW accounts | | 21,244 | | 20,095 | | 1,149 | | 5.7 | | | 22.9 | | | 21,244 | | 21,981 | | (737) | | (3.4) | |
Money market accounts | | 29,317 | | 27,969 | | 1,348 | | 4.8 | | | 19.3 | | | 29,317 | | 25,343 | | 3,974 | | 15.7 | |
Savings | | 3,443 | | 3,460 | | (17) | | (0.5) | | | (2.0) | | | 3,443 | | 3,917 | | (474) | | (12.1) | |
Consumer and other time | | 30,684 | | 29,760 | | 924 | | 3.1 | | | 12.4 | | | 30,684 | | 29,311 | | 1,373 | | 4.7 | |
| | | | | | | | | | | | | | | | | | | | | |
Total consumer and commercial deposits | | 107,515 | | 102,239 | | 5,276 | | 5.2 | | | 20.6 | | | 107,515 | | 101,168 | | 6,347 | | 6.3 | |
Brokered and foreign deposits | | 7,417 | | 12,648 | | (5,231) | | (41.4) | | | NM | | | 7,417 | | 15,469 | | (8,052) | | (52.1) | |
| | | | | | | | | | | | | | | | | | | | | |
Total deposits | | $114,932 | | $114,887 | | $45 | | 0.0 | % | | 0.0 | % | | $114,932 | | $116,637 | | ($1,705) | | (1.5) | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
SELECTED CREDIT DATA (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Nonaccrual loans | | $4,640,988 | | $3,940,026 | | $700,962 | | 17.8 | % | | 71.2 | % | | $4,640,988 | | $2,037,960 | | $2,603,028 | | NM | % |
Other real estate owned (OREO) | | 593,579 | | 500,481 | | 93,098 | | 18.6 | | | 74.4 | | | 593,579 | | 244,906 | | 348,673 | | NM | |
Other repossessed assets | | 11,807 | | 15,866 | | (4,059) | | (25.6) | | | NM | | | 11,807 | | 6,340 | | 5,467 | | 86.2 | |
| | | | | | | | | | | | | | | | | | | | | |
Total nonperforming assets | | $5,246,374 | | $4,456,373 | | $790,001 | | 17.7 | % | | 70.9 | % | | $5,246,374 | | $2,289,206 | | $2,957,168 | | NM | % |
| | | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | | $2,735,000 | | $2,350,996 | | $384,004 | | 16.3 | % | | 65.3 | % | | $2,735,000 | | $1,545,340 | | $1,189,660 | | 77.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
1 Multiply percentage change by 4 to calculate sequential annualized change.
2 “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful.
3 During the first quarter of 2009, the Company began incorporating certain types of loan-related losses in the allowance for loan and lease losses. These losses, representing borrower misrepresentation and insurance claim denials, were previously recorded within noninterest expense.
Page 14
SunTrust Banks, Inc. and Subsidiaries
RETAIL AND COMMERCIAL LINE OF BUSINESS
(Dollars in thousands) (Unaudited)
| | | | | | | | | |
| | | Three Months Ended | |
| | | March 31
2009 | | | March 31
2008 | | | %
Change3 | |
| | | |
Statements of Income | | | | | | | | | |
| | | |
Net interest income1 | | $549,271 | | | $633,731 | | | (13.3) | % |
FTE adjustment | | 8,793 | | | 8,785 | | | 0.1 | |
| | | | | | | | | |
Net interest income - FTE | | 558,064 | | | 642,516 | | | (13.1) | |
Provision for loan losses2 | | 219,031 | | | 103,556 | | | NM | |
| | | | | | | | | |
Net interest income after provision for loan losses - FTE | | 339,033 | | | 538,960 | | | (37.1) | |
| | | | | | | | | |
| | | |
Noninterest income before securities gains/(losses) | | 329,209 | | | 331,488 | | | (0.7) | |
Securities losses, net | | (72) | | | - | | | - | |
| | | | | | | | | |
Total noninterest income | | 329,137 | | | 331,488 | | | (0.7) | |
| | | | | | | | | |
| | | |
Noninterest expense before amortization/impairment of goodwill/intangible assets | | 696,015 | | | 626,779 | | | 11.0 | |
Amortization/impairment of goodwill/intangible assets | | 311,113 | | | 14,941 | | | NM | |
| | | | | | | | | |
Total noninterest expense | | 1,007,128 | | | 641,720 | | | 56.9 | |
| | | | | | | | | |
| | | |
Income/(loss) before provision/(benefit) for income taxes and income attributable to noncontrolling interest | | (338,958) | | | 228,728 | | | NM | |
