SunTrust Reports Third Quarter Earnings of $0.88 Per Share

Company Says Resiliency Underscored by Continued Profitability and Improved
Capital Position

ATLANTA, Oct. 23 /PRNewswire-FirstCall/ -- SunTrust Banks, Inc.
(NYSE: STI) today reported net income available to common shareholders of
$307.3 million for the third quarter of 2008, or $0.88 per average common
diluted share, compared to $412.6 million, or $1.18 per average common diluted
share, in the third quarter of 2007. The challenging credit environment
continued to have an adverse impact on the Company's financial performance as
evidenced by the increase in net charge-offs, nonperforming loans, and
credit-related expenses.
"SunTrust's continued profitability and improved capital position not only
underscore our resiliency in a quarter marked by unprecedented industry
turmoil, but also serve as a realistic basis for our confidence that we will
continue to manage successfully -- albeit not unscathed -- through the
challenges that our industry clearly will face in the period ahead," said
James M. Wells III, Chairman, President and Chief Executive Officer. "We also
believe that there will be attractive growth opportunities for SunTrust in the
near future. With that in mind, we will continue to take the steps necessary
for us to be able to capitalize on those opportunities."
Mr. Wells said the potential impact of economic weakness on credit quality
remains "near-term concern number one" for SunTrust even though the Company
has been seeing some "signs of slowing credit deterioration." Mr. Wells said
charge-offs, which were in line with expectations in the third quarter, are
likely to remain at elevated levels into 2009.
"We are managing our credit risk profile very carefully to minimize the
impact of further deterioration in the economy," said Mr. Wells. "However, we
have all seen how quickly things can change in this environment. As a result,
we do not believe it prudent or responsible to try to predict the ultimate
path of the economy and the resulting impact on asset quality and earnings."
Mr. Wells noted that the Company's Board of Directors has authorized an
application for the sale of preferred stock to the U.S. Treasury under the
TARP program, and also that the Company continues to evaluate its capital
structure and dividend policy. Mr. Wells said he expects the evaluation to be
completed "in short order" with any decisions communicated promptly.
Mr. Wells pointed out that despite the current industry turmoil,
SunTrust's 30,000 employees remain "steadily focused every day on building our
business, serving our current customers, and attracting new ones who find
SunTrust's relative strength and stability a distinct competitive advantage in
these uncertain times."
SunTrust's previously announced capital enhancing transactions were
completed during the quarter and the results are reflected in the Company's
capital ratios. Estimated Tier 1 capital at September 30, 2008 is a healthy
8.15%, up 68 basis points from 7.47% at June 30, 2008. The total capital
ratio also increased and now exceeds 11%. In addition, the Company reported
total average equity to total average assets of 10.34%, and a tangible equity
to tangible asset ratio of 6.40% which is one of the highest ratios among
large banks.

Third Quarter 2008 Consolidated Highlights

3rd Quarter 3rd Quarter %
2008 2007 Change
Income Statement
(Dollars in millions, except per
share data)
Net income available to common shareholders $307.3 $412.6 (25.5)%
Net income per average common diluted share 0.88 1.18 (25.4)%
Revenue - fully taxable-equivalent 2,460.9 2,038.4 20.7%
Net interest income - fully taxable-
equivalent 1,175.7 1,219.2 (3.6)%
Provision for loan losses 503.7 147.0 242.6%

Noninterest income 1,285.2 819.1 56.9%
Noninterest expense 1,668.1 1,291.2 29.2%
Net interest margin 3.07% 3.18%
Efficiency ratio 67.78% 63.35%

Balance Sheet
(Dollars in billions)
Average loans $125.6 $119.6 5.1%
Average consumer and commercial deposits 100.2 96.7 3.6%

Capital
Tier 1 capital ratio(1) 8.15% 7.44%
Total average shareholders' equity to total
average assets 10.34% 10.05%
Tangible equity to tangible assets 6.40% 6.36%

Asset Quality
Net charge-offs to average loans
(annualized) 1.24% 0.34%
Nonperforming loans to total loans 2.60% 0.81%

(1) Current period Tier 1 capital ratio is estimated as of the earnings
release date.

