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SunTrust Reports Second Quarter 2011 Results

Earnings Per Share Increased to $0.33; Asset Quality Meaningfully Improved

PR Newswire
ATLANTA
Jul 22, 2011

ATLANTA, July 22, 2011 /PRNewswire/ -- SunTrust Banks, Inc. (NYSE: STI) today reported net income available to common shareholders of $174 million, or $0.33 per average common share, for the second quarter of 2011.  These results compare favorably to the prior quarter's earnings of $0.08 per average common share, or $0.22 per share excluding the non-cash charge related to the redemption of the TARP preferred shares.  Second quarter results improved significantly from a loss of $0.11 per share reported in the second quarter of 2010.

"Our earnings per share improvement continued this quarter," said William H. Rogers, Jr., SunTrust's president and chief executive officer.  "While the economic recovery remains uneven, we continued to demonstrate meaningful improvements in asset quality.  Additionally, our client-centric approach is driving even higher levels of loyalty and is increasingly evidencing itself in the form of enhanced performance by many of our businesses."  Mr. Rogers also noted that the company is committed to even stronger performance in the future, including an increased focus on expense management.

Second Quarter 2011 Financial Highlights

Income Statement

  • Net income available to common shareholders was $0.33 per average common share, compared to earnings of $0.08 per average common share, or $0.22 per share excluding the impact related to the redemption of TARP preferred shares, during the prior quarter.  

  • Net interest income was up 1% from the prior quarter and 6% from the prior year.  The growth from the prior quarter was mainly related to an additional business day in the current quarter.  The change over the same quarter last year was primarily due to lower funding costs resulting from lower rates paid on deposits and a continued shift toward lower-cost deposits.

  • Net interest margin was stable compared to the prior quarter at 3.53% and increased 20 basis points over the second quarter of 2010.

  • Noninterest income increased 3% over the prior quarter due to widespread growth in consumer and commercial categories, led by strong investment banking income.  Compared to the prior year, noninterest income was down 4%, primarily due to lower net gains on the sale of investment securities, lower service charges on deposit accounts, and lower valuation gains on the Company's index-linked CDs and public debt carried at fair value.

  • Noninterest expense increased 5% compared to the prior quarter driven primarily by higher environmental factors, including credit-related expenses and an increase in FDIC insurance assessments.  Noninterest expense increased 3% over the prior year, primarily due to compensation expenses associated with improved business performance and an increase in full-time equivalent employees.

Credit Quality

  • Credit quality continued to improve with net charge-offs, nonperforming loans, nonperforming assets, and early stage delinquencies all declining.

  • Nonperforming loans declined for the eighth consecutive quarter, decreasing 9% from the prior quarter and 23% from the prior year.  Net charge-offs declined 12% and 30%, respectively.  

  • Provision for credit losses declined due to the lower net charge-offs and the impact of improved credit quality on the allowance for loan losses.  The allowance for loan losses was $2.7 billion, or 2.40% of total loans, down 9 basis points from the prior quarter.  

Balance Sheet

  • Average loans were stable compared to the prior quarter; within the context of overall portfolio de-risking, commercial & industrial loans grew while higher-risk segments of the portfolio continued to decline.

  • Average client deposits grew to a record level, and the favorable trend in the deposit mix toward lower-cost accounts continued.

  • Estimated capital ratios are well above current regulatory requirements, as well as the Basel III proposed guidance.  The Tier 1 capital and Tier 1 common ratios were estimated to be 11.10% and 9.20%, respectively.  






2Q 2010

1Q 2011

2Q 2011

Income Statement




(Presented on a fully taxable equivalent basis)

(Dollars in millions, except per share data)




Net income

$12

$180

$178

Net (loss)/income available to common shareholders

(56)

38

174

Earnings/(loss) per average common diluted share

(0.11)

0.08

0.33

Earnings/(loss) per average common diluted share, excluding impact of TARP redemption

(0.11)

0.22

0.33

Total revenue

2,160

2,160

2,198

Total revenue, excluding net securities gains/losses

2,103

2,096

2,166

Net interest income

1,208

1,277

1,286

Provision for credit losses

662

447

392

Noninterest income

952

883

912

Noninterest expense

1,503

1,465

1,542

Net interest margin

3.33%

3.53%

3.53%





Balance Sheet




(Dollars in billions)




Average loans

$113.0

$115.2

$114.9

Average consumer and commercial deposits

116.5

120.7

121.9





Capital




Tier 1 capital ratio (1)

13.51%

11.00%

11.10%

Tier 1 common equity ratio (1)

7.92%

9.05%

9.20%

 Total average shareholders' equity to total average assets

13.03%

13.35%

11.44%





Asset Quality




Net charge-offs to average loans (annualized)

2.57%

2.01%

1.76%

Allowance for loan losses to period end loans

2.81%

2.49%

2.40%

Nonperforming loans to total loans

4.16%

3.46%

3.14%





(1)  Current period Tier 1 capital and Tier 1 common equity ratios are estimated as of the earnings release date.



