News Releases

Back to News Releases

SunTrust Reports Third Quarter 2011 Results

Earnings Per Share Increased to $0.39; Favorable Loan, Deposit, and Asset Quality Trends

PR Newswire
ATLANTA
Oct 21, 2011

ATLANTA, Oct. 21, 2011 /PRNewswire/ -- SunTrust Banks, Inc. (NYSE: STI) today reported net income available to common shareholders of $211 million, or $0.39 per average common share, for the third quarter of 2011.  This compares favorably to earnings of  $0.33 per average common share for the second quarter of 2011.  Results benefited from continued improvement in credit quality, resulting in a decline in the provision for credit losses, as well as higher loan balances.  Earnings improved significantly from the $0.17 per average common share reported for the third quarter of 2010.

"Lower-cost deposit growth and improved credit quality continued in the third quarter," said SunTrust President and Chief Executive Officer, William H. Rogers, Jr.  "Further, overall loan growth was driven by solid increases in targeted consumer and commercial loan portfolios.  We remain focused on delivering improved shareholder value through the execution of our client-centric initiatives and the implementation of our expense program."   

Third Quarter 2011 Financial Highlights

Income Statement

  • Net income available to common shareholders was $0.39 per average common share, compared to earnings of $0.33 per average common share for the prior quarter and $0.17 per average common share for the third quarter of 2010.
  • Earnings per share was $0.81 for the first nine months of 2011 compared to a net loss of $(0.41) per average common share in 2010. The growth was driven by higher net interest income, a lower provision for credit losses, and the elimination of the TARP preferred dividends at the end of the first quarter of 2011.
  • Revenue, excluding net gains on the sale of investment securities, was relatively stable compared to the prior quarter and the third quarter of 2010, up 1% and down 2%, respectively.
  • Net interest income increased modestly compared to the prior quarter and 2% compared to the third quarter of 2010. Growth from the prior year was primarily due to lower rates on deposits, a continued shift in deposit mix toward lower-cost deposits, and a reduction in higher-cost funding.
  • The net interest margin was 3.49%, a decline of four basis points from the prior quarter due to lower earning asset yields, partially offset by lower rates on interest-bearing liabilities. The margin increased eight basis points over the third quarter of 2010 due to favorable deposit mix and pricing trends.
  • Noninterest income declined 1% from the prior quarter. Higher mortgage production income and debt valuation gains were offset by lower gains on the sale of investment securities and lower investment banking revenue. Noninterest income decreased 14% compared to the third quarter of 2010, primarily due to lower mortgage-related revenue and lower gains on the sale of investment securities.
  • Noninterest expense increased 1% compared to the prior quarter due to higher mortgage-related expenses. Expenses increased 4% over the third quarter of 2010, attributable to higher mortgage-related expenses, as well as increased employee compensation due to improved revenue in certain businesses and an increase in personnel.

Credit Quality

  • Credit quality improved with net charge-offs, nonperforming loans, nonperforming assets, and early stage delinquencies all declining.
  • Net charge-offs declined 3% compared to the prior quarter and 29% compared to the third quarter of 2010.
  • Nonperforming loans declined 10% from the prior quarter, the ninth consecutive quarterly decline. Nonperforming loans were down $1.1 billion, or 26%, from a year ago.
  • Provision for credit losses declined due to lower net charge-offs and a reduction in the allowance for loan losses due to the continued improvement in credit quality. The allowance for loan losses was $2.6 billion, or 2.22% of total loans, as of September 30, 2011.

Balance Sheet

  • Average loans increased 1% compared to the prior quarter. Targeted commercial and consumer portfolios grew, while certain higher-risk portions of the portfolio continued to be managed down.
  • Average client deposits grew to another record level, increasing $1.1 billion, or 1%, compared to the prior quarter. The favorable trend in the deposit mix toward lower-cost accounts continued.
  • Estimated capital ratios continue to be 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 11.05% and 9.25%, respectively, as of the end of the quarter.








