Rule 425

Filed by SunTrust Banks, Inc.

pursuant to Rule 425

under the Securities Act of

1933, as amended and deemed

filed under Rule 14a-6

under the Securities Exchange Act

of 1934, as amended

Subject Company: GB&T Bancshares Inc.

Exchange Act File Number of

Subject Company: 000-24203

 

LOGO

   News Release

 

Contact:      
Investors    Media   
Steve Shriner    Barry Koling   
(404) 827-6714    (404) 230-5268   

For Immediate Release

April 22, 2008

SunTrust Reports First Quarter Earnings of $0.81 Per Share

Credit Costs Impact Results as Company Points to Underlying Progress and Financial Strength

 

 

ATLANTA— SunTrust Banks, Inc. (NYSE: STI) today reported net income available to common shareholders for the first quarter of 2008 of $283.6 million, or $0.81 per average common diluted share, compared to $513.9 million, or $1.44 per average common diluted share, in the first quarter of 2007. Growth in the balance sheet and core business revenues coupled with disciplined expense management were more than offset by increased credit costs associated with the continued deterioration in the housing market, as well as net mark-to-market valuation losses related to certain asset-backed securities. Positively impacting the quarter were gains from the Company’s interest in Visa, Inc. (“Visa”) and prior decisions to sell its remaining interest in Lighthouse Investment Partners and certain bank-owned real estate.

“Growth in credit costs associated with the residential real estate correction continued to take a toll in the first quarter; further, the backdrop of emerging recession fears clouds the near-term outlook. However, SunTrust is financially strong, with ample liquidity, adequate capital, and a solid balance sheet, and we are effectively managing through this difficult economic environment. Perhaps most importantly, we are encouraged by underlying progress in key business lines, good deposit and some modest loan growth, and the positive impact of improved expense discipline. Given the success we are achieving in our E2 Efficiency and Productivity program, we have increased our 2008 savings estimate to $500 million, up $150 million from our previous estimate. Economic uncertainty notwithstanding, we remain confident in the validity of our strategies, our execution of those strategies, and the growth potential within our existing businesses and markets,” said James M. Wells III, President and Chief Executive Officer of SunTrust.

As the deterioration of residential real estate markets continued in the first quarter of 2008, the Company increased its provision for loan losses to $560 million, increasing the ratio of allowance to total loans outstanding to 1.25% as of March 31, 2008. Annualized net charge-offs for the quarter of 0.97% of average loans were principally related to loans secured by residential real estate. The increase in the allowance for loan and lease losses was also attributable to an increase in expected losses in the existing residential mortgage, home equity lines of credit, and residential construction portfolios.

During the quarter, the Company also recognized approximately $163.7 million in net valuation losses. The losses pertained primarily to mark-to-market valuation adjustments on trading assets and loan warehouses, as well as certain asset-backed securities that are classified as available for sale, net of gains on the Company’s public debt carried at fair value and related hedges. The unrealized loss on certain available for sale securities was recognized through earnings, as the assets were deemed to be other-than-temporarily impaired, thus triggering an accounting recognition of the losses. The after-tax earnings impact of the net valuation losses was $101.5 million, or $0.29 per diluted common share. Through sales, maturities and pay downs, the Company has reduced its exposure to these distressed assets by over $1.0 billion since the end of 2007, leaving the quarter-end exposure at approximately $1.6 billion. The Company continues to actively evaluate its holdings of these specific securities with an objective of continuing to lower its exposure to such assets.


First Quarter 2008 Consolidated Highlights:

 

     1st Quarter
2008
    1st Quarter
2007
    %
Change
 
      
Income Statement       

(Dollars in millions, except per share data)

      

Net income available to common shareholders

   $ 283.6     $ 513.9     (44.8 )%

Net income per average common diluted share

     0.81       1.44     (43.8 )%

Revenue – fully taxable-equivalent

     2,225.3       2,067.2     7.6 %

Net interest income – fully taxable equivalent

     1,167.8       1,188.3     (1.7 )%

Provision for loan losses

     560.0       56.4     892.2 %

Noninterest income

     1,057.5       878.9     20.3 %

Noninterest expense

     1,255.1       1,236.0     1.5 %

Net interest margin

     3.07 %     3.02 %  

Efficiency ratio

     56.40 %     59.79 %  

Balance Sheet

      

(Dollars in billions)

      

Average loans

   $ 123.3     $ 121.5     1.4 %

Average consumer and commercial deposits

     101.2       97.8     3.5 %

Capital

      

Tier 1 capital ratio (1)

     7.25 %     7.60 %  

Total average shareholders’ equity to total average assets

     10.21 %     9.76 %  

Tangible equity to tangible assets

     6.53 %     5.97 %  

Asset Quality

Net charge-offs to average loans (annualized)

     0.97 %     0.21 %  

Nonperforming loans to total loans

     1.67 %     0.57 %  

 

(1)

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

 

 

Net income available to common shareholders decreased 44.8% and net income per average common diluted share decreased 43.8% from the first quarter of 2007 primarily due to higher provision for loan losses.

 

 

Fully taxable-equivalent revenue increased 7.6% compared to the first quarter of 2007, as growth in noninterest income more than offset a decline in net interest income.

 

 

Fully taxable-equivalent net interest income declined 1.7% from the first quarter of 2007, despite a five basis point improvement in margin, as earning assets declined 4.1% due to a reduction in interest earning trading assets. Both the increase in margin and the decrease in interest earning trading assets were a result of balance sheet management strategies.

 

 

Noninterest income increased 20.3% from the first quarter of 2007, driven by double digit growth in service charges on deposit accounts, retail investment services, investment banking, and card fees. Net market valuation losses were offset by gains related to the Company’s interest in Visa, gain on the sale of its remaining 24.9% interest in Lighthouse Investment Partners, and the gain on the sale/leaseback of certain bank-owned branches and office buildings.

 

 

Noninterest expense increased 1.5% from the first quarter of 2007 and declined 13.8% compared to the fourth quarter of 2007. During the first quarter of 2008, the Company reversed $39.1 million of Visa litigation expense that was recorded in the fourth quarter of 2007 and incurred $11.7 million in debt extinguishment costs. Year-over-year core expense growth remained well controlled and would have declined if not for $35.9 million in higher credit-related expenses.

 

 

The effective income tax rate for the first quarter of 2008 was 24.0% due to lower pre-tax income and the release of tax reserves in conjunction with the settlement of certain tax positions.

 

 

Total average loans increased 1.4% from the first quarter of 2007. The increase in average loans was due to growth in the commercial (C&I) loan portfolio, partially offset by declines in real estate 1-4 family and

 

2


 

construction loans as a result of loan sales in the second quarter of 2007 associated with specific balance sheet management strategies and risk management tactics, respectively. Average consumer and commercial deposits increased 3.5% over the first quarter of 2007. The increase in average consumer and commercial deposits 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 7.25%, 10.21%, and 6.53%, respectively. The Company maintains a Tier 1 capital ratio target of 7.5%.

 

 

Annualized net charge-offs were 0.97% of average loans for the first quarter of 2008, up from 0.21% in the first quarter of 2007 and 0.55% in the fourth quarter of 2007. The increase reflects deterioration in consumer credit, particularly in residential real estate secured loans.

 

 

Nonperforming loans to total loans increased to 1.67% as of March 31, 2008, from 1.19% as of December 31, 2007 and 0.57% as of March 31, 2007, due mainly to increased levels of residential real estate secured loans and residential real estate construction loans.

CONSOLIDATED FINANCIAL PERFORMANCE

Revenue

Fully taxable-equivalent revenue was $2,225.3 million for the first quarter of 2008, an increase of 7.6% compared to the first quarter of 2007, driven by gains from the Company’s interest in Visa, gains on the sale of certain non-strategic assets, and double digit growth in many of the fee-related core business products. These gains more than offset a slight decline in net interest income and net mark-to-market valuation losses.

Net Interest Income

Fully taxable-equivalent net interest income was $1,167.8 million in the first quarter of 2008, a decrease of 1.7% from the first quarter of 2007, despite a five basis point improvement in margin, as earning assets declined 4.1% due to a reduction in interest earning trading assets. Both the increase in margin and the decrease in interest earning trading assets were a result of balance sheet management strategies. On a sequential quarter basis, net interest margin was down six basis points. The decline was driven by the impact of benchmark interest rate reductions on earning asset yields that exceeded reductions in rates paid on interest-bearing deposits.

Noninterest Income

Total noninterest income was $1,057.5 million for the first quarter of 2008, up $178.6 million, or 20.3%, from the first quarter of 2007. Included in the first quarter of 2008 were the following transaction-related gains:

 

   

$89.4 million from the gain on sale of Lighthouse Investment Partners

 

   

$86.3 million from the Visa initial public offering

 

   

$37.0 million from the sale/leaseback of corporate owned real estate

During the quarter, the Company also recorded approximately $287 million in market valuation losses related primarily to investments in asset-backed securities that were acquired in late 2007 and other trading and securitization activities. These losses were recorded primarily in trading account profits and commissions, which declined $62.0 million, or 68.7%, from first quarter of 2007 and also included approximately $240 million of valuation gains recorded on the Company’s publicly-traded debt net of associated hedges carried at fair value. In the first quarter of 2007, trading account profit and commissions income included $81.0 million in market valuation gains related to trading assets and liabilities and related hedges that the Company elected to record at fair value. Underlying growth in trading account profit and

 

3


commissions income in the first quarter of 2008 as compared to the first quarter of 2007 was due to increased core client activity, primarily in derivative sales. Securities gains/losses in the first quarter of 2008 included $64.1 million in market value impairment related primarily to certain asset-backed securities that were classified as available for sale and estimated to be other-than-temporarily impaired at quarter end, triggering accounting recognition of the unrealized loss in current period earnings.

Mortgage production income was $85.5 million in the first quarter of 2008 compared to a loss of $8.7 million in the first quarter of 2007. The increase was due to higher margins on current mortgage production, as well as certain changes in accounting methodologies. Specifically, application of Staff Accounting Bulletin 109 (SAB 109) accelerated the recognition of servicing value to the date of the interest rate lock commitment in 2008, and in connection with the Company’s second quarter of 2007 election to record at fair value certain newly-originated mortgage loans held for sale, the recognition of loan fees were accelerated in 2008 to the date of closing. The first quarter of 2008 included $52.6 million in market value declines in mortgages held for sale, while the first quarter of 2007 included $42.2 million of income reductions related to the Company’s adoption of the fair value accounting standards and $26.6 million of losses related to Alt-A loan valuations.

In the first quarter of 2008, the Company experienced strong growth in the following noninterest income categories: service charges on deposit accounts increased 12.1%, retail investment services increased 13.8%, card fees increased 14.9%, and investment banking income increased 10.5%. Trust and investment management income decreased 7.6% compared to the first quarter of 2007, which reflects the sale of Lighthouse Investment Partners on January 2, 2008. The first quarter of 2007 results included a $32.3 million gain on sale upon merger of Lighthouse Partners.

Noninterest Expense

Total noninterest expense in the first quarter of 2008 was $1,255.1 million, up $19.1 million, or 1.5%, from the first quarter of 2007 and down $200.2 million, or 13.8%, on a sequential quarter basis as the Company recognized the benefits of its cost savings from the E2 Efficiency and Productivity program. Personnel expenses in the first quarter of 2008 increased $16.1 million, or 2.3%, from the same period in 2007; however, personnel expenses would have declined if not for a $34.5 million impact related to loan origination costs that were deferred prior to the Company’s election to record at fair value certain newly-originated mortgage loans held for sale. Total personnel declined from 33,397 as of March 31, 2007 to 31,745 as of March 31, 2008. Compared to the fourth quarter of 2007, personnel expense increased $32.3 million, or 4.7%, primarily due to the seasonal increase in Company paid payroll taxes and 401(k) matching contributions. Other expenses included in the first quarter of 2008 included an $11.7 million net cost of early retirement of debt and a $35.9 million increase in credit-related expenses such as collection services, valuation losses on other real estate owned, and mortgage fraud related losses. The first quarter of 2008 also included a $39.1 million reversal of a portion of the accrued liability associated with Visa litigation for which the Company recorded $76.9 million in the fourth quarter of 2007.

Balance Sheet

As of March 31, 2008, SunTrust had total assets of $179.0 billion. Shareholders’ equity of $18.4 billion as of March 31, 2008, represented 10.3% of total assets. Book value per common share was $51.26 as of March 31, 2008.

Loans

Average loans for the first quarter of 2008 were $123.3 billion, up $1.7 billion, or 1.4%, from the first quarter of 2007. The increase was primarily in commercial loans, as average residential real estate and consumer loans declined as a result of balance sheet management strategies, while construction declined due to slowing residential building activity and Company efforts to reduce exposure. Compared to the fourth quarter of 2007, average loans were up $2.2 billion, or 7.2%, on a sequential annualized basis, primarily driven by commercial loan growth.

 

4


Deposits

Average consumer and commercial deposits for the first quarter of 2008 were $101.2 billion, up 3.5% from the first quarter of 2007, as increases in NOW and money market deposits were partially offset by declines in demand deposit and savings account balances. Average total brokered and foreign deposits declined 42.1% from the first quarter of 2007, as the Company strategically reduced the size of its earning assets, thereby enabling the reduction of these higher cost funding sources and substantially improving the Company’s liquidity position.

On a sequential annualized basis, average consumer and commercial deposits increased 6.1% from the fourth quarter of 2007, driven by growth in NOW and money market account balances as a result of marketing campaigns and customers’ increased preference for the safety of insured deposit products. This growth offset declines in demand and savings deposit balances.

Capital

The estimated Tier 1 capital, total average shareholders’ equity to total average assets, and tangible equity to tangible asset ratios at March 31, 2008, were 7.25%, 10.21%, and 6.53%, respectively. Tier 1 capital decreased 35 basis points compared to March 31, 2007, while the total average shareholders’ equity to total average assets and tangible equity to tangible asset ratios increased 45 and 56 basis points, respectively. Compared to December 31, 2007, Tier 1 capital increased 32 basis points due to the issuance of Tier 1 qualifying enhanced trust preferred securities which primarily replaced securities retired in the third and fourth quarters of 2007. The Company’s regulatory capital ratios are in excess of the regulatory requirements for well capitalized status. The Company maintains its established Tier 1 capital ratio target of 7.5%.

The Company’s current Tier 1 capital level does not include the benefit of the equity value of its common stock holdings in The Coca-Cola Company (“Coke”), as SunTrust does not receive regulatory credit for the equity value of this position. As SunTrust has stated, the Company anticipates completing transactions related to this position in the second quarter of 2008 which will generate approximately $1 billion of Tier 1 capital or approximately 65 basis points of capital. The process that the Company embarked upon in 2007 is designed to result in a regulatory capital benefit from the holdings. In addition, as SunTrust management has indicated, this process is entirely focused on increasing the capital efficiency of this position and does not relate to SunTrust’s view of the current value of the Coke stock, nor its positive view of the long-term prospects of the company.

Asset Quality

Annualized net charge-offs in the first quarter of 2008 were 0.97% of average loans, up from 0.21% in the first quarter of 2007 and 0.55% in the fourth quarter of 2007. Net charge-offs were $297.2 million in the first quarter of 2008, as compared to $62.9 million in the first quarter of 2007 and $168.0 million in the fourth quarter of 2007. The increase in net charge-offs over the first quarter of 2007 reflects deterioration in consumer credit, particularly in residential real estate secured loans. The increase in net charge-offs in 2008 was most pronounced in home equity and residential mortgages.

Nonperforming loans were $2,068.7 million, or 1.67%, of total loans, as of March 31, 2008, compared to $1,460.3 million, or 1.19%, of total loans, as of December 31, 2007, and $665.1 million, or 0.57%, of total loans, as of March 31, 2007. The increase in nonperforming loans was mainly due to an increase in residential mortgage and real estate construction loans as the overall weakening of the housing markets and economy continued to increase delinquencies.

The allowance for loan and lease losses increased $262.8 million from December 31, 2007, to $1,545.3 million as of March 31, 2008. The increase in the allowance for loan and lease losses was attributable to the deterioration in certain segments of the consumer and residential real estate market, and contributed to the $203.2 million increase in provision for loan losses compared to the fourth quarter of 2007. The allowance for loan and lease losses as of March 31, 2008, represented 1.25% of period-end total loans compared to 1.05% as of December 31, 2007. The allowance for loan and lease losses as of March

 

5


31, 2008 represented 75% of period-end nonperforming loans of which over 63% were mortgages secured by residential real estate.

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. All revenue is reported on a fully taxable-equivalent basis. Previously, the Company had five business segments. The segment reporting structure was adjusted to align with the recently modified organizational structure that better aligns with serving clients’ needs. 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.

Retail and Commercial Banking

Three Months Ended March 31, 2008 vs. 2007

Retail and Commercial Banking net income for the first quarter of 2008 was $96.7 million, a decrease of $107.3 million, or 52.6%, compared to the first quarter of 2007. This decrease was primarily the result of higher provision expense due to home equity related charge-offs, lower net interest income driven by a continued shift in deposit mix and decreased spreads, partially offset by higher noninterest income driven by an increase in service charges on deposits.

