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SunTrust Reports Third Quarter Earnings

'No Negative Surprises': Results Reflect Company's Emphasis on Consistency Despite Tough Economy

Oct 9, 2002

SunTrust Banks, Inc. today reported net income for the third quarter of 2002 of $343.0 million, up 3% from $334.1 million in the third quarter of 2001. Net income per diluted share was $1.20, up 4% from the $1.15 per diluted share earned in the third quarter of 2001. For the quarter, reported return on assets was 1.30% and return on average realized equity was 19.18%.

On an operating basis, earnings per share was down 2% from the $1.22 per diluted share earned in the third quarter of 2001. Operating income in 2001 excluded $0.07 per share in after-tax, nonrecurring items associated with the Company's proposal to acquire the former Wachovia Corporation.

"In a difficult quarter for our economy and for banks in general, SunTrust more than held its own. Moreover, coming in the wake of a pre-earnings season marked by big negative surprises by some in our industry, there are no negative surprises in SunTrust's results. Our numbers confirm the validity of our conservative approach to our business, especially in times like these. And they reflect our long-standing emphasis on maintaining quality and consistency in key performance measures even when the operating environment is problematic," said L. Phillip Humann, SunTrust chairman, president and CEO.

"At the same time, we can't escape the pinch of an economy that remains both weak and uncertain," Mr. Humann added. "Most visibly, revenue growth across-the-board is slower than we had expected it to be at this stage of the game. With respect to industry credit quality concerns, we expect to continue to look very good relative to our peers but it now seems unlikely that we will see a meaningful reduction in nonperforming assets in the near future. The good news is that these dampening factors are offset to some degree by positive trends like good deposit generation, solid loan growth in key business lines and increased effectiveness at expense control."

For the first nine months of 2002, operating income was $1,031.4 million or $3.60 per diluted share, down 1% from the first nine months of 2001. As previously reported, operating income excludes $39.8 million in after-tax merger charges taken in the first quarter of 2002 associated with SunTrust's acquisition of the Florida franchise of Huntington Bancshares, Inc., and excludes $20.2 million in after-tax, nonrecurring items associated with the Company's Wachovia proposal. On a reported basis for the first nine months of 2002, earnings per share was $3.46, down $0.02 per share from 2001.

Despite the quarter's economic weakness and the current interest rate environment, fully taxable net interest income was $815.1 million, essentially unchanged from the third quarter of 2001. The net interest margin was 3.38% in the third quarter, a decline of 10 basis points from the second quarter of 2002. In addition to continued margin pressure caused by a lower rate environment and a balance sheet positioned for rising rates, the Company experienced a significant increase in mortgage refinance related prepayments that created additional earning asset rate declines in both its mortgage portfolios and security portfolios.

Average loans for the third quarter were $71.7 billion, up 4% from $69.0 billion in the third quarter of 2001. Excluding the impact of the Huntington transaction and reflecting the soft loan demand typical in an uncertain economy, average loans were flat from the third quarter of 2001. Average consumer and commercial deposits for the third quarter were $66.1 billion, up 16% from the third quarter of 2001. Adjusting for the impact of Huntington, average consumer and commercial deposits were up 8% from the third quarter of 2001.

Noninterest income, excluding securities gains and losses, was $535.1 million in the quarter, up 4% from the third quarter of 2001. Adjusting for the impact of Huntington and excluding securities gains, noninterest income was up 2% compared to the third quarter of 2001. Noninterest income, without net securities gains, represented 40% of total revenue, up slightly from 39% in the third quarter of 2001. Including net securities gains, total noninterest income was $580.9 million for the quarter, up 6% from the third quarter of 2001.

Total noninterest expense in the quarter was $808.1 million, down from $818.1 million and up from $776.8 million, in the second quarter of 2002 and in the third quarter of 2001, respectively. Third quarter expenses include $18.3 million ($11.9 million after tax) or $0.04 per diluted share related to the Company's "One Bank" initiative of systems enhancements that will yield future operating efficiencies. Sequential reduction in expense levels reflects the continued impact of a program of expense control measures instituted in early 2002.

Net charge-offs in the third quarter were $98.3 million or 0.54% of average loans, down from 0.62% in the second quarter of this year and up from 0.46% for the third quarter of 2001. The provision for loan losses was $98.7 million for the quarter.

Nonperforming loans were $553.8 million at quarter end or 0.76% of loans, up 16% from $479.0 million or 0.67% of loans at second quarter end. Most of the increase in nonperforming loans was attributable to a loan totaling approximately $46 million to an operating subsidiary of Adelphia Corporation. This loan was placed on nonperforming status in the third quarter of 2002 upon receipt by SunTrust of the Company's 2002 Shared National Credit Examination by the Federal Reserve. Total nonperforming loans plus OREO were $568.8 million at quarter end or 0.78% of loans plus OREO, up 14% from $497.2 million or 0.69% of loans plus OREO at second quarter end.

Total nonperforming assets were $594.7 million at quarter end, or 0.82% of loans plus OREO and other repossessed assets, up 15% from $518.5 million or 0.72% of loans plus OREO and other repossessed assets at second quarter end. Nonperforming assets at September 30, 2002 included $553.8 million in nonperforming loans, $15.0 million in net other real estate owned and $25.9 million of other repossessed assets.

The allowance for loan losses at September 30, 2002 was $929.3 million, which represented 1.28% of loans and 167.8% of nonperforming loans. SunTrust noted its level of nonperforming assets has been consistently below industry averages over the long term, and current levels continue to compare favorably with the most recently published industry averages.

At September 30, 2002, SunTrust had total assets of $112.4 billion. Equity capital of $8.8 billion represented 7.9% of total assets. Book value per share was $31.04, up 9% from September 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 October 9 at 9:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals are encouraged to call in beginning at 8:45 a.m. by dialing 1-888-455-9639 (Passcode 100902; Leader: Gary Peacock.). Individuals calling from outside the United States should dial 1-712-257-2272 (Passcode 100902; Leader: Gary Peacock). A replay of the call will be available beginning the afternoon of October 9 by dialing 1-888-566-0581 (domestic) or 1-402-998-0693 (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 from the SunTrust home page by clicking on the link "3rd Qtr. Results and Webcast Links" found at the lower right-hand corner of the page. Beginning October 10, 2002, listeners may access an archived version of the presentation on the "Investor Relations" page. A link to the Investor Relations page is also found in the footer of the SunTrust home page.

In connection with today's earnings announcement, SunTrust also said the Annual Meeting of Shareholders of SunTrust Banks, Inc. will be held at 9:30 a.m. on Tuesday, April 15, 2003 in Room 225 on the second floor of the SunTrust Plaza Gardens Office, 303 Peachtree Center Ave., Atlanta, Georgia.

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 for SunTrust Banks, Inc.