Consolidated Financial Performance

(Presented on a fully taxable-equivalent basis unless otherwise noted)

Revenue

Total revenue was $2,198 million for the second quarter of 2011 compared to $2,160 million in both the first quarter of 2011 and the second quarter of 2010.  Net gains from the sales of securities were $32 million in the current quarter compared to $64 million in the first quarter of 2011 and $57 million in the second quarter of 2010.  Excluding these gains, revenue increased 3% on both a sequential quarter and a prior year basis.  The growth from the first quarter of 2011 was due to higher fee income, most notably investment banking income.  The increase compared to the prior year quarter was due to higher net interest income, partially offset by lower deposit service charges.

For the six months ended June 30th, total revenue was $4,358 million in 2011 compared to $4,060 million for the prior year.  The 7% increase was due to higher net interest income, growth in most consumer and commercial fee categories, and higher net gains from the sales of securities, partially offset by lower service charges due to the implementation of new regulatory requirements in the third quarter of 2010.

Net Interest Income

For the second quarter of 2011, net interest income was $1,286 million compared with $1,277 million in the prior quarter and $1,208 million in the prior year quarter.  The 1% increase on a sequential quarter basis was mainly related to one more day in the current quarter.  The 6% increase over the second quarter of 2010 was primarily attributable to lower rates paid on deposits, a continued shift in deposit mix toward lower-cost deposits, and a reduction in higher-cost funding.

Net interest margin for the second quarter of 2011 was 3.53%, consistent with the prior quarter and up 20 basis points over the prior year quarter.  On a sequential quarter basis, yields on earning assets declined five basis points, driven by lower loan yields, while rates paid on interest-bearing liabilities declined seven basis points, as rates paid on deposits and long-term debt costs declined.  Compared to the prior year quarter, the favorable shift in the deposit mix, lower rates paid, and reduced long-term debt contributed to a decline in interest-bearing liabilities of 34 basis points, more than offsetting the nine basis point decline in earning asset yields, which were primarily loan-related.

For the six months ended June 30th, net interest income was $2,563 million in 2011 compared to $2,410 million in 2010, an increase of 6%.  Net interest margin was 3.53% in 2011, up 21 basis points.  The primary drivers of the increases to net interest income and net interest margin were consistent with those described in the quarterly comparisons.

Noninterest Income

Total noninterest income was $912 million in the second quarter of 2011 compared with $883 million in the prior quarter and $952 million in the prior year quarter.  The $29 million increase on a sequential quarter basis was due to broad-based growth in consumer and commercial fee categories, led by strong investment banking income, and partially offset by a $32 million decline in net gains on the sale of investment securities.  Compared with the second quarter of 2010, noninterest income declined $40 million, or 4%, due to lower net gains on the sale of investment securities, lower service charges on deposit accounts, and lower valuation gains on the Company's index-linked CDs and public debt carried at fair value.  The year-over-year decline was partially offset by growth in certain consumer and commercial fee categories, including investment banking, retail investment services, and card fees.

Investment banking income was $95 million in the current quarter compared with $67 million in the prior quarter and $58 million in the prior year quarter.  The increases of $28 million and $37 million compared to the prior quarter and prior year, respectively, were attributable to strong syndicated finance fees, which resulted from continued market penetration.

Trading account profits and commissions were $53 million in the current quarter compared with $52 million in the first quarter and $109 million in the second quarter of 2010.  Compared to the prior quarter, the essentially flat results were driven by more favorable mark-to-market impacts on the Company's fair value debt and index-linked CDs, which offset a decline in core trading income.  Compared to the prior year, the $56 million decline in trading account profits and commissions was mainly attributable to a $60 million reduction in valuation gains on the Company's fair value debt and index-linked CDs, as the Company's credit spreads tightened.

Mortgage production and servicing income was a combined $76 million in the second quarter of 2011, compared with $71 million in the prior quarter and $72 million in the prior year quarter.  During the current quarter, mortgage repurchase costs were $90 million, an increase of $10 million over the prior quarter due to higher agency-related repurchase requests.  As of June 30, 2011, reserves for mortgage repurchases totaled $299 million, an increase of $29 million over March 31, 2011, reflective of higher unresolved repurchase requests.  The mortgage servicing portfolio was $162.9 billion at the end of the second quarter.

All other noninterest income categories increased on a sequential quarter basis, including service charges on deposit accounts, which reversed a declining trend from the past three quarters.  Compared to the second quarter of 2010, trust income, retail investment income, and card fees all increased, while service charges on deposits declined 18% due to regulatory-induced product changes that became effective in the third quarter of 2010.  

For the six months ended June 30th, noninterest income was $1,795 million in 2011 and $1,650 million in 2010.  The $145 million, or 9%, increase over the prior year was driven by growth across most consumer and commercial fee categories, including investment banking, card fees, retail investment services, and trust income.  Higher gains on the sale of investment securities also contributed to the growth, which was partially offset by a decline in service charge income.

Noninterest Expense

Noninterest expense was $1,542 million in the current quarter compared with $1,465 million in the prior quarter and $1,503 million in the prior year quarter.  The $77 million, or 5%, increase on a sequential quarter basis was largely driven by a $37 million increase in credit-related expenses, attributable to legal and compliance accruals.  The FDIC insurance assessment increased $10 million due to a change in the assessment methodology.  Personnel-related expenses declined 1% due to seasonal declines in employee benefits, partially offset by higher incentive compensation.