Income Statement (presented on a fully taxable-equivalent basis)

3Q 2010


2Q 2011


3Q 2011

(Dollars in millions, except per share data)






Net income

$

153



$

178



$

215


Net income available to common shareholders

84



174



211


Earnings per average common diluted share

0.17



0.33



0.39


Total revenue

2,313



2,198



2,196


Total revenue, excluding net securities gains/losses

2,244



2,166



2,194


Net interest income

1,266



1,286



1,293


Provision for credit losses

615



392



347


Noninterest income

1,047



912



903


Noninterest expense

1,499



1,542



1,560


Net interest margin

3.41

%


3.53

%


3.49

%







Balance Sheet






(Dollars in billions)






Average loans

$

113.3



$

114.9



$

115.6


Average consumer and commercial deposits

117.2



121.9



123.0








Capital






Tier 1 capital ratio(1)

13.58

%


11.11

%


11.05

%

Tier 1 common equity ratio(1)

8.02

%


9.22

%


9.25

%

Total average shareholders' equity to total average assets

13.42

%


11.44

%


11.62

%







Asset Quality






Net charge-offs to average loans (annualized)

2.42

%


1.76

%


1.69

%

Allowance for loan losses to period end loans

2.69

%


2.40

%


2.22

%

Nonperforming loans to total loans

3.80

%


3.14

%


2.76

%

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




Consolidated Financial Performance

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

Revenue

Total revenue was $2.2 billion for the third quarter of 2011, essentially unchanged from the prior quarter and lower by $117 million from the third quarter of 2010.  Net gains from the sales of securities were $2 million for the third quarter of 2011 compared to $32 million for the second quarter of 2011 and $69 million for the third quarter of 2010.  Excluding these gains, total revenue increased 1% compared to the prior quarter, primarily due to increased mortgage production income, and declined 2% compared to the third quarter of 2010, primarily due to lower mortgage-related revenue.

For the nine months ended September 30, 2011, total revenue was $6.6 billion, up $180 million, or 3%, compared to 2010.  The increase was due to higher net interest income, higher valuation gains on the Company's fair value debt and index-linked CDs, and growth in most consumer and commercial fee categories.  This growth was partially offset by lower service charges, lower mortgage-related revenue, and lower net gains from the sales of investment securities.

Net Interest Income

For the third quarter of 2011, net interest income was $1,293 million compared with $1,286 million for the prior quarter and $1,266 million for the third quarter of 2010.  The 1% increase on a sequential quarter basis was primarily related to one more day in the current quarter.  The 2% increase over the third quarter of 2010 was driven by lower rates on deposits, a continued shift in deposit mix toward lower-cost deposits, and a reduction in higher-cost funding.

Net interest margin in the third quarter of 2011 was 3.49%, a decline of four basis points from the prior quarter and an increase of eight basis points from the third quarter of 2010.  On a sequential quarter basis, yields on earning assets declined nine basis points, driven by lower loan yields, and rates on interest-bearing liabilities declined five basis points due to lower rates on deposits and long-term debt.  Compared to the third quarter of 2010, the favorable shift in the deposit mix, lower rates paid, and reduced long-term debt contributed to a decline in interest-bearing liabilities of 29 basis points, more than offsetting the 17 basis point decline in earning asset yields.

For the nine months ended September 30, 2011, net interest income increased 5% to $3,855 million compared to $3,676 million for 2010.  Net interest margin was 3.52% for 2011, up 17 basis points from the prior year due to the decline in rates on deposit accounts more than offsetting the lower yield on earning assets.    

Noninterest Income

Total noninterest income was $903 million for the third quarter of 2011 compared with $912 million for the prior quarter and $1,047 million for the third quarter of 2010.  The $9 million decline compared to the prior quarter was due to a $30 million decline in net gains on the sale of investment securities and lower investment banking income, partially offset by higher mortgage production income and valuation gains on the Company's debt carried at fair value.  Compared with the third quarter of 2010, noninterest income declined $144 million, or 14%, due to lower net gains on the sale of investment securities, a decline in investment banking income, and lower mortgage-related income.  This was partially offset by growth in trust income, retail investment services, and card fees, as well as higher valuation gains on the Company's index-linked CDs and public debt carried at fair value.

