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Form 10-K
Securities and Exchange Commission
Washington, D.C.20549
Annual Report Pursuant to Section 13 or 15(d)of the Securities
Exchange Act of 1934
For the Fiscal Year Ended December 31, 1994
Commission file number 1-8918
SunTrust Banks, Inc.
Incorporated in the State of Georgia
I.R.S. Employer Identification Number 58-1575035
Address: 25 Park Place, N.E., Atlanta, GA 30303
Telephone: (404) 588-7711
Securities Registered Pursuant to Section 12(b) of the Act: Common Stock -
$1.00 par value. which is registered on the New York Stock Exchange.
As of January 31, 1994, SunTrust had 115,624,075 shares of common stock
outstanding. The aggregate market value of SunTrust common stock held by
non-affiliates on January 31, 1995 was approximately $5.8 billion.
SunTrust (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past
90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
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Documents Incorporated By Reference
Part III information is incorporated herein by reference, pursuant to
Instruction G of Schedules and Reports on Form 10-K, from SunTrust's Proxy
Statement for its 1994 Annual Shareholders' Meeting, which will be filed
with the Commission by April 30, 1995. Certain Part I and Part II
information required by Form 10-K is incorporated by reference from the
SunTrust Annual Report to Shareholders as indicated below, which is included
as an exhibit hereto.
Annual Report
Part Page Number
- ------------------------------------------------ ---------------------
PART I
Item 1 Business AR-1, AR-3 thru AR-37
Item 2 Properties AR-37
Item 3 Legal Proceedings AR-37
Item 4 Not Applicable
PART II
Item 5 Market for the Registrant's Common
Equity and Related Stockholder AR-2, AR-5, AR-29,
Matters AR-35, AR-64
Item 6 Selected Financial Data AR-5
Item 7 Management's Discussion and Analysis
of Financial Condition and Results of
Operations AR-3 thru AR-34
Item 8 Financial Statements and AR-28 thru AR-34,
Supplementary Data AR-38 thru AR-63
Item 9 Not Applicable
PART III
Item 10 Directors and Executive Officers of
the Registrant Proxy Statement
Item 11 Executive Compensation Proxy Statement
Item 12 Security Ownership of Certain
Beneficial Owners and Management Proxy Statement
Item 13 Certain Relationships and Related
Transactions Proxy Statement
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
Financial Statements Filed. See "Index to Consolidated Financial
Statements" on page 72 of this Form 10-K.
All financial statement schedules are omitted because the data is either
not applicable or is discussed in the financial statements or related
footnotes.
The Company's Articles of Incorporation, By-laws, certain instruments
defining the rights of securities holders, including designations of the
terms of outstanding indentures, constituent instruments relating to various
employee benefit plans, and a statement setting forth the computation of per
share earnings and certain other documents are filed as Exhibits to this
Report or incorporated by reference herein pursuant to the Securities
Exchange Act of 1934.
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3. Exhibit Index
Sequential
Page
Exhibit Description Number
3.1 Amended and Restated Articles of Incorporation of *
SunTrust Banks, Inc. ("SunTrust") effective as of
November 14, 1989, incorporated by reference to
Exhibit 3.1 to Registrant's Annual Report on 10-K for
the year ended December 31, 1989.
3.2 Amended and Restated Bylaws of SunTrust effective as *
of February 12, 1991, incorporated by reference to
Exhibit 3.2 to Registrant's Annual Report on 10-K for
the year ended December 31, 1990.
4.1 Indenture Agreement between SunTrust and Morgan *
Guaranty Trust Company of New York, as Trustee,
incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-00084.
4.2 Indenture Agreement between SunTrust and *
Manufacturers Hanover Trust Company, as Trustee,
incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-12186.
4.3 Indenture between SunTrust and PNC, N.A., as Trustee, *
incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-62162.
4.4 Indenture between SunTrust and The First National *
Bank of Chicago, as Trustee, incorporated by
reference to Exhibit 4(b) to Registration Statement
No. 33-62162.
Executive Compensation Plans and Arrangements:
10.1 SunTrust Banks, Inc. Supplemental Executive Plan, as *
amended and restated effective February 13, 1990,
incorporated by reference to Exhibit 10.1 to
Registrant's Annual Report on 10-K for the year ended
December 31, 1989.
10.2 SunTrust Banks, Inc. Performance Unit Plan, as *
amended and restated effective November 8, 1988,
incorporated by reference to Exhibit 10.2 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1988.
10.3 SunTrust Banks, Inc. Performance Unit Plan dated
January 4, 1995. 7
10.4 SunTrust Banks, Inc. Management Incentive Plan dated
January 4, 1995. 15
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10.5 SunTrust Banks, Inc. Management Incentive Plan *
Deferred Compensation Fund, effective January 1,
1986, incorporated by reference to Exhibit 10.3 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1985.
10.6 SunTrust Banks, Inc. Executive Stock Plan, *
incorporated by reference to Exhibit 10.5 to
Registrant's Annual Report on 10-K for the year ended
December 31, 1989.
10.7 SunTrust Banks, Inc. 1995 Executive Stock Plan
10.8 Trust Company of Georgia 1977 Employee Stock Option *
Plan, as amended, incorporated by reference to Exhibit
A to Prospectus and Proxy Statement to Post-Effective
Amendment No. 1 to Registration Statement No. 2-92421.
10.9 Amendment to Trust Company of Georgia 1977 Employee *
Stock Option Plan and Consent to Adoption by SunTrust
Banks, Inc., effective July 1, 1985, incorporated by
reference to Exhibit 19(d) to SunTrust's Form 10-Q
for the quarter ended June 30, 1985.
10.10 Directors Deferred Compensation Plan, incorporated by *
reference to Exhibit 10.8 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
11 Statement re computation of per share earnings. 33
12 Ratio of Earnings to Fixed Charges. 34
13 SunTrust's 1994 Annual Report to Shareholders. 35
21 SunTrust Subsidiaries. 99
22 SunTrust's Proxy Statement relating to the 1995 *
Annual Meeting of Shareholders, dated February 22,
1995.
23 Consent of Independent Public Accountants. 101
27 Financial Data Schedule 102
Certain instruments defining rights of holders of long-term debt of
SunTrust and its subsidiaries are not filed herewith pursuant to Item
601(b)(4)(iii) of Regulation S-K. At the Commission's request, SunTrust
agrees to give the Commission a copy of any instrument with respect to long-
term debt of SunTrust and its consolidated subsidiaries and any of its
unconsolidated subsidiaries for which financial statements are required to
be filed under which the total amount of debt securities authorized does
not exceed ten percent of the total assets of SunTrust and its subsidiaries
on a consolidated basis.
* Incorporated by reference.
Certain statistical data required by the Securities and Exchange Commission
are included on pages 39-68.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf on February 14, 1995 by the undersigned, thereunto duly
authorized.
SunTrust Banks, Inc.
(Registrant)
By: /s/ James B. Williams
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on February 14, 1994 by the following persons on behalf
of the Registrant and in the capacities indicated.
By: /s/ James B. Williams
Chairman of the Board of Directors
and Chief Executive Officer
By: /s/ L. Phillip Humann
President
By: /s/ John W. Spiegel
Executive Vice President and
Chief Financial Officer
By: /s/ William P. O'Halloran
Senior Vice President and Controller
(Chief Accounting Officer)
/s/ J. Hyatt Brown Director
J. Hyatt Brown
/s/ James D. Camp, Jr. Director
James D. Camp, Jr.
/s/ Warren M. Cason Director
Warren M. Cason
/s/ Roberto C. Goizueta Director
Roberto C. Goizueta
/s/ T. Marshall Hahn, Jr. Director
T. Marshall Hahn, Jr.
/s/ David H. Hughes Director
David H. Hughes
/s/ Joseph L. Lanier, Jr. Director
Joseph L. Lanier, Jr.
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/s/ H.G. Patillo Director
H.G. Patillo
/s/ Scott L. Probasco, Jr. Director
Scott L. Probasco, Jr.
/s/ Robert W. Scherer Director
Robert W. Scherer
/s/ J. Walter Tucker, Jr. Director
J. Walter Tucker, Jr.
/s/ James H. Williams Director
James H. Williams
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SUNTRUST BANKS, INC. PERFORMANCE UNIT PLAN
Amended and Restated as of January 4, 1995
Section 1. Name and Purpose
The name of this Plan is the SunTrust Banks, Inc. Performance Unit Plan.
The purpose of the Plan is to promote the long-term interests of the
Corporation and its stockholders through the granting of Performance Units to
key executive employees of the Corporation and its Subsidiaries in order to
motivate and retain superior executives who contribute in a significant
manner to the actual financial performance of the Corporation as measured
against a pre-established goal for the Corporation's profits.
Section 2. Effective Date, Term and Amendments
The effective date of the amended and restated Plan shall be November 8,
1994, and the amended and restated Plan shall apply to all awards granted on
or after such date. The Plan shall continue for an indefinite term until
terminated by the Board; provided, however, that the Corporation and the
Committee after such termination shall continue to have full administrative
power to take any and all action contemplated by the Plan which is necessary
or desirable and to make payment of any awards earned by Participants during
any then unexpired Performance Measurement Cycle. The Board or the Committee
may amend the Plan in any respect from time to time. The Plan as in effect
on November 7, 1994 shall continue in effect for awards granted on or before
such date.
Section 3. Definitions and Construction
A. As used in this Plan, the following terms shall have the meanings
indicated, unless the context clearly requires another meaning:
1. "Board" means the Board of Directors of the Corporation.
2. "Calendar Year Report" means the report prepared for each calendar
year by the Controller's office of the Corporation entitled "SunTrust Banks,
Inc. Contribution to Consolidated Net Income for the Calendar Year", which is
prepared in accordance with generally accepted accounting principles, or any
successor to such report.
3. "Code" means the Internal Revenue Code of 1986, as amended.
4. "Committee" means the Compensation Committee of the Board or any
other Committee of the Board to which the responsibility to administer this
Plan is delegated by the Board; such Committee shall consist of at least two
members of the Board, who shall not be eligible to receive an award under the
Plan and each of whom shall be a "disinterested" person within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, and shall be or be
treated as an "outside director" for purposes of Section 162(m) of the Code.
5. "Corporation" means SunTrust Banks, Inc. and any successor thereto.
6. "Covered Employee" means for each calendar year the Chief Executive
Officer and the four other executive officers whose compensation would be
reportable on the "summary compensation table" under the Securities and
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Exchange Commission's executive compensation disclosure rules, as set forth
in Item 402 of Regulation S-K, 17 C.F.R. 229.402, under the Securities
Exchange Act of 1934, if the report was prepared as of the last day of such
calendar year.
7. "Change in Control" means a change in control of the Corporation of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
of 1934 ("34 Act") as in effect on the effective date of this Plan, provided
that such a change in control shall be deemed to have occurred at such time
as (i) any "person" (as that term is used in Sections 13(d) and 14(d)(2) of
the 34 Act), is or becomes the beneficial owner (as defined in Rule 13d-3
under the 34 Act) directly or indirectly, of securities representing 20% or
more of the combined voting power for election of directors of the then
outstanding securities of the Corporation or any successor of the
Corporation; (ii) during any period of two consecutive years or less,
individuals who at the beginning of such period constitute the Board cease,
for any reason, to constitute at least a majority of the Board, unless the
election or nomination for election of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; (iii) the shareholders of the
Corporation approve any merger, consolidation or share exchange as a result
of which the common stock of the Corporation shall be changed, converted or
exchanged (other than a merger with a wholly-owned subsidiary of the
Corporation) or any dissolution or liquidation of the Corporation or any sale
or the disposition of 50% or more of the assets or business of the
Corporation; or (iv) the shareholders of the Corporation approve any merger
or consolidation to which the Corporation is a party or a share exchange in
which the Corporation shall exchange its shares for shares of another
corporation as a result of which the persons who were shareholders of the
Corporation immediately prior to the effective date of the merger,
consolidation or share exchange shall have beneficial ownership of less than
50% of the combined voting power for election of directors of the surviving
corporation following the effective date of such merger, consolidation or
share exchange; provided, however, and notwithstanding the occurrence of any
of the events previously described in this definition, that no "change in
control" shall be deemed to have occurred under this definition if, prior to
such time as a "change in control" would otherwise be deemed to have occurred
under this definition, the Board determines otherwise.
8. "Earnings Per Share" means for each calendar year in each
Performance Measurement Cycle the primary earnings per common share of the
Corporation as set forth in the Calendar Year Report for each such year,
adjusted to exclude items which should be excluded as being extraordinary in
nature as determined by the Committee; provided, however, no such adjustment
shall be made with respect to a Covered Employee if the Committee determines
that such adjustment shall cause an award to such Covered Employee to fail to
qualify as "performance-based compensation" under Section 162(m) of the Code.
9. "Employment" means continuous employment with the Corporation or a
Subsidiary from the beginning to the end of each Performance Measurement
Cycle, which continuous employment shall not be considered to be interrupted
by transfers between the Corporation and a Subsidiary or between
Subsidiaries.
10. "Final Value" means the value of a Performance Unit determined in
accordance with Section 6 as the basis for payments to Participants at the
end of a Performance Measurement Cycle.
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11. "Grant Value" means the initial value assigned to a Performance
Unit as determined by the Committee.
12. "Net Income" means the Corporation's consolidated net income for
each calendar year in each Performance Measurement Cycle (as set forth in the
Calendar Year Report for each such year), adjusted to exclude items which
should be excluded as being extraordinary in nature as determined by the
Committee; provided, however, no such adjustment shall be made with respect
to a Covered Employee if the Committee determines that such adjustment shall
cause an award to such Covered Employee to fail to qualify as "performance-
based compensation" under Section 162(m) of the Code.
13. "Participant" means any key executive employee of the Corporation
and/or its Subsidiaries who is selected by the Committee or the Committee's
delegate to participate in the Plan based upon the employee's substantial
contributions to the growth and profitability of the Corporation and/or its
Subsidiaries.
14. "Performance Goal" means the performance objective of the
Corporation which is established pursuant to Section 6 by the Committee for
each Performance Measurement Cycle as the basis for determining the Final
Value of a Performance Unit.
15. "Performance Measurement Cycle" shall mean a period of consecutive
calendar years as set by the Committee which commences on the first day of
the first calendar year in such period.
16. "Performance Unit" means a unit awarded to a Participant under the
Plan for a Performance Measurement Cycle, and each unit shall have an
assigned value for accounting purposes which shall be determined by the
Committee.
17. "Plan" means the SunTrust Banks, Inc. Performance Unit Plan as
amended and restated in this document and all amendments thereto.
18. "Proportionate Final Value" means the product of a fraction, the
numerator of which is the actual number of full months in a Performance
Measurement Cycle that an employee was a Participant in the Plan and the
denominator of which is the total number of months in that Performance
Measurement Cycle, multiplied by the Final Value of a Performance Unit.
19. "Subsidiary" means any bank, corporation or entity which the
Corporation controls either directly or indirectly through ownership of fifty
percent (50%) or more of the total combined voting power of all classes of
stock of such bank, corporation or entity, except for such direct or indirect
ownership by the Corporation while the Corporation or a Subsidiary is acting
in a fiduciary capacity with respect to any trust, probate estate,
conservatorship, guardianship or agency.
20. "Termination Value" means the value of a Performance Unit as
determined by the Committee, in its absolute discretion, upon the early
termination of a Performance Measurement Cycle or upon a Participant's
termination of Employment before the end of such a cycle, which value shall
be the basis for the payment of an award to a Participant, in accordance with
Sections 8(B), 8(C), 9(A) or 9(B) of the Plan based on the Participant's
Employment prior to his termination of Employment or the early termination of
such cycle.
B. In the construction of the Plan, the masculine shall include
the feminine and the singular shall include the plural in all instances in
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which such meanings are appropriate. The Plan and all agreements executed
pursuant to the Plan shall be governed by the laws of Georgia.
Section 4. Committee Responsibilities
A. The Committee may, from time to time, adopt rules and
regulations and prescribe forms and procedures for carrying out the purposes
and provisions of the Plan. The Committee shall have the final authority to
select Participants and to designate the number of Performance Units to be
awarded to each Participant. The Committee shall have the sole and final
authority to determine awards, designate the periods for Performance
Measurement Cycles, assign Performance Unit values, determine Performance
Goals, and answer all questions arising under the Plan, including questions
on the proper construction and interpretation of the Plan. Any
interpretation, decision or determination made by the Committee shall be
final, binding and conclusive upon all interested parties, including the
Corporation and its Subsidiaries, Participants and other employees of the
Corporation or any Subsidiary, and the successors, heirs and representatives
of all such persons. The Committee shall use its best efforts to ensure that
awards to Covered Employees under the Plan qualify as "performance-based
compensation" for purposes of Section 162(m) of the Code.
B. Subject to the express provisions of the Plan and prior to the
beginning of a calendar year (or such later time as may be permitted for
awards paid for such year to be treated as performance-based compensation
under Section 162(m)), the Committee shall:
1. Designate the period of consecutive calendar years for each
Performance Measurement Cycle which shall begin on the first day of such
year.
2. Select the Participants for each such Performance Measurement
Cycle.
3. Establish the Performance Goals for each such Performance
Measurement Cycle.
4. Designate the number of Performance Units to be awarded to each
Participant.
5. Assign a Grant Value to each Performance Unit and establish the
method of calculating the Final Value of each Performance Unit.
6. Authorize management (a) to notify each Participant that he has
been selected as a Participant, inform him of the number of Performance Units
awarded to him and the Performance Goal that has been established for such
Performance Measurement Cycle and (b) to obtain from him such agreements and
powers and designations of beneficiaries as it shall reasonably deem
necessary for the administration of the Plan.
C. During any Performance Measurement Cycle, the Committee may if it
determines that it will promote the purpose of the Plan:
1. Select as additional Participants any key executive employees of
the Corporation and its Subsidiaries who have been hired, transferred or
promoted into a position eligible for participation in the Plan and may award
Performance Units to such Participants for such Performance Measurement
Cycle. The Performance Units awarded to any such Participant shall be
subject to the same restrictions, limitations, Performance Goals and other
conditions as those held by other Participants for the same Performance
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Measurement Cycle and their participation may be made retroactive to the
first day of such cycle; provided, however, no Participant who is added will
be paid an award for any calendar year to the extent such payment, when added
to all his other compensation for such year, would be nondeductible under
Section 162(m) of the Code.
2. Revoke the designation of an individual as a Participant under the
Plan, revoke the grant to a Participant of Performance Units subject to an
award, if any, under a specific Performance Measurement Cycle and authorize
management to inform him in writing of such revocation.
D. The Committee may revise the Performance Goals for any Performance
Measurement Cycle to the extent the Committee, in the exercise of its
absolute discretion, believes necessary to achieve the purpose of the Plan in
light of any unexpected or unusual circumstances or events, including but not
limited to changes in accounting rules, accounting practices, tax laws and
regulations, or in the event of mergers, acquisitions, divestitures,
unanticipated increases in Federal Deposit Insurance premiums, and
extraordinary or unanticipated economic circumstances; provided, however, no
change will be effective for any Participant who at the time of payment of
the award is a Covered Employee, to the extent the Committee determines that
such change might make the amount of the award to such Participant
nondeductible under Section 162(m).
Section 5. Performance Units
The Committee shall determine the aggregate Grant Value (Grant Value
times the number of Performance Units) of the Performance Units awarded at
the date of grant to each Participant.
Section 6. Performance Goals
For each Performance Measurement Cycle, the Committee shall establish
one or more Performance Goals which shall determine individually or jointly
the Final Value of the Performance Units under each award for such cycle and
which shall be based on Net Income and/or Earnings Per Share. The Committee
shall fix a minimum Net Income objective and/or a minimum Earnings Per Share
objective for the cycle, and the Final Value of such units shall be equal to
zero if actual Net Income and/or actual Earnings Per Share fall below either
or both the minimum objectives, as established by the Committee. The
Committee shall also fix a maximum Net Income objective and/or Earnings Per
Share objective and such other Net Income and/or Earnings Per Share
objectives which fall between the minimum and maximum objectives as the
Committee shall deem appropriate, with corresponding Final Values for such
units. Awards will be determined based upon achieving or exceeding the
Performance Goals set by the Committee. Awards are determined by multiplying
each Participant's number of Performance Units by the Final Value. Straight
line interpolation will be used to calculate the awards when Net Income or
Earnings Per Share fall between any two specified Net Income or Earnings Per
Share objectives, as applicable. No individual may receive an award in
excess of $1 million for any Performance Measurement Cycle.
Section 7. Payment of an Award
A. Upon completion of each Performance Measurement Cