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SunTrust Reports Record Net Income and Earnings Per Share Earnings Per Share Up 13%

PRNewswire
ATLANTA
Jul 6, 2001

SunTrust Banks, Inc. today reported record net income for the second quarter of 2001 of $347.1 million, up 9% from the second quarter of 2000. Net income per diluted share was $1.19, up 13% from the $1.05 per diluted share earned in the second quarter of 2000. For the quarter, reported return on assets was 1.38% and return on average realized equity was 22.43%.

"We're pleased to deliver another quarter of solid earnings growth despite a softening economy," said L. Phillip Humann, Chairman, President and Chief Executive Officer of SunTrust. "During the second quarter, we experienced strong revenue growth of 9% with effective cost management, continued to build on our core earnings momentum, and demonstrated superior credit quality. We believe our second quarter performance further underscores the financial strength supporting our proposal to merge with Wachovia."

For the first six months of 2001, net income was $684.7 million, up 8% from the $636.9 million earned in the first six months of 2000. Net income per diluted share was $2.33, up 11% from the first six months of 2000.

Fully taxable net interest income was $834.1 million in the second quarter, up 7% from the second quarter of 2000. The net interest margin for the quarter was 3.61%, up 4 basis points from the first quarter. For the first six months of 2001, fully taxable net interest income was $1,649.4 million, up 5% from the first six months of 2000.

Average loans for the second quarter were $69.9 billion and average earning assets were $92.6 billion. Adjusting for recent securitizations, average loans were up 4% from the second quarter of last year. Average deposits for the second quarter were $56.3 billion (excluding foreign and brokered deposits), up an annualized 13% from the first quarter.

During the strong quarter, the Company reinvested revenues to improve its risk profile. The Company repositioned its balance sheet to reduce risk to rising interest rates. In doing so, the Company recorded $27.4 million of securities gains as it shortened the average life of its investment portfolio. These gains were offset by a $27.4 million loss ($17.8 million after-tax) as the Company repaid long-term debt in order to lengthen the maturity of its market borrowings. In accordance with generally accepted accounting principles, the loss on the early extinguishment of debt was reported as an extraordinary item and reflected separately on the income statement on an after-tax basis. To enhance its credit risk profile, the Company sold the assets and liabilities of SunTrust Credit Corp. at an $11.3 million after-tax loss. SunTrust Credit Corp. made higher yielding loans to small businesses with limited access to credit.

Noninterest income, excluding securities gains and losses, was $494.1 million in the quarter, up 12% from the second quarter of 2000. Total noninterest income, including net securities gains, was $521.8 million for the quarter, up 18% from the second quarter of 2000. Noninterest income represented 38% of total revenue or 37% without net securities gains. For the first six months of 2001, noninterest income, excluding securities gains and losses, was $962.9 million, up 10% from the first six months of 2000.

Total noninterest expense in the quarter was $763.8 million. During the quarter, the Company spent $14.7 million ($9.6 million after-tax) or $.03 per diluted share on its One Bank initiative for enhancements to customer based systems that will yield operating efficiencies in the future. For the first six months of 2001, the Company spent $21.7 million ($14.1 million after-tax) or $.05 per diluted share on this initiative. Also included in the noninterest expenses for the second quarter was $17.4 million ($11.3 million after-tax) or $.04 per diluted share in expenses associated with the SunTrust Credit Corp. sale. These expenses were comprised of $12.7 million in additional goodwill amortization and $4.7 million in other expenses. The Company's efficiency ratio was 56.33%, an improvement from the 58.87% reported in the second quarter of 2000. For the first six months of 2001, total noninterest expenses were $1,506.5 million, up 6% from the first six months of 2000.

The Company maintained its standards for high credit quality with net charge-offs in the second quarter of $38.8 million or .22% of average loans down from .38% in the first quarter. The provision for loan losses was $39.6 million for the second quarter. For the first six months of 2001, annualized net charge-offs were .30% of average loans, well below industry peers.

Nonperforming assets were $431.4 million at quarter end or .63% of loans and foreclosed properties. Total nonperforming assets were up 17% from the first quarter end, and despite continued signs of weakness in the overall economy, nonperforming assets were only slightly higher than the Company's yearend 2000 total of $428.3 million. The Company continues to sell nonperforming assets in the secondary loan market as opportunities permit. Nonperforming assets at June 30, 2001 included $411.2 million in nonperforming loans and $20.3 million in net other real estate owned. The allowance for loan losses at June 30, 2001 was $866.1 million and represented 1.26% of loans and 211% of nonperforming loans.

At June 30, 2001, SunTrust had total assets of $100.8 billion. Equity capital of $7.9 billion represented 7.81% of total assets. Book value per share was $27.29, up 9% from the second quarter 2000.

Please refer to the Investor Relations section of our website at http://www.suntrust.com/ for the corresponding financial tables and information.

SunTrust Banks, Inc., based in Atlanta, Georgia, is the nation's 9th largest commercial banking organization. The Company provides a wide range of services to meet the financial needs of its growing customer base in Alabama, Florida, Georgia, Maryland, Tennessee, Virginia, and the District of Columbia. Its primary businesses include traditional deposit and credit services as well as trust and investment services. Through various subsidiaries the Company provides credit cards, mortgage banking, insurance, brokerage and investment services.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, (i) statements about the benefits of a merger between SunTrust and Wachovia Corporation, including future financial and operating results, cost savings and accretion to reported and cash earnings that may be realized from such merger; (ii) statements with respect to SunTrust's plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. These statements are based upon the current beliefs and expectations of SunTrust's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the businesses of SunTrust and Wachovia may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; (3) revenues following the merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption, including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected following the merger; (5) the regulatory approvals required for the merger may not be obtained on the proposed terms or on the anticipated schedule; (6) the failure of SunTrust's and Wachovia's stockholders to approve the merger; (7) competitive pressures among depository and other financial institutions may increase significantly and may have an effect on pricing, spending, third-party relationships and revenues; (8) the strength of the United States economy in general and the strength of the local economies in which the combined company will conduct operations may be different than expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the combined company's loan portfolio and allowance for loan losses; (9) changes in the U.S. and foreign legal and regulatory framework; and (10) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on the combined company's capital markets and asset management activities. Additional factors that could cause SunTrust's results to differ materially from those described in the forward-looking statements can be found in SunTrust's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission and available at the SEC's Internet site (http://www.sec.gov/). All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to SunTrust or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. SunTrust does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

On May 14, 2001, SunTrust delivered a merger proposal to the Board of Directors of Wachovia. Subject to future developments, SunTrust intends to file with the SEC a registration statement at a date or dates subsequent hereto to register the SunTrust shares to be issued in its proposed merger with Wachovia. Investors and security holders are urged to read the registration statement (when available) and any other relevant documents filed or to be with the SEC, as well as any amendments or supplements to those documents, because they contain (or will contain) important information. Investors and security holders may obtain a free copy of the registration statement (when available) and such other documents at the SEC's Internet web site at http://www.sec.gov/. The registration statement (when available) and such other documents may also be obtained free of charge from SunTrust by directing such request to: SunTrust Banks, Inc., 303 Peachtree Street, N.E., Atlanta, GA 30308, Attention: Gary Peacock (404-658-4753).

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SOURCE: SunTrust Banks, Inc.

Contact: Gary Peacock, Jr. of SunTrust Banks, Inc., 404-658-4879


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