Net interest income decreased $81.0 million, or 11.4%, mainly driven by the 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 loan balances declined $1.0 billion, or 1.9%, with the movement of Middle Market clients to the Wholesale Banking segment decreasing loans by approximately $2.0 billion. Remaining loan growth was driven by commercial loans and equity lines.

Provision for loan losses increased $129.1 million over the same period in 2007. The provision increase was most pronounced in home equity lines and loans reflecting the negative impact from the current deterioration in certain segments of the consumer portfolio, primarily related to the residential real estate market.

Total noninterest income increased $25.7 million, or 8.8%, from the first quarter of 2007. This increase was driven primarily by an $18.9 million, or 11.4%, increase in service charges on deposits related to both consumer and business accounts.

Total noninterest expense declined $13.2 million, or 2.1%, from the first quarter of 2007 with the transfer of the Middle Market business to Wholesale Banking being responsible for $5.5 million of the decline. The remainder of the decline reflects the continuing impact of expense savings initiatives, offset primarily by investments in the branch distribution network.

Wholesale Banking

Three Months Ended March 31, 2008 vs. 2007

Wholesale Banking reported net income of $86.2 million for the first quarter of 2008, a decrease of $6.3 million, or 6.8%, compared to the first quarter of 2007. An increase in net income due to the

 

6


movement of Middle Market clients into Wholesale Banking was offset by lower net interest income and higher provision for loan losses.

Net interest income decreased $5.7 million, or 4.0%. Average loan balances increased $3.1 billion, or 10.5%, while the corresponding net interest income was virtually unchanged due to a decline in the higher spread residential builder portfolio and increased levels of real estate related nonaccrual loans. The increase in average loan balances includes an approximate $2.0 billion impact from the migration of Middle Market balances to Wholesale Banking. The remainder of Wholesale Banking’s loan growth of approximately $1.2 billion, or 4.0%, was despite a $1.9 billion structured asset sale of corporate loans in the first quarter of 2007. The additional loan growth was driven by corporate banking, partially offset by declining loan balances in the residential builder portfolio. Total average deposits were up $3.7 billion, or 79.2%; however, net interest income decreased $3.2 million. Higher cost corporate money market balances increased $3.1 billion while the resulting net interest income increased $1.8 million. Interest income from demand deposits was down $4.6 million due to slightly lower balances and the impact of the lower rate environment on the value of these deposits.

Provision for loan losses was $12.3 million, an increase of $9.5 million from the same period in 2007, driven primarily by higher residential builder related charge-offs.

Total noninterest income increased $4.8 million, or 2.8%. The migration of Middle Market clients into Wholesale Banking accounted for $4.4 million of the growth while the remaining Wholesale Banking increased $0.4 million, or 0.2%. Solid performances in fixed income sales and trading, derivatives, bond originations, structured leasing, and equity capital markets were offset, in part, by lower revenues from securitization and loan syndications, as well as lower income related to the structured asset sale in the first quarter of 2007.

Total noninterest expense increased $8.9 million, or 4.7%. Expense associated with Middle Market relationship management accounted for $5.6 million, or over 60% of the noninterest expense increase. The remaining $3.4 million was driven by higher incentive-based compensation expenses primarily related to increased fixed income and equity sales and trading revenue, increased Affordable Housing related expenses, and higher outside processing costs.

Mortgage

Three Months Ended March 31, 2008 vs. 2007

Mortgage reported a net loss of $31.4 million for the first quarter of 2008, a decrease in income of $38.3 million compared to the first quarter of 2007. The decrease resulted from higher credit related costs that were partially offset by the impact of adopting new accounting standards and by higher margins in secondary marketing in the first quarter of 2008.

Net interest income for the first quarter increased $0.9 million, or 0.7%, due to higher income from mortgage loans held for sale, mortgage backed securities and deposits offset by lower income on loans held for investment and increased funding cost of nonearning assets. Total average loans, principally residential mortgage and residential construction loans, decreased $0.4 billion, or 1.2%. The decline in average loans was partially due to the Company’s balance sheet management strategies that included the transfer of $4.1 billion of portfolio loans to loans held for sale at the end of first quarter 2007. The effect of the transfer has been substantially offset by new loan originations. Lower loan portfolio balances, declining spreads, and increased nonaccrual loans resulted in lower loan-related net interest income of $15.4 million. Average nonearning assets increased $0.7 billion over the first quarter of 2007. Funding of these assets lowered net interest income by $6.7 million. Average loans held for sale declined $4.3 billion, or 43.4%. However, higher spreads increased net interest income by $14.6 million. Additionally, average investment securities, which were up $3.6 billion, contributed $8.7 million to net interest income, and deposits, which were up $0.3 billion, contributed $1.2 million to net interest income.

Provision for loan losses increased $88.0 million, driven by higher residential mortgage and residential construction charge-offs.

Total noninterest income increased $93.6 million. This increase was driven by the adoption of new accounting standards, which impacted the timing of recognizing origination fees and servicing value and

 

7


improved secondary marketing margins. The increases were partially offset by valuation adjustments on loans held for sale and lower servicing income. Loan production of $11.7 billion was down $3.1 billion, or 20.9%; however, mortgage production income was up $104.4 million. In 2007, income was reduced by $42.2 million resulting from the adoption of SFAS 157. Additionally, loan fees increased $32.9 million in the first quarter of 2008 due to the recognition of loan fees that were previously deferred prior to the May 2007 fair value election under SFAS 159 for certain newly-originated loans. Newly adopted accounting standards related to the recognition of loan servicing value at the time of interest rate lock commitment in the first quarter of 2008 contributed $18.3 million to production income during the quarter. Servicing income declined $6.0 million, principally due to higher MSR amortization that was only partially offset by higher fees resulting from an increased servicing portfolio. Total loans serviced at March 31, 2008 were $155.5 billion, up 12.1% from March 31, 2007. Noninterest income was also impacted by $8.5 million of net securities losses related to market value impairment on asset-backed securities deemed to be other-than-temporarily impaired.

Total noninterest expense increased $67.9 million, or 44.6%. Drivers of the increase were higher loan origination costs, higher operating losses and increased credit costs related to collections and other real estate. Loan origination expense was up $37.0 million due to recognition of loan origination costs on certain newly originated mortgage loans that were previously deferred. Operating losses recorded in the first quarter of 2008 were higher due to loan application fraud from customer misstatements of income or assets primarily on Alt-A products originated in prior periods.

Wealth and Investment Management

Three Months Ended March 31, 2008 vs. 2007

Wealth and Investment Management’s net income for the first quarter of 2008 was $104.2 million, an increase of $36.2 million, or 53.1%, compared to the first quarter of 2007. The increase was driven by approximately $33 million of incremental net income generated by the sale of the Company’s investment in Lighthouse Partners. In the first quarter of 2007, the Company’s investment in Lighthouse Partners generated $22.4 million of net income, which included a $20.1 million after-tax gain resulting from the gain on sale upon merger of Lighthouse Partners into Lighthouse Investment Partners, the entity that was serving as the sub-advisor to the Lighthouse funds. This transaction resulted in the Company maintaining a 24.9% minority interest in the combined entity. In the first quarter 2008, SunTrust recorded a $55.4 million after tax gain on the merger of Lighthouse Investment Partners with HFA Holdings, an Australian fund manager, in exchange for the Company’s 24.9% minority interest in the firm. Additional increases in net income primarily resulted from lower noninterest expense and higher retail investment and trust income, offset by lower net interest income primarily from deposits.

Net interest income decreased $10.2 million, or 11.3%, primarily due to a continued shift in deposit mix to higher cost deposits. Average deposits were practically unchanged as declines in demand deposit and certain money market accounts were offset by increases in higher-cost NOW accounts and time deposits. This shift in deposit mix coupled with compressed spreads due to increased competition for deposits resulted in a $7.9 million decrease in net interest income. Average loans decreased $306.1 million, or 3.7%, reducing net interest income $0.4 million. The decline in average loans was driven by lower consumer and commercial real estate balances.

Provision for loan losses increased $4.1 million primarily due to higher home equity, personal credit line and consumer mortgage net charge-offs.

Total noninterest income increased $45.7 million, or 16.0%, compared to the first quarter of 2007 driven by $39.0 million of incremental revenue from the sale of the Company’s Lighthouse Partners investment. Retail investment income increased $7.7 million, or 12.4%, due to strong annuity sales and higher recurring managed account fees. Trust income, excluding Lighthouse Partners, increased $4.3 million, or 2.7%. As of March 31, 2008, assets under management were approximately $140.4 billion compared to $137.2 billion as of March 31, 2007. Assets under management include individually managed assets, the Ridgeworth Funds, institutional assets managed by Ridgeworth Capital Management, and participant-directed retirement accounts as of March 31, 2008. SunTrust’s total assets under advisement

 

8


were approximately $248.3 billion, which includes $140.4 billion in assets under management, $63.9 billion in non-managed trust assets, $39.3 billion in retail brokerage assets, and $4.7 billion in non-managed corporate trust assets.

Total noninterest expense decreased $25.4 million, or 9.5%, driven by lower salaries, discretionary expense, and allocated overhead and operations costs, as well as lower structural expense resulting from the sale of Lighthouse Partners.

Corporate Other and Treasury

Three Months Ended March 31, 2008 vs. 2007

Corporate Other and Treasury’s net income for the first quarter of 2008 was $34.7 million, a decrease of $115.1 million, or 76.8%, compared to the first quarter of 2007 driven by an increased provision for loan losses and securities losses. This decreases was partially offset by an increase in net interest income due to favorable net gains on hedges, an increase in noninterest income due to a gain on the Visa initial public offering, gains from the sale/leaseback of corporate real estate properties, and a decrease in noninterest expenses due to the reversal of a portion of the accrued liability associated with the Visa litigation.

Net interest income in the first quarter of 2008 increased $75.6 million, or 66.1%, over the same period in 2007 mainly due to interest rate hedging activities and an increase in net interest income due to balance sheet management strategies executed in the second quarter of last year. These strategies improved the yield on the securities portfolio and delevered the balance sheet, thereby reducing reliance on higher-cost wholesale funding. Total average assets decreased $8.4 billion, or 26.7%, mainly due to the reduction in size of the investment portfolio. Total average deposits decreased $11.6 billion, or 42.8%, 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 $272.9 million in conjunction with an increase in the allowance for loan losses due to the further deterioration in the residential real estate market and consumer credit quality.

Total noninterest income increased $8.8 million, or 9.4%, in the first quarter of 2008 compared to the same period in 2007. In the first quarter of 2008, the Company recognized approximately $240 million of valuation gains recorded on the Company’s publicly traded debt carried at fair value. The Company also realized an $86.3 million gain from the Visa initial public offering and $37.0 million gain from the sale/leaseback of real estate properties. These gains were offset by securities gains/losses in the first quarter of 2008 which included $55.6 million in market value impairment related primarily to certain asset-backed securities that were classified as available for sale and estimated to be other-than-temporarily impaired, triggering accounting recognition of the unrealized loss in current period earnings. There were also an additional $239 million in trading losses in the first quarter of 2008 versus a $74.3 million gain in the first quarter of 2007. These mark-downs reflect the lack of liquidity in the market for these securities and deterioration in the credit quality of some of the underlying assets.

Total noninterest expense decreased $19.1 million compared to the first quarter of 2007. The decrease in expenses was mainly due to a $39.1 million reversal of a portion of the accrued liability associated with the Visa litigation. This decrease was partially offset by the recognition of $11.7 million of net cost related to the early retirement of debt and an increase of $9.8 million in advertising cost related to the “My Cause” advertisement campaign.

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

 

9


Relations section located under “About SunTrust”. This information is also included in a current report on Form 8-K filed 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 on April 22, 2008, at 8:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals are encouraged to call in beginning at 7:45 a.m. (Eastern Time) by dialing 1-888-972-7805 (Passcode: 1Q08). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 1Q08). A replay of the call will be available beginning April 22, 2008, and ending May 6, 2008, by dialing 1-800-333-1859 (domestic) or 1-402-220-0205 (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 22, 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.

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 “may,” “could,” “will,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “initiatives,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions. Such statements are based upon the current beliefs and expectations of SunTrust’s management, and on information currently available to management, and speak as of the date hereof. 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 SunTrust’s results to differ materially from those described in the forward-looking statements can be found in the Company’s 2007 Annual Report on Form 10-K, in the Quarterly Reports on Form 10-Q and in the Current Reports filed on Form 8-K with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov). Those factors include: (1) adverse changes in general business or economic conditions could have a material adverse effect on our financial condition and results of operations; (2) changes in market interest rates or capital markets could adversely affect our revenues and expenses, the value of assets and obligations, costs of capital, or liquidity; (3) the fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our earnings; (4) changes in securities markets or markets for commercial or residential real estate could harm our revenues and profitability; (5) customers could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; (6) customers may decide not to use banks to complete their financial transactions, which could affect net income; (7) we have businesses other than banking, which subjects us

 

10


to a variety of risks; (8) hurricanes and other natural disasters may adversely affect loan portfolios and operations and increase the cost of doing business; (9) negative public opinion could damage our reputation and adversely impact our business; (10) we rely on other companies for key components of our business infrastructure; (11) we rely on our systems, employees and certain counterparties, and certain failures could materially adversely affect our operations; (12) we depend on the accuracy and completeness of information about clients and counterparties; (13) regulation by federal and state agencies could adversely affect our business, revenues, and profit margins; (14) competition in the financial services industry is intense and could result in losing business or reducing profit margins; (15) future legislation could harm our competitive position; (16) maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services; (17) our ability to receive dividends from our subsidiaries accounts for most of our revenues and could affect our liquidity and ability to pay dividends; (18) significant legal actions could subject us to substantial uninsured liabilities; (19) 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; (20) we depend on the expertise of key personnel without whom our operations may suffer; (21) we may be unable 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; (22) our accounting policies and methods are key to how we report financial condition and results of operations, and may require management to make estimates about matters that are uncertain; (23) changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition; (24) our stock price can be volatile; (25) our disclosure controls and procedures may fail to prevent or detect all errors or acts of fraud; (26) our trading assets and financial instruments carried at fair value expose the Company to certain market risks; (27) weakness in residential property values and mortgage loan markets could adversely affect us; (28) 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; and (29) we may enter into transactions with off-balance sheet entities affiliated with SunTrust or its subsidiaries which may cause us to recognize current or future losses.

The forward-looking statements in this news release speak only as of this date, and SunTrust does not assume any obligation to update such statements or to update the reasons why actual results could differ from those contained in such statements.

###

 

11


SunTrust Banks, Inc. and Subsidiaries

FINANCIAL HIGHLIGHTS

(Dollars in millions, except per share data) (Unaudited)

 

 

 

     Three Months Ended
March 31
    %
Change
 
     2008     2007    

EARNINGS & DIVIDENDS

      

Net income

   $290.6     $521.2     (44.2 )%

Net income available to common shareholders

   283.6     513.9     (44.8 )

Total revenue - FTE 2

   2,225.3     2,067.2     7.6  

Net income per average common share

      

Diluted

   0.81     1.44     (43.8 )

Basic

   0.82     1.45     (43.4 )

Dividends paid per average common share

   0.77     0.73     5.5  

CONDENSED BALANCE SHEETS

      

Selected Average Balances

      

Total assets

   $176,917     $181,506     (2.5 )%

Earning assets

   153,004     159,474     (4.1 )

Loans

   123,263     121,515     1.4  

Consumer and commercial deposits

   101,168     97,792     3.5  

Brokered and foreign deposits

   15,469     26,714     (42.1 )

Total shareholders’ equity

   18,062     17,720     1.9  

As of

      

Total assets

   178,987     186,385     (4.0 )

Earning assets

   152,715     163,299     (6.5 )

Loans

   123,713     116,913     5.8  

Allowance for loan and lease losses

   1,545     1,034     49.4  

Consumer and commercial deposits

   103,432     99,875     3.6  

Brokered and foreign deposits

   12,747     23,563     (45.9 )

Total shareholders’ equity

   18,431     17,969     2.6  

FINANCIAL RATIOS & OTHER DATA

      

Return on average total assets

   0.66 %   1.16 %   (43.1 )%

Return on average assets less net unrealized securities gains 1

   0.72     1.15     (37.4 )

Return on average common shareholders’ equity

   6.49     12.10     (46.4 )

Return on average realized common shareholders’ equity 1

   7.69     12.54     (38.7 )

Net interest margin 2

   3.07     3.02     1.7  

Efficiency ratio 2

   56.40     59.79     (5.7 )

Tangible efficiency ratio 1

   55.47     58.65     (5.4 )

Effective tax rate

   23.98     30.59     (21.6 )

Tier 1 capital ratio

   7.25 3   7.60     (4.6 )

Total capital ratio

   11.00 3   10.94     0.5  

Tier 1 leverage ratio

   7.20 3   7.24     (0.6 )

Total average shareholders’ equity to total average assets

   10.21     9.76     4.6  

Tangible equity to tangible assets 1

   6.53     5.97     9.4  

Full-time equivalent employees

   31,745     33,397     (4.9 )

Number of ATMs

   2,509     2,543     (1.3 )

Full service banking offices

   1,678     1,691     (0.8 )

Traditional

   1,343     1,338     0.4  

In-store

   335     353     (5.1 )

Book value per common share

   $51.26     $49.00     4.6  

Market price:

      

High

   70.00     87.43     (19.9 )

Low

   52.94     80.76     (34.4 )

Close

   55.14     83.04     (33.6 )

Market capitalization

   19,290     29,604     (34.8 )

Average common shares outstanding (000s)

      

Diluted

   348,072     357,214     (2.6 )

Basic

   346,581     353,448     (1.9 )

 

 

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.

