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SunTrust Reports 5% Growth In Earnings Per Share; Company Cites Expense Control as Key Priority for Balance of 2002

Apr 10, 2002

SunTrust Banks, Inc. today reported operating income for the first quarter of 2002 of $344.7 million or $1.20 per diluted share, up 5% from the $1.14 per diluted share earned in the first quarter of 2001.

Operating income for the first quarter of 2002 excludes $39.8 million in after-tax merger charges associated with SunTrust's acquisition of the Florida franchise of Huntington Bancshares, Inc., which closed on February 15, 2002. The $39.8 million of after-tax merger charges consists of $16 million ($10.4 million after tax) in merger and integration expenses and $45.3 million ($29.4 million after tax) in additional provision expenses to bring the former Huntington-Florida loan loss reserves to SunTrust standards. Including these one-time charges, reported net income was $304.9 million, or $1.06 per diluted share. For the quarter, reported return on assets was 1.21% and return on average realized equity was 18.37%.

"Our first quarter results underscore SunTrust's ability to deliver consistent earnings growth even as we manage through the higher credit quality costs and lower loan-related revenues associated with a weak economy," said L. Phillip Humann, SunTrust's Chairman, President and Chief Executive Officer. "Also during the quarter, we saw increasing evidence of our enhanced capacity to generate stronger revenue growth once the economy rebounds. At this point, however, we do not anticipate a resumption of vigorous economic expansion this year. Therefore, more stringent control of operating expenses has now moved to center stage as a key corporate priority for the balance of 2002."

Fully taxable net interest income was $807.7 million and the net interest margin was 3.51% in the first quarter. Average loans for the first quarter were $69.7 billion. Adjusting for securitizations, average loans were down 1% from the first quarter of 2001, and excluding the impact of the Huntington transaction, average loans would have been down 3% from the first quarter of 2001. Reflecting a concerted drive to increase deposits, average consumer and commercial deposits for the first quarter were $62.2 billion, up 14% from the first quarter of 2001. Excluding the impact of Huntington, deposits were up 10% from the first quarter of 2001.

Noninterest income, excluding securities gains and losses, was $551.8 million in the quarter, up 18% from the first quarter of 2001. The increase is in part attributable to improvements in the performance of SunTrust's trust and investment management businesses. Excluding the impact of Huntington and securities gains, noninterest income was up 17%. Noninterest income, without net securities gains, represented 41% of total revenue, up from 37% in the first quarter of 2001. Including net securities gains and the impact of Huntington, total noninterest income was $615.3 million for the quarter, also up 17% from the first quarter of 2001.

Total noninterest expense in the quarter was $837.6 million. Included in first quarter expenses was $36.2 million of additional operating expenses related to the expansion of SunTrust's Florida franchise resulting from the Huntington merger. Excluding those operational expenses, total noninterest expenses would have declined 3% from fourth quarter levels. The Company spent $16.8 million ($10.9 million after tax) or $0.04 per diluted share in the first quarter on its "One Bank" initiative of systems enhancements that will yield future operating efficiencies.

In line with SunTrust's conservative approach to managing credit quality, net charge-offs in the first quarter were $118.6 million or 0.69% of average loans, up from 0.50% in the fourth quarter of last year. The increase in charge-offs is entirely attributed to Enron and Enron-related credits. The provision for loan losses was $163.6 million for the quarter and includes $45.3 million of additional, one-time, provision expense related to the Huntington-Florida merger.

Nonperforming assets were $552.7 million at quarter end or 0.78% of loans and foreclosed properties, down 5% from $578.8 million or 0.84% of loans and foreclosed properties at fourth quarter end. Nonperforming assets at March 31, 2002 included $534.2 million in nonperforming loans and $18.5 million in net other real estate owned. The allowance for loan losses at March 31, 2002 was $927.6 million, up from $867.1 million in the fourth quarter. The allowance for loan losses represented 1.31% of loans and 173.6% of nonperforming loans. SunTrust noted its level of nonperforming assets has been substantially below industry averages over the long term, and current levels remain much better than the most recently published industry averages.

At March 31, 2002, SunTrust had total assets of $106.2 billion. Equity capital of $8.6 billion represented 8.07% of total assets. Book value per share was $29.97, up 12% from March 31, 2001.

To view the corresponding financial tables and information, please refer to the Investor Relations section located under "About SunTrust" on our website at . This information may also be directly accessed via the quick link entitled "Earnings Release" located at the lower right hand corner of the SunTrust homepage.

SunTrust management will host a conference call on April 10 at 9:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals can access the call by dialing 1-888-935-0260 (Verbal Passcode 041002; Leader: Gary Peacock). Individuals calling from outside the United States should dial 1-712-271-0939 (Verbal Passcode 041002; Leader: Gary Peacock). A replay of the call will be available beginning the afternoon of April 10 by dialing 1-800-739-2831 (domestic) or 1-402-220-0358 (international).

Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust website at . The webcast will be hosted under "Investor Relations" located under "About SunTrust" and may also be accessed directly on the SunTrust home page by clicking on the blue phrase "1st Qtr. Results and Webcast links." Beginning April 11, 2002, listeners may access an archived version of the presentation located on the "Investor Relations" page. A link to the Investor Relations page is also found in the footer of the SunTrust home page.

SunTrust Banks, Inc., headquartered in Atlanta, Georgia, is one of the nation's largest commercial banking organizations. The company operates through an extensive distribution network in Alabama, Florida, Georgia, Maryland, Tennessee, Virginia and the District of Columbia and 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 and capital markets services. SunTrust's Internet address is .

This press release may contain forward-looking statements as defined by federal securities law which involve significant risks and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in the economic scenario: significant changes in regulatory requirements; and significant changes in securities markets. SunTrust does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.


SOURCE: SunTrust Banks, Inc.

Contact: media, Barry Koling, +1-404-230-5268, or investors, Gary
Peacock, +1-404-658-4879, both of SunTrust Banks, Inc.