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SunTrust Reports Second Quarter Earnings

In Uncertain Economy Solid Results Reflect Core Business Strength, Conservative Business Approach

Jul 10, 2002

SunTrust Banks, Inc. today reported net income and operating income for the second quarter of 2002 of $343.7 million or $1.20 per diluted share, up 1% from the $1.19 per diluted share earned in the second quarter of 2001. For the quarter, reported return on assets was 1.33% and return on average realized equity was 19.97%.

"We are pleased to have delivered another quarter of solid, core business- driven earnings even as a sluggish economy continues to have a dampening effect on the banking industry overall, notably when it comes to loan-related revenue growth," said L. Phillip Humann, SunTrust's chairman, president and chief executive officer. "In general, the quality of SunTrust's second quarter results underscores the validity of our conservative approach to our business, especially in times like these. In particular, the quarter reflected the positive earnings impact of our strategy of selective investment in key lines of business to complement our traditional banking activities. We also began to see the early results of our recently intensified focus on controlling operating expense growth."

For the first six months of 2002, operating income was $688.4 million or $2.40 per diluted share, up 3% from the first six months of 2001. Operating return on assets was 1.35% and operating return on average realized equity was 20.37%. Operating basis items excludes $39.8 million in previously reported after-tax merger charges taken in the first quarter associated with SunTrust's acquisition of the Florida franchise of Huntington Bancshares, Inc., which closed on February 15, 2002.

Fully taxable net interest income was $823.1 million and the net interest margin was 3.48% in the second quarter. Average loans for the second quarter were $71.0 billion, up only slightly from $69.9 in the second quarter of 2001, reflecting weak loan demand due to the uncertain economy. Excluding the impact of the Huntington transaction, average loans were down 2% from the second quarter of 2001.

Reflecting SunTrust's continuing focus on deposit generation, average consumer and commercial deposits for the second quarter were $65.5 billion, up 16% from the second quarter of 2001. Adjusting for the impact of Huntington, deposits were up 8% from the second quarter of 2001.

Non-interest income, excluding securities gains and losses, was $570.1 million in the quarter, up 15% from the second quarter of 2001. The increase is in part attributable to improvements in the performance of SunTrust's trust and investment management businesses and increased success in the Company's corporate and investment banking-related fee businesses. In part, these results reflect the positive impact of selective acquisitions in both business lines, in line with SunTrust's strategic priority of enhancing its fee-income generation capabilities. Adjusting for the impact of Huntington and excluding securities gains, non-interest income was up 13% compared to the second quarter of 2001. Non-interest income, without net securities gains, represented 41% of total revenue, up from 37% in the second quarter of 2001. Including net securities gains, total non-interest income was $625.8 million for the quarter, up 20% from the second quarter of 2001.

Total non-interest expense in the quarter was $818.1 million. The Company spent $9.4 million ($6.1 million after tax) or $0.02 per diluted share in the second quarter on its "One Bank" initiative of systems enhancements that will yield future operating efficiencies. The efficiency ratio for the second quarter of 2002 was 56.46, which represents a significant reduction from 58.35 in the second quarter of 2001 and 58.87 in the first quarter of 2002. The improvement in the efficiency ratio reflects the early impact of a program of expense control measures instituted in March 2002. SunTrust said it anticipates further reduction in expense growth as these measures more fully take hold within the organization in subsequent quarters.

In line with SunTrust's conservative approach to managing credit quality, net charge-offs in the second quarter were $109.7 million or 0.62% of average loans, down from 0.69% in the first quarter of this year. The provision for loan losses was $111.0 million for the quarter.

Non-performing assets were $497.2 million at quarter end or 0.69% of loans and foreclosed properties, down 10% from $552.7 million or 0.78% of loans and foreclosed properties at first quarter end. Non-performing assets at June 30, 2002, included $479.0 million in non-performing loans and $18.3 million in net other real estate owned. The allowance for loan losses at June 30, 2002 was $928.9 million, which represented 1.29% of loans and 194% of non-performing loans. SunTrust noted its level of non-performing 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 June 30, 2002, SunTrust had total assets of $108.0 billion. Equity capital of $9.0 billion represented 8.33% of total assets. Book value per share was $31.41, up 15% from June 30, 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 July 10, 2002, at 9:00 a.m. (Eastern Time) to discuss earnings results and business trends. Individuals may access the call by dialing 877-675-5901 (Verbal Passcode 47832; Leader: Gary Peacock). Individuals calling from outside the United States should dial 630-395-0034 (Verbal Passcode 47832; Leader: Gary Peacock). A replay of the call will be available beginning the afternoon of July 10, 2002, by dialing 800-754-7904 (domestic) or 402-220-0364 (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 homepage by clicking on the blue phrase "2nd Qtr. Results and Webcast Links."

Beginning July 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 homepage.

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