Investment banking income was $68 million for the third quarter of 2011 compared with $95 million for the prior quarter and $96 million for the third quarter of 2010.  The decline in the current quarter was partially due to strong prior quarter results, coupled with challenging market conditions during the current quarter.  

Trading account profits and commissions were $66 million for the third quarter of 2011 compared with $53 million for the prior quarter and a trading loss of $22 million for the third quarter of 2010.  The $13 million sequential quarter increase was driven by a $53 million increase in valuation gains on the Company's fair value debt and index-linked CDs due to the widened credit spreads of financial institutions during the current quarter.  Offsetting these valuation gains was a $24 million increase in valuation losses related to illiquid securities and previously securitized loans.  In addition, core trading income was negatively impacted by the volatile markets during the current quarter.  The $88 million increase in trading account profits and commissions compared to the third quarter of 2010 was mainly attributable to $78 million in valuation gains for the current quarter on the Company's fair value debt and index-linked CDs, in comparison to $81 million in valuation losses for the third quarter of 2010.  This was partially offset by lower fair market value adjustments on illiquid securities and previously securitized loans, as well as a decline in core trading income.

Mortgage production income was $54 million for the third quarter of 2011, compared with $4 million for the prior quarter and $133 million for the third quarter of 2010.  The $50 million sequential quarter increase was driven by higher loan production and margins resulting from the decline in mortgage rates during the third quarter of 2011, partially offset by higher mortgage repurchase costs. During the quarter, the mortgage repurchase cost was $117 million, an increase of $27 million over the prior quarter due to higher agency-related repurchase requests.  As of September 30, 2011, reserves for mortgage repurchases totaled $282 million, a decline of $17 million from the prior quarter, reflective of the increase in resolutions during the third quarter of 2011.  Compared to the third quarter of 2010, mortgage production income declined $79 million, primarily due to a decrease in refinance volume.    

Mortgage servicing income was $58 million for the third quarter of 2011, compared to $72 million for the prior quarter and $132 million for the third quarter of 2010.  A decline in the net hedge performance was the primary driver of the $14 million sequential quarter decline and the $74 million decline compared to the third quarter of 2010.  The mortgage servicing portfolio was $161 billion at the end of the third quarter of 2011.

Service charges on deposit accounts increased $6 million, or 4%, on a sequential quarter basis while all other noninterest income categories were relatively stable.  Compared to the third quarter of 2010, trust income, retail investment income, and card fees all increased.

For the nine months ended September 30, noninterest income of $2.7 billion for 2011 was essentially equal to the same period in 2010.  Increases in trust income, retail investment income, investment banking income, card fees, and higher valuation gains on the Company's fair value debt and index-linked CDs were offset by lower mortgage-related income, reduced net gains on the sale of investment securities, and lower service charges on deposit accounts.

Noninterest Expense

Noninterest expense was $1,560 million for the current quarter compared with $1,542 million for the prior quarter and $1,499 million for the third quarter of 2010.  The 1% increase on a sequential quarter basis was primarily due to a $19 million increase in mortgage-related expenses, including higher operating losses related to mortgage servicing.  All other noninterest expenses were essentially flat on a sequential quarter basis.

The 4% increase in noninterest expense over the third quarter of 2010 was primarily due to a $45 million increase in operating losses related to mortgage servicing, a $41 million increase in employee compensation, and a $13 million increase in FDIC insurance premiums due to the change in assessment methodology.  This was partially offset by a $15 million decline in other real estate expenses and a $13 million decrease in debt extinguishment costs.  The increase in employee compensation was driven by a 3% increase in full-time equivalent employees, primarily in client interfacing and mortgage loss mitigation and servicing positions, as well as higher revenue-related compensation due to improved performance in certain businesses.  

For the nine months ended September 30, noninterest expense was $4,567 million for 2011 and $4,362 million for 2010.  The 5% increase in the current year was attributable to higher personnel-related expenses, mortgage-related expenses, and FDIC insurance premiums, partially offset by lower losses on the extinguishment of debt.

Income Taxes

For the third quarter of 2011, the Company recorded a provision for income taxes of $45 million compared with $58 million for the prior quarter and $14 million for the third quarter of 2010.  The effective tax rate of 17.3% for the third quarter of 2011 compares to 24.5% for the prior quarter, which was impacted by the recognition of specific discrete items, and 8.3% for the third quarter of 2010.

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 or third quarters 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 third quarter of 2010 included $67 million of preferred dividends paid to the U.S. Treasury.

Balance Sheet

As of September 30, 2011, SunTrust had total assets of $172.6 billion and shareholders' equity of $20.2 billion, representing 11.7% of total assets.  Book value and tangible book value per common share were $37.29 and $25.60, respectively, as of September 30, 2011, up 3% and 4%, respectively, from the second quarter.

Loans

Average loans for the third quarter of 2011 were $115.6 billion, compared with average balances of $114.9 billion and $113.3 billion during the second quarter of 2011 and the third quarter of 2010, respectively.  On a sequential quarter basis, average loans increased $0.7 billion, or 1%.  Growth was concentrated in commercial & industrial loans which increased $1.1 billion, or 2%, while higher-risk loan categories such as home equity, commercial real estate, and construction loans continued to decline.  Average loans increased $2.3 billion, or 2%, over the third quarter of 2010.  Growth from the prior year was driven by targeted loan categories, including commercial & industrial, indirect auto, and government-guaranteed student loans, which increased by approximately $6 billion combined, while residential real estate categories were managed down.  The risk profile of the loan portfolio continued to improve during the 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 September 30, 2011.

Deposits

Average consumer and commercial deposits for the third quarter of 2011 were $123.0 billion, compared to average balances of $121.9 billion and $117.2 billion for the second quarter of 2011 and third quarter of 2010, respectively.  The favorable shift in the deposit mix continued during the quarter.  The $1.1 billion sequential quarter growth in average deposits was driven by a $2.1 billion, or 7%, increase in demand deposits, partially offset by a decline in interest bearing demand and time deposits.  

Compared to the third quarter of 2010, average consumer and commercial deposits increased $5.7 billion, or 5%. Average lower-cost deposit products increased a combined $9.7 billion, or 10%, while time deposits declined $4.0 billion, or 17%.  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 at 11.05% and 9.25%, respectively, and the tangible equity to tangible assets ratio increased to 8.38% as of September 30, 2011.  

During the quarter, the U.S. Treasury conducted an auction of the Company's warrants which were previously issued to the U.S. Treasury under the Capital Purchase Program.  The Company purchased approximately four million of these warrants in the auction, resulting in an $11 million decline in equity.  Also during the quarter, the Company announced an increase to its quarterly common dividend to $0.05 per share from $0.01 per share.  The Company continues to have substantial available liquidity provided in the form of its client deposit base, other available funding resources, and the retention of cash and high-quality government-backed securities.

Asset Quality

Asset quality improved during the quarter, with declining net charge-offs, nonperforming loans, and early stage delinquencies.

Nonperforming loans totaled $3.2 billion as of September 30, 2011, a decline of $371 million, or 10%, from the prior quarter, marking the ninth consecutive quarterly decline.  The percentage of nonperforming loans to total loans declined to 2.76%, down 38 basis points from the prior quarter.  The sequential quarter decline was primarily driven by reductions in commercial construction, commercial real estate, and commercial & industrial loans.  Compared to September 30, 2010, nonperforming loans declined $1.1 billion, or 26%, with the most significant reductions in commercial construction and, to a lesser extent, residential mortgages, commercial & industrial, and residential construction loans.  Other real estate owned totaled $509 million at the end of the quarter, up 5% on a sequential quarter basis; however, it was down $136 million, or 21%, since September 30, 2010.

Net charge-offs were $492 million compared to $505 million in the prior quarter and $690 million in the third quarter of 2010.  The $13 million sequential quarter decline was concentrated in residential mortgage loans. Compared to the third quarter of 2010, net charge-offs decreased $198 million, or 29%, with declines across all loan categories. The ratio of annualized net charge-offs to total average loans was 1.69%, a decline of 7 basis points and 73 basis points from the second quarter of 2011 and the third quarter of 2010, respectively.  The provision for credit losses was $347 million, a decline of $45 million and $268 million from the second quarter of 2011 and the third quarter of 2010, respectively.

As of September 30, 2011, the allowance for loan losses was $2.6 billion and represented 2.22% of total loans, down 18 basis points from June 30, 2011.  The $144 million decline in allowance for loan losses during the third quarter of 2011 was reflective of the continued improvement in asset quality.

Early stage delinquencies declined to 1.04%, an improvement of five basis points from the end of the second quarter of 2011. Excluding government-guaranteed student loans and Ginnie Mae insured repurchased mortgage loans, early stage delinquencies were 0.70%, a decline of three basis points from June 30, 2011.

Accruing restructured loans totaled $2.8 billion, and nonaccruing restructured loans totaled $883 million as of September 30, 2011.  Accruing restructured loans increased $105 million, while nonaccruing restructured loans declined $40 million.  $3.2 billion of restructured loans related to residential loans, 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 the Investor Relations portion of its website at www.suntrust.com/investorrelations. 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 Investor Relations portion of the Company's website at www.suntrust.com/investorrelations. 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 October 21, 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: 3Q11). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 3Q11). A replay of the call will be available approximately one hour after the call ends on October 21, 2011, and will remain available until November 4, 2011, by dialing 1-866-443-8027 (domestic) or 1-203-369-1125 (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 October 21, 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.  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 periods ended June 30, 2011 and 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, and if these individuals leave or change their roles without effective replacements, then our 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, and 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



Nine Months Ended




September 30


%

September 30


%


2011


2010


Change (5)

2011


2010


Change (5)

EARNINGS & DIVIDENDS











Net income

$215


$153


41%

$573


$5


NM

Net income/(loss) available to common shareholders

211


84


NM

424


(201)


NM

Total revenue - FTE (1), (2)

2,196


2,313


-5%

6,553


6,373


3%

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

2,194


2,244


-2%

6,455


6,245


3%

Net income/(loss) per average common share              











    Diluted (4)

0.39


0.17


NM

0.81


(0.41)


NM

    Diluted excluding effect of accelerated accretion associated with repurchase of preferred stock issued to the U.S. Treasury (1), (4)

0.39


0.17


NM

0.95


(0.41)


NM

    Basic

0.40


0.17


NM

0.81


(0.41)


NM

Dividends paid per common share          

0.05


0.01


NM

0.07


0.03


NM

CONDENSED BALANCE SHEETS











Selected Average Balances











Total assets

$172,076


$171,999


0%

$171,886


$171,569


0%

Earning assets

146,836


147,249


0%

146,536


146,538


0%

Loans

115,638


113,322


2%

115,242


113,587


1%

Consumer and commercial deposits

122,974


117,233


5%

121,863


116,267


5%

Brokered and foreign deposits

2,312


2,740


-16%

2,418


2,945


-18%

Total shareholders' equity

20,000


23,091


-13%

20,861


22,583


-8%

As of











Total assets

172,553


174,703


-1%






Earning assets

148,991


149,994


-1%






Loans

117,475


115,055


2%






Allowance for loan and lease losses

2,600


3,086


-16%






Consumer and commercial deposits

123,933


117,494


5%






Brokered and foreign deposits

2,318


2,850


-19%






Total shareholders' equity

20,200


23,438


-14%






FINANCIAL RATIOS & OTHER DATA











Return on average total assets

0.50

%

0.35

%

43%

0.45

%

0.00

%

NM

Return on average common shareholders' equity

4.23


1.83


NM

2.96


(1.53)


NM

Net interest margin (2)

3.49


3.41


2%

3.52


3.35


5%

Efficiency ratio (2)

71.05


64.80


10%

69.69


68.45


2%

Tangible efficiency ratio (1), (2)

70.55


64.24


10%

69.18


67.83


2%

Effective tax rate/(benefit)

17.33


8.25


NM

19.15


(102.05)


NM

Tier 1 common equity (3)

9.25


8.02


15%






Tier 1 capital (3)

11.05


13.58


-19%






Total capital (3)

13.85


16.42


-16%






Tier 1 leverage (3)