 

Page 1


SunTrust Banks, Inc. and Subsidiaries

FIVE QUARTER FINANCIAL HIGHLIGHTS

(Dollars in millions, except per share data) (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    December 31
2007
    September 30
2007
    June 30
2007
    March 31
2007
 

EARNINGS & DIVIDENDS

          

Net income

   $290.6     $11.1     $420.2     $681.4     $521.2  

Net income available to common shareholders

   283.6     3.3     412.6     673.9     513.9  

Total revenue - FTE 2

   2,225.3     1,770.8     2,038.3     2,374.6     2,067.2  

Net income per average common share

          

Diluted

   0.81     0.01     1.18     1.89     1.44  

Basic

   0.82     0.01     1.19     1.91     1.45  

Dividends paid per average common share

   0.77     0.73     0.73     0.73     0.73  

CONDENSED BALANCE SHEETS

          

Selected Average Balances

          

Total assets

   $176,917     $175,130     $174,653     $179,996     $181,506  

Earning assets

   153,004     151,541     152,328     157,594     159,474  

Loans

   123,263     121,094     119,559     118,165     121,515  

Consumer and commercial deposits

   101,168     99,649     96,708     97,927     97,792  

Brokered and foreign deposits

   15,469     15,717     21,140     23,983     26,714  

Total shareholders’ equity

   18,062     18,033     17,550     17,928     17,720  

As of

          

Total assets

   178,987     179,574     175,857     180,314     186,385  

Earning assets

   152,715     154,397     151,229     157,095     163,299  

Loans

   123,713     122,319     120,748     118,788     116,913  

Allowance for loan and lease losses

   1,545     1,283     1,094     1,050     1,034  

Consumer and commercial deposits

   103,432     101,870     98,834     97,822     99,875  

Brokered and foreign deposits

   12,747     15,973     17,026     25,069     23,563  

Total shareholders’ equity

   18,431     18,053     17,907     17,369     17,969  

FINANCIAL RATIOS & OTHER DATA

          

Return on average total assets

   0.66 %   0.03 %   0.95 %   1.52 %   1.16 %

Return on average assets less net unrealized securities gains 1

   0.72     (0.01 )   0.93     1.18     1.15  

Return on average common shareholders’ equity

   6.49     0.07     9.60     15.51     12.10  

Return on average realized common shareholders’ equity 1

   7.69     (0.33 )   9.86     12.71     12.54  

Net interest margin 2

   3.07     3.13     3.18     3.10     3.02  

Efficiency ratio 2

   56.40     82.19     63.35     52.69     59.79  

Tangible efficiency ratio 1

   55.47     80.86     62.13     51.64     58.65  

Effective tax rate

   23.98     (116.22 )   26.68     31.45     30.59  

Tier 1 capital ratio

   7.25 3   6.93     7.44     7.49     7.60  

Total capital ratio

   11.00 3   10.30     10.72     10.67     10.94  

Tier 1 leverage ratio

   7.20 3   6.90     7.28     7.11     7.24  

Total average shareholders’ equity to total average assets

   10.21     10.30     10.05     9.96     9.76  

Tangible equity to tangible assets 1

   6.53     6.28     6.32     5.85     5.97  

Full-time equivalent employees

   31,745     32,323     32,903     33,241     33,397  

Number of ATMs

   2,509     2,507     2,518     2,533     2,543  

Full service banking offices

   1,678     1,682     1,683     1,685     1,691  

Traditional

   1,343     1,343     1,339     1,338     1,338  

In-store

   335     339     344     347     353  

Book value per common share

   $51.26     $50.38     $50.01     $48.33     $49.00  

Market price:

          

High

   70.00     78.76     90.47     94.18     87.43  

Low

   52.94     60.02     73.61     78.16     80.76  

Close

   55.14     62.49     75.67     85.74     83.04  

Market capitalization

   19,290     21,772     26,339     29,928     29,604  

Average common shares outstanding (000s)

          

Diluted

   348,072     348,072     349,592     356,008     357,214  

Basic

   346,581     345,917     346,150     351,987     353,448  

 

 

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.

 

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  
     2008     2007     Amount     %  

Interest income

   $2,258,332     $2,528,057     ($269,725 )   (10.7 )%

Interest expense

   1,118,465     1,363,498     (245,033 )   (18.0 )
                

NET INTEREST INCOME

   1,139,867     1,164,559     (24,692 )   (2.1 )

Provision for loan losses

   560,022     56,441     503,581     NM  
                

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

   579,845     1,108,118     (528,273 )   (47.7 )
                

NONINTEREST INCOME

        

Service charges on deposit accounts

   211,839     189,035     22,804     12.1  

Trust and investment management income

   161,102     174,318     (13,216 )   (7.6 )

Retail investment services

   72,300     63,543     8,757     13.8  

Other charges and fees

   127,231     118,137     9,094     7.7  

Investment banking income

   55,420     50,157     5,263     10.5  

Trading account profits and commissions

   28,218     90,201     (61,983 )   (68.7 )

Card fees

   73,761     64,195     9,566     14.9  

Mortgage production related income/(loss)

   85,549     (8,655 )   94,204     NM  

Mortgage servicing related income

   29,098     35,403     (6,305 )   (17.8 )

Gain on Visa IPO

   86,305     -     86,305     NM  

Net gain on sale or merger of Lighthouse interests

   89,390     32,340     57,050     NM  

Net gain on sale/leaseback of premises

   37,039     -     37,039     NM  

Other noninterest income

   60,836     70,212     (9,376 )   (13.4 )

Securities gains/(losses), net

   (60,586 )   20     (60,606 )   NM  
                

Total noninterest income

   1,057,502     878,906     178,596     20.3  
                

NONINTEREST EXPENSE

        

Employee compensation and benefits

   715,083     699,000     16,083     2.3  

Net occupancy expense

   86,441     86,257     184     0.2  

Outside processing and software

   109,165     99,676     9,489     9.5  

Equipment expense

   52,395     49,409     2,986     6.0  

Marketing and customer development

   55,703     45,705     9,998     21.9  

Amortization of intangible assets

   20,715     23,542     (2,827 )   (12.0 )

Net loss on extinguishment of debt

   11,723     -     11,723     NM  

Visa litigation

   (39,124 )   -     (39,124 )   NM  

Other noninterest expense

   243,043     232,408     10,635     4.6  
                

Total noninterest expense

   1,255,144     1,235,997     19,147     1.5  
                

INCOME BEFORE PROVISION FOR INCOME TAXES

   382,203     751,027     (368,824 )   (49.1 )

Provision for income taxes

   91,648     229,731     (138,083 )   (60.1 )
                

Net income

   290,555     521,296     (230,741 )   (44.3 )

Preferred dividends

   6,977     7,363     (386 )   (5.2 )
                

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

   $283,578     $513,933     ($230,355 )   (44.8 )
                

Net interest income - FTE 1

   $1,167,842     $1,188,272     ($20,430 )   (1.7 )

Net income per average common share

        

Diluted

   0.81     1.44     (0.63 )   (43.8 )

Basic

   0.82     1.45     (0.63 )   (43.4 )

Cash dividends paid per common share

   0.77     0.73     0.04     5.5  

Average common shares outstanding (000s)

        

Diluted

   348,072     357,214     (9,142 )   (2.6 )

Basic

   346,581     353,448     (6,867 )   (1.9 )

 

 

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.

 

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
2008
    December 31
2007
    September 30
2007
    June 30
2007
   March 31
2007
 

Interest income

   $2,258,332     $2,448,701     $2,515,292     $2,543,870    $2,528,057  

Interest expense

   1,118,465     1,281,188     1,323,104     1,348,586    1,363,498  
                             

NET INTEREST INCOME

   1,139,867     1,167,513     1,192,188     1,195,284    1,164,559  

Provision for loan losses

   560,022     356,781     147,020     104,680    56,441  
                             

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

   579,845     810,732     1,045,168     1,090,604    1,108,118  
                             

NONINTEREST INCOME

           

Service charges on deposit accounts

   211,839     222,213     213,939     196,844    189,035  

Trust and investment management income

   161,102     170,854     175,242     164,620    174,318  

Retail investment services

   72,300     71,650     71,064     71,785    63,543  

Other charges and fees

   127,231     121,849     120,730     118,358    118,137  

Investment banking income

   55,420     55,041     47,688     61,999    50,157  

Trading account profits/(losses) and commissions

   28,218     (437,162 )   (31,187 )   16,437    90,201  

Card fees

   73,761     77,481     70,450     68,580    64,195  

Mortgage production related income

   85,549     22,366     12,950     64,322    (8,655 )

Mortgage servicing related income

   29,098     57,364     57,142     45,527    35,403  

Gain on Visa IPO

   86,305     -     -     -    -  

Net gain on sale or merger of Lighthouse interests

   89,390     -     -     -    32,340  

Net gain on sale/leaseback of premises

   37,039     118,840     -     -    -  

Other noninterest income

   60,836     89,827     80,130     109,738    70,212  

Securities gains/(losses), net

   (60,586 )   5,694     991     236,412    20  
                             

Total noninterest income

   1,057,502     576,017     819,139     1,154,622    878,906  
                             

NONINTEREST EXPENSE

           

Employee compensation and benefits

   715,083     682,810     677,765     710,613    699,000  

Net occupancy expense

   86,441     92,705     87,626     84,650    86,257  

Outside processing and software

   109,165     105,407     105,132     100,730    99,676  

Equipment expense

   52,395     51,734     51,532     53,823    49,409  

Marketing and customer development

   55,703     59,115     46,897     43,326    45,705  

Amortization of intangible assets

   20,715     23,414     24,820     24,904    23,542  

Net loss on extinguishment of debt

   11,723     -     9,800     -    -  

Visa litigation

   (39,124 )   76,930     -     -    -  

Other noninterest expense

   243,043     363,226     287,673     233,148    232,408  
                             

Total noninterest expense

   1,255,144     1,455,341     1,291,245     1,251,194    1,235,997  
                             

INCOME/(LOSS) BEFORE PROVISION/(BENEFIT) FOR INCOME TAXES

   382,203     (68,592 )   573,062     994,032    751,027  

Provision/(benefit) for income taxes

   91,648     (79,716 )   152,898     312,601    229,731  
                             

Net income

   290,555     11,124     420,164     681,431    521,296  

Preferred dividends

   6,977     7,867     7,526     7,519    7,363  
                             

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

   $283,578     $3,257     $412,638     $673,912    $513,933  
                             

Net interest income - FTE 1

   $1,167,842     $1,194,757     $1,219,243     $1,219,952    $1,188,272  

Net income per average common share

           

Diluted

   0.81     0.01     1.18     1.89    1.44  

Basic

   0.82     0.01     1.19     1.91    1.45  

Cash dividends paid per common share

   0.77     0.73     0.73     0.73    0.73  

Average common shares outstanding (000s)

           

Diluted

   348,072     348,072     349,592     356,008    357,214  

Basic

   346,581     345,917     346,150     351,987    353,448  

 

 

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.

 

Page 4


SunTrust Banks, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands) (Unaudited)

 

 

 

     As of March 31     Increase/(Decrease) 3  
     2008     2007     Amount     %  

ASSETS

        

Cash and due from banks

   $3,994,267     $3,867,957     $126,310     3.3 %

Interest-bearing deposits in other banks

   21,283     21,974     (691 )   (3.1 )

Funds sold and securities purchased under agreements to resell

   1,247,495     883,833     363,662     41.1  

Trading assets

   10,932,251     21,545,502     (10,613,251 )   (49.3 )

Securities available for sale 1

   15,882,088     13,163,036     2,719,052     20.7  

Loans held for sale (loans at fair value: $5,097,410 and $ 4,033,083 as of
March 31, 2008 and 2007, respectively)

   6,977,289     14,067,788     (7,090,499 )   (50.4 )

Loans:

        

Commercial

   37,306,872     33,484,170     3,822,702     11.4  

Real estate:

        

Home equity lines

   15,134,297     14,039,685     1,094,612     7.8  

Construction

   12,980,917     14,175,478     (1,194,561 )   (8.4 )

Residential mortgages (loans at fair value: $282,760 and $ 0 as of
March 31, 2008 and 2007, respectively)

   33,092,433     30,248,543     2,843,890     9.4  

Commercial real estate

   12,893,708     12,454,475     439,233     3.5  

Consumer:

        

Direct

   4,192,168     4,293,308     (101,140 )   (2.4 )

Indirect

   7,305,213     7,840,962     (535,749 )   (6.8 )

Credit card

   807,587     375,938     431,649     NM  
                

Total loans

   123,713,195     116,912,559     6,800,636     5.8  

Allowance for loan and lease losses

   (1,545,340 )   (1,033,939 )   511,401     49.5  
                

Net loans

   122,167,855     115,878,620     6,289,235     5.4  

Goodwill

   6,923,033     6,896,723     26,310     0.4  

Other intangible assets

   1,430,268     1,293,457     136,811     10.6  

Other real estate owned

   244,906     74,645     170,261     NM  

Other assets

   9,166,212     8,691,306     474,906     5.5  
                

Total assets 2

   $178,986,947     $186,384,841     ($7,397,894 )   (4.0 )
                

LIABILITIES

        

Noninterest-bearing consumer and commercial deposits

   $22,325,750     $22,765,045     ($439,295 )   (1.9 )%

Interest-bearing consumer and commercial deposits:

        

NOW accounts

   22,292,330     20,802,207     1,490,123     7.2  

Money market accounts

   25,843,396     22,070,587     3,772,809     17.1  

Savings

   3,990,007     5,102,312     (1,112,305 )   (21.8 )

Consumer time

   16,876,836     17,044,783     (167,947 )   (1.0 )

Other time

   12,104,125     12,089,882     14,243     0.1  
                

Total consumer and commercial deposits

   103,432,444     99,874,816     3,557,628     3.6  

Brokered deposits (CDs at fair value: $317,578 and $ 229,884 as of
March 31, 2008 and 2007, respectively)

   11,034,332     18,203,295     (7,168,963 )   (39.4 )

Foreign deposits

   1,712,504     5,360,164     (3,647,660 )   (68.1 )
                

Total deposits

   116,179,280     123,438,275     (7,258,995 )   (5.9 )

Funds purchased

   3,795,641     6,433,195     (2,637,554 )   (41.0 )

Securities sold under agreements to repurchase

   5,446,204     6,851,863     (1,405,659 )   (20.5 )

Other short-term borrowings

   3,061,003     1,958,438     1,102,565     56.3  

Long-term debt (debt at fair value: $7,784,744 and $ 6,896,790 as of
March 31, 2008 and 2007, respectively)

   23,602,919     19,007,959     4,594,960     24.2  

Trading liabilities

   2,356,037     1,642,958     713,079     43.4  

Other liabilities

   6,114,415     9,083,615     (2,969,200 )   (32.7 )
                

Total liabilities

   160,555,499     168,416,303     (7,860,804 )   (4.7 )
                

SHAREHOLDERS’ EQUITY

        

Preferred stock, no par value

   500,000     500,000     -     -  

Common stock, $1.00 par value

   370,578     370,578     -     -  

Additional paid in capital

   6,682,828     6,688,660     (5,832 )   (0.1 )

Retained earnings

   10,661,250     10,325,246     336,004     3.3  

Treasury stock, at cost, and other

   (1,692,117 )   (1,101,172 )   590,945     53.7  

Accumulated other comprehensive income, net of tax

   1,908,909     1,185,226     723,683     61.1  
                

Total shareholders’ equity

   18,431,448     17,968,538     462,910     2.6  
                

Total liabilities and shareholders’ equity

   $178,986,947     $186,384,841     ($7,397,894 )   (4.0 )
                

Common shares outstanding

   349,832,264     356,504,563     (6,672,299 )   (1.9 )

Common shares authorized

   750,000,000     750,000,000     -     -  

Preferred shares outstanding

   5,000     5,000     -     -  

Preferred shares authorized

   50,000,000     50,000,000     -     -  

Treasury shares of common stock

   20,746,134     14,073,835     6,672,299     47.4  
   

1   Includes net unrealized gains of

   $2,835,823     $2,333,896     $501,927     21.5 %

2   Includes earning assets of

   152,714,700     163,299,162     (10,584,462 )   (6.5 )