Less: pre-tax income attributable to noncontrolling interest | | - | | | - | | | - | |
Provision/(benefit) for income taxes | | (51,355) | | | 55,639 | | | NM | |
FTE adjustment | | 8,793 | | | 8,785 | | | 0.1 | |
| | | | | | | | | |
Net income/(loss) | | ($296,396) | | | $164,304 | | | NM | |
| | | | | | | | | |
| | | |
Total revenue - FTE | | $887,201 | | | $974,004 | | | (8.9) | |
| | | |
Selected Average Balances | | | | | | | | | |
| | | |
Total loans | | $50,453,738 | | | $50,402,018 | | | 0.1 | % |
Goodwill | | 6,206,435 | | | 6,089,255 | | | 1.9 | |
Other intangible assets excluding MSRs | | 138,996 | | | 165,700 | | | (16.1) | |
Total assets | | 58,164,316 | | | 58,010,005 | | | 0.3 | |
Consumer and Commercial Deposits | | 86,654,408 | | | 82,372,969 | | | 5.2 | |
| | | |
Performance Ratios | | | | | | | | | |
| | | |
Efficiency ratio | | 113.52 | % | | 65.88 | % | | | |
Impact of excluding amortization/impairment of goodwill/intangible assets | | (41.13) | | | (5.85) | | | | |
| | | | | | | | | |
Tangible efficiency ratio | | 72.39 | % | | 60.03 | % | | | |
| | | | | | | | | |
1 | Net interest income does not include the funding benefit that would result from holding shareholders’ equity at the line of business level due to the fact that shareholders’ equity is not allocated to the lines of business at this time. |
2 | Provision for loan losses represents net charge-offs for the lines of business. |
3 | “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful. |
Page 15
SunTrust Banks, Inc. and Subsidiaries
CORPORATE AND INVESTMENT BANKING LINE OF BUSINESS
(Dollars in thousands) (Unaudited)
| | | | | | | | | |
| | | Three Months Ended | |
| | | March 31
2009 | | | March 31
2008 | | | %
Change3 | |
| | | |
Statements of Income | | | | | | | | | |
| | | |
Net interest income1 | | $76,160 | | | $58,194 | | | 30.9 | % |
FTE adjustment | | 18,275 | | | 14,038 | | | 30.2 | |
| | | | | | | | | |
Net interest income - FTE | | 94,435 | | | 72,232 | | | 30.7 | |
Provision for loan losses2 | | 75,070 | | | (376) | | | NM | |
| | | | | | | | | |
Net interest income after provision for loan losses - FTE | | 19,365 | | | 72,608 | | | (73.3) | |
| | | | | | | | | |
| | | |
Noninterest income before securities gains/(losses) | | 159,270 | | | 150,529 | | | 5.8 | |
Securities gains/(losses), net | | - | | | - | | | - | |
| | | | | | | | | |
Total noninterest income | | 159,270 | | | 150,529 | | | 5.8 | |
| | | | | | | | | |
| | | |
Noninterest expense before amortization of intangible assets | | 151,796 | | | 134,355 | | | 13.0 | |
Amortization of intangible assets | | 122 | | | 122 | | | - | |
| | | | | | | | | |
Total noninterest expense | | 151,918 | | | 134,477 | | | 13.0 | |
| | | | | | | | | |
| | | |
Income/(loss) before provision/(benefit) for income taxes and income attributable to noncontrolling interest | | 26,717 | | | 88,660 | | | (69.9) | |
Less: pre-tax income attributable to noncontrolling interest | | - | | | - | | | - | |
Provision/(benefit) for income taxes | | (7,607) | | | 13,958 | | | NM | |
FTE adjustment | | 18,275 | | | 14,038 | | | 30.2 | |
| | | | | | | | | |
Net income | | $16,049 | | | $60,664 | | | (73.5) | |
| | | | | | | | | |
| | | |
Total revenue - FTE | | $253,705 | | | $222,761 | | | 13.9 | |
| | | |
Selected Average Balances | | | | | | | | | |
| | | |
Total loans | | $23,205,539 | | | $19,664,675 | | | 18.0 | % |
Goodwill | | 223,307 | | | 223,426 | | | (0.1) | |
Other intangible assets excluding MSRs | | 305 | | | 801 | | | (61.9) | |
Total assets | | 34,796,955 | | | 29,703,886 | | | 17.1 | |
Consumer and Commercial Deposits | | 7,214,294 | | | 6,255,368 | | | 15.3 | |
| | | |
Performance Ratios | | | | | | | | | |
| | | |
Efficiency ratio | | 59.88 | % | | 60.37 | % | | | |
Impact of excluding amortization of intangible assets | | (0.66) | | | (0.73) | | | | |
| | | | | | | | | |
Tangible efficiency ratio | | 59.22 | % | | 59.64 | % | | | |
| | | | | | | | | |
1 | Net interest income does not include the funding benefit that would result from holding shareholders’ equity at the line of business level due to the fact that shareholders’ equity is not allocated to the lines of business at this time. |
2 | Provision for loan losses represents net charge-offs for the lines of business. |
3 | “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful. |
Page 16
SunTrust Banks, Inc. and Subsidiaries
HOUSEHOLD LENDING LINE OF BUSINESS
(Dollars in thousands) (Unaudited)
| | | | | | | | | |
| | | Three Months Ended | | | | |
| | | March 31
2009 | | | March 31
2008 | | | %
Change3 | |
Statements of Income | | | | | | | | | |
| | | |
Net interest income1 | | $201,902 | | | $187,561 | | | 7.6 | % |
FTE adjustment | | - | | | - | | | - | |
| | | | | | | | | |
Net interest income - FTE | | 201,902 | | | 187,561 | | | 7.6 | |
Provision for loan losses2 | | 305,820 | | | 188,092 | | | 62.6 | |
| | | | | | | | | |
Net interest loss after provision for loan losses - FTE | | (103,918) | | | (531) | | | NM | |
| | | | | | | | | |
| | | |
Noninterest income before securities gains/(losses) | | 336,660 | | | 152,603 | | | NM | |
Securities losses, net | | (723) | | | (5,010) | | | (85.6) | |
| | | | | | | | | |
Total noninterest income | | 335,937 | | | 147,593 | | | NM | |
| | | | | | | | | |
| | | |
Noninterest expense before amortization/impairment of goodwill/intangible assets | | 345,559 | | | 255,293 | | | 35.4 | |
Amortization/impairment of goodwill/intangible assets | | 452,294 | | | 763 | | | NM | |
| | | | | | | | | |
Total noninterest expense | | 797,853 | | | 256,056 | | | NM | |
| | | | | | | | | |
| | | |
Loss before benefit for income taxes and income attributable to noncontrolling interest | | (565,834) | | | (108,994) | | | NM | |
Less: pre-tax income attributable to noncontrolling interest | | 869 | | | 442 | | | 96.6 | |
Benefit for income taxes | | (63,673) | | | (45,638) | | | 39.5 | |
FTE adjustment | | - | | | - | | | - | |
| | | | | | | | | |
Net loss | | ($503,030) | | | ($63,798) | | | NM | |
| | | | | | | | | |
| | | |
Total revenue - FTE | | $537,839 | | | $335,154 | | | 60.5 | |
| | | |
Selected Average Balances | | | | | | | | | |
| | | |
Total loans | | $43,279,858 | | | $45,009,044 | | | (3.8) | % |
Goodwill | | 283,291 | | | 276,592 | | | 2.4 | |
Other intangible assets excluding MSRs | | 9,355 | | | 1,274 | | | NM | |
Total assets | | 52,482,628 | | | 58,013,698 | | | (9.5) | |
Consumer and Commercial Deposits | | 2,954,598 | | | 2,105,235 | | | 40.3 | |
| | | |
Performance Ratios | | | | | | | | | |
| | | |
Efficiency ratio | | 148.34 | % | | 76.40 | % | | | |
Impact of excluding amortization/impairment of goodwill/intangible assets | | (84.50) | | | (0.93) | | | | |
| | | | | | | | | |
Tangible efficiency ratio | | 63.84 | % | | 75.47 | % | | | |
| | | | | | | | | |
| | | |
Other Information | | | | | | | | | |
| | | |
Production Data | | | | | | | | | |
Channel mix | | | | | | | | | |
Retail | | $6,380,622 | | | $5,357,407 | | | 19.1 | % |
Wholesale | | 3,605,375 | | | 4,204,623 | | | (14.3) | |
Correspondent | | 3,456,256 | | | 2,169,602 | | | 59.3 | |
| | | | | | | | | |
Total production | | $13,442,253 | | | $11,731,632 | | | 14.6 | |
| | | | | | | | | |
| | | |
Channel mix - percent | | | | | | | | | |
Retail | | 47 | % | | 46 | % | | | |
Wholesale | | 27 | | | 36 | | | | |
Correspondent | | 26 | | | 18 | | | | |
| | | | | | | | | |
Total production | | 100 | % | | 100 | % | | | |
| | | | | | | | | |
| | | |
Purchase and refinance mix | | | | | | | | | |
Refinance | | $10,800,272 | | | $6,715,286 | | | 60.8 | |
Purchase | | 2,641,981 | | | 5,016,346 | | | (47.3) | |
| | | | | | | | | |
Total production | | $13,442,253 | | | $11,731,632 | | | 14.6 | |
| | | | | | | | | |
| | | |
Purchase and refinance mix - percent | | | | | | | | | |
Refinance | | 80 | % | | 57 | % | | | |
Purchase | | 20 | | | 43 | | | | |
| | | | | | | | | |
Total production | | 100 | % | | 100 | % | | | |
| | | | | | | | | |
| | | |
Applications | | $25,614,207 | | | $21,209,440 | | | 20.8 | |
| | | |
Mortgage Servicing Data (End of Period) | | | | | | | | | |
Total loans serviced | | $166,420,008 | | | $155,450,933 | | | 7.1 | % |
Total loans serviced for others | | 131,882,752 | | | 121,147,815 | | | 8.9 | |
Net carrying value of MSRs | | 894,797 | | | 1,143,405 | | | (21.7) | |
Ratio of net carrying value of MSRs to total
loans serviced for others | | 0.678 | % | | 0.944 | % | | | |
1 | Net interest income does not include the funding benefit that would result from holding shareholders’ equity at the line of business level due to the fact that shareholders’ equity is not allocated to the lines of business at this time. |
2 | Provision for loan losses represents net charge-offs for the lines of business. |
3 | “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful. |
Page 17
SunTrust Banks, Inc. and Subsidiaries
WEALTH AND INVESTMENT MANAGEMENT LINE OF BUSINESS
(Dollars in thousands) (Unaudited)
| | | | | | | | | |
| | | Three Months Ended | | | | |
| | | March 31
2009 | | | March 31
2008 | | | %
Change | |
Statements of Income | | | | | | | | | |
| | | |
Net interest income1 | | $69,744 | | | $79,906 | | | (12.7) | % |
FTE adjustment | | 4 | | | 10 | | | (60.0) | |
| | | | | | | | | |
Net interest income - FTE | | 69,748 | | | 79,916 | | | (12.7) | |
Provision for loan losses2 | | 9,798 | | | 5,116 | | | 91.5 | |
| | | | | | | | | |
Net interest income after provision for loan losses - FTE | | 59,950 | | | 74,800 | | | (19.9) | |
| | | | | | | | | |
| | | |
Noninterest income before securities gains/(losses) | | 173,193 | | | 331,358 | | | (47.7) | |
Securities gains, net | | 3 | | | 4 | | | (25.0) | |
| | | | | | | | | |
Total noninterest income | | 173,196 | | | 331,362 | | | (47.7) | |
| | | | | | | | | |
| | | |
Noninterest expense before amortization of intangible assets | | 220,537 | | | 239,084 | | | (7.8) | |
Amortization of intangible assets | | 3,385 | | | 4,786 | | | (29.3) | |
| | | | | | | | | |
Total noninterest expense | | 223,922 | | | 243,870 | | | (8.2) | |
| | | | | | | | | |
| | | |
Income before provision for income taxes and income attributable to noncontrolling interest | | 9,224 | | | 162,292 | | | (94.3) | |
Less: pre-tax income attributable to noncontrolling interest | | - | | | 219 | | | (100.0) | |
Provision for income taxes | | 3,733 | | | 59,214 | | | (93.7) | |
FTE adjustment | | 4 | | | 10 | | | (60.0) | |
| | | | | | | | | |
Net income | | $5,487 | | | $102,849 | | | (94.7) | |
| | | | | | | | | |
| | | |
Total revenue - FTE | | $242,944 | | | $411,278 | | | (40.9) | |
| | | |
Selected Average Balances | | | | | | | | | |
| | | |
Total loans | | $8,162,721 | | | $7,890,128 | | | 3.5 | % |
Goodwill | | 338,211 | | | 332,890 | | | 1.6 | |
Other intangible assets excluding MSRs | | 63,648 | | | 126,269 | | | (49.6) | |
Total assets | | 8,909,689 | | | 8,805,524 | | | 1.2 | |
Consumer and Commercial Deposits | | 10,032,542 | | | 9,794,424 | | | 2.4 | |
| | | |
Performance Ratios | | | | | | | | | |
| | | |
Efficiency ratio | | 92.17 | % | | 59.30 | % | | | |
Impact of excluding amortization of intangible assets | | (3.12) | | | (1.89) | | | | |
| | | | | | | | | |
Tangible efficiency ratio | | 89.05 | % | | 57.41 | % | | | |
| | | | | | | | | |
| | | |
Other Information (End of Period) | | | | | | | | | |
| | | |
Assets under administration | | | | | | | | | |
Managed (discretionary) assets | | $105,316,231 | | | $140,439,761 | | | (25.0) | % |
Non-managed assets | | 40,363,929 | | | 63,875,844 | | | (36.8) | |
| | | | | | | | | |
Total assets under administration | | 145,680,160 | | | 204,315,605 | | | (28.7) | |
| | | | | | | | | |
| | | |
Brokerage assets | | 28,760,749 | | | 39,279,523 | | | (26.8) | |
Corporate trust assets | | 6,659,408 | | | 4,699,047 | | | 41.7 | |
| | | | | | | | | |
Total assets under advisement | | $181,100,317 | | | $248,294,175 | | | (27.1) | |
| | | | | | | | | |
1 | Net interest income does not include the funding benefit that would result from holding shareholders’ equity at the line of business level due to the fact that shareholders’ equity is not allocated to the lines of business at this time. |
2 | Provision for loan losses represents net charge-offs for the lines of business. |
Page 18
SunTrust Banks, Inc. and Subsidiaries
CORPORATE OTHER AND TREASURY
(Dollars in thousands) (Unaudited)
| | | | | | | | | |
| | | Three Months Ended | | | | |
| | | March 31
2009 | | | March 31
2008 | | | %
Change2 | |
| | | |
Statements of Income | | | | | | | | | |
| | | |
Net interest income | | $165,021 | | | $180,475 | | | (8.6) | % |
FTE adjustment | | 3,787 | | | 5,142 | | | (26.4) | |
| | | | | | | | | |
Net interest income - FTE | | 168,808 | | | 185,617 | | | (9.1) | |
Provision for loan losses1 | | 384,379 | | | 263,634 | | | 45.8 | |
| | | | | | | | | |
Net interest loss after provision for loan losses - FTE | | (215,571) | | | (78,017) | | | NM | |
| | | | | | | | | |
| | | |
Noninterest income before securities gains/(losses) | | 144,833 | | | 152,110 | | | (4.8) | |
Securities gains/(losses), net | | 4,169 | | | (55,580) | | | NM | |
| | | | | | | | | |
Total noninterest income | | 149,002 | | | 96,530 | | | 54.4 | |
| | | | | | | | | |
Noninterest expense before amortization of intangible assets | | (3,596) | | | (23,993) | | | (85.0) | |
Amortization of intangible assets | | 102 | | | 103 | | | (1.0) | |
| | | | | | | | | |
Total noninterest expense | | (3,494) | | | (23,890) | | | (85.4) | |
| | | | | | | | | |
| | | |
Income/(loss) before provision/(benefit) for income taxes and income attributable to noncontrolling interest | | (63,075) | | | 42,403 | | | NM | |
Less: pre-tax income attributable to noncontrolling interest | | 2,290 | | | 2,250 | | | 1.8 | |
Provision/(benefit) for income taxes | | (31,875) | | | 8,475 | | | NM | |
FTE adjustment | | 3,787 | | | 5,142 | | | (26.4) | |
| | | | | | | | | |
Net income/(loss) | | ($37,277) | | | $26,536 | | | NM | |
| | | | | | | | | |
| | | |
Total revenue - FTE | | $317,810 | | | $282,147 | | | 12.6 | |
| | | |
Selected Average Balances | | | | | | | | | |
| | | |
Total loans | | $231,641 | | | $297,170 | | | (22.1) | % |
Securities available for sale | | 18,686,431 | | | 15,350,028 | | | 21.7 | |
Goodwill | | - | | | 714 | | | (100.0) | |
Other intangible assets excluding MSRs | | 4,070 | | | 4,484 | | | (9.2) | |
Total assets | | 24,517,697 | | | 22,383,788 | | | 9.5 | |
Consumer and Commercial Deposits | | 659,136 | | | 640,416 | | | 2.9 | |
| | | |
Other Information | | | | | | | | | |
| | | |
Duration of investment portfolio | | 2.2 | % | | 4.3 | % | | | |
| | | |
Accounting net interest income interest rate sensitivity3: | | | | | | | | | |
% Change in net interest income under: | | | | | | | | | |
Instantaneous 100 bp increase in rates over next 12 months | | 2.1 | % | | 0.4 | % | | | |
Instantaneous 100 bp decrease in rates over next 12 months | | (0.4) | % | | (1.0) | % | | | |
| | | |
Economic net interest income interest rate sensitivity3: | | | | | | | | | |
% Change in net interest income under: | | | | | | | | | |
Instantaneous 100 bp increase in rates over next 12 months | | 1.5 | % | | (0.8) | % | | | |
Instantaneous 100 bp decrease in rates over next 12 months | | 0.1 | % | | 0.2 | % | | | |
1 | Provision for loan losses is the difference between net charge-offs recorded by the lines of business and consolidated provision for loan losses. |
2 | “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful. |
3 | The recognition of interest rate sensitivity from an accounting perspective is different from the economic perspective due to the election of fair value accounting for certain long-term debt and the related interest rate swaps. The net interest income sensitivity profile from an economic perspective assumes the net interest payments from the related swaps were included in net interest income. |
Page 19
SunTrust Banks, Inc. and Subsidiaries
CONSOLIDATED - SEGMENT TOTALS
(Dollars in thousands) (Unaudited)
| | | | | | | | | |
| | | Three Months Ended | | | | |
| | | March 31
2009 | | | March 31
2008 | | | %
Change1 | |
Statements of Income | | | | | | | | | |
| | | |
Net interest income | | $1,062,098 | | | $1,139,867 | | | (6.8) | % |
FTE adjustment | | 30,859 | | | 27,975 | | | 10.3 | |
| | | | | | | | | |
Net interest income - FTE | | 1,092,957 | | | 1,167,842 | | | (6.4) | |
Provision for loan losses | | 994,098�� | | | 560,022 | | | 77.5 | |
| | | | | | | | | |
Net interest income after provision for loan losses - FTE | | 98,859 | | | 607,820 | | | (83.7) | |
| | | | | | | | | |
| | | |
Noninterest income before securities gains/(losses) | | 1,143,165 | | | 1,118,088 | | | 2.2 | |
Securities gains/(losses), net | | 3,377 | | | (60,586) | | | NM | |
| | | | | | | | | |
Total noninterest income | | 1,146,542 | | | 1,057,502 | | | 8.4 | |
| | | | | | | | | |
| | | |
Noninterest expense before amortization/impairment of goodwill/intangible assets | | 1,410,311 | | | 1,231,518 | | | 14.5 | |
Amortization/impairment of goodwill/intangible assets | | 767,016 | | | 20,715 | | | NM | |
| | | | | | | | | |
Total noninterest expense | | 2,177,327 | | | 1,252,233 | | | 73.9 | |
| | | | | | | | | |
| | | |
Income/(loss) before provision/(benefit) for income taxes and income attributable to noncontrolling interest | | (931,926) | | | 413,089 | | | NM | |
Less: pre-tax income attributable to noncontrolling interest | | 3,159 | | | 2,911 | | | 8.5 | |
Provision/(benefit) for income taxes | | (150,777) | | | 91,648 | | | NM | |
FTE adjustment | | 30,859 | | | 27,975 | | | 10.3 | |
| | | | | | | | | |
Net income/(loss) | | ($815,167) | | | $290,555 | | | NM | |
| | | | | | | | | |
| | | |
Total revenue - FTE | | $2,239,499 | | | $2,225,344 | | | 0.6 | |
| | | |
Selected Average Balances | | | | | | | | | |
| | | |
Total loans | | $125,333,497 | | | $123,263,035 | | | 1.7 | % |
Goodwill | | 7,051,244 | | | 6,922,877 | | | 1.9 | |
Other intangible assets excluding MSRs | | 216,374 | | | 298,528 | | | (27.5) | |
Total assets | | 178,871,285 | | | 176,916,901 | | | 1.1 | |
Consumer and Commercial Deposits | | 107,514,978 | | | 101,168,412 | | | 6.3 | |
| | | |
Performance Ratios | | | | | | | | | |
| | | |
Efficiency ratio | | 97.22 | % | | 56.27 | % | | | |
Impact of excluding amortization/impairment of goodwill/intangible assets | | (34.25) | | | (0.93) | | | | |
| | | | | | | | | |
Tangible efficiency ratio | | 62.97 | % | | 55.34 | % | | | |
| | | | | | | | | |
1 | “NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful. |
Page 20