-- Net income per average common diluted share decreased 25.4% from the
third quarter of 2007 primarily due to higher provision for loan losses,
higher credit-related expenses, the recognition of losses related to an
agreement in principle to purchase certain auction rate securities ("ARS"),
and valuation losses on trading assets. These impacts were partially offset by
net valuation gains on the Company's publicly traded debt and related hedges
carried at fair value and the gain on the sale of a non-strategic subsidiary.
-- The third quarter of 2008 results included a number of gains and losses
that were a function of the current environment. Items that positively
impacted the reported results included mark-to-market gains on the Company's
public debt and related hedges of $0.60 per share, a gain on the sale of
TransPlatinum, the Company's fuel card and fleet management subsidiary, of
$0.14 per share, and the tax benefit from the contribution of 3.6 million
shares of The Coca-Cola Company ("Coke") to the Company's charitable
foundation of $0.20 per share. Items that negatively impacted reported
results included an expected market valuation write-down of ARS of $0.31 per
share and net mark-to-market losses on trading assets and loan warehouses of
$0.24 per share.
-- Fully taxable-equivalent revenue increased 20.7% compared to the third
quarter of 2007, as the gain recognized on the charitable contribution of Coke
shares, positive net market valuation impacts, the gain on the sale of
TransPlatinum, and core fee income growth more than offset a decline in net
interest income.
-- Fully taxable-equivalent net interest income declined 3.6% from the
third quarter of 2007 and was essentially flat compared to the prior quarter.
Net interest margin declined 6 basis points during the quarter and 11 basis
points compared to the third quarter of 2007 due to the detrimental impact of
higher nonperforming loans, declining interest rates, and a shift in loan and
deposit mix.
-- Noninterest income increased 56.9% from the third quarter of 2007,
driven by securities gains related to the contribution of Coke stock to the
Company's charitable foundation, mark-to-market valuation gains on the
Company's public debt and related hedges, the gain from the sale of a
non-strategic business, and double digit growth in service charges, card fees,
mortgage-related income, and investment banking fees. Partially offsetting
these increases were the reduction in trust and investment management income,
the expected market valuation write-down of ARS, and mark-to-market losses on
trading assets and loan warehouses.
-- Noninterest expense increased 29.2% from the third quarter of 2007,
driven by increased credit-related expenses, the expense related to the
tax-free contribution of the Coke stock to the Company's charitable
foundation, and an increase in estimated VISA-related litigation liability.
Core operating expenses, excluding credit-related expenses, remained well
controlled as a result of the Company's efficiency and productivity efforts.
-- Provision for income taxes for the quarter was a net benefit of $52.8
million primarily related to the tax-free contribution of the Coke stock, as
well as lower taxable income.
-- Total average loans increased 5.1% from the third quarter of 2007
principally due to growth in the commercial loan portfolio. Average loans
held for sale declined 54.3%, as mortgage loan originations declined 35.5% and
efficiency in loan delivery improved. Average consumer and commercial
deposits increased 3.6% over the third quarter of 2007. The increase was
driven mainly by growth in NOW and money market account balances.
-- The estimated Tier 1 capital, total average shareholders' equity to
total average assets, and tangible equity to tangible asset ratios were 8.15%,
10.34%, and 6.40%, respectively.
-- Annualized quarterly net charge-offs were 1.24% of average loans for
the third quarter of 2008, up from 0.34% in the third quarter of 2007 and
1.04% in the second quarter of 2008. The increase reflects deterioration in
consumer residential real estate and residential construction loans.
-- Nonperforming loans to total loans increased to 2.60% as of September
30, 2008, from 2.09% as of June 30, 2008, and 0.81% as of September 30, 2007,
due mainly to increased levels of nonperforming residential real estate and
construction loans.

CONSOLIDATED FINANCIAL PERFORMANCE

Revenue
Fully taxable-equivalent revenue was $2,460.9 million for the third
quarter of 2008, an increase of 20.7% compared to the third quarter of 2007,
driven by the securities gains from the contribution of the Coke stock, mark
to market valuation gains on the Company's public debt and related hedges
carried at fair value, and increased fee income. These items were partially
offset by a 3.6% decline in net interest income, a decline in trust and
investment management income, and the expected market valuation write-down of
ARS.
For the nine months, fully taxable-equivalent revenue was $7,284.2
million, up 12.4% over prior year. The increase was driven by incremental net
securities gains of $424.8 million, gains from the sale of non-strategic
businesses and the sale/leaseback of certain corporate real estate properties,
the Visa IPO gain, net positive mark-to-market valuations, and increased fee
income from the Company's core businesses. These contributions to growth were
partially offset by lower net interest income, trust and investment management
income, and the write-down related to ARS.
Net Interest Income
Fully taxable-equivalent net interest income was $1,175.7 million in the
third quarter of 2008, a decrease of 3.6% from the third quarter of 2007. Net
interest margin declined 11 basis points compared to the third quarter of
2007. On a sequential quarter basis, net interest margin declined 6 basis
points. The decline in net interest income was primarily due to the increase
in nonaccrual loans, a reduction in Coke and Federal Home Loan Bank ("FHLB")
dividend income, LIBOR rate volatility during September in particular, and
lower interest income associated with a small increase in the Company's
leverage lease ("LILO") reserves. While earning assets remained essentially
flat over the past twelve months, higher yielding assets, such as loans held
for sale, have declined and lower yielding assets, such as commercial loans,
have increased. Lower rates on customer and wholesale deposits, as well as
growth in customer deposits, helped offset the decline in interest income.
For the nine months, fully taxable-equivalent net interest income was
$3,528.5 million, a decline of 2.7% from 2007 while net interest margin was
relatively flat. Balance sheet management strategies initiated in 2007 led to
a $3.8 billion, or 2.5%, decline in average earning assets, namely loans held
for sale, real estate construction loans, and interest-earning trading assets,
which was partially offset by growth in commercial loans.
Noninterest Income
Total noninterest income was $1,285.2 million for the third quarter of
2008, up 56.9% from the third quarter of 2007. The third quarter of 2008
included the gain from the contribution of Coke stock of $183.4 million to a
charitable foundation and a $81.8 million gain on the sale of TransPlatinum, a
fuel card and fleet management subsidiary, as well as mark-to-market valuation
gains on the Company's public debt and related hedges of $341.0 million versus
a mark-to-market valuation gain of $63.0 million in the third quarter of 2007.
The gains on the Company's public debt related to the widening in credit
spreads across the entire financial institutions sector as a result of the
global credit crisis. When stability in debt markets returns, spreads are
expected to tighten, and, if this occurs, then these valuation gains will
reverse. The third quarter of 2008 also included $172.8 million of expected
losses related to ARS and $136.9 million in mark-to-market losses on illiquid
trading securities and loan warehouses compared to $220.5 million in
mark-to-market losses in the third quarter of 2007. The fair value of the
illiquid securities acquired in the fourth quarter of 2007 declined to
approximately $350 million, from approximately $770 million as of June 30,
2008, primarily due to sales during the third quarter. This reduction was
partially offset by the purchase in the third quarter of 2008 of a $70 million
par value bond from an affiliated money market mutual fund. As of September
30, 2008, the fair value of this bond was $6.5 million.
The expected loss related to auction rate securities was recognized in
trading account profits and commissions as a result of the Company's decision
to offer to purchase ARS from certain clients and includes approximately $5
million in regulatory fines. The par value of the securities the Company will
offer to purchase is approximately $725 million. Approximately $625 million
of these securities are government sponsored securities or securities where
the issuer has indicated support of the underlying assets. The remaining $100
million of securities pertains to a senior tranche within a securitization of
trust preferred securities. We believe that the bulk of this write-down
relates to liquidity and duration risks not the ultimate collectability of
estimated cash flows. The majority of these securities are expected to be
purchased in the fourth quarter.
Mortgage production income was $50.0 million in the third quarter of 2008
compared to $13.0 million in the third quarter of 2007. Lower loan production
and related fees in 2008 were offset by a significant reduction in valuation
losses recorded in the third quarter of 2007 on the Alt-A loans held in the
warehouse. Mortgage servicing related income in the third quarter of 2008
increased primarily due to higher servicing fee income driven by growth in the
servicing portfolio from $149.9 billion as of September 30, 2007 to $159.3
billion as of September 30, 2008. On a sequential quarter basis, servicing
income increased primarily due to a $19.0 million gain on sale of excess
servicing rights.
In the third quarter of 2008, the Company experienced strong growth in
service charges on deposit accounts and card fees, which increased 12.3% and
10.9%, respectively, over the same period of 2007. Investment banking income
grew 30.4%, related to increased loan syndication and capital markets
activity; however, trust and investment income declined 15.8%, reflecting the
sale of certain trust related businesses earlier in 2008 and lower fee income
attributable to the decline in the equity markets. Trading account profits
and commissions includes the mark-to-market valuation adjustments on financial
instruments carried at fair value including the Company's publicly-traded debt
and related hedges carried at fair value and the ARS expected loss.
Securities gains included the $183.4 million gain from the contribution of
Coke shares, partially offset by a $10.3 million charge for
other-than-temporary impairment of certain securities available for sale.
For the nine months, total noninterest income was $3,755.7 million, which
was 31.7% over the same period of 2007. The increase was largely due to the
following transaction-related gains:
-- $497.4 million incremental gain on the sale and contribution of Coke
stock