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
2008
    December 31
2007
    September 30
2007
    June 30
2007
    March 31
2007
 

ASSETS

          

Cash and due from banks

   $3,994,267     $4,270,917     $4,162,456     $4,254,430     $3,867,957  

Interest-bearing deposits in other banks

   21,283     24,355     29,684     25,991     21,974  

Funds sold and securities purchased under agreements to resell

   1,247,495     1,347,329     968,553     1,143,995     883,833  

Trading assets

   10,932,251     10,518,379     9,566,806     13,044,972     21,545,502  

Securities available for sale 1

   15,882,088     16,264,107     15,243,133     14,725,957     13,163,036  

Loans held for sale

   6,977,289     8,851,695     8,675,427     12,474,932     14,067,788  

Loans:

          

Commercial

   37,306,872     35,929,400     34,969,714     34,362,837     33,484,170  

Real estate:

          

Home equity lines

   15,134,297     14,911,598     14,598,774     14,303,659     14,039,685  

Construction

   12,980,917     13,776,651     14,358,990     14,417,949     14,175,478  

Residential mortgages

   33,092,433     32,779,744     31,603,884     30,759,216     30,248,543  

Commercial real estate

   12,893,708     12,609,543     12,487,309     12,416,329     12,454,475  

Consumer:

          

Direct

   4,192,168     3,963,869     4,419,290     4,391,739     4,293,308  

Indirect

   7,305,213     7,494,130     7,642,099     7,739,369     7,840,962  

Credit card

   807,587     854,059     668,353     396,624     375,938  
                              

Total loans

   123,713,195     122,318,994     120,748,413     118,787,722     116,912,559  

Allowance for loan and lease losses

   (1,545,340 )   (1,282,504 )   (1,093,691 )   (1,050,362 )   (1,033,939 )
                              

Net loans

   122,167,855     121,036,490     119,654,722     117,737,360     115,878,620  

Goodwill

   6,923,033     6,921,493     6,912,110     6,897,050     6,896,723  

Other intangible assets

   1,430,268     1,362,995     1,327,060     1,290,460     1,293,457  

Other real estate owned

   244,906     183,753     156,106     100,973     74,645  

Other assets

   9,166,212     8,792,420     9,161,172     8,618,252     8,691,306  
                              

Total assets 2

   $178,986,947     $179,573,933     $175,857,229     $180,314,372     $186,384,841  
                              

LIABILITIES

          

Noninterest-bearing consumer and commercial deposits

   $22,325,750     $21,083,234     $20,857,240     $22,725,654     $22,765,045  

Interest-bearing consumer and commercial deposits:

          

NOW accounts

   22,292,330     22,558,374     20,319,435     20,255,930     20,802,207  

Money market accounts

   25,843,396     24,522,640     24,011,524     21,645,616     22,070,587  

Savings

   3,990,007     3,917,099     4,376,155     4,698,516     5,102,312  

Consumer time

   16,876,836     17,264,208     17,037,866     16,745,010     17,044,783  

Other time

   12,104,125     12,524,470     12,231,832     11,751,246     12,089,882  
                              

Total consumer and commercial deposits

   103,432,444     101,870,025     98,834,052     97,821,972     99,874,816  

Brokered deposits

   11,034,332     11,715,024     14,188,886     16,659,978     18,203,295  

Foreign deposits

   1,712,504     4,257,601     2,836,775     8,408,752     5,360,164  
                              

Total deposits

   116,179,280     117,842,650     115,859,713     122,890,702     123,438,275  

Funds purchased

   3,795,641     3,431,185     1,512,054     3,405,459     6,433,195  

Securities sold under agreements to repurchase

   5,446,204     5,748,277     5,548,486     6,081,096     6,851,863  

Other short-term borrowings

   3,061,003     3,021,358     2,971,761     2,083,518     1,958,438  

Long-term debt

   23,602,919     22,956,508     22,661,381     20,604,933     19,007,959  

Trading liabilities

   2,356,037     2,160,385     1,906,002     2,156,279     1,642,958  

Other liabilities

   6,114,415     6,361,052     7,490,585     5,723,532     9,083,615  
                              

Total liabilities

   160,555,499     161,521,415     157,949,982     162,945,519     168,416,303  
                              

SHAREHOLDERS’ EQUITY

          

Preferred stock, no par value

   500,000     500,000     500,000     500,000     500,000  

Common stock, $1.00 par value

   370,578     370,578     370,578     370,578     370,578  

Additional paid in capital

   6,682,828     6,707,293     6,709,002     6,589,387     6,688,660  

Retained earnings

   10,661,250     10,646,640     10,897,059     10,739,449     10,325,246  

Treasury stock, at cost, and other

   (1,692,117 )   (1,779,142 )   (1,821,360 )   (1,751,449 )   (1,101,172 )

Accumulated other comprehensive income, net of tax

   1,908,909     1,607,149     1,251,968     920,888     1,185,226  
                              

Total shareholders’ equity

   18,431,448     18,052,518     17,907,247     17,368,853     17,968,538  
                              

Total liabilities and shareholders’ equity

   $178,986,947     $179,573,933     $175,857,229     $180,314,372     $186,384,841  
                              

Common shares outstanding

   349,832,264     348,411,163     348,073,971     349,052,800     356,504,563  

Common shares authorized

   750,000,000     750,000,000     750,000,000     750,000,000     750,000,000  

Preferred shares outstanding

   5,000     5,000     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

   20,746,134     22,167,235     22,504,427     21,525,598     14,073,835  
                                

1   Includes net unrealized gains of

   $2,835,823     $2,724,643     $2,391,606     $2,035,623     $2,333,896  

2   Includes earning assets of

   152,714,700     154,397,231     151,228,575     157,094,873     163,299,162  

 

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, 2008     December 31, 2007  
     Average
Balances
    Interest
Income/
Expense
   Yields/
Rates
    Average
Balances
    Interest
Income/
Expense
   Yields/
Rates
 

ASSETS

              

Loans:

              

Real estate 1-4 family

   $32,440.0     $521.3    6.43 %   $31,990.3     $517.4    6.47 %

Real estate construction

   12,450.2     189.8    6.13     13,250.9     238.8    7.15  

Real estate home equity lines

   14,603.0     234.3    6.45     14,394.8     268.1    7.39  

Real estate commercial

   13,113.1     201.3    6.17     12,891.6     221.2    6.81  

Commercial - FTE 1

   36,374.6     539.2    5.96     34,879.3     564.9    6.43  

Credit card

   774.4     2.9    1.52     690.1     2.1    1.23  

Consumer - direct

   4,063.4     62.5    6.19     3,949.3     70.7    7.10  

Consumer - indirect

   7,645.3     120.2    6.32     7,877.3     125.7    6.33  

Nonaccrual and restructured

   1,799.0     5.4    1.21     1,170.7     4.3    1.45  
                                  

Total loans

   123,263.0     1,876.9    6.12     121,094.3     2,013.2    6.60  

Securities available for sale:

              

Taxable

   12,087.1     186.8    6.18     11,814.6     182.9    6.19  

Tax-exempt - FTE 1

   1,071.4     16.5    6.13     1,054.0     16.0    6.07  
                                  

Total securities available for sale - FTE 1

   13,158.5     203.3    6.18     12,868.6     198.9    6.18  

Funds sold and securities purchased under agreements to resell

   1,326.9     8.9    2.67     1,066.1     11.6    4.25  

Loans held for sale

   6,865.7     99.0    5.77     8,777.6     139.2    6.34  

Interest-bearing deposits

   21.9     0.2    4.54     18.2     0.3    6.22  

Interest earning trading assets

   8,367.6     98.0    4.71     7,716.2     112.8    5.80  
                                  

Total earning assets

   153,003.6     2,286.3    6.01     151,541.0     2,476.0    6.48  

Allowance for loan and lease losses

   (1,393.1 )        (1,114.9 )     

Cash and due from banks

   3,166.5          3,462.6       

Other assets

   17,076.4          17,172.3       

Noninterest earning trading assets

   2,609.5          1,660.9       

Unrealized gains on securities available for sale, net

   2,454.0          2,408.6       
                      

Total assets

   $176,916.9          $175,130.5       
                      

LIABILITIES AND SHAREHOLDERS’ EQUITY

              

Interest-bearing deposits:

              

NOW accounts

   $21,981.1     $101.9    1.87 %   $20,737.2     $121.0    2.32 %

Money market accounts

   25,342.7     154.7    2.46     24,261.5     177.7    2.91  

Savings

   3,917.0     5.7    0.59     4,177.7     11.1    1.05  

Consumer time

   17,030.8     187.8    4.43     17,170.7     197.2    4.56  

Other time

   12,280.5     141.1    4.62     12,353.3     151.5    4.87  
                                  

Total interest-bearing consumer and commercial deposits

   80,552.1     591.2    2.95     78,700.4     658.5    3.32  

Brokered deposits

   11,216.4     123.0    4.34     12,771.1     168.2    5.15  

Foreign deposits

   4,252.2     33.6    3.13     2,945.9     32.6    4.33  
                                  

Total interest-bearing deposits

   96,020.7     747.8    3.13     94,417.4     859.3    3.61  

Funds purchased

   2,885.7     21.9    3.00     2,151.4     24.1    4.38  

Securities sold under agreements to repurchase

   5,889.4     35.1    2.36     5,706.7     55.2    3.78  

Interest-bearing trading liabilities

   713.0     6.0    3.41     504.2     3.5    2.75  

Other short-term borrowings

   2,887.6     22.8    3.17     3,202.8     37.4    4.63  

Long-term debt

   22,808.3     284.9    5.02     22,808.1     301.7    5.25  
                                  

Total interest-bearing liabilities

   131,204.7     1,118.5    3.43     128,790.6     1,281.2    3.95  

Noninterest-bearing deposits

   20,616.3          20,948.1       

Other liabilities

   5,347.4          5,812.5       

Noninterest-bearing trading liabilities

   1,686.8          1,546.5       

Shareholders’ equity

   18,061.7          18,032.8       
                      

Total liabilities and shareholders’ equity

   $176,916.9          $175,130.5       
                      
                      

Interest Rate Spread

        2.58 %        2.53 %
                          

Net Interest Income - FTE 1

     $1,167.8        $1,194.8   
                  
                      

Net Interest Margin 2

        3.07 %        3.13 %
                      

 

 

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, 2007     June 30, 2007     March 31, 2007  
    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

  $31,003.5     $498.5   6.43 %   $30,754.4     $493.2   6.42 %   $34,089.1     $527.3   6.19 %

Real estate construction

  13,686.6     260.0   7.54     13,710.1     259.4   7.59     13,430.3     252.7   7.63  

Real estate home equity lines

  14,133.1     279.5   7.85     13,849.7     272.4   7.89     13,738.1     268.3   7.92  

Real estate commercial

  12,759.3     225.3   7.01     12,731.8     220.8   6.95     12,830.6     220.2   6.96  

Commercial-FTE 1

  34,247.9     562.6   6.52     33,607.7     539.6   6.44     34,032.8     535.6   6.38  

Credit card

  516.3     4.2   3.29     403.7     5.9   5.80     369.5     5.5   5.94  

Consumer-direct

  4,368.0     80.0   7.26     4,347.5     78.2   7.21     4,220.5     76.0   7.30  

Consumer-indirect

  7,966.4     124.6   6.21     8,063.6     123.1   6.12     8,166.5     122.0   6.06  

Nonaccrual and restructured

  877.5     3.8   1.72     696.1     4.8   2.76     637.5     4.5   2.85  
                                               

Total loans

  119,558.6     2,038.5   6.76     118,164.6     1,997.4   6.78     121,514.9     2,012.1   6.72  

Securities available for sale:

                 

Taxable

  11,546.2     179.7   6.23     11,014.3     167.7   6.09     6,650.6     108.7   6.54  

Tax-exempt-FTE 1

  1,040.9     15.8   6.05     1,041.2     15.2   5.85     1,038.8     15.2   5.86  
                                               

Total securities available for sale-FTE 1

  12,587.1     195.5   6.21     12,055.5     182.9   6.07     7,689.4     123.9   6.44  

Funds sold and securities purchased under agreements to resell

  872.5     11.1   4.99     1,038.1     13.2   5.04     1,006.3     12.9   5.12  

Loans held for sale

  9,748.0     155.6   6.39     13,454.3     200.4   5.96     11,205.2     173.7   6.20  

Interest-bearing deposits

  24.9     0.3   4.28     24.1     0.3   5.74     28.9     0.4   5.69  

Interest earning trading assets

  9,536.5     141.2   5.88     12,857.6     174.3   5.44     18,028.9     228.8   5.15  
                                               

Total earning assets

  152,327.6     2,542.2   6.62     157,594.2     2,568.5   6.54     159,473.6     2,551.8   6.49  

Allowance for loan and lease losses

  (1,059.1 )       (1,037.6 )       (1,050.5 )    

Cash and due from banks

  3,417.2         3,427.7         3,520.0      

Other assets

  16,719.9         16,626.9         16,272.9      

Noninterest earning trading assets

  1,155.9         986.6         985.1      

Unrealized gains on securities available for sale, net

  2,091.9         2,398.7         2,305.3      
                             

Total assets

  $174,653.4         $179,996.5         $181,506.4      
                             

LIABILITIES AND SHAREHOLDERS’ EQUITY

                 

Interest-bearing deposits:

                 

NOW accounts

  $19,543.4     $117.9   2.39 %   $20,065.8     $119.0   2.38 %   $19,820.1     $115.9   2.37 %

Money market accounts

  22,560.3     160.0   2.81     21,773.3     142.0   2.62     22,089.1     142.9   2.62  

Savings

  4,456.5     13.3   1.19     4,786.7     14.8   1.24     5,024.8     16.3   1.32  

Consumer time

  16,839.9     193.4   4.56     16,942.3     190.5   4.51     16,809.4     183.1   4.42  

Other time

  11,862.4     146.3   4.89     11,962.4     144.5   4.85     12,115.8     144.0   4.82  
                                               

Total interest-bearing consumer and commercial deposits

  75,262.5     630.9   3.33     75,530.5     610.8   3.24     75,859.2     602.2   3.22  

Brokered deposits

  15,806.3     214.6   5.31     16,972.2     227.5   5.30     18,888.5     250.8   5.31  

Foreign deposits

  5,333.6     68.8   5.05     7,011.2     92.9   5.24     7,825.6     102.9   5.26  
                                               

Total interest-bearing deposits

  96,402.4     914.3   3.76     99,513.9     931.2   3.75     102,573.3     955.9   3.78  

Funds purchased

  2,291.3     28.9   4.94     3,967.7     52.2   5.21     4,693.1     61.2   5.22  

Securities sold under agreements to repurchase

  5,732.3     64.7   4.42     6,339.0     74.4   4.64     6,768.0     79.5   4.70  

Interest-bearing trading liabilities

  354.1     3.4   3.85     453.1     4.4   3.87     409.4     4.3   4.25  

Other short-term borrowings

  2,730.1     33.6   4.89     2,262.3     28.3   5.02     1,758.4     21.7   5.01  

Long-term debt

  21,143.5     278.1   5.22     19,772.4     258.0   5.24     19,000.8     240.9   5.14  
                                               

Total interest-bearing liabilities

  128,653.6     1,323.0   4.08     132,308.4     1,348.5   4.09     135,203.0     1,363.5   4.09  

Noninterest-bearing deposits

  21,445.1         22,395.8         21,933.1      

Other liabilities

  5,633.7         6,185.4         5,499.1      

Noninterest-bearing trading liabilities

  1,370.8         1,178.8         1,150.8      

Shareholders’ equity

  17,550.2         17,928.1         17,720.4      
                             

Total liabilities and shareholders’ equity

  $174,653.4         $179,996.5         $181,506.4      
                             
                             

Interest Rate Spread

      2.54 %       2.45 %       2.40 %
                                   

Net Interest Income-FTE 1

    $1,219.2       $1,220.0       $1,188.3  
                       
                             

Net Interest Margin 2

      3.18 %       3.10 %       3.02 %
                             

 

 

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)  
     2008     2007     Amount     %1  

CREDIT DATA

        

Allowance for loan and lease losses-beginning

   $1,282,504     $1,044,521     $237,983     22.8 %

Provision for loan losses

   560,022     56,441     503,581     NM  

Allowance associated with loans at fair value2

   -     (4,100 )   (4,100 )   (100.0 )

Charge-offs

        

Commercial

   (38,289 )   (22,280 )   16,009     71.9  

Real estate:

        

Home equity lines

   (98,602 )   (15,872 )   82,730     NM  

Construction

   (23,182 )   (598 )   22,584     NM  

Residential mortgages

   (109,186 )   (14,293 )   94,893     NM  

Commercial real estate

   (233 )   (287 )   (54 )   (18.8 )

Consumer:

        

Direct

   (10,315 )   (5,856 )   4,459     76.1  

Indirect

   (42,889 )   (25,761 )   17,128     66.5  
                

Total charge-offs

   (322,696 )   (84,947 )   237,749     NM  
                

Recoveries

        

Commercial

   5,736     5,771     (35 )   (0.6 )

Real estate:

        

Home equity lines

   2,368     1,183     1,185     NM  

Construction

   78     119     (41 )   (34.5 )

Residential mortgages

   1,223     1,413     (190 )   (13.4 )

Commercial real estate

   162     41     121     NM  

Consumer:

        

Direct

   2,381     2,453     (72 )   (2.9 )

Indirect

   13,562     11,044     2,518     22.8  
                

Total recoveries

   25,510     22,024     3,486     15.8  
                

Net charge-offs

   (297,186 )   (62,923 )   234,263     NM  
                

Allowance for loan and lease losses-ending

   $1,545,340     $1,033,939     $511,401     49.5  
                

Net charge-offs to average loans (annualized)

        

Commercial

   0.35 %   0.19 %   0.16 %   82.5 %

Real estate:

        

Home equity lines

   2.64     0.43     2.21     NM  

Construction

   0.74     0.01     0.73     NM  

Residential mortgages

   1.29     0.15     1.14     NM  

Commercial real estate

   -     0.01     (0.01 )   (100.0 )

Consumer:

        

Direct

   0.78     0.33     0.46     NM  

Indirect

   1.52     0.73     0.80     NM  

Total net charge-offs to total average loans

   0.97     0.21     0.76     NM  

Period Ended

        

Nonaccrual loans

        

Commercial

   $97,930     $118,737     ($20,807 )   (17.5 )%

Real estate:

        

Construction

   520,704     54,885     465,819     NM  

Residential mortgages 3

   1,308,224     392,093     916,131     NM  

Commercial real estate

   64,251     47,463     16,788     35.4  

Consumer loans

   46,851     24,143     22,708     94.1  
                

Total nonaccrual loans

   2,037,960     637,321     1,400,639     NM  

Restructured loans

   30,787     27,772     3,015     10.9  
                

Total nonperforming loans

   2,068,747     665,093     1,403,654     NM  

Other real estate owned (OREO)

   244,906     74,645     170,261     NM  

Other repossessed assets

   6,340     6,202     138     2.2  
                

Total nonperforming assets

   $2,319,993     $745,940     $1,574,053     NM  
                

Total accruing loans past due 90 days or more

   $743,969     $369,940     $374,029     NM %
                

Total nonperforming loans to total loans

   1.67 %   0.57 %   1.10 %   NM %

Total nonperforming assets to total loans plus OREO and other repossessed assets

   1.87     0.64     1.23     NM  

Allowance to period-end loans

   1.25     0.88     0.37     42.0  

Allowance to nonperforming loans

   74.7     155.5     (80.8 )   (51.9 )

Allowance to annualized net charge-offs

   1.29 x   4.05 x   (2.76 ) x   (68.1 )

 

 

1

“NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful.

2

Amount removed from the allowance for loan losses related to the Company’s election to record $4.1 billion of residential mortgages at fair value.

3

Includes home equity lines on nonaccrual status.

 

Page 9


SunTrust Banks, Inc. and Subsidiaries

FIVE QUARTER OTHER FINANCIAL DATA

(Dollars in thousands) (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    December 31
2007
    Increase/(Decrease)     September 30
2007
    June 30
2007
    March 31
2007
 
         Amount     % 1        

CREDIT DATA

              

Allowance for loan and lease losses-beginning

   $1,282,504     $1,093,691     $188,813     17.3 %   $1,050,362     $1,033,939     $1,044,521  

Provision for loan losses

   560,022     356,781     203,241     57.0     147,020     104,680     56,441  

Allowance associated with loans at fair value 2

   -     -     -     -     -     -     (4,100 )

Charge-offs

              

Commercial

   (38,289 )   (38,239 )   50     0.1     (39,487 )   (40,853 )   (22,280 )

Real estate:

              

Home equity lines

   (98,602 )   (46,842 )   51,760     NM     (29,075 )   (24,429 )   (15,872 )

Construction

   (23,182 )   (7,616 )   15,566     NM     (2,477 )   (1,468 )   (598 )

Residential mortgages

   (109,186 )   (59,319 )   49,867     84.1     (19,853 )   (19,615 )   (14,293 )

Commercial real estate

   (233 )   (299 )   (66 )   (22.1 )   (789 )   (694 )   (287 )

Consumer:

              

Direct

   (10,315 )   (6,630 )   3,685     55.6     (5,661 )   (5,362 )   (5,856 )

Indirect

   (42,889 )   (32,448 )   10,441     32.2     (28,944 )   (19,301 )   (25,761 )
                                  

Total charge-offs

   (322,696 )   (191,393 )   131,303     68.6     (126,286 )   (111,722 )   (84,947 )
                                  

Recoveries

              

Commercial

   5,736     6,613     (877 )   (13.3 )   6,322     5,536     5,771  

Real estate:

              

Home equity lines

   2,368     2,182     186     8.5     2,101     2,323     1,183  

Construction

   78     705     (627 )   (88.9 )   82     244     119  

Residential mortgages

   1,223     1,328     (105 )   (7.9 )   1,107     1,614     1,413  

Commercial real estate

   162     846     (684 )   (80.9 )   861     162     41  

Consumer:

              

Direct

   2,381     2,484     (103 )   (4.1 )   2,108     2,568     2,453  

Indirect

   13,562     9,267     4,295     46.3     10,014     11,018     11,044  
                                  

Total recoveries

   25,510     23,425     2,085     8.9     22,595     23,465     22,024  
                                  

Net charge-offs

   (297,186 )   (167,968 )   129,218     76.9     (103,691 )   (88,257 )   (62,923 )
                                  

Allowance for loan and lease losses-ending

   $1,545,340     $1,282,504     $262,836     20.5     $1,093,691     $1,050,362     $1,033,939  
                                  

Net charge-offs to average loans (annualized)

              

Commercial

   0.35 %   0.35 %   - %   - %   0.38 %   0.42 %   0.19 %

Real estate:

              

Home equity lines

   2.64     1.23     1.41     NM     0.76     0.64     0.43  

Construction

   0.74     0.20     0.54     NM     0.07     0.04     0.01  

Residential mortgages

   1.29     0.70     0.59     84.4     0.24     0.23     0.15  

Commercial real estate

   -     (0.02 )   (0.02 )   (100.0 )   -     0.02     0.01  

Consumer:

              

Direct

   0.78     0.42     0.36     86.5     0.32     0.26     0.33  

Indirect

   1.52     1.16     0.36     31.4     0.94     0.41     0.73  

Total net charge-offs to total average loans

   0.97     0.55     0.42     76.4     0.34     0.30     0.21  

Period Ended

              

Nonaccrual loans

              

Commercial

   $97,930     $74,463     $23,467     31.5 %   $74,246     $91,895     $118,737  

Real estate:

              

Construction

   520,704     295,335     225,369     76.3     158,194     77,936     54,885  

Residential mortgages 3

   1,308,224     977,076     331,148     33.9     676,822     500,400     392,093  

Commercial real estate

   64,251     44,502     19,749     44.4     40,649     44,168     47,463  

Consumer loans

   46,851     39,031     7,820     20.0     24,880     22,401     24,143  
                                  

Total nonaccrual loans

   2,037,960     1,430,407     607,553     42.5     974,791     736,799     637,321  

Restructured loans

   30,787     29,851     936     3.1     29,057     27,816     27,772  
                                  

Total nonperforming loans

   2,068,747     1,460,258     608,489     41.7     1,003,848     764,615     665,093  

Other real estate owned (OREO)

   244,906     183,753     61,153     33.3     156,106     100,973     74,645  

Other repossessed assets

   6,340     11,536     (5,196 )   (45.0 )   9,974     7,250     6,202  
                                  

Total nonperforming assets

   $2,319,993     $1,655,547     $664,446     40.1     $1,169,928     $872,838     $745,940  
                                  

Total accruing loans past due 90 days or more

   $743,969     $611,003     $132,966     21.8 %   $495,384     $449,038     $369,940  
                                  

Total nonperforming loans to total loans

   1.67 %   1.19 %   0.48 %   40.3 %   0.83 %   0.64 %   0.57 %

Total nonperforming assets to total loans plus OREO and other repossessed assets

   1.87     1.35     0.52     38.5     0.97     0.73     0.64  

Allowance to period-end loans

   1.25     1.05     0.20     19.0     0.91     0.88     0.88  

Allowance to nonperforming loans

   74.7     87.8     (13.1 )   (14.9 )   109.0     137.4     155.5  

Allowance to annualized net charge-offs

   1.29 x   1.92 x   (0.63 ) x   (32.8 )   2.66 x   2.97 x   4.05 x

 

 

1

“NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful.

2

Amount removed from the allowance for loan losses related to the Company’s election to record $4.1 billion of residential mortgages at fair value.

3

Includes home equity lines on nonaccrual status.

 

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
    Other     Total        

OTHER INTANGIBLE ASSET ROLLFORWARD

          

Balance, beginning of period

   $241,614     $810,509     $129,861     $1,181,984    

Amortization

   (18,785 )   (41,359 )   (4,758 )   (64,902 )  

MSRs originated

   -     152,105     -     152,105    

Purchase of GenSpring (formerly AMA, LLC) minority shares

   -     -     128     128    

Intangible assets obtained from sale upon merger of Lighthouse Partners, net1

   -     -     24,142     24,142    
                          

Balance March 31, 2007

   $222,829     $921,255     $149,373     $1,293,457    
                          

Balance, beginning of period

   $172,655     $1,049,425     $140,915     $1,362,995    

Amortization

   (14,952 )   (56,442 )   (5,763 )   (77,157 )  

MSRs originated

   -     152,303     -     152,303    

Sale of interest in Lighthouse Investment Partners, LLC

   -     -     (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    
                          
     Three Months Ended  
     March 31
2008
    December 31
2007
    September 30
2007
    June 30
2007
    March 31
2007
 

COMMON SHARE ROLLFORWARD

          

Beginning balance

   348,411     348,074     349,053     356,505     354,903  

Common shares issued/exchanged for employee benefit plans, stock option, performance and restricted stock activity

   1,421     337     483     1,228     2,218  

Acquisition of treasury stock

   -     -     (1,462 )   (8,680 )   (616 )
                              

Ending balance

   349,832     348,411     348,074     349,053     356,505  
                              

COMMON STOCK REPURCHASE ACTIVITY

          

Number of common shares repurchased 2

   17     12     1,472     8,715     653  

Average price per share of repurchased common shares

   $62.38     $69.31     $81.00     $87.02     $82.83  

Total cost to acquire treasury shares

   $-     $-     $-     $853,386     $-  

Maximum number of common shares that may yet be purchased under plans or programs 3

   30,000     30,000     30,000     2,471     11,151  

 

 

1

During the first quarter of 2007 SunTrust merged its wholly-owned subsidiary, Lighthouse Partners, into Lighthouse Investment Partners, LLC in exchange for a minority interest in Lighthouse Investment Partners, LLC and a revenue-sharing agreement. This transaction resulted in a $7.9 million decrease in existing intangible assets and a new intangible asset of $32.0 million.

2

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.

3

In August 2006, the Board authorized the Company to repurchase up to an additional $1 billion or 13,333,334 shares of the Company’s Common Stock, under which authority the Company repurchased 9,926,589 shares during 2006 under an Accelerated Share Repurchase Agreement (“ASR”). The 3,406,745 shares remaining under the August 2006 authorization, combined with 8,360,000 shares remaining under Board authorization from April 2006, left the Company with authorization to repurchase up to 11,766,745 shares as of January 1, 2007. The Company completed the aforementioned ASR with the repurchase of 615,514 shares during the first quarter of 2007. During 2007, the Company entered into a second ASR, as announced in the Company’s 8-K filing on June 7, 2007, by repurchasing 8,022,254 shares during the second quarter of 2007. This ASR was completed in the third quarter of 2007 when the Company received, without additional payment, an additional 1,462,091 shares. On August 14, 2007, the Board of Directors authorized the Company to repurchase up to 30 million shares of common stock and specified that such authorization replaced (terminated) existing unused authorizations.

 

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
2008
    December 31
2007
    September 30
2007
    June 30
2007
    March 31
2007
 

NON-GAAP MEASURES PRESENTED IN THE EARNINGS RELEASE

          

Net income

   $290,555     $11,124     $420,164     $681,431     $521,296  

Securities (gains)/losses, net of tax

   37,563     (3,530 )   (614 )   (146,575 )   (12 )
                              

Net income excluding net securities gains and losses, net of tax

   328,118     7,594     419,550     534,856     521,284  

The Coca-Cola Company dividend, net of tax

   (14,738 )   (13,206 )   (13,210 )   (13,218 )   (14,580 )
                              

Net income/(loss) excluding net securities (gains)/losses and The Coca-Cola Company dividend

   313,380     (5,612 )   406,340     521,638     506,704  

Preferred dividends

   6,977     7,867     7,526     7,519     7,363  
                              

Net income/(loss) available to common shareholders excluding net securities (gains)/losses and The Coca-Cola Company dividend

   $306,403     ($13,479 )   $398,814     $514,119     $499,341  
                              

Total average assets

   $176,916,901     $175,130,464     $174,653,377     $179,996,457     $181,506,369  

Average net unrealized securities gains

   (2,453,981 )   (2,408,596 )   (2,091,892 )   (2,398,651 )   (2,305,306 )
                              

Average assets less net unrealized securities gains

   $174,462,920     $172,721,868     $172,561,485     $177,597,806     $179,201,063  
                              

Total average common shareholders’ equity

   $17,561,709     $17,532,786     $17,050,182     $17,428,101     $17,220,384  

Average accumulated other comprehensive income

   (1,533,427 )   (1,292,785 )   (998,561 )   (1,206,487 )   (1,074,497 )
                              

Total average realized common shareholders’ equity

   $16,028,282     $16,240,001     $16,051,621     $16,221,614     $16,145,887  
                              

Return on average total assets

   0.66 %   0.03 %   0.95 %   1.52 %   1.16 %

Impact of excluding net realized and unrealized securities (gains)/losses and The Coca-Cola Company dividend

   0.06     (0.04 )   (0.02 )   (0.34 )   (0.01 )
                              

Return on average total assets less net unrealized securities gains 1

   0.72 %   (0.01 )%   0.93 %   1.18 %   1.15 %
                              

Return on average common shareholders’ equity

   6.49 %   0.07 %   9.60 %   15.51 %   12.10 %

Impact of excluding net realized and unrealized securities (gains)/ losses and The Coca-Cola Company dividend

   1.20     (0.40 )   0.26     (2.80 )   0.44  
                              

Return on average realized common shareholders’ equity 2

   7.69 %   (0.33 )%   9.86 %   12.71 %   12.54 %
                              

Efficiency ratio 3

   56.40 %   82.19 %   63.35 %   52.69 %   59.79 %

Impact of excluding amortization of intangible assets other than mortgage servicing rights (“MSRs”)

   (0.93 )   (1.33 )   (1.22 )   (1.05 )   (1.14 )
                              

Tangible efficiency ratio 4

   55.47 %   80.86 %   62.13 %   51.64 %   58.65 %
                              

Total shareholders’ equity

   $18,431,448     $18,052,518     $17,907,247     $17,368,853     $17,968,538  

Goodwill

   (6,923,033 )   (6,921,493 )   (6,912,110 )   (6,897,050 )   (6,896,723 )

Other intangible assets including MSRs

   (1,430,268 )   (1,362,995 )   (1,327,060 )   (1,290,460 )   (1,293,457 )

MSRs

   1,143,405     1,049,426     995,984     942,012     921,255  
                              

Tangible equity

   $11,221,552     $10,817,456     $10,664,061     $10,123,355     $10,699,613  
                              

Total assets

   $178,986,947     $179,573,933     $175,857,229     $180,314,372     $186,384,841  

Goodwill

   (6,923,033 )   (6,921,493 )   (6,912,110 )   (6,897,050 )   (6,896,723 )

Other intangible assets including MSRs

   (1,430,268 )   (1,362,995 )   (1,327,060 )   (1,290,460 )   (1,293,457 )

MSRs

   1,143,405     1,049,426     995,984     942,012     921,255  
                              

Tangible assets

   $171,777,051     $172,338,871     $168,614,043     $173,068,874     $179,115,916  
                              

Tangible equity to tangible assets 5

   6.53 %   6.28 %   6.32 %   5.85 %   5.97 %

Net interest income

   $1,139,867     $1,167,513     $1,192,188     $1,195,284     $1,164,559  

Taxable-equivalent adjustment

   27,975     27,244     27,055     24,668     23,713  
                              

Net interest income-FTE

   1,167,842     1,194,757     1,219,243     1,219,952     1,188,272  

Noninterest income

   1,057,502     576,017     819,139     1,154,622     878,906  
                              

Total revenue-FTE

   $2,225,344     $1,770,774     $2,038,382     $2,374,574     $2,067,178  
                              

 

 

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 Company’s securities portfolio which includes the ownership by the Company of 43.6 million shares of The Coca-Cola Company as of March 31, 2008. 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

The Company 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 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 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.

 

Page 12


SunTrust Banks, Inc. and Subsidiaries

QUARTER-TO-QUARTER COMPARISON - ACTUAL

APPENDIX B TO THE EARNINGS RELEASE

(Dollars in thousands) (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    December 31
2007
    Increase/(Decrease)     Sequential
Annualized 1
%
    March 31
2008
    March 31
2007
    Increase/(Decrease)  
         Amount     %           Amount     %  

STATEMENTS OF INCOME

                  

NET INTEREST INCOME

   $1,139,867     $1,167,513     ($27,646 )   (2.4 )%   (9.5 )%   $1,139,867     $1,164,559     ($24,692 )   (2.1 )%

Provision for loan losses

   560,022     356,781     203,241     57.0     NM     560,022     56,441     503,581     NM  
                                  

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

   579,845     810,732     (230,887 )   (28.5 )   NM     579,845     1,108,118     (528,273 )   (47.7 )
                                  

NONINTEREST INCOME

                  

Service charges on deposit accounts

   211,839     222,213     (10,374 )   (4.7 )   (18.7 )   211,839     189,035     22,804     12.1  

Trust and investment management income

   161,102     170,854     (9,752 )   (5.7 )   (22.8 )   161,102     174,318     (13,216 )   (7.6 )

Retail investment services

   72,300     71,650     650     0.9     3.6     72,300     63,543     8,757     13.8  

Other charges and fees

   127,231     121,849     5,382     4.4     17.7     127,231     118,137     9,094     7.7  

Investment banking income

   55,420     55,041     379     0.7     2.8     55,420     50,157     5,263     10.5  

Trading account profits/(losses) and commissions

   28,218     (437,162 )   465,380     NM     NM     28,218     90,201     (61,983 )   (68.7 )

Card fees

   73,761     77,481     (3,720 )   (4.8 )   (19.2 )   73,761     64,195     9,566     14.9  

Mortgage production related income

   85,549     22,366     63,183     NM     NM     85,549     (8,655 )   94,204     NM  

Mortgage servicing related income

   29,098     57,364     (28,266 )   (49.3 )   NM     29,098     35,403     (6,305 )   (17.8 )

Net gain on sale/leaseback of premises

   37,039     118,840     (81,801 )   (68.8 )   NM     37,039     -     37,039     NM  

Net gain on sale or merger of Lighthouse interests

   89,390     -     89,390     NM     NM     89,390     32,340     57,050     NM  

Gain on Visa IPO

   86,305     -     86,305     NM     NM     86,305     -     86,305     NM  

Other noninterest income

   60,836     89,827     (28,991 )   (32.3 )   NM     60,836     70,212     (9,376 )   (13.4 )

Net securities gains/(losses)

   (60,586 )   5,694     (66,280 )   NM     NM     (60,586 )   20     (60,606 )   NM  
                                  

Total noninterest income

   1,057,502     576,017     481,485     83.6     NM     1,057,502     878,906     178,596     20.3  
                                  

NONINTEREST EXPENSE

                  

Employee compensation and benefits

   715,083     682,810     32,273     4.7     18.9     715,083     699,000     16,083     2.3  

Net occupancy expense

   86,441     92,705     (6,264 )   (6.8 )   (27.0 )   86,441     86,257     184     0.2  

Outside processing and software

   109,165     105,407     3,758     3.6     14.3     109,165     99,676     9,489     9.5  

Equipment expense

   52,395     51,734     661     1.3     5.1     52,395     49,409     2,986     6.0  

Marketing and customer development

   55,703     59,115     (3,412 )   (5.8 )   (23.1 )   55,703     45,705     9,998     21.9  

Amortization of intangible assets

   20,715     23,414     (2,699 )   (11.5 )   (46.1 )   20,715     23,542     (2,827 )   (12.0 )

Loss on extinguishment of debt

   11,723     -     11,723     NM     NM     11,723     -     11,723     NM  

Visa litigation

   (39,124 )   76,930     (116,054 )   NM     NM     (39,124 )   -     (39,124 )   NM  

Other noninterest expense

   243,043     363,226     (120,183 )   (33.1 )   NM     243,043     232,408     10,635     4.6  
                                  

Total noninterest expense

   1,255,144     1,455,341     (200,197 )   (13.8 )   (55.0 )   1,255,144     1,235,997     19,147     1.5  
                                  

INCOME/(LOSS) BEFORE INCOME TAXES

   382,203     (68,592 )   450,795     NM     NM     382,203     751,027     (368,824 )   (49.1 )

Provision/(benefit) for income taxes

   91,648     (79,716 )   171,364     NM     NM     91,648     229,731     (138,083 )   (60.1 )
                                  

NET INCOME

   290,555     11,124     279,431     NM     NM     290,555     521,296     (230,741 )   (44.3 )

Preferred dividends

   6,977     7,867     (890 )   (11.3 )   (45.3 )   6,977     7,363     (386 )   (5.2 )
                                  

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

   $283,578     $3,257     $280,321     NM     NM     $283,578     $513,933     ($230,355 )   (44.8 )
                                  

REVENUE

                  

Net interest income

   $1,139,867     $1,167,513     ($27,646 )   (2.4 )%   (9.5 )%   $1,139,867     $1,164,559     ($24,692 )   (2.1 )%

Taxable-equivalent adjustment

   27,975     27,244     731     2.7     10.7     27,975     23,713     4,262     18.0  
                                  

Net interest income - FTE

   1,167,842     1,194,757     (26,915 )   (2.3 )   (9.0 )   1,167,842     1,188,272     (20,430 )   (1.7 )

Noninterest income

   1,057,502     576,017     481,485     83.6     NM     1,057,502     878,906     178,596     20.3  
                                  

Total revenue - FTE

   2,225,344     1,770,774     454,570     25.7     NM     2,225,344     2,067,178     158,166     7.7  
                                  

SELECTED AVERAGE BALANCES (Dollars in millions)

                  

Average loans

                  

Commercial-FTE

   $36,375     $34,879     $1,496     4.3 %   17.2 %   $36,375     $34,033     $2,342     6.9 %

Real estate home equity lines

   14,603     14,395     208     1.4     5.8     14,603     13,738     865     6.3  

Real estate construction

   12,450     13,251     (801 )   (6.0 )   (24.2 )   12,450     13,430     (980 )   (7.3 )

Real estate 1-4 family

   32,440     31,990     450     1.4     5.6     32,440     34,089     (1,649 )   (4.8 )

Real estate commercial

   13,113     12,892     221     1.7     6.9     13,113     12,831     282     2.2  

Credit card

   774     690     84     12.2     48.8     774     370     404     NM  

Consumer - direct

   4,063     3,949     114     2.9     11.6     4,063     4,220     (157 )   (3.7 )

Consumer - indirect

   7,646     7,877     (231 )   (2.9 )   (11.7 )   7,646     8,166     (520 )   (6.4 )

Nonaccrual and restructured

   1,799     1,171     628     53.7     NM     1,799     638     1,161     NM  
                                  

Total loans

   $123,263     $121,094     $2,169     1.8 %   7.2 %   $123,263     $121,515     $1,748     1.4 %
                                  

Average deposits

                  

Noninterest bearing deposits

   $20,616     $20,948     ($332 )   (1.6 )%   (6.3 )%   $20,616     $21,933     ($1,317 )   (6.0 )%

NOW accounts

   21,981     20,737     1,244     6.0     24.0     21,981     19,820     2,161     10.9  

Money market accounts

   25,343     24,262     1,081     4.5     17.8     25,343     22,089     3,254     14.7  

Savings

   3,917     4,178     (261 )   (6.2 )   (25.0 )   3,917     5,025     (1,108 )   (22.0 )

Consumer and other time

   29,311     29,524     (213 )   (0.7 )   (2.9 )   29,311     28,925     386     1.3  
                                  

Total consumer and commercial deposits

   101,168     99,649     1,519     1.5     6.1     101,168     97,792     3,376     3.5  

Brokered and foreign deposits

   15,469     15,717     (248 )   (1.6 )   (6.3 )   15,469     26,714     (11,245 )   (42.1 )
                                  

Total deposits

   $116,637     $115,366     $1,271     1.1 %   4.4 %   $116,637     $124,506     ($7,869 )   (6.3 )%
                                  

SELECTED CREDIT DATA (Dollars in thousands)

                  

Nonaccrual loans

   $2,037,960     $1,430,407     $607,553     42.5 %   NM %   $2,037,960     $637,321     $1,400,639     NM %

Restructured loans

   30,787     29,851     936     3.1     12.5     30,787     27,772     3,015     10.9  
                                  

Total nonperforming loans

   2,068,747     1,460,258     608,489     41.7     NM     2,068,747     665,093     1,403,654     NM  

Other real estate owned (OREO)

   244,906     183,753     61,153     33.3     NM     244,906     74,645     170,261     NM  

Other repossessed assets

   6,340     11,536     (5,196 )   (45.0 )   NM     6,340     6,202     138     2.2  
                                  

Total nonperforming assets

   $2,319,993     $1,655,547     $664,446     40.1 %   NM %   $2,319,993     $745,940     $1,574,052     NM %
                                  

Allowance for loan and lease losses

   $1,545,340     $1,282,504     $262,836     20.5 %   82.0 %   $1,545,340     $1,033,939     $511,401     49.5 %
                                  

 

 

1

Multiply percentage change by 4 to calculate sequential annualized change. Any sequential annualized change over 100 percent is labeled as “NM” because those changes over 100 percent were not considered to be meaningful.

 

Page 13


SunTrust Banks, Inc. and Subsidiaries

RETAIL AND COMMERCIAL LINE OF BUSINESS

(Dollars in thousands)    (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    March 31
2007
    %
Change 3
 

Statements of Income

      

Net interest income1

   $620,773     $701,070     (11.5 )%

FTE adjustment

   8,732     9,449     (7.6 )
              

Net interest income - FTE

   629,505     710,519     (11.4 )

Provision for loan losses2

   176,515     47,387     NM  
              

Net interest income after provision for loan losses - FTE

   452,990     663,132     (31.7 )
              

Noninterest income before securities gains/(losses)

   318,323     292,597     8.8  

Securities gains/(losses), net

   -     3     (100.0 )
              

Total noninterest income

   318,323     292,600     8.8  
              

Noninterest expense before amortization of intangible assets

   607,367     616,695     (1.5 )

Amortization of intangible assets

   14,941     18,773     (20.4 )
              

Total noninterest expense

   622,308     635,468     (2.1 )
              

Income before provision for income taxes

   149,005     320,264     (53.5 )

Provision for income taxes

   43,571     106,848     (59.2 )

FTE adjustment

   8,732     9,449     (7.6 )
              

Net income

   $96,702     $203,967     (52.6 )
              

Total revenue - FTE

   $947,828     $1,003,119     (5.5 )

Average Balance Sheets

      

Total loans

   $49,894,256     $50,859,629     (1.9 )%

Goodwill

   6,144,556     6,133,789     0.2  

Other intangible assets excluding MSRs

   165,700     230,492     (28.1 )

Total assets

   57,747,123     58,669,733     (1.6 )

Total deposits

   80,782,944     81,084,211     (0.4 )

Performance Ratios

      

Efficiency ratio

   65.66 %   63.35 %  

Impact of excluding amortization of intangible assets

   (6.03 )   (5.79 )  
              

Tangible efficiency ratio

   59.63 %   57.56 %  
              

 

 

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 14


SunTrust Banks, Inc. and Subsidiaries

WHOLESALE BANKING LINE OF BUSINESS

(Dollars in thousands)    (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    March 31
2007
    %
Change 3
 

Statements of Income

      

Net interest income1

   $123,805     $133,566     (7.3 )%

FTE adjustment

   14,091     10,064     40.0  
              

Net interest income - FTE

   137,896     143,630     (4.0 )

Provision for loan losses2

   12,276     2,808     NM  
              

Net interest income after provision for loan losses - FTE

   125,620     140,822     (10.8 )
              

Noninterest income before securities gains/(losses)

   173,486     168,682     2.8  

Securities gains/(losses), net

   -     -     -  
              

Total noninterest income

   173,486     168,682     2.8  
              

Noninterest expense before amortization of intangible assets

   199,640     190,728     4.7  

Amortization of intangible assets

   122     122     -  
              

Total noninterest expense

   199,762     190,850     4.7  
              

Income before provision/(benefit) for income taxes

   99,344     118,654     (16.3 )

Provision/(benefit) for income taxes

   (991 )   16,049     NM  

FTE adjustment

   14,091     10,064     40.0  
              

Net income

   $86,244     $92,541     (6.8 )
              

Total revenue - FTE

   $311,382     $312,312     (0.3 )

Average Balance Sheets

      

Total loans

   $32,617,953     $29,506,266     10.5 %

Goodwill

   168,134     168,149     -  

Other intangible assets excluding MSRs

   801     1,285     (37.7 )

Total assets

   43,527,780     38,189,909     14.0  

Total deposits

   8,473,592     4,729,069     79.2  

Performance Ratios

      

Efficiency ratio

   64.15 %   61.11 %  

Impact of excluding amortization of intangible assets

   (0.42 )   (0.39 )  
              

Tangible efficiency ratio

   63.73 %   60.72 %  
              

 

 

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

MORTGAGE LINE OF BUSINESS

(Dollars in thousands)    (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    March 31
2007
    %
Change3
 

Statements of Income

      

Net interest income1

   $130,449     $129,591     0.7 %

FTE adjustment

   -     -     -  
              

Net interest income-FTE

   130,449     129,591     0.7  

Provision for loan losses2

   98,255     10,209     NM  
              

Net interest income after provision for loan losses-FTE

   32,194     119,382     (73.0 )
              

Noninterest income before securities gains/(losses)

   137,130     38,483     NM  

Securities gains/(losses), net

   (5,010 )   -     NM  
              

Total noninterest income

   132,120     38,483     NM  
              

Noninterest expense before amortization of intangible assets

   219,482     151,562     44.8  

Amortization of intangible assets

   763     763     -  
              

Total noninterest expense

   220,245     152,325     44.6  
              

(Loss)/income before provision/(benefit) for income taxes

   (55,931 )   5,540     NM  

Benefit for income taxes

   (24,576 )   (1,355 )   NM  

FTE adjustment

   -     -     -  
              

Net income/(loss)

   ($31,355 )   $6,895     NM  
              

Total revenue-FTE

   $262,569     $168,074     56.2  

Average Balance Sheets

      

Total loans

   $31,996,829     $32,380,987     (1.2 )%

Goodwill

   276,583     275,982     0.2  

Other intangible assets excluding MSRs

   1,274     4,304     (70.4 )

Total assets

   43,889,138     44,266,813     (0.9 )

Total deposits

   2,070,297     1,792,004     15.5  

Performance Ratios

      

Efficiency ratio

   83.88 %   90.63 %  

Impact of excluding amortization of intangible assets

   (1.27 )   (2.04 )  
              

Tangible efficiency ratio

   82.61 %   88.59 %  
              

Other Information

      

Production Data

      

Channel mix

      

Retail

   $5,357,407     $5,919,652     (9.5 )%

Wholesale

   4,204,623     5,572,112     (24.5 )

Correspondent

   2,169,602     3,334,590     (34.9 )
              

Total production

   $11,731,632     $14,826,354     (20.9 )
              

Channel mix-percent

      

Retail

   46 %   40 %  

Wholesale

   36     38    

Correspondent

   18     22    
              

Total production

   100 %   100 %  
              

Purchase and refinance mix

      

Refinance

   $6,715,286     $7,566,542     (11.3 )

Purchase

   5,016,346     7,259,812     (30.9 )
              

Total production

   $11,731,632     $14,826,354     (20.9 )
              

Purchase and refinance mix-percent

      

Refinance

   57 %   51 %  

Purchase

   43     49    
              

Total production

   100 %   100 %  
              

Applications

   $21,209,440     $24,498,985     (13.4 )

Mortgage Servicing Data (End of Period)

      

Total loans serviced

   $155,450,933     $138,620,903     12.1 %

Total loans serviced for others

   121,147,815     101,017,554     19.9  

Net carrying value of MSRs

   1,143,405     921,255     24.1  

Ratio of net carrying value of MSRs to total loans serviced for others

   0.944 %   0.912 %  

 

 

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

WEALTH AND INVESTMENT MANAGEMENT LINE OF BUSINESS

(Dollars in thousands)    (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    March 31
2007
    %
Change3
 

Statements of Income

      

Net interest income 1

   $79,885     $90,042     (11.3 )%

FTE adjustment

   10     16     (37.5 )
              

Net interest income - FTE

   79,895     90,058     (11.3 )

Provision for loan losses2

   5,116     1,059     NM  
              

Net interest income after provision for loan losses - FTE

   74,779     88,999     (16.0 )
              

Noninterest income before securities gains/(losses)