The $39 million, or 3%, increase in noninterest expenses over the second quarter of 2010 was largely driven by a $66 million increase in employee compensation.  This was attributable to a 3% increase in personnel – primarily in client service and loss mitigation positions - and higher incentive compensation related to improved business performance.  FDIC insurance premiums increased $16 million due to the change in the assessment methodology.  Additionally, credit-related expenses increased $15 million as higher legal and compliance costs were partially offset by a decline in other real estate expenses.  The second quarter of 2010 also included $63 million of losses related to the extinguishment of debt.

For the six months ended June 30th, noninterest expense was $3,007 million in 2011 and $2,864 million in 2010.  The 5% increase was attributable to higher personnel-related expenses, credit-related expenses, and FDIC insurance premiums, partially offset by lower losses on the extinguishment of debt.

Income Taxes

In the second quarter of 2011, the Company recorded a provision for income taxes of $58 million compared with a provision of $33 million in the prior quarter and a $50 million benefit in the second quarter of 2010.  The effective tax rate in the current quarter increased to 24.5% and was impacted by the recognition of specific discrete items.

U.S. Treasury Preferred Dividends

The Company formerly paid dividends to the U.S. Treasury on its $4.85 billion of TARP preferred securities.  The Company redeemed these shares at the end of the first quarter of 2011, and, therefore, did not pay such dividends in the second quarter of 2011.  The first quarter of 2011 included $66 million of preferred dividends paid to the U.S. Treasury, as well as a $74 million non-cash charge associated with the redemption of the TARP preferred shares.  The second quarter of 2010 included $66 million of preferred dividends paid to the U.S. Treasury.

Balance Sheet

As of June 30, 2011, SunTrust had total assets of $172.3 billion and shareholders' equity of $19.7 billion, representing 11.4% of total assets.  Book and tangible book value per common share were $36.30 and $24.57, respectively, as of June 30, 2011, up 2% and 3%, respectively, from the prior quarter.

Loans

Average loans for the current quarter were $114.9 billion, compared with average balances of $115.2 billion and $113.0 billion during the first quarter of 2011 and the second quarter of 2010, respectively.  While average balances were relatively flat on a sequential quarter basis, commercial & industrial loans increased $1.0 billion, or 2%, while higher-risk categories such as commercial construction and certain other residential real estate-related loans continued to decline.  The $1.9 billion, or 2%, average balance increase over the second quarter of 2010 was driven by the acquisition of auto and student loans, as well as from organic growth in commercial & industrial loans and government-guaranteed residential mortgage loans.  The risk profile of the loan portfolio continued to improve during the past year; in addition to higher-risk loan categories declining meaningfully, approximately 8% of the Company's loan portfolio was comprised of government-guaranteed loans as of June 30, 2011, compared to approximately 6% as of June 30, 2010.

Deposits

Average consumer and commercial deposits in the second quarter of 2011 were $121.9 billion, compared to average balances of $120.7 billion and $116.5 billion in the prior quarter and prior year quarter, respectively.  The favorable shift in the deposit mix continued during the current quarter, as the sequential increase of $1.2 billion, or 1%, was concentrated in demand deposits, while time deposits declined by $0.3 billion, or 1%.

Compared to the second quarter of 2010, average consumer and commercial deposits increased $5.4 billion, or 5%.  Average lower-cost deposit products increased a combined $9.7 billion, or 11%, while time deposits declined $4.3 billion, or 18%.  While changing client preferences and the economic environment have contributed to this favorable shift in deposit mix, SunTrust also attributes the lower-cost deposit growth to its investments in enhancing the client experience and its marketing initiatives.

Capital and Liquidity

The Company's estimated capital ratios are well above regulatory requirements, as well as the proposed guidelines recently published by the Basel Committee and endorsed by U.S. regulatory agencies.  The Tier 1 capital and Tier 1 common ratios were estimated to have expanded to 11.10% and 9.20%, respectively, and the tangible equity to tangible assets ratio increased to 8.07% as of June 30, 2011.  The Company also has substantial available liquidity, as client deposits have been retained in cash and high-quality government-backed securities.

Asset Quality

Asset quality improved during the quarter, with continued trends of declining net charge-offs, nonperforming loans, and other real estate that began in early 2010.  Early stage delinquencies also continued to decline on a sequential quarter basis.

Net charge-offs were $505 million in the current quarter compared to $571 million in the prior quarter and $722 million in the prior year quarter.  The $66 million sequential quarter decline was concentrated in residential mortgage loans and was partially offset by a slight increase in commercial & industrial loans.  Compared to the second quarter of 2010, net charge-offs decreased $217 million, or 30%, with declines across all loan segments, particularly residential loans.  The ratio of annualized net charge-offs to total average loans was 1.76% in the current quarter and declined 25 basis points and 81 basis points from the prior quarter and the prior year quarter, respectively.  The provision for credit losses was $392 million in the second quarter of 2011, a decline of $55 million and $270 million compared to the prior quarter and the second quarter of 2010, respectively.