-- $57.1 million incremental gain on sale of Lighthouse interests

-- $37.0 million gain on the sale/leaseback of corporate real estate

-- $81.8 million gain on the sale of TransPlatinum

-- $29.6 million gain on sale of First Mercantile Trust

-- $86.3 million gain recorded on the Visa IPO

Partially offsetting these gains was the expected market valuation
write-down of $172.8 million related to ARS and securities losses recorded
primarily in the first and third quarters of 2008 totaling $75.1 million in
conjunction with available-for-sale securities that were determined to be
other-than-temporarily impaired.
For the first nine months of 2008, SunTrust experienced solid growth in
most noninterest income categories, including service charges on deposits
accounts, up $82.6 million, other fees up, $28.4 million, card fees up, $27.2
million, investment banking income up, $18.7 million, and retail investment
income up, $12.5 million. Trading account profits and commissions increased
$24.6 million over the first nine months of 2007 as positive mark-to-market
gains on the Company's public debt net of related hedges exceeded
mark-to-market losses on illiquid securities during 2008, as compared to net
mark-to-market losses during 2007.
Mortgage production income increased 190.1% over the first nine months of
2007 due to the recognition of servicing value at the time of the interest
rate lock commitment in accordance with recently adopted accounting standards,
partially offset by a decline in loan production. The prior period also
included the impact of mortgage spread widening related to Alt-A loans held in
the mortgage loan warehouse, which have been substantially eliminated, and
$42.2 million of income reductions recorded in conjunction with our adoption
of specific fair value accounting standards. Drivers behind changes in other
components of noninterest income categories were consistent with those
impacting the third quarter.
Noninterest Expense
Total noninterest expense in the third quarter of 2008 was $1,668.1
million, up 29.2% from the third quarter of 2007. Almost half of the increase
was related to the $183.4 million contribution of Coke stock to our charitable
foundation recognized in marketing and customer development. The majority of
the remaining increase was due to credit-related expenses, which increased
$178.2 million over the third quarter of 2007. Credit-related expenses
include fraud losses primarily related to borrower misrepresentations on
mortgage loan documentation, other real estate losses, credit and collection
costs, and additions to mortgage insurance reserves. Additionally, SunTrust
increased its estimate of future liability related to VISA litigation by $20
million as a result of a tentative settlement. Excluding the charitable
contribution, VISA litigation, and credit-related items, expenses were well
controlled as a result of the Company's E2 Efficiency and Productivity
Program, which through the third quarter 2008 has generated gross savings of
approximately $397 million. Personnel expenses in the third quarter of 2008
increased 2.7% from the same period in 2007. Salaries declined $8.6 million
from the third quarter of 2007, reflecting a reduction of approximately 3,500
full time equivalent employees since September 30, 2007 to 29,447 as of
quarter end 2008. The increase in personnel expense is due primarily to the
annual issuance of restricted stock, and in the third quarter of 2007, a
year-to-date downward adjustment to incentive accruals. Other expenses in the
third quarter of 2007 included a $45.0 million accrual for severance costs
related to the E2 program and a $9.8 million debt extinguishment charge,
partially offset by a $33.6 million reduction of the accrued liability related
to a capital instrument. On a sequential quarter basis, the increase in
outside processing was substantially offset by the decrease in employee
compensation and benefits due to the outsourcing of certain back-office
operations in the third quarter of 2008.
For the nine months, total noninterest expense was $4,301.8 million, an
increase of 13.9% over the same period in 2007. The increase was primarily
due to increased credit-related costs of $290.7 million, the contribution of
Coke stock of $183.4 million, and the mortgage origination costs that were
previously deferred prior to the Company's election during the second quarter
of 2007 to record at fair value certain newly originated mortgage loans
held-for-sale.
Income Taxes
The Company recognized a benefit for income taxes of $52.8 million in the
third quarter of 2008 compared to a provision for income taxes of $152.9
million in the third quarter of 2007. The decrease in income taxes was due to
lower taxable income and the recognition of a $68.5 million tax benefit from
the charitable contribution of 3.6 million Coke shares.
Balance Sheet
As of September 30, 2008, SunTrust had total assets of $174.8 billion.
Shareholders' equity of $18.0 billion as of September 30, 2008 represented
10.27% of total assets. Book value and tangible book value per common share
were $49.32 and $30.27 as of September 30, 2008, respectively.
Loans
Average loans for the third quarter of 2008 were $125.6 billion, up $6.1
billion, or 5.1%, from the third quarter of 2007. The increase was primarily
in commercial-related categories. Average construction loans declined $3.2
billion, or 23.3%, due to the Company's efforts to reduce its exposure to
construction loans and the transfer to nonaccrual loans. Indirect auto loans
declined $0.8 billion, or 10.2%, driven by SunTrust's de-emphasis of this
business. Average loans held-for-sale also declined $5.3 billion, or 54.3%,
as loan originations declined 35.5%, production shifted to predominantly
agency products, and efficiency improved in loan delivery. On a sequential
quarter basis, total average loans increased slightly with the product trends
remaining consistent.
Deposits
Average consumer and commercial deposits for the third quarter of 2008
were $100.2 billion, up $3.5 billion, or 3.6%, from the third quarter of 2007,
as increases in NOW and money market deposits were partially offset by
declines in demand deposit and savings account balances. Average brokered
deposits declined $5.1 billion, or 32.3%, from the third quarter of 2007 as
consumer and commercial interest bearing deposits increased $4.1 billion. On
a sequential quarter basis, total average deposits decreased $0.8 billion, or
0.7%, driven by reductions in most deposit categories. The decline in average
balances was driven largely by decreases experienced in July and August, as
September reversed this trend with growing balances, particularly in the later
part of the month.
Capital
The estimated Tier 1 capital, total average shareholders' equity to total
average assets, and tangible equity to tangible assets ratios at September 30,
2008 were 8.15%, 10.34%, and 6.40%, respectively. This compares to 7.44%,
10.05%, and 6.36% at September 30, 2007 and 7.47%, 10.31%, and 6.27% at June
30, 2008. The increases are primarily attributable to completion of the Coke
transactions. The Company's regulatory capital ratios are significantly in
excess of the regulatory requirements for well capitalized status.
Asset Quality
Nonaccrual loans were $3,289.5 million, or 2.60%, of total loans as of
September 30, 2008, compared to $2,625.3 million, or 2.09%, of total loans as
of June 30, 2008 and $974.8 million, or 0.81%, of total loans as of September
30, 2007. The increase in nonaccrual loans was mainly due to an increase in
real estate construction loans and residential mortgages, as the overall
weakening of the housing markets and economy continued to increase
delinquencies. Other real estate owned also increased $52.5 million, or
15.7%, to $387.0 million, as the Company foreclosed on the collateral securing
specific nonperforming loans. Restructured loans still accruing interest
increased $217.7 million to $381.0 million as a result of actions the Company
is proactively taking to mitigate further losses and enable borrowers to repay
their loans under revised terms that in the long run preserve the value of the
Company's interests.
Annualized quarterly net charge-offs in the third quarter of 2008 were
1.24% of average loans, up from 0.34% in the third quarter of 2007 and 1.04%
in the second quarter of 2008. Net charge-offs were $392.1 million in the
third quarter of 2008 compared to $322.7 million in the second quarter of 2008
and $103.7 million in the third quarter of 2007. The increase in net
charge-offs over the third quarter of 2007 reflects the deterioration in
consumer credit and home values, particularly in residential real estate
secured loans. The increase in net charge-offs in 2008 has been most
pronounced in home equity lines, residential mortgages, and construction loans
as home values continued to fall. The provision for loan losses increased to
$503.7 million compared to $448.0 million in the second quarter of 2008 and
$147.0 million in the third quarter of 2007.
The allowance for loan and lease losses was $1,941.0 million as of
September 30, 2008 and represented 1.54% of period-end loans. Since year-end
2007, the allowance to loans outstanding has increased 49 basis points, as the
deterioration in certain segments of the consumer and residential real estate
market continued. The allowance for loan and lease losses as of September 30,
2008 represented 1.24 times annualized net charge-offs in the quarter and
62.1% of period-end nonperforming loans.
LINE OF BUSINESS FINANCIAL PERFORMANCE
The following discussion details results for SunTrust's four business
lines: Retail and Commercial Banking, Wholesale Banking, Mortgage, and Wealth
and Investment Management. In 2007, the Company reported five business
segments.
All revenue 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 loan loss provision
compared to net charge-offs, as well as equity and its related impact.
Retail and Commercial Banking
Three Months Ended September 30, 2008 vs. 2007
Retail and Commercial Banking net income for the third quarter of 2008 was
$64.7 million, a decrease of $138.1 million, or 68.1%, compared to the third
quarter of 2007. This decrease was primarily the result of higher provision
expense due to home equity line and commercial net charge-offs, lower deposit
related net interest income and higher credit and fraud related noninterest
expense, partially offset by strong growth in service charges on deposits.
Net interest income decreased $51.6 million, or 7.3%, driven by a shift in
deposit mix and compressed spreads due to increased competition for deposits.
Average deposits increased $0.9 billion, or 1.1%, while deposit spreads
decreased 18 basis points resulting in a $32.8 million decrease in net
interest income. Low cost demand deposit and savings accounts decreased a
combined $1.3 billion, or 6.7%, primarily in commercial demand deposits while
higher cost NOW and money market accounts increased a combined $2.6 billion,
or 7.4%. Certificates of deposit and IRA accounts dropped $0.4 billion, or
1.7%, although spreads increased slightly. Net interest income from loans
decreased $11.8 million as average loan balances declined $0.5 billion, or
1.0%. Average loan balances declined approximately $2.2 billion related to
the migration of middle market clients from the Retail and Commercial line of
business to Wholesale Banking. This decline was substantially offset by loan
growth from the GB&T acquisition, commercial loans, equity lines, and student
loans.
Provision for loan losses increased $151.1 million over the same period in
2007. The provision increase was most pronounced in home equity lines,
reflecting deterioration in the residential real estate market, and commercial
loans, primarily to clients with annual revenue of less then $5 million.
Total noninterest income increased $30.2 million, or 9.4%, from the third
quarter of 2007. This increase was driven primarily by a $22.1 million, or
11.6%, increase in service charges on deposit accounts from both consumer and
business accounts primarily due to growth in the number of accounts, higher
NSF rates and an increase in occurrences of NSF fees. Interchange fees
increased $7.4 million, or 14.6%, and ATM revenue increased $3.0 million, or
10.1%.
Total noninterest expense increased $47.1 million, or 7.4%, from the third
quarter of 2007. This increase was driven primarily by higher credit related
expenses including operating losses due to fraud, shared corporate overhead
expense, and continued investment in the branch distribution network.
Nine Months Ended September 30, 2008 vs. 2007
Retail and Commercial Banking net income for the nine months ended
September 30, 2008 was $283.0 million, a decrease of $329.5 million, or 53.8%,
compared to the same period in 2007. This decrease was primarily the result
of higher provision expense due to home equity line net charge-offs, lower net
interest income related to deposit spreads and higher credit-related
noninterest expense, partially offset by strong growth in service charges on
deposits.
Net interest income decreased $201.4 million, or 9.4%, driven by a
continued shift in deposit mix and decreased spreads as deposit competition
and the interest rate environment encouraged customers to migrate into higher
yielding interest-bearing deposits. Average deposit balances increased $0.4
billion, or 0.5%, while deposit spreads decreased 30 basis points resulting in
a $172.7 million decrease in net interest income. Low cost demand deposit and
savings accounts decreased a combined $1.9 billion, or 9.4%, driven by a
decrease in commercial demand, while higher cost NOW and money market accounts
increased a combined $2.4 billion, or 7.0%. Net interest income from loans
decreased $21.8 million, or 2.8%, as average loan balances declined $0.4
billion, or 0.8%. The transfer of middle market clients to the Wholesale
Banking line of business decreased loans by approximately $2.1 billion and was
partially offset by loans acquired in the GB&T acquisition and growth in
commercial loans, equity lines and student loans.
Provision for loan losses increased $409.0 million over the same period in
2007. The provision increase was most pronounced in home equity lines,
indirect auto, as well as in commercial loans primarily to clients with annual
revenue of less then $5 million.
Total noninterest income increased $101.6 million, or 11.0%, over the same
period in 2007. This increase was driven primarily by a $69.2 million, or
13.0%, increase in service charges on both consumer and business deposit
accounts, primarily due to growth in the number of accounts, higher NSF rates
and an increase in occurrences of NSF fees. Interchange fees increased $22.3
million, or 15.0%, while ATM revenue also increased $7.1 million, or 8.0%.
Total noninterest expense increased $15.9 million, or 0.8%, from the same
period in 2007. The continuing positive impact of expense savings initiatives
was offset by higher credit-related expenses, including operating losses due
to fraud, and continued investments in the branch distribution network.
Wholesale Banking
Three Months Ended September 30, 2008 vs. 2007
Wholesale Banking net income for the third quarter of 2008 was $42.1
million, an increase of $9.7 million, or 30.2%, compared to the third quarter
of 2007. Lower mark-to-market trading losses and higher investment banking
income was partially offset by higher incentive based compensation as well as
decreased net interest income and increased provision expense.
Net interest income decreased $10.8 million, or 7.6%. While average loan
balances increased $5.2 billion, or 17.7%, the corresponding net interest
income declined $13.1 million, or 11.4%. Approximately $2.2 billion of the
increase is related to the migration of middle market clients from the Retail
and Commercial line of business to the Wholesale Banking line of business.
Average loans in the legacy Wholesale Banking line of business increased
approximately $3.1 billion, or 10.5%, driven by growth from large corporate
clients partially offset by reductions in the residential builder portfolio.
The decline in loan related net interest income is due to a shift in mix away
from higher spread residential construction loans to lower spread commercial
loans, as well as increased residential construction nonaccrual loans. Total
average deposits were up $4.0 billion, or 75.8%, primarily in higher cost
corporate money market and Eurodollar accounts. The net interest income
associated with the higher-cost deposit categories was relatively flat as the
additional volume was offset by lower deposit spreads.
Provision for loan losses was $32.3 million, an increase of $16.8 million,
or 108.9%, from the same period in 2007. The increase resulted from higher
residential builder-related charge-offs partially offset by lower charge-offs
from large corporate clients.
Total noninterest income increased $85.8 million, or 118.4%. Solid
performance in loan syndications, fixed income sales, direct finance, equity
offerings and leasing, as well as lower mark-to-market trading losses
primarily related to structured products, were in part offset by lower
revenues in bond origination and structured leasing.
Total noninterest expense increased $24.2 million, or 13.5%. The
migration of middle market clients accounted for approximately $6.7 million of
the increase. The remainder of Wholesale Banking expenses increased $17.5
million, or 9.8%, driven primarily by higher incentive-based compensation
primarily related to an increase in noninterest income, partially offset by
lower Affordable Housing related and discretionary expenses.
Nine Months Ended September 30, 2008 vs. 2007
Wholesale Banking net income for the nine months ended September 30, 2008
was $206.5 million, a decrease of $37.3 million, or 15.3%, compared to the
same period in 2007. Lower mark-to-market trading losses were offset by
reductions in private equity gains, higher incentive based compensation, as
well as decreased net interest income and increased provision expense.
Net interest income decreased $26.3 million, or 6.1%. Average loan
balances increased $4.4 billion, or 15.1%, while the corresponding net
interest income declined $23.2 million, or 6.7%. Approximately $2.1 billion
of the loan increase is related to the migration of middle market clients from
the Retail and Commercial line of business to the Wholesale Banking line of
business. Average loans in the legacy Wholesale line of business increased
$2.3 billion, or 8.0%, driven by increased corporate banking loans which were
partially offset by reductions in the residential builder portfolio. The
decline in net interest income is due to a shift in mix away from higher
spread residential construction loans to lower spread commercial loans and
increased residential construction nonaccrual loans. Total average deposits
were up $4.1 billion, or 82.4%, primarily in higher cost corporate money
market and Eurodollar accounts. The associated net interest income decreased
$5.5 million driven by the lower credit for funds on demand deposits. The net
interest income associated with the higher-cost deposit categories was
relatively flat as the additional volume was offset by the lower deposit
spreads.
Provision for loan losses was $55.6 million, an increase of $21.7 million,
or 64.1%, from the same period in 2007, resulting from higher residential
builder related charge-offs partially offset by lower charge-offs in corporate
banking.
Total noninterest income increased $49.8 million, or 10.7%. Lower
mark-to-market trading losses mainly affecting structured products was the
main driver of the increase. Solid performance in loan syndications, fixed
income and equity sales and trading, equity offerings and leasing were, in
part, offset by a reduction in private equity gains and lower revenues in
structured leasing, derivatives and M&A advisory.
Total noninterest expense increased $38.6 million, or 6.8%. The transfer
of middle market clients accounted for approximately $19.7 million of the
increase. The remainder of Wholesale Banking's expense increased $18.9
million, or 3.4%, driven primarily by higher incentive-based compensation
primarily related to a 45% increase in Capital Markets noninterest income. In
addition, higher outside processing and credit services expenses were
partially offset by lower Affordable Housing, personnel, and discretionary
expenses.
Mortgage
Three Months Ended September 30, 2008 vs. 2007
Mortgage reported a net loss of $156.1 million for the third quarter of
2008, a $143.6 million higher loss compared with the third quarter of 2007.
The larger net loss was principally due to higher credit-related costs.
Net interest income declined $23.5 million, or 18.0%. Average loans
increased $1.0 billion, or 3.4%, while net interest income on loans declined
$19.9 million, or 22.8%. This decline was principally due to a $1.2 billion
increase in average nonaccrual loans which resulted in $12.1 million of the
net interest income decline. Additionally, average consumer mortgage and
residential construction loans declined $0.3 billion resulting in a net
interest income decline of $7.4 million. Also contributing to the decrease
was a $4.0 million decline in net interest income on deposits primarily
related to a lower credit for funds on demand deposits.
Provision for loan losses increased $113.1 million over the $11.7 million
recorded in the third quarter of 2007 due to higher residential mortgage and
residential construction net charge-offs.
Total noninterest income increased $38.5 million, or 42.8%. Mortgage
production income increased $29.6 million, or 148.4%. Total loan production
of $8.1 billion was down $4.5 billion, or 35.5%; however, valuation losses due
to spread widening in the mortgage market were lower in 2008 and offset the
negative effect of lower loan production. Servicing income increased $5.8
million, or 10.2%. Higher service fees due to a larger servicing portfolio
were only partially offset by higher Mortgage Servicing Rights ("MSR")
amortization. Total loans serviced at September 30, 2008 were $159.3 billion
compared with $149.9 billion at September 30, 2007.
Total noninterest expense increased $129.7 million, or 55.0%. Operating
losses increased $71.6 million principally driven by fraud related to borrower
misrepresentation, while reserves for mortgage reinsurance losses increased
$47.9 million. Other real estate and collection services expenses increased
$38.1 million. Commission expense was down $19.5 million due to lower loan
production as were other origination-related expenses.
Nine Months Ended September 30, 2008 vs. 2007
Mortgage reported a net loss of $276.8 million for the nine months ended
September 30, 2008, a decrease of $312.7 million compared to net income of
$35.9 million reported in the same period in 2007 principally due to
credit-related costs and lower servicing income.
Net interest income declined $33.2 million, or 8.4%. Average loans
increased $1.0 billion, or 3.2%, while the resulting net interest income
declined $48.2 million. This decline was principally due to a $1.1 billion
increase in average nonaccrual loans which contributed $32.6 million to the
decline in net interest income. Additionally, the changing mix in portfolio
assets drove an income decline of $15.5 million, as declining construction
perm and Alt A balances were replaced with lower yielding prime first lien
mortgages. Average deposits increased $0.1 billion, or 5.1%, while the
resulting net interest income decreased $6.4 million due primarily to lower
funds credit for demand deposits. Partially offsetting the decline was higher
income from loans held for sale of $26.7 million due to wider spreads and
higher income from mortgage-backed securities of $19.4 million.
Provision for loan losses increased $316.1 million, to $351.1 million from
$35.0 million, due to higher residential mortgage and residential construction
net charge-offs.
Total noninterest income increased $103.9 million, or 39.1%. Total loan
production of $29.2 billion was down $16.2 billion, or 35.7%, from the prior
year. While production income was negatively affected by lower loan
production, total production income increased $138.9 million, or 200.9%, due
to lower valuation losses resulting from spread widening in the mortgage
market in 2008 and recognition of loan origination fees resulting from the
Company's election to record certain mortgage loans at fair value beginning in
May 2007. Servicing income was down principally due to higher MSR
amortization and hedge costs and lower gains on sale of mortgage servicing
assets. These declines were partially offset by higher service fees due to a
larger servicing portfolio. Total loans serviced at September 30, 2008 were
$159.3 billion compared with $149.9 billion at September 30, 2007.
Total noninterest expense increased $254.5 million, or 43.5%. Operating
losses increased $101.8 million principally driven by fraud related to
borrower misrepresentation. Reserves for mortgage reinsurance losses
increased $79.8 million while other real estate expense and collection
services expense increased $70.8 million. Additionally, the recognition of
loan origination costs resulting from the Company's election to record certain
mortgage loans at fair value beginning in May 2007 increased noninterest
expense compared with the prior year. These increases were partially offset
by lower commission expense which was down $58.7 million due to lower loan
production.
Wealth and Investment Management
Three Months Ended September 30, 2008 vs. 2007
Wealth and Investment Management's net income for the third quarter of
2008 was $4.4 million, a decrease of $56.8 million, or 92.8%. The decline in
net income was primarily the result of a mark-to-market loss on a single
security. In September 2008, the Company purchased $70 million of Lehman
Brothers Holdings Inc. ("Lehman") bonds, at par, from the RidgeWorth Prime
Quality Money Market Fund in order to protect SunTrust clients from possible
losses associated with Lehman's default. Subsequent to purchase, a $63.5
million pre-tax mark-to-market loss was recorded reflecting the fair value as
of September 30, 2008.
Net interest income decreased $3.1 million, or 3.6%, primarily due to
compressed spreads on loans and deposits. Average deposits were down 0.3% and
net interest income declined $1.6 million, or 2.9%, primarily related to a
lower credit for funds on demand deposits. Average loans increased $0.4
billion, or 4.7%, driven by a $240.7 million increase in commercial loans.
However, the increase in balances was offset by decreased spreads in both the
consumer and commercial portfolios resulting in a $2.3 million decrease in net
interest income.
Provision for loan losses increased $7.2 million primarily due to higher
home equity, consumer direct, and consumer mortgage net charge-offs.
Total noninterest income decreased $96.7 million, or 37.4%, driven by the
$63.5 million mark-to-market loss on the Lehman bonds and the sale of
Lighthouse Partners and First Mercantile Trust. Retail investment income
increased $0.9 million, or 1.3%, due to higher annuity sales and recurring
managed account fees. Trust income decreased $27.5 million, or 15.7%,
primarily due to lower revenue streams stemming from the sale of Lighthouse
Partners and First Mercantile Trust and lower market valuations on managed
equity assets. As of September 30, 2008, assets under management were
approximately $129.5 billion compared to $142.9 billion as of September 30,
2007. Assets under management include individually managed assets, the
RidgeWorth Funds, institutional assets managed by RidgeWorth Capital
Management, and participant-directed retirement accounts. SunTrust's total
assets under advisement were approximately $218.3 billion, which includes
$129.5 billion in assets under management, $51.4 billion in non-managed trust
assets, $35.9 billion in retail brokerage assets, and $1.7 billion in
non-managed corporate trust assets.
Total noninterest expense decreased $17.5 million, or 7.1%, driven by
lower staff and discretionary expenses, as well as lower structural expense
resulting from the sale of Lighthouse Partners and First Mercantile Trust.
Nine Months Ended September 30, 2008 vs. 2007
Wealth and Investment Management's net income for the nine months ended
September 30, 2008 was $153.3 million, a decrease of $30.5 million, or 16.6%,
from the prior year. The following transactions represented $13.6 million of
the year-over-year decline:
-- $39.4 million decrease due to the after-tax impact of the
mark-to-market loss on Lehman bonds.
-- $55.4 million increase due to the after-tax gain on sale of a minority
interest in Lighthouse Investment Partners in the first quarter of 2008.
-- $18.4 million increase due to the after-tax gain on the sale of First
Mercantile Trust in the second quarter of 2008.
-- $27.9 million decrease due to the after-tax impairment charge on a
client-based intangible asset incurred in the second quarter of 2008.
-- $20.1 million decrease due to the after-tax gain resulting from the
sale upon merger of Lighthouse Partners into Lighthouse Investment Partners in
the first quarter of 2007.
Net interest income decreased $17.1 million, or 6.4%, primarily due to a
shift in deposit mix to higher cost deposits. Average deposits were
practically unchanged as declines in demand deposits and savings accounts were
offset by increases in higher-cost NOW and money market accounts. This shift
in deposit mix coupled with compressed spreads due to increased competition
for deposits resulted in a $13.2 million decrease in net interest income.
Average loans increased slightly as growth in commercial loans was partially
offset by declines in higher spread consumer loans resulting in a $3.6 million
decline in net interest income.
Provision for loan losses increased $10.9 million, or 183.9%, driven by
higher home equity, consumer direct, and consumer mortgage net charge-offs.
Total noninterest income decreased $32.1 million, or 4.0%, compared to the
nine months ended September 30, 2007 driven by the $63.5 million
mark-to-market loss on Lehman bonds. This decline was partially offset by a
$29.6 million gain on sale of First Mercantile Trust and $28.7 million of
incremental revenue from the sale of our Lighthouse Partners investment.
Retail investment income increased $9.6 million, or 4.7%, due to higher
annuity sales and higher recurring managed account fees. Trust income
decreased $48.0 million, or 9.4%, primarily due to the aforementioned sales of
Lighthouse Partners and First Mercantile Trust which resulted in a $37.4
million decline in trust income.
Total noninterest expense decreased $9.6 million, or 1.3%. This decline
includes a $45.0 million impairment charge on a client based intangible
incurred in the second quarter of 2008. Noninterest expense before intangible
amortization declined $50.9 million, or 6.8%, driven by lower staff,
discretionary, and indirect expenses, as well as lower structural expense
resulting from the sales of Lighthouse Partners and First Mercantile Trust.
Corporate Other and Treasury
Three Months Ended September 30, 2008 vs. 2007
Corporate Other and Treasury's net income for the third quarter of 2008
was $357.4 million, an increase of $221.0 million, or 162.0%, compared to the
third quarter of 2007. The increase was driven by the release of a deferred
tax liability related to the charitable contribution of Coke stock, net
positive valuations on long-term debt and related hedges carried at fair
value, lower mark-to-market losses on trading securities and the gain on sale
of the TransPlatinum subsidiary. These increases were partially offset by the
expected market valuation write-down of auction rate securities and an
increase in provision for loan losses.
Net interest income increased $45.5 million, or 29.5%, over the same
period in 2007 mainly due to interest risk management activities. Total
average assets decreased $4.0 billion, or 17.6%, mainly due to the reduction
in the size of the investment portfolio as part of the Company's overall
balance sheet management strategy. Total average deposits decreased $6.7
billion, or 31.1%, mainly due to a decrease in brokered deposits, as the
Company reduced its reliance on wholesale funding sources.
Provision for loan losses, which predominantly represents the difference
between consolidated provision for loan losses and net charge-offs for the
lines of business, increased $68.4 million, or 157.8%, due to a higher
increase in the Company's allowance for loan losses.
Total noninterest income increased $408.3 million in the third quarter of
2008 compared to the same period in 2007. Of the increase, $278.0 million was