   331,343     285,734     16.0  

Securities gains/(losses), net

   4     (56 )   NM  
              

Total noninterest income

   331,347     285,678     16.0  
              

Noninterest expense before amortization of intangible assets

   237,491     264,001     (10.0 )

Amortization of intangible assets

   4,786     3,663     30.7  
              

Total noninterest expense

   242,277     267,664     (9.5 )
              

Income before provision for income taxes

   163,849     107,013     53.1  

Provision for income taxes

   59,603     38,932     53.1  

FTE adjustment

   10     16     (37.5 )
              

Net income

   $104,236     $68,065     53.1  
              

Total revenue - FTE

   $411,242     $375,736     9.4  

Average Balance Sheets

      

Total loans

   $7,890,128     $8,196,226     (3.7 )%

Goodwill

   332,890     324,577     2.6  

Other intangible assets excluding MSRs

   126,269     117,377     7.6  

Total assets

   8,805,524     9,062,013     (2.8 )

Total deposits

   9,794,424     9,784,131     0.1  

Performance Ratios

      

Efficiency ratio

   58.91 %   71.24 %  

Impact of excluding amortization of intangible assets

   (1.87 )   (1.85 )  
              

Tangible efficiency ratio

   57.04 %   69.39 %  
              

Other Information (End of Period)

      

Assets under administration

      

Managed (discretionary) assets

   $140,439,761     $137,163,001     2.4 %

Non-managed assets

   63,875,844     58,587,002     9.0  
              

Total assets under administration

   204,315,605     195,750,003     4.4  
              

Brokerage assets

   39,279,523     40,568,938     (3.2 )

Corporate trust assets

   4,699,047     8,053,617     (41.7 )
              

Total assets under advisement

   $248,294,175     $244,372,558     1.6  
              

 

 

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

CORPORATE OTHER AND TREASURY

(Dollars in thousands)    (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    March 31
2007
    %
Change2
 

Statements of Income

      

Net interest income

   $184,955     $110,290     67.7 %

FTE adjustment

   5,142     4,184     22.9  
              

Net interest income - FTE

   190,097     114,474     66.1  

Provision for loan losses1

   267,860     (5,022 )   NM  
              

Net interest income after provision for loan losses - FTE

   (77,763 )   119,496     NM  
              

Noninterest income before securities gains/(losses)

   157,806     93,390     69.0  

Securities gains/(losses), net

   (55,580 )   73     NM  
              

Total noninterest income

   102,226     93,463     9.4  
              

Noninterest expense before amortization of intangible assets

   (29,551 )   (10,531 )   NM  

Amortization of intangible assets

   103     221     (53.4 )
              

Total noninterest expense

   (29,448 )   (10,310 )   NM  
              

Income before provision for income taxes

   53,911     223,269     (75.9 )

Provision for income taxes

   14,041     69,257     (79.7 )

FTE adjustment

   5,142     4,184     22.9  
              

Net income

   $34,728     $149,828     (76.8 )
              

Total revenue - FTE

   292,323     207,937     40.6  

Average Balance Sheets

      

Total loans

   $863,869     $571,787     51.1 %

Securities available for sale

   15,349,910     22,736,695     (32.5 )

Goodwill

   714     8,253     (91.3 )

Other intangible assets excluding MSRs

   4,484     5,190     (13.6 )

Total assets

   22,947,336     31,317,901     (26.7 )

Total deposits (mainly brokered and foreign)

   15,515,667     27,116,957     (42.8 )
      
              
     March 31
2008
    December 31
2007
       

Other Information

      

Duration of investment portfolio

   4.3 %   3.8 %  

Accounting net interest income interest rate sensitivity 3:

      

% Change in net interest income under:

      

Instantaneous 100 bp increase in rates over next 12 months

   0.4 %   0.1 %  

Instantaneous 100 bp decrease in rates over next 12 months

   (1.0 ) %   (0.8 ) %  

Economic net interest income interest rate sensitivity 3:

      

% Change in net interest income under:

      

Instantaneous 100 bp increase in rates over next 12 months

   (0.8 ) %   (1.0 ) %  

Instantaneous 100 bp decrease in rates over next 12 months

   0.2 %   0.3 %  

 

 

1

Provision for loan losses represents difference between net charge-offs for 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 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 margin.

 

Page 18


SunTrust Banks, Inc. and Subsidiaries

CONSOLIDATED - SEGMENT TOTALS

(Dollars in thousands)    (Unaudited)

 

 

 

     Three Months Ended  
     March 31
2008
    March 31
2007
    %
Change1
 

Statements of Income

      

Net interest income

   $1,139,867     $1,164,559     (2.1 )%

FTE adjustment

   27,975     23,713     18.0  
              

Net interest income - FTE

   1,167,842     1,188,272     (1.7 )

Provision for loan losses

   560,022     56,441     NM  
              

Net interest income after provision for loan losses - FTE

   607,820     1,131,831     (46.3 )
              

Noninterest income before securities gains/(losses)

   1,118,088     878,886     27.2  

Securities gains/(losses), net

   (60,586 )   20     NM  
              

Total noninterest income

   1,057,502     878,906     20.3  
              

Noninterest expense before amortization of intangible assets

   1,234,429     1,212,455     1.8  

Amortization of intangible assets

   20,715     23,542     (12.0 )
              

Total noninterest expense

   1,255,144     1,235,997     1.5  
              

Income before provision for income taxes

   410,178     774,740     (47.1 )

Provision for income taxes

   91,648     229,731     (60.1 )

FTE adjustment

   27,975     23,713     18.0  
              

Net income

   $290,555     $521,296     (44.3 )
              

Total revenue - FTE

   $2,225,344     $2,067,178     7.7  

Average Balance Sheets

      

Total loans

   $123,263,035     $121,514,895     1.4 %

Goodwill

   6,922,877     6,910,750     0.2  

Other intangible assets excluding MSRs

   298,528     358,648     (16.8 )

Total assets

   176,916,901     181,506,369     (2.5 )

Total deposits

   116,636,924     124,506,372     (6.3 )

Performance Ratios

      

Efficiency ratio

   56.40 %   59.79 %  

Impact of excluding amortization of intangible assets

   (0.93 )   (1.14 )  
              

Tangible efficiency ratio

   55.47 %   58.65 %  
              

 

 

1

“NM” - Not meaningful. Those changes over 100 percent were not considered to be meaningful.

 

Page 19


SunTrust Banks, Inc.
1Q 2008 Earnings Presentation
April 22, 2008


1
The following should be read in conjunction with the financial statements, notes and other information contained in the Company’s 2007 Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. 
This
presentation
includes
non-GAAP
financial
measures
to
describe
SunTrust’s
performance.
The
reconciliation
of
those
measures
to
GAAP
measures
are
provided within this presentation.
In this presentation, net interest income and net interest margin are presented on a fully taxable-equivalent (“FTE”) basis, and ratios
are
presented
on
an
annualized
basis.
The
FTE
basis
adjusts
for
the
tax-favored
status
of
income
from
certain
loans
and
investments.
The
Company
believes
this
measure
to
be
the
preferred
industry
measurement
of
net
interest
income
and
provides
relevant
comparison
between
taxable
and
non-taxable
amounts.
The information in this presentation may contain forward-looking statements.
Statements that do not describe historical or current facts, including statements
about
beliefs
and
expectations,
and
in
particular
the
outlook
statements
provided
at
slide
26-27,
are
forward-looking
statements.
These
statements
often
include
the
words “may,”
“could,”
“will,”
“should,”
“believes,”
“expects,”
“anticipates,”
“estimates,”
“intends,”
“plans,”
“targets,”
“initiatives,”
“potentially,”
“probably,”
“projects,”
“outlook”
or similar expressions.
Such statements are based upon the current beliefs and expectations of SunTrust's 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 SunTrust does not intend 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 SunTrust’s results to differ materially from those
described in the forward-looking statements can be found in the Company's 2007 Annual Report on Form 10-K, in the Company’s Quarterly Reports on Form 10-Q,
and in the Current Reports on Form 8-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:
(1)
adverse
changes
in
general
business
or
economic
conditions
could
have
a
material
adverse
effect
on
our
financial
condition
and
results
of
operations;
(2)
changes
in
market
interest
rates
or
capital
markets
could
adversely
affect
our
revenues
and
expenses,
the
value
of
assets
and
obligations, costs of capital, or liquidity; (3) the fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our
earnings; (4) changes in securities markets or markets for commercial or residential real estate could harm our revenues and profitability; (5) customers could pursue
alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; (6) customers may decide not to use banks to complete their financial
transactions,
which
could
affect
net
income;
(7)
we
have
businesses
other
than
banking,
which
subjects
us
to
a
variety
of
risks;
(8)
hurricanes
and
other natural
disasters may adversely affect loan portfolios and operations and increase the cost of doing business; (9) negative public opinion could damage our reputation and
adversely impact our business; (10) we rely on other companies for key components of our business infrastructure; (11) we rely on our systems, employees and
certain counterparties, and certain failures could materially adversely affect our operations; (12) we depend on the accuracy and completeness of information about
clients
and
counterparties;
(13)
regulation
by
federal
and
state
agencies
could
adversely
affect
our
business,
revenues,
and
profit
margins;
(14)
competition
in
the
financial services industry is intense and could result in losing business or reducing profit margins; (15) future legislation could harm our competitive position; (16)
maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services; (17) our ability to receive dividends from
our
subsidiaries
accounts
for
most
of
our
revenues
and
could
affect
our
liquidity
and
ability
to
pay
dividends;
(18)
significant
legal
actions
could
subject
us to
substantial uninsured liabilities; (19) 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; (20) we depend on the expertise of
key personnel without whom our operations may suffer; (21) we may be unable 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;
(22)
our
accounting
policies
and
methods
are
key
to
how
we
report
financial
condition and
results of operations, and may require management to make estimates about matters that are uncertain; (23) changes in our accounting policies or in accounting
standards could materially affect how we report our financial results and condition; (24) our stock price can be volatile; (25) our disclosure controls and procedures
may fail to prevent or detect all errors or acts of fraud; (26) our trading assets and financial instruments carried at fair value expose the Company to certain market
risks;
(27)
weakness
in
residential
property
values
and
mortgage
loan
markets
could
adversely
affect
us;
(28)
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; and (29) we may enter into transactions with off-balance sheet entities affiliated with SunTrust or its subsidiaries
which may cause us to recognize current or future losses.


2
Financial Performance:  Income Statement Summary
($ in millions, except per share data)
1Q 2008        
4Q 2007            1Q 2007
% Change
Net Interest Income (FTE)
$1,167.8
-2%
-2%
Provision for Loan Losses
560.0
57%                 892%
Noninterest Income
1,057.5
84%
20%
Total Revenue (FTE)
2,225.3
26%                     8%
Total
Noninterest
Expense
1,255.1
-14%
2%
Provision for Income Taxes
91.6
-215%
-60%
Net Income Available to Common Shareholders        283.6
NM                 -45%
Net Income Per Average Common Diluted Share    $   0.81
NM
-44%
EPS of $0.81 Impacted by Increased Provision Expense and
Net Positive Non Core-Items


3
Capital & Liquidity
Solid Capital Foundation and Enhanced Liquidity Position
Tier 1 Capital Ratio
7.25%
Total Capital Ratio
11.00%     
Tangible Equity to Tangible Assets        
6.53%
Tier 1 target remains 7.5%
Issued $685 million enhanced trust preferred securities in February
Planned transactions regarding stock holdings in The Coca-Cola Company
expected to be resolved during 2Q 2008
Anticipated Tier 1 increase of $1 billion or more from The Coca-Cola Company
transactions would add roughly 65bps to Tier 1 ratio on a pro forma basis
Strong liquidity position; Brokered and Foreign deposits down 42%
1.
Estimated
1
1


4
Efficiency and Productivity Program: Goals
$325¹
$350
$530¹
Total
Initial Goals
First Revision
of Goals
Second Revision
of Goals
2007 Actual/Goal
2008 Goal
2009 Goal
$215
(Actual)
$205
$135
2007 expense
savings of
$215
million was 119% of
goal
Increased goals
for
the second time
since program
inception
2009 gross expense
savings represent
11% of 2006
expense base
Expect $500 Million in 2008 Benefits, Up $150 Million; 2009
Program Goal Increased to $600 Million
1.
Gross cost savings goals include approximately $50 million of interest expense savings related to reduced financing costs from disposition
of
corporate
real
estate,
which
will
be
fully
realized
beginning
in
2Q
2008
($ in millions)
$600¹
Total
$500
$215
(Actual)


5
E   Efficiency and Productivity Program: Results
($ in millions)
Gross Savings in 1Q 2008 of $113 Million
Over 50% increase from 4Q
2007 run rate of $75 million
Annualized1Q 2008 savings
level of over $450 million
One-third of increase in run rate
driven by organizational review
Key contributors to achieving
remaining goals include supplier
management, outsourcing, and
process reengineering
$500 2008 Goal
$113 1Q Savings¹
1.  1Q 2008 gross savings includes $10 million in interest expense savings related to disposition of corporate real estate
500
400
300
200
100
2


6
Risk Review:  Market Update
Volatility in the credit
markets has been
unprecedented
Prices of these indices
declined during the
quarter
Corporate and
mortgage credit markets
have taken the brunt of
the volatility
Source: Bloomberg
Source: Markit, SunTrust
ABX
06-2
AAA:
Synthetic
Index
of
AAA-rated
benchmark
subprime
RMBS
from
the
latter
half
of
2006
CMBX 06-2 AAA: Synthetic Index of AAA-rated benchmark CMBS from the latter half of 2006
LCDX: Synthetic Index of syndicated secured loans from the latter half of 2007
CDX:
Synthetic
Index
referenced
to
125
investment
grade
entities
domiciled
in
North
America
Structured Credit Index Prices - Q1 2008
64
68
72
76
80
84
88
92
96
100
CMBX 06-2 AAA
LCDX 9 5YR
ABX 06-2 AAA
5-yr CDX -
Q1 2008
70
80
90
100
110
120
130
140
150
160
170
180
190
200


7
Risk Review:  Acquired Securities Portfolio
Aggressively Managing Trading Assets; 59% Reduction in Exposure
to Acquired Securities
We expect to sell additional securities
on an opportunistic basis; current
market environment continues to
remain challenging
Aggregate portfolio reduction will
continue, albeit at a slower rate. At a
minimum, we expect portfolio
exposure to be reduced below $1.4
billion by end of Q2
Mark-to-Market accounting
1.  Grand Horn is a AAA-rated security arising from the securitization of a commercial leveraged loan warehouse
Carrying         Acquisition
Value
Value
3/31/08
Q4 2007
SIV
$  685
$1,478
RMBS
242              1,042
CDO
287
429
Other ABS
46                
148
CLO
39                 
47
Subtotal             
1,299
3,144
Grand Horn
CLO
1
323
359
Total
$1,622
$3,503
($ in millions)


8
Risk Review:  Available for Sale Portfolio
SunTrust Maintains a High Quality AFS Investment Portfolio
Portfolio Quality
High quality with 91% rated
AAA
Short duration of 4.3 years
Unrealized gain of $171 million
3.9%
1.  Excludes equity securities with a market value of $3.4 billion
2.  Excludes unrealized gains of $171 million on debt securities
AAA, 91%
AA, 4%
A & Below, 3%
NR, 2%
$12.3 Billion AFS Debt Securities
As of March 31, 2008
1,2


9
Credit Perspective:  Asset Quality Metrics
Annualized Charge-Offs of 97bps, ALLL Increased to 1.25%, NPL
ratio up to 1.67%, but Early Stage Delinquency Rate Stable
$ in Millions
03/31/2008
12/31/2007
Variance
Total Loans
$123,713.2
$122,319.0
$1,394.2
Allowance for Loans & Lease Losses
1,545.3
1,282.5
262.8
Net Charge-offs
297.2
168.0
129.2
Provision Expense
560.0
356.8
203.2
NPAs
2,320.0
1,655.5
664.5
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NPLs
to Total Loans
1.67%
1.19%
0.48%
NPAs
to Total Loans + OREO/OA
1.87%
1.35%
0.52%
ALLL to NPLs
74.70%
87.83%
-13.12%
ALLL to Loans
1.25%
1.05%
0.20%
NCOs (annualized to Average Loans)
0.97%
0.55%
0.42%
30-
89
Days
Past
Due
1.52%
1.53%
-0.01%


10
Credit Perspective:  Loan Portfolio as of 1Q 2008
Product Category
Nonaccrual
$MM's
Charge-Off
Rate
Residential Mortgages /
1.29%
Home Equity Lines
2.64%
Construction
520.7
        
0.74%
Commercial
97.9
         
0.35%
Commercial Real Estate
64.3
         
0.00%
Consumer
46.9
         
1.26%
$2,038.0
0.97%
$1,308.2
Growth
in
Nonaccrual
Loans
driven
by
Residential
Mortgage
and
Construction
Loans
Residential Mortgage & Home Equity combined represented 39% of total loans but they
comprised
64%
of
total
Nonaccrual
Loans
Loan Portfolio -
$123,713 million
Nonaccrual Loans -
$2,038 million
Commercial,  $37,307
Commercial Real Estate, 
$12,894
Retail Consumer & Credit
Card,  $12,305
Construction,  $12,981
Home Equity,  $15,134
Residential Mg,  $33,092
Consumer -
Direct   $4,192
Consumer -
Indirect $7,305
Credit Card             $  808


11
Performance in the Residential Mortgage Portfolio is Stabilizing
1. Does not include nonaccruals
2.00%
6.50
8.30
3.30
1.60
0.80
1.40%
12/31/07
60 + DLQ
1
1.77%
8.92
8.28
3.71
1.35
0.50
1.28%
03/31/08
60 + DLQ
1
$1,073.4
60.5
241.8
121.7
77.7
41.7
$  530.0
Total
$NPLs
Credit Quality Metrics
79%
100%
$ 33,092
Total
97
1.4
470
Alt-A 2
nd
77
3.3
1,085
Alt-A 1
st
84
4.8
1,575
Lot Loans
92
12.3
4,080
Prime 2
nd
Insured
75 
10.9
3,625
Home Equity Loans
77%
67.3%
$ 22,257
Core Portfolio
Orig
WACLTV
%
03/31/08
Balance
Loan Type
Portfolio Profile
Credit Perspective:  Residential Mortgages
Residential Mortgages $33,092 million
(As of 03/31/08, $ in millions)


12
Credit Perspective:  Residential Mortgages
(As of 03/31/08, $ in millions)
We Have Already Recognized Expected Losses on 60% of the
Residential Mortgage NPL Balance
1. Most NPL’s
in this category are claims in process.  A small number of losses were recognized due to denied claims.
2. Includes Home Equity NPL’s
of $41.7 million not shown in above table
NPL’s
with Write-downs
Loan Type
Balance
before
write-
down
-
Amount
of write-
down
=
NPL
Balance
+
NPLs
not
yet written
down  
=
Total
NPL’s
2
% Loss
Severity
Core Portfolio
$ 362.6
$ (31.7)
$ 330.8
$ 199.2
$ 530.0
8.8%
Prime 2
nd
Insured
1
53.6
(10.8)
42.8
35.0
77.7
NA
Lot Loans
108.7
(29.9)
78.8
42.9
121.7
27.5
Alt-A 1
st
187.5
(20.9)
167.0
74.8
241.8
11.1
Alt-A 2
nd
150.1
(121.5)
28.6
31.9
60.5
80.9
Total
$ 862.8
$ (214.8)
$ 648.0
$ 383.7
$ 1,073.4


13
Credit Perspective:  Home Equity Lines
Home Equity Lines $15,134 million
(As of 03/31/08, $ in millions)
1.  Excludes 3rd
party originated
2.  Excludes 3rd party originated and CLTV 90+%
3.  Excludes 3rd party originated, CLTV 90+% and Florida (81-90%)
4.  Annualized first quarter rate
Performance Issues Largely Confined to 3
Party Originated, 
CLTV’s
of >80% for Florida, and >90% for States Other Than
Florida
$15,134
9,409.5
1,162.2
2,705.2
$1,857.1
03/31/08
Balance
2.48%
1.55%
2.64%
723
74%
100.0%
Total
0.87
2.56
1.76
4.10%
%
NPL
0.94
4.24
3.34
9.11%
Q1
C/O
4
%
Credit Quality Metrics
1.46
722
65
62.2
All Other
3
3.43
717
86
7.7
Florida
2
(81-90%
LTV)
2.87
736
95
17.9
CLTV > 90%
1
5.71%
715
86%
12.2%
3
Party
Originated
30 +
DLQ
Current
WAFICO
Orig
WACLTV
%
of
Portfolio
Type
Portfolio Profile
rd
rd


14
Credit Perspective:  Construction
1.  Annualized first quarter charge-off ratio
(As of 03/31/08, $ in millions)
Charge-offs increased during Q1 primarily in Construction-to-
Perm loans. Increase in NPLs
driven by Construction-to-Perm and
Residential
Construction $12,981 million
4.0
39
117.8
0.42
666
26
16
2,135
Residential A&D
Commercial
0.2
3
8.5
0.00
1, 503
27
26
3,381
Construction
0.7
0
9.6
0.00
788
26
4
589
Commercial A&D
37%
39
42
50%
FL
NPL
%
$ 12,981
1,256
2,543
$ 3,077
03/31/08
Balance
4.5%
$520.6
0.74%
28%
100%
Total
32.9
189.0
$162.8
$
NPL
0.00
1.23
1.66%
Q1
C/O¹
%
Credit Quality Metrics
3.7
795
21
10
Raw Land
3.2
400
30
20
Construction
Residential
11.6%
477
31%
24%
Construction Perm
%
30 +
DLQ
Avg.
Size
$000’s
%
FL
%
of
Portfolio
Type
Portfolio Profile


15
Credit Perspective:  Loss Mitigation Actions Taken or Planned
Residential builder portfolio
Reviews of exposure $
$1MM
Client prioritization discipline
Reduced exposure $1.4B in 2007
New Special Assets group dedicated to Real Estate
Three geographic units
Significant increase in workout officers
Handles homebuilders, large conventional
mortgages and construction to perm mortgages
Wholesale portfolio reviews
Proactive reviews of Wholesale segments of
portfolios
Monthly central credit review of relationships $
$100MM
Targeted reviews on industries with signs of
deterioration
Introduced new policy on:
Direct exposure
Indirect exposure
Exception approval
Weekly conference calls on market conditions
Repeated and on-going Home Equity policy changes:
Curbed Wholesale/broker channel originations
Eliminated CLTVs
> 89.9% in broker channel
Additional LTV restrictions for
“Declining Markets”,
2   
homes
and condos
DTI and Credit score restrictions
Mortgage / Home Equity
Wholesale
Centralized construction to perm administration
Tightened underwriting standards for C/P and lot loans
(restricting LTV, DTI and property type, size and channel)
Tightened underwriting standards on Agency production
Enhancements to automated dialer calling strategies
Standardized more rigorous charge-off procedures
Significantly expanded workout/collections staff
Implemented aggressive loss mitigation program to keep
borrowers in their homes and avoid foreclosure
nd


16
Financial Performance: Loans & Deposits
($ in millions, average balances)
1Q 2008
4Q 2007
4Q 2007
1Q 2007
% Change
Annualized
Commercial
$   36,375
4%
17%
7%
Real Estate Home Equity Lines
14,603
1
6                         6
Real Estate Construction
12,450
-6                      -24                       -7
Real Estate 1-4 Family
32,440
1                         6                       -5
Real Estate Commercial
13,113
2                         7                        2
Consumer –
Direct
4,063
3                       12             
-4
Consumer –
Indirect
7,646                         -3                     -12                       -6
Credit Card
774
12
49
109
Total Loans
121,464    
1                        5                        0
Noninterest-Bearing Deposits
20,616
-2                       -6                      -6
NOW Accounts
21,981
6                      24                      11
Money Market Accounts
25,343                           5                     18                      15
Savings
3,917
-6                     -25                     -22
Consumer Time
17,031
-1                       -3                        1
Other Time
12,280
-1
-2
1
Total Consumer and Commercial Deposits
101,168                           2                     
6                         3 
Brokered & Foreign Deposits
15,469
-2
-6
-42
Total Deposits
$116,637
1%
4%                     -6%


17
Financial Performance:  Net Interest Margin
3.02%
3.10%
3.18%
3.07%
3.13%
1Q 2007
2Q 2007
3Q 2007
4Q 2007
1Q 2008
Margin of 3.07%, Up 5 bps from 1Q 2007, but Down 6 bps from
4Q 2007
Margin pressure from deposit pricing and
growing NPAs
continues
Seeing early signs of stabilizing DDA
Further expected Fed rate reductions,
pricing pressure, and growing NPAs
will
continue to create downward pressure on
net interest margin
As a result we expect some additional
compression in 2Q


18
Financial Performance:  Provision
Provision
$560.0 
$356.8           $147.0          $104.7
Net Charge-Offs
$297.2         $168.0           $103.7          $  88.3
Net Charge-Off Ratio
0.97%
0.55%           0.34%           0.30%
Net ALLL Increase          
$262.8         $188.8           $  43.3         $   16.4
Allowance to Loan Ratio         
1.25%          1.05%            0.91%           0.88%
1Q 2008
4Q 2007
3Q 2007
2Q 2007
($ in millions)
Provision Expense Drives 20 bps Increase in Allowance to
Loan Ratio


19
Financial Performance:  Noninterest Income
($ in millions)
Noninterest Income up 20% over 1Q 2007 and 13% Excluding Net
Gains from Both Periods
1Q 2008
1Q 2007
Change
Noninterest
Income
$1,058
$879
20%
Net Adjustments¹
71
2
Adjusted Noninterest Income           987
$877
13%
Reported
noninterest
income
up
20%
versus
1Q
2007
driven
by
solid
performance
in
most
fee
income businesses
Adjusting both years’
results for net gains results in a 13% increase
1.  Adjustment detail included in appendix includes securities gains and losses, Visa and Lighthouse gains, and impacts from adoption of FAS 157/159 and
SAB 109
$
%


20
Financial Performance:  Noninterest Expense
Core Expenses in 1Q 2008 Down Versus 4Q 2007 and Flat
Compared to 1Q 2007
Year over year adjusted expense flat in spite of $36 million in increased credit costs
Sequential quarter adjusted expenses are down even after absorbing $35 million seasonal increase
in employee benefits expense
1. Adjustment detail included in appendix
2. Includes operating losses, credit and collections, and other real estate expense
Noninterest
Expense
$1,255             $1,455
$1,236
-14%            2%
Net Adjustments
-24
145
-45
Adjusted Noninterest
Expense             $1,279   
$1,310
$1,281  
Change          Change
1Q 2008
4Q 2007
1Q 2007
4Q 2007
1Q 2007
%
%
($ in millions)
-2%          0%
2
1


21
Summary
Increasing capital and improving liquidity
Raising E   goals
Aggressively managing trading asset exposure
Minimizing new credit risk and mitigating existing risk
Growing deposits and prudently increasing loans
Manageable level of margin pressure
Solid noninterest income trends
Strong expense management results
2


22
Appendix


23
Items Impacting Financial Performance
Revenue
Visa IPO Gain
Other Income
$  86
$    -
Market Valuation Write-downs
Trading Income
(47)
(477)
Market Valuation Write-downs
Mortgage Production Income
(53)
(78)
Lighthouse Sale Gain
Other Income
89
-
Corporate Real Estate Gain
Other Income
37
119
SAB 109
Mortgage Production Income
18                                -
MSR Sale
Mortgage Servicing Income                       -
19
Other-Than-Temporarily Impaired: AFS
Securities Gains/(Losses)       
(64)                               -
Expense
Seasonal Employee Benefits
Employee Comp
(35)
-
Net E 
Nonrecurring
Miscellaneous
(5)
(10)
Debt Retirement
Other Expense                                           (12)                              -
Visa Litigation
Other Expense
39                            (77)
Affordable Housing Expense
Other Expense
(2)
(58)
Income Statement Category
1Q 2008  
Estimated 
Impact                 
4Q 2007           
Estimated 
Impact
($ in millions)
2


24
Noninterest Income Reconciliation
($ in millions)
%                  %
Change        Change
1Q 2008
4Q 2007
1Q 2007
4Q 2007
1Q 2007
Total Noninterest Income
$1,058        $   576
$879
84%
20%
Securities Gains/(Losses)
4                 6
-
AFS ABS OTTI –
Securities Losses                 -64                -
-
VISA IPO
86
-
-
Market Valuation Write-downs                       -287
-561                    -9                  
Trading
STI Debt Valuation Write-up                            240               84             
-6 
Trading
Market Valuation Write-downs                         -53              -78
-27
Mortgage Production
Lighthouse Gain
89                  -
32
Corporate Real Estate Gains                             37     
119                     -
FAS 157/159 –
Trading                                          -
-
88 
FAS 157/159 –
Mortgage Production                  -
-
-42
FAS 91 –
Mortgage Production¹
-
-
-33
SAB 109 –
Mortgage Production                      18
-
-
Net Adjustments                                                 
71
-430
2
Adjusted Noninterest Income                      $  987        $1,006              $876             -2%           13%
1. FAS 91 deferral elimination adjustments is reflected as an increase to 1Q 2007 to make comparable to future quarters


25
Noninterest Expense Reconciliation
1. FAS 91 deferral elimination increased expenses beginning
in 2Q 2007.  1Q 2007 expenses adjusted upward to provide comparability to
subsequent quarters
Noninterest Expense
$1,255             $1,455
$1,236              -14%              2%
Net E   Nonrecurring
5
10                     2
FAS 91 Deferral
-
-
-37
Visa Litigation Accrual
-39                     77
-
Debt Retirement
12
-
-
Affordable Housing Write-down
2                     58                    -
Tax Reserve Release
-4
-
-10
Net Adjustments
-24
145
-45
Adjusted
Noninterest
Expense
$1,279
$1,310
$1,281                -2%            0%
Change        Change
1Q 2008        4Q 2007        1Q 2007
4Q 2007
1Q 2007
%
%
($ in millions)
2
1


26
Outlook
Economic Outlook
Expect a weak economy in the short-term with the possibility that weakness could extend into 2009
Expect home values to decline further
Risk
Looking at current NPL’s and delinquency queues, and recognizing that our foresight is constrained by economic uncertainty, we
expect
charge-offs
to
increase
in
the
2nd
quarter
by
15%-20%
from
the
$300
million
recorded
in
the
1st
quarter.
Deterioration
has
slowed and we believe ultimate losses will be manageable within our current capital, liquidity and earnings framework.
Looking at the portfolio trends and potential future scenarios, we believe we should experience lower charge-offs in the second half of
the year provided that the economy and home prices do not deteriorate too far or fast from here.  
Expect that some additional reserve building will be required; however, after increasing the reserve ratio by a combined 34 basis points
in
the
last
two
quarters,
including
20
bps
in
the
1
quarter,
we
expect
that
future
quarterly
increases
will
be
at
a
much
slower
pace.
94%
of
the
residential
mortgage
portfolio
shows
a
decrease
in
60+
delinquencies
we
view
this
as
a
leading
indicator
of
potentially
lower future NPL’s
and subsequent charge-offs.
We expect the home equity line portfolio to continue to produce significant charge-offs at least for the next few quarters as 30+
delinquency has ticked up since December and as home values remain soft.  There are some mitigating factors which suggest charge-
offs could stabilize: reductions in the prime rate are materially lowering payments, approximately two-thirds of the portfolio continues to
perform
well,
and
while
30+
delinquency
ticked
up
from
December,
the
rate
of
increase
has
slowed. 
We expect the construction to permanent portfolio to rapidly decline over the next year.  Charge-offs in the book should peak in the
next 3 to 6 months and decline after that as the portfolio runs-off.
Residential construction loans will continue to show increasing problems in our softer markets.
Aggressively managing trading assets, reducing exposure to acquired securities.  Aggregate portfolio reduction will continue, albeit at a
slower rate; at a minimum, exposure is expected to be reduced below $1.4 billion by the end of the second quarter.  We believe we are
carrying these securities at appropriate values; however, markets remain volatile and further valuation adjustments up or down are
possible.
1.
Actual
results
could
differ
materially
from
those
contained
in
or
implied
by
such
statements
-
a
list
of
important
factors
that
could
affect
actual
results
are
listed on slide 1
st
1


27
Outlook
Balance Sheet
There are early indications of DDA stabilization
Early signs indicated a cyclical shift in commercial client balances out of sweep accounts and into DDAs
Long-term Tier 1 target remains 7.5%
Expect transactions involving The Coca-Cola Company equity holdings to be complete in the second quarter of 2008
Anticipate minimum Tier 1 capital increase of approximately $1 billion from The Coca-Cola Company equity holdings
transactions, which would add roughly 65 basis points to the Tier 1 ratio on a pro-forma basis
Anticipate reassessing the appropriateness of long-term Tier 1 target of 7.5% in a post transaction environment
Revenue & Expense
Realization of the full impact of the first quarter Fed rate reductions, continuing deposit pricing competition, growing NPA’s,
and the potential for additional Fed cuts all point to further margin compression in the second quarter
Anticipate
stabilization
and
possible
expansion
of
margin
in
the
second
half
of
2008
if
deposit
pricing
pressures
and
volumes improve, despite the continuing potential for rising NPA’s
Expect to achieve run-rate savings of $500 million in 2008
Increased overall E  
program
goal to $600 million in run-rate savings during 2009
The
bulk
of
the
growth
in
E
savings
going
forward
will
be
generated
by
Supplier
Management,
Outsourcing,
and
Process
Reengineering
1.
Actual
results
could
differ
materially
from
those
contained
in
or
implied
by
such
statements
-
a
list
of
important
factors
that
could
affect
actual
results
are
listed on slide 1
1
2
2