Nonperforming loans totaled $3.6 billion as of June 30, 2011, a decline of $361 million, or 9%, from the prior quarter.  This marks the eighth consecutive quarter of declining nonperforming loans.  The sequential quarter decline was primarily driven by reductions in commercial construction loans; however, declines were also prevalent in other loan categories.  Compared to June 30, 2010, nonperforming loans were down $1.1 billion, or 23%.  The decline was driven primarily by reductions in the commercial construction, residential mortgage, commercial & industrial, and residential construction loan categories.  As of June 30, 2011, nonperforming loans represented 3.14% of total loans, down 32 basis points from the prior quarter and down 102 basis points from June 30, 2010.  Other real estate owned totaled $483 million as of the end of the quarter, down $217 million, or 31%, since June 30, 2010.

Early stage delinquencies declined to 1.09%, an improvement of 6 basis points from the end of the prior quarter.  Excluding government-guaranteed student loans and Ginnie Mae insured repurchased mortgage loans, early stage delinquencies were 0.73%, a decline of 7 basis points from March 31, 2011.

As of June 30, 2011, the allowance for loan losses was $2.7 billion representing 2.40% of total loans, down 9 basis points from March 31, 2011.  The allowance for loan losses declined $110 million during the current quarter as a result of the improvement in asset quality.  

Accruing restructured loans totaled $2.7 billion and nonaccruing restructured loans totaled $0.9 billion as of June 30, 2011.  Both were relatively stable compared to the prior quarter end.  $3.1 billion of restructured loans related to residential mortgages, while $0.5 billion were commercial loans.

LINE OF BUSINESS FINANCIAL PERFORMANCE

Line of Business Results

The Company has included line of business financial tables as part of this release on its website at www.suntrust.com in the Investor Relations section located under "About SunTrust."  The Company's business segments are: Retail Banking, Diversified Commercial Banking, Corporate and Investment Banking, Mortgage, Wealth and Investment Management, and Commercial Real Estate.  All revenue in the line of business tables is reported on a fully taxable-equivalent basis.  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.  The Corporate Other and Treasury 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 for loan losses compared to net charge-offs, as well as equity and its related impact.  A detailed discussion of the line of business results will be included in the Company's forthcoming quarterly report on Form 10-Q.

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 website at www.suntrust.com in the Investor Relations section located under "About SunTrust."  This information is also included in a current report on Form 8-K furnished with the Securities and Exchange Commission today.

Conference Call

SunTrust management will host a conference call on July 22, 2011, at 8:00 a.m. (Eastern Daylight Time) to discuss the earnings results and business trends. Individuals may call in beginning at 7:45 a.m. (Eastern Daylight Time) by dialing 1-888-972-7805 (Passcode: 2Q11).  Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 2Q11).  A replay of the call will be available approximately one hour after the call ends on July 22, 2011, and will remain available until August 5, 2011, by dialing 1-866-352-7718 (domestic) or 1-203-369-0076 (international).

Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust investor relations website at www.suntrust.com/investorrelations. Beginning the afternoon of July 22, 2011, listeners may access an archived version of the webcast in the "Webcasts and Presentations" subsection found on the investor relations webpage. 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 Southeast and Mid-Atlantic states and a full array of technology-based, 24-hour delivery channels. The Company also serves clients in selected markets nationally. Its primary businesses include deposit, credit, and trust and investment management services.  Through various subsidiaries, the Company provides mortgage banking, insurance, brokerage, equipment leasing, and capital markets services. SunTrust's Internet address is www.suntrust.com.

Important Cautionary Statement About Forward-Looking Statements

This news release includes non-GAAP financial measures to describe SunTrust's performance. The reconciliations of those measures to GAAP measures are provided within or in the appendix to this news release. In this news release, the Company presents net interest income and net interest margin on a fully taxable-equivalent ("FTE") basis, and ratios 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.

This news release contains forward-looking statements. The statement regarding our expectations about expected earnings increases as a result of business initiatives is a forward looking statements. Also, any statement that does not describe historical or current facts, is a forward-looking statement. These statements often include the words "believes," "expects," "anticipates," "estimates," "intends," "plans," "goals," "targets," "initiatives," "potentially," "probably," "projects," "outlook" or similar expressions or future conditional verbs such as "may," "will," "should," "would," and "could."  Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements 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 actual results to differ materially from those described in the forward-looking statements can be found in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2010, and in Part II, "Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the period ended March 31, 2011, and in other periodic reports that we file with the SEC. Those factors include: difficult market conditions have adversely affected our industry; concerns over market volatility continue; the Dodd-Frank Act makes fundamental changes in the regulation of the financial services industry, some of which may adversely affect our business; we are subject to capital adequacy and liquidity guidelines and, if we fail to meet these guidelines, our financial condition would be adversely affected; emergency measures designed to stabilize the U.S. banking system are beginning to wind down; we are subject to credit risk; our ALLL may not be adequate to cover our eventual losses; we will realize future losses if the proceeds we receive upon liquidation of nonperforming assets are less than the carrying value of such assets; weakness in the economy and in the real estate market, including specific weakness within our geographic footprint, has adversely affected us and may continue to adversely affect us; weakness in the real estate market, including the secondary residential mortgage loan markets, has adversely affected us and may continue to adversely affect us; we are subject to certain risks related to originating and selling mortgages. 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; we are subject to risks related to delays in the foreclosure process; we may continue to suffer increased losses in our loan portfolio despite enhancement of our underwriting policies; as a financial services company, adverse changes in general business or economic conditions could have a material adverse effect on our financial condition and results of operations. Changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital or liquidity; the fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our earnings; depressed market values for our stock may require us to write down goodwill; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; consumers may decide not to use banks to complete their financial transactions, which could affect net income; we have businesses other than banking which subject us to a variety of risks; hurricanes and other natural or man-made disasters may adversely affect loan portfolios and operations and increase the cost of doing business; negative public opinion could damage our reputation and adversely impact business and revenues; the soundness of other financial institutions could adversely affect us; we rely on other companies to provide key components of our business infrastructure; we rely on our systems, employees, and certain counterparties, and certain failures could materially adversely affect our operations; we depend on the accuracy and completeness of information about clients and counterparties; regulation by federal and state agencies could adversely affect the business, revenue, and profit margins; competition in the financial services industry is intense and could result in losing business or margin declines; maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services; we may not pay dividends on your common stock; disruptions in our ability to access global capital markets may negatively affect our capital resources and liquidity; any reduction in our credit rating could increase the cost of our funding from the capital markets; 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; we are subject to certain litigation, and our expenses related to this litigation may adversely affect our results; we depend on the expertise of key personnel. If these individuals leave or change their roles without effective replacements, operations may suffer; we may not be able 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 strategies; our accounting policies and processes are critical to how we report our financial condition and results of operations. They require management to make estimates about matters that are uncertain; changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition; our stock price can be volatile; our disclosure controls and procedures may not prevent or detect all errors or acts of fraud; our financial instruments carried at fair value expose us to certain market risks; our revenues derived from our investment securities may be volatile and subject to a variety of risks; and we may enter into transactions with off-balance sheet affiliates or our subsidiaries.

SunTrust Banks, Inc. and Subsidiaries













FINANCIAL HIGHLIGHTS













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



























Three Months Ended




Six Months Ended





June 30


  %


June 30


  %



2011


2010


Change (5)


2011


2010


Change (5)















EARNINGS & DIVIDENDS













Net income/(loss)

$178


$12


NM

%

$358


($149)


NM

%

Net income/(loss) available to common shareholders

174


(56)


NM


212


(285)


NM


Total revenue - FTE (1, 2)

2,198


2,160


2


4,358


4,060


7


Total revenue - FTE excluding securities gains, net (1, 2)

2,166


2,103


3


4,262


4,002


6


Net income/(loss) per average common share              













    Diluted (4)

0.33


(0.11)


NM


0.41


(0.58)


NM


    Diluted excluding effect of accelerated accretion associated













      with repurchase of preferred stock issued to the U.S. Treasury (1, 4)

0.33


(0.11)


NM


0.55


(0.58)


NM


    Basic

0.33


(0.11)


NM


0.41


(0.58)


NM


Dividends paid per common share          

0.01


0.01


-


0.02


0.02


-















CONDENSED BALANCE SHEETS













Selected Average Balances













Total assets

$170,527


$171,273


-

%

$171,789


$171,351


-

%

Earning assets

145,985


145,464


-


146,383


146,176


-


Loans

114,920


113,016


2


115,040


113,721


1


Consumer and commercial deposits

121,879


116,460


5


121,298


115,776


5


Brokered and foreign deposits

2,340


2,670


(12)


2,472


3,049


(19)


Total shareholders' equity

19,509


22,313


(13)


21,298


22,326


(5)















As of













Total assets

172,173


170,668


1








Earning assets

146,367


145,601


1








Loans

114,913


112,925


2








Allowance for loan and lease losses

2,744


3,156


(13)








Consumer and commercial deposits

121,671


116,261


5








Brokered and foreign deposits

3,250


2,407


35








Total shareholders' equity

19,660


23,024


(15)





















FINANCIAL RATIOS & OTHER DATA













Return on average total assets

0.42

%

0.03

%

NM

%

0.42

%

(0.17)

%

NM

%

Return on average assets less net unrealized













  securities gains (1)

0.35


(0.08)


NM


0.33


(0.25)


NM


Return on average common shareholders' equity

3.61


(1.29)


NM


2.28


(3.31)


NM


Return on average realized common shareholders' equity (1)

3.21


(2.53)


NM


1.49


(4.23)


NM


Net interest margin (2)

3.53


3.33


6


3.53


3.32


6


Efficiency ratio (2)

70.17


69.57


1


69.01


70.52


(2)


Tangible efficiency ratio (1, 2)        

69.64


68.96


1


68.49


69.87


(2)


Effective tax rate/(benefit)

24.45


(133.13)


NM


20.21


(62.17)


NM


Tier 1 common equity

9.20

(3)

7.92


16








Tier 1 capital

11.10

(3)

13.51


(18)








Total capital

14.00

(3)

16.96


(17)








Tier 1 leverage

8.92

(3)

10.94


(18)








Total average shareholders' equity to total average assets

11.44


13.03


(12)


12.40


13.03


(5)


Tangible equity to tangible assets (1)                  

8.07


10.18


(21)


































Book value per common share

$36.30


$36.19


-








Tangible book value per common share (1)

24.57


23.58


4








Market price:













    High

30.13


31.92


(6)


33.14


31.92


4


    Low

24.63


23.12


7


24.63


20.16


22


    Close

25.80


23.30


11


25.80


23.30


11


Market capitalization

13,852


11,648


19





















Average common shares outstanding (000s)













    Diluted

535,416


498,499


7


519,548


498,369


4


    Basic

531,792


495,351


7


515,819


495,112


4















Full-time equivalent employees

29,235


28,250


3








Number of ATMs

2,919


2,902


1








Full service banking offices

1,661


1,675


(1)


































(1)  See Appendix A 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 common equity, tier 1 capital, total capital and tier 1 leverage ratios are estimated as of the earnings release date.      

(4)  For earnings per share calculation purposes, the impact of dilutive securities are excluded from the diluted share count during periods that the Company has recognized a net loss available to common shareholders because the impact would be antidilutive.

(5)  "NM" - Not meaningful.  Those changes over 100 percent were not considered to be meaningful. 




SunTrust Banks, Inc. and Subsidiaries











FIVE QUARTER FINANCIAL HIGHLIGHTS











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























Three Months Ended



June 30


March 31


December 31


September 30


June 30



2011


2011


2010


2010


2010













EARNINGS & DIVIDENDS











Net income

$178


$180


$185


$153


$12


Net income/(loss) available to common shareholders

174


38


114


84


(56)


Total revenue - FTE (1, 2)

2,198


2,160


2,326


2,313


2,160


Total revenue - FTE excluding securities gains, net (1, 2)

2,166


2,096


2,262


2,244


2,103


Net income/(loss) per average common share              











    Diluted (4)

0.33


0.08


0.23


0.17


(0.11)


    Diluted excluding effect of accelerated accretion associated











      with repurchase of preferred stock issued to the U.S. Treasury (1, 4)

0.33


0.22


0.23


0.17


(0.11)


    Basic

0.33


0.08


0.23


0.17


(0.11)


Dividends paid per common share        

0.01


0.01


0.01


0.01


0.01













CONDENSED BALANCE SHEETS











Selected Average Balances











Total assets

$170,527


$173,066


$174,768


$171,999


$171,273


Earning assets

145,985


146,786


149,114


147,249


145,464


Loans

114,920


115,162


114,930


113,322


113,016


Consumer and commercial deposits

121,879


120,710


119,688


117,233


116,460


Brokered and foreign deposits

2,340


2,606


2,827


2,740


2,670


Total shareholders' equity

19,509


23,107


23,576


23,091


22,313













As of











Total assets

172,173


170,794


172,874


174,703


170,668


Earning assets

146,367


145,895


148,473


149,994


145,601


Loans

114,913


114,932


115,975


115,055


112,925


Allowance for loan and lease losses

2,744


2,854


2,974


3,086


3,156


Consumer and commercial deposits

121,671


121,559


120,025


117,494


116,261


Brokered and foreign deposits

3,250


2,426


3,019


2,850


2,407


Total shareholders' equity

19,660


19,223


23,130


23,438


23,024













FINANCIAL RATIOS & OTHER DATA











Return on average total assets

0.42

%

0.42

%

0.42

%

0.35

%

0.03

%

Return on average assets less net unrealized











     securities gains (1)

0.35


0.30


0.31


0.23


(0.08)


Return on average common shareholders' equity

3.61


0.84


2.44


1.83


(1.29)


Return on average realized common shareholders' equity (1)

3.21


(0.35)


1.53


0.70


(2.53)


Net interest margin (2)

3.53


3.53


3.44


3.41


3.33


Efficiency ratio (2)

70.17


67.83


66.57


64.80


69.57


Tangible efficiency ratio (1, 2)

69.64


67.32


66.07


64.24


68.96


Effective tax rate/(benefit)

24.45


15.54


19.66


8.25


(133.13)


Tier 1 common equity

9.20

(3)

9.05


8.08


8.02


7.92


Tier 1 capital

11.10

(3)

11.00


13.67


13.58


13.51


Total capital

14.00

(3)

13.92


16.54


16.42


16.96


Tier 1 leverage

8.92

(3)

8.72


10.94


11.03


10.94


Total average shareholders' equity to total average assets          

11.44


13.35


13.49


13.42


13.03


Tangible equity to tangible assets (1)

8.07


7.87


10.12


10.19


10.18













Book value per common share

$36.30


$35.49


$36.34


$37.01


$36.19


Tangible book value per common share (1)

24.57


23.79


23.76


24.42


23.58


Market price:











    High

30.13


33.14


29.82


27.05


31.92


    Low

24.63


27.38


23.25


21.79


23.12


    Close

25.80


28.84


29.51


25.83


23.30


Market capitalization

13,852


15,482


14,768


12,914


11,648













Average common shares outstanding (000s)











    Diluted

535,416


503,503


499,423


498,802


498,499


    Basic

531,792


499,669


495,710


495,501


495,351













Full-time equivalent employees

29,235


29,052


29,056


28,599


28,250


Number of ATMs

2,919


2,924


2,918


2,928


2,902


Full service banking offices

1,661


1,665


1,668


1,670


1,675
























(1)  See Appendix A 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 common equity, tier 1 capital, total capital and tier 1 leverage ratios are estimated as of the earnings release date.          

(4)  For earnings per share calculation purposes, the impact of dilutive securities are excluded from the diluted share count during periods that the Company has recognized a net loss available to common shareholders because the impact would be antidilutive.



SunTrust Banks, Inc. and Subsidiaries                                                          















RECONCILEMENT OF NON-GAAP MEASURES                                        















APPENDIX A TO THE EARNINGS RELEASE                                              















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






























Three Months Ended


Six  Months Ended



June 30


March 31


December 31


September 30


June 30


June 30


June 30



2011


2011


2010


2010


2010


2011


2010

















NON-GAAP MEASURES PRESENTED IN THE EARNINGS RELEASE(8)  






























Total average assets                

$170,527


$173,066


$174,768


$171,999


$171,273


$171,789


$171,351


Average net unrealized securities gains                    

(2,483)


(2,294)


(2,664)


(2,395)


(1,969)


(2,389)


(1,927)


Average assets less net unrealized securities gains                    

$168,044


$170,772


$172,104


$169,604


$169,304


$169,400


$169,424

















Total average common shareholders' equity                          

$19,336


$18,269


$18,638


$18,159


$17,387


$18,806


$17,403


Average accumulated other comprehensive income                    

(1,575)


(1,530)


(2,055)


(1,721)


(998)


(1,553)


(944)


Total average realized common shareholders' equity                

$17,761


$16,739


$16,583


$16,438


$16,389


$17,253


$16,459

















Return on average total assets                

0.42

%

0.42

%

0.42

%

0.35

%

0.03

%

0.42

%

(0.17)

%

Impact of excluding net realized and unrealized securities (gains)/losses          















  and The Coca-Cola Company stock dividend          

(0.07)


(0.12)


(0.11)


(0.12)


(0.11)


(0.09)


(0.08)


Return on average total assets less net unrealized securities gains(1)

0.35

%

0.30

%

0.31

%

0.23

%

(0.08)

%

0.33

%

(0.25)

%
















Return on average common shareholders' equity                    

3.61

%

0.84

%

2.44

%

1.83

%

(1.29)

%

2.28

%

(3.31)

%

Impact of excluding net realized and unrealized securities (gains)/losses















  and The Coca-Cola Company stock dividend                

(0.40)


(1.19)


(0.91)


(1.13)


(1.24)


(0.79)


(0.92)


Return on average realized common shareholders' equity(2)          

3.21

%

(0.35)

%

1.53

%

0.70

%

(2.53)

%

1.49

%

(4.23)

%
















Efficiency ratio(3)

70.17

%

67.83

%

66.57

%

64.80

%

69.57

%

69.01

%

70.52

%

Impact of excluding amortization of intangible assets              

(0.53)


(0.51)


(0.50)


(0.56)


(0.61)


(0.52)


(0.65)


Tangible efficiency ratio(4)        

69.64

%

67.32

%

66.07

%

64.24

%

68.96

%

68.49

%

69.87

%
















Total shareholders' equity                

$19,660


$19,223


$23,130


$23,438


$23,024






Goodwill, net of deferred taxes                    

(6,199)


(6,185)


(6,189)


(6,192)


(6,197)






Other intangible assets including MSRs, net of deferred taxes

(1,518)


(1,635)


(1,545)


(1,174)


(1,409)






MSRs

1,423


1,538


1,439


1,072


1,298






Tangible equity              

13,366


12,941


16,835


17,144


16,716






Preferred stock

(172)


(172)


(4,942)


(4,936)


(4,929)






Tangible common equity

$13,194


$12,769


$11,893


$12,208


$11,787





















Total assets                

$172,173


$170,794


$172,874


$174,703


$170,668






Goodwill                

(6,343)


(6,324)


(6,323)


(6,323)


(6,323)






Other intangible assets including MSRs                

(1,539)


(1,659)


(1,571)


(1,204)


(1,443)






MSRs

1,423


1,538


1,439


1,072


1,298






Tangible assets                

$165,714


$164,349


$166,419


$168,248


$164,200





















Tangible equity to tangible assets(5)          

8.07

%

7.87

%

10.12

%

10.19

%

10.18

%





Tangible book value per common share(6)

$24.57


$23.79


$23.76


$24.42


$23.58





















Net interest income                    

$1,259


$1,249


$1,266


$1,238


$1,178


$2,508


$2,350


Taxable-equivalent adjustment                  

27


28


28


28


30


55


60


Net interest income - FTE                

1,286


1,277


1,294


1,266


1,208


2,563


2,410


Noninterest income                    

912


883


1,032


1,047


952


1,795


1,650


Total revenue - FTE              

2,198


2,160


2,326


2,313


2,160


4,358


4,060


Securities gains, net

(32)


(64)


(64)


(69)


(57)


(96)


(58)


Total revenue - FTE excluding net securities gains(7)

$2,166


$2,096


$2,262


$2,244


$2,103


$4,262


$4,002















































(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 securities portfolio which includes the ownership by the Company of common shares of The Coca-Cola Company.  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 client relationship and client transaction driven.  The return on average assets less net unrealized gains on securities is computed by dividing annualized net income/(loss), excluding securities (gains)/losses and The Coca-Cola Company stock dividend, net of tax, by average assets less net unrealized securities (gains)/losses.

(2)  SunTrust 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/(loss) available to common shareholders, excluding securities (gains)/losses and The Coca-Cola Company stock dividend, net of tax, by average realized common shareholders' equity.    

(3)  Computed by dividing noninterest expense by total revenue - FTE.  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 after-tax 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.

(6)  SunTrust presents a tangible book value per common share that excludes the after-tax impact of purchase accounting intangible assets and also excludes preferred stock from tangible equity.  The Company believes this measure is useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity as well as preferred stock (the level of which may vary from company to company), it allows investors to more easily compare the Company's book value on common stock to other companies in the industry. 

(7)  SunTrust presents total revenue - FTE excluding net securities gains.  The Company believes noninterest income without net securities gains is more indicative of the Company's performance because it isolates income that is primarily client relationship and client transaction driven and is more indicative of normalized operations.

(8)  Certain amounts in this schedule are presented net of applicable income taxes, which are calculated based on each subsidiary’s federal and state tax rates and laws.  In general, the federal marginal tax rate is 35%, but the state marginal tax rates range from 1% to 8% in accordance with the subsidiary’s income tax filing requirements with various tax authorities.  In addition, the effective tax rate may differ from the federal and state marginal tax rates in certain cases where a permanent difference exists.



SunTrust Banks, Inc. and Subsidiaries                                                          














RECONCILEMENT OF NON-GAAP MEASURES                                        














APPENDIX A TO THE EARNINGS RELEASE, continued                                              














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




























Three Months Ended


Six  Months Ended


June 30


March 31


December 31


September 30


June 30


June 30


June 30


2011


2011


2010


2010


2010


2011


2010















NON-GAAP MEASURES PRESENTED IN THE EARNINGS RELEASE(1)  




























Net income/(loss)      

$178


$180


$185


$153


$12


$358


($149)

Preferred dividends, Series A

(2)


(2)


(2)


(2)


(2)


(4)


(4)

U.S. Treasury preferred dividends and accretion of discount

-


(66)


(67)


(67)


(66)


(66)


(132)

Accelerated accretion associated with repurchase of preferred stock














   issued to the U.S. Treasury

-


(74)


-


-


-


(74)


-

Dividends and undistributed earnings allocated to unvested shares

(2)


-


(2)


-


-


(2)


-

Net income/(loss) available to common shareholders  

174


38


114


84


(56)


212


(285)

Securities gains, net of tax                

(20)


(40)


(39)


(43)


(35)


(60)


(36)

The Coca-Cola Company stock dividend, net of tax                  

(13)


(13)


(12)


(12)


(12)


(25)


(24)

Net income/(loss) available to common shareholders excluding securities            














   gains and The Coca-Cola Company stock dividend, net of tax

$141


($15)


$63


$29


($103)


$127


($345)















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














   stock dividend, net of tax                        

$145


$127


$134


$98


($35)


$273


($209)















Net income/(loss) available to common shareholders  

$174


$38


$114


$84


($56)


$212


($285)















Accelerated accretion associated with repurchase of preferred stock














   issued to the U.S. Treasury

-


74


-


-


-


74


-

Net income/(loss) available to common shareholders excluding accelerated














   accretion associated with repurchase of preferred stock issued to the














   U.S. Treasury

$174


$112


$114


$84


($56)


$286


($285)















Net income/(loss) per average common share - diluted

$0.33


$0.08


$0.23


$0.17


($0.11)


$0.41


($0.58)

Effect of accelerated accretion associated with repurchase of preferred stock














   issued to the U.S. Treasury

-


0.14


-


-


-


0.14


-

Net income/(loss) per average common share - diluted, excluding effect of














   accelerated accretion associated with repurchase of preferred stock














   issued to the U.S. Treasury

$0.33


$0.22


$0.23


$0.17


($0.11)


$0.55


($0.58)











































(1) Certain amounts in this schedule are presented net of applicable income taxes, which are calculated based on each subsidiary’s federal and state tax rates and laws.  In general, the federal marginal tax rate is 35%, but the state marginal tax rates range from 1% to 8% in accordance with the subsidiary’s income tax filing requirements with various tax authorities.  In addition, the effective tax rate may differ from the federal and state marginal tax rates in certain cases where a permanent difference exists.



SOURCE SunTrust Banks, Inc.