8.85


11.03


-20%






Total average shareholders' equity to total average assets

11.62


13.42


-13%

12.14


13.16


-8%

Tangible equity to tangible assets (1)

8.38


10.19


-18%






Book value per common share

$37.29


$37.01


1%






Tangible book value per common share (1)

25.60


24.42


5%






Market price:











    High

26.52


27.05


-2%

33.14


31.92


4%

    Low

16.51


21.79


-24%

16.51


20.16


-18%

    Close

17.95


25.83


-31%

17.95


25.83


-31%

Market capitalization

9,639


12,914


-25%






Average common shares outstanding (000s)











    Diluted

535,395


498,802


7%

524,888


498,515


5%

    Basic

531,928


495,501


7%

521,248


495,243


5%

Full-time equivalent employees

29,483


28,599


3%






Number of ATMs

2,889


2,928


-1%






Full service banking offices

1,658


1,670


-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



September 30


June 30


March 31


December 31


September 30



2011


2011


2011


2010


2010


EARNINGS & DIVIDENDS











Net income

$215


$178


$180


$185


$153


Net income available to common shareholders

211


174


38


114


84


Total revenue - FTE (1), (2)                      

2,196


2,198


2,160


2,326


2,313


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

2,194


2,166


2,096


2,262


2,244


Net income per average common share              











    Diluted

0.39


0.33


0.08


0.23


0.17


    Diluted excluding effect of accelerated accretion associated with repurchase of preferred stock issued to the U.S. Treasury (1)

0.39


0.33


0.22


0.23


0.17


    Basic

0.40


0.33


0.08


0.23


0.17


Dividends paid per common share        

0.05


0.01


0.01


0.01


0.01


CONDENSED BALANCE SHEETS











Selected Average Balances











Total assets

$172,076


$170,527


$173,066


$174,768


$171,999


Earning assets

146,836


145,985


146,786


149,114


147,249


Loans

115,638


114,920


115,162


114,930


113,322


Consumer and commercial deposits

122,974


121,879


120,710


119,688


117,233


Brokered and foreign deposits

2,312


2,340


2,606


2,827


2,740


Total shareholders' equity

20,000


19,509


23,107


23,576


23,091


As of











Total assets

172,553


172,173


170,794


172,874


174,703


Earning assets

148,991


146,367


145,895


148,473


149,994


Loans

117,475


114,913


114,932


115,975


115,055


Allowance for loan and lease losses

2,600


2,744


2,854


2,974


3,086


Consumer and commercial deposits

123,933


121,671


121,559


120,025


117,494


Brokered and foreign deposits

2,318


3,250


2,426


3,019


2,850


Total shareholders' equity

20,200


19,660


19,223


23,130


23,438


FINANCIAL RATIOS & OTHER DATA











Return on average total assets

0.50

%

0.42

%

0.42

%

0.42

%

0.35

%

Return on average common shareholders' equity

4.23


3.61


0.84


2.44


1.83


Net interest margin (2)

3.49


3.53


3.53


3.44


3.41


Efficiency ratio (2)

71.05


70.17


67.83


66.57


64.80


Tangible efficiency ratio (1), (2)              

70.55


69.64


67.32


66.07


64.24


Effective tax rate

17.33


24.45


15.54


19.66


8.25


Tier 1 common equity (3)

9.25


9.22


9.05


8.08


8.02


Tier 1 capital (3)

11.05


11.11


11.00


13.67


13.58


Total capital (3)

13.85


14.01


13.92


16.54


16.42


Tier 1 leverage (3)

8.85


8.92


8.72


10.94


11.03


Total average shareholders' equity to total average assets          

11.62


11.44


13.35


13.49


13.42


Tangible equity to tangible assets (1)              

8.38


8.07


7.87


10.12


10.19


Book value per common share

$37.29


$36.30


$35.49


$36.34


$37.01


Tangible book value per common share (1)

25.60


24.57


23.79


23.76


24.42


Market price:











    High

26.52


30.13


33.14


29.82


27.05


    Low

16.51


24.63


27.38


23.25


21.79


    Close

17.95


25.80


28.84


29.51


25.83


Market capitalization

9,639


13,852


15,482


14,768


12,914


Average common shares outstanding (000s)











    Diluted

535,395


535,416


503,503


499,423


498,802


    Basic

531,928


531,792


499,669


495,710


495,501


Full-time equivalent employees

29,483


29,235


29,052


29,056


28,599


Number of ATMs

2,889


2,919


2,924


2,918


2,928


Full service banking offices

1,658


1,661


1,665


1,668


1,670
























(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.          



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


Nine  Months Ended


September 30


June 30


March 31


December 31


September 30


September 30


September 30


2011


2011


2011


2010


2010


2011


2010

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














Efficiency ratio(2)                    

71.05%


70.17%


67.83%


66.57%


64.80%


69.69%


68.45%

Impact of excluding amortization of intangible assets              

-0.50%


-0.53%


-0.51%


-0.50%


-0.56%


-0.51%


-0.62%

Tangible efficiency ratio(3)                      

70.55%


69.64%


67.32%


66.07%


64.24%


69.18%


67.83%

Total shareholders' equity                

$20,200


$19,660


$19,223


$23,130


$23,438





Goodwill, net of deferred taxes of $149 million, $144 million, $139 million, $134 million, and $131 million, respectively

(6,195)


(6,199)


(6,185)


(6,189)


(6,192)





Other intangible assets, net of deferred taxes of $18 million, $21 million, $24 million, $26 million, and $30 million, respectively, and MSRs

(1,120)


(1,518)


(1,635)


(1,545)


(1,174)





MSRs

1,033


1,423


1,538


1,439


1,072





Tangible equity              

13,918


13,366


12,941


16,835


17,144





Preferred stock

(172)


(172)


(172)


(4,942)


(4,936)





Tangible common equity

$13,746


$13,194


$12,769


$11,893


$12,208





Total assets                

$172,553


$172,173


$170,794


$172,874


$174,703





Goodwill                

(6,344)


(6,343)


(6,324)


(6,323)


(6,323)





Other intangible assets including MSRs                

(1,138)


(1,539)


(1,659)


(1,571)


(1,204)





MSRs

1,033


1,423


1,538


1,439


1,072





Tangible assets                

$166,104


$165,714


$164,349


$166,419


$168,248





Tangible equity to tangible assets(4)          

8.38%


8.07%


7.87%


10.12%


10.19%





Tangible book value per common share(5)

$25.60


$24.57


$23.79


$23.76


$24.42





Net interest income                    

$1,263


$1,259


$1,249


$1,266


$1,238


$3,771


$3,587

Taxable-equivalent adjustment                  

30


27


28


28


28


84


89

Net interest income - FTE                

1,293


1,286


1,277


1,294


1,266


3,855


3,676

Noninterest income                    

903


912


883


1,032


1,047


2,698


2,697

Total revenue - FTE              

2,196


2,198


2,160


2,326


2,313


6,553


6,373

Securities gains, net

(2)


(32)


(64)


(64)


(69)


(98)


(128)

Total revenue - FTE excluding net securities gains(6)

$2,194


$2,166


$2,096


$2,262


$2,244


$6,455


$6,245











































(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.

(2) 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.

(3) 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.  

(4) 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.

(5) 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. 

(6) 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.



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


Nine  Months Ended


September 30


June 30


March 31


December 31


September 30


September 30


September 30


2011


2011


2011


2010


2010


2011


2010

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














Net income/(loss) available to common shareholders  

$211


$174


$38


$114


$84


$424


($201)

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

$211


$174


$112


$114


$84


$498


($201)

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

$0.39


$0.33


$0.08


$0.23


$0.17


$0.81


($0.41)

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

$0.39


$0.33


$0.22


$0.23


$0.17


$0.95


($0.41)

Net income

$215


$178


$180


$185


$153


$573


$5

Preferred dividends, Series A

(2)


(2)


(2)


(2)


(2)


(5)


(6)

U.S. Treasury preferred dividends and accretion of discount

-


-


(66)


(67)


(67)


(66)


(200)

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)


-


(4)


-

Net income/(loss) available to common shareholders  

211


174


38


114


84


424


(201)











































(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.