driven by net valuation gains on publicly-traded debt. These net valuation
gains are primarily due to the significant widening in credit spreads on the
Company's publicly-traded debt and related hedges carried at fair value.
There was also an increase of $177.7 million in securities gains primarily
from the gain on the contribution of Coke stock and a gain of $81.8 million on
sale of the TransPlatinum subsidiary. These increases were partially offset by
the expected market valuation write-down of $172.8 million on auction rate
securities.
Total noninterest expense increased $193.3 million compared to the third
quarter of 2007. The increase in expense was mainly due to a $183.4 million
charitable contribution of Coke stock, and increase in the VISA related
litigation liability.
Nine Months Ended September 30, 2008 vs. 2007
Corporate Other and Treasury's net income for the nine months ended
September 30, 2008 was $777.3 million, an increase of $230.5 million, or
42.1%, from the same period in 2007. The increase was driven by securities
gains primarily related to the incremental gains on the sale and contribution
of Coke stock, net valuation gains on the Company's publicly-traded debt and
related hedges carried at fair value, and the gain on sale of the
TransPlatinum subsidiary. These increases were partially offset by the
expected market valuation write-down of auction rate securities,
mark-to-market valuation losses on illiquid trading securities and provision
for loan losses.
Net interest income increased $178.9 million, or 45.7%, over the same
period in 2007 mainly due to interest rate risk management activities. Total
average assets decreased $6.1 billion, or 22.9%, mainly due to the reduction
in the size of trading assets. Total average deposits decreased $9.4 billion,
or 38.8%, mainly due to a decrease in brokered and foreign deposits as the
Company reduced its reliance on wholesale funding sources.
Provision for loan losses, which predominantly represents the difference
between consolidated provision for loan losses and net charge-offs for the
lines of business, increased $445.8 million in conjunction with an increase in
the allowance for loan losses due primarily to expected deterioration in the
residential real estate market and related loan credit quality.
Total noninterest income increased $680.0 million compared to the same
period in 2007 mainly due to a $497.4 increase in gains on the sale and
contribution of Coke stock. Additionally, there was an $86.3 million gain on
holdings of VISA in connection with its initial public offering, an $81.8
million gain on sale of TransPlatinum, and an additional $37.0 million gain
from the sale/leaseback of real estate properties. Noninterest income also
included an additional increase of $442.9 million of net positive
mark-to-market valuations on the Company's public debt and related hedges
carried at fair value. These valuations reflect the widening in the credit
spreads on SunTrust's publicly-traded debt carried at fair value. These gains
were partially offset by $176.6 million in net valuation losses on illiquid
trading securities, an expected loss of $172.8 million on ARS, an $81.0
million decrease due to gains on trading assets and liabilities recorded in
2007 related to the Company's adoption of fair value, and a $58.4 million
increase in securities losses during this period primarily driven by market
value impairment related to certain asset-backed securities that were
estimated to be other-than-temporarily impaired.
Total noninterest expense increased $223.9 million from the same period in
2007. The increase in expense was mainly due to the $183.4 million charitable
contribution of Coke stock, and an increase in the VISA related litigation
liability.
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 SEC today.
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 US 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 October 23, 2008, at 8:00
a.m. (Eastern Time) to discuss the earnings results and business trends.
Individuals may call in beginning at 7:45 a.m. (Eastern Time) by dialing
1-888-972-7805 (Passcode: 3Q08). Individuals calling from outside the United
States should dial 1-517-308-9091 (Passcode: 3Q08). A replay of the call will
be available one hour after the call ends on October 23, 2008, and will remain
available until November 6, 2008, dialing 1-866-435-5412 (domestic) or
1-203-369-1031 (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, 3rd Quarter Earnings Release." Beginning the
afternoon of October 23, 2008, listeners may access an archived version of the
webcast in the "Webcasts and Presentations" subsection found under "Investor
Relations." This webcast will be archived and available for one year. 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 customers in selected markets nationally. Its primary businesses
include deposit, credit, trust and investment services. Through various
subsidiaries the Company provides credit cards, mortgage banking, insurance,
brokerage, 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 that
do not describe historical or current facts, including statements about
beliefs and expectations, are forward-looking statements. 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. The forward-looking statements are intended
to be subject to the safe harbor provided by Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. 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
in Exhibit 99.3 to our Current Reports on Form 8-K filed on October 23, 2008
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 other
financial institutions could adversely affect us; there can be no assurance
that recently enacted legislation will stabilize the U.S. financial system;
the impact on us of recently enacted legislation, in particular the Emergency
Economic Stabilization Act of 2008 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; 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 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; 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 methods are key 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 that could result in current or future gains or losses or the
possible consolidation of those entities; and we are subject to market risk
associated with our asset management and commercial paper conduit businesses.
SOURCE SunTrust Banks, Inc.

Investors, Steve Shriner, +1-404-827-6714, or Media, Barry Koling,
+1-404-230-5268, both for SunTrust Banks, Inc./ /FIRST ADD -- TABULAR MATERIAL
-- TO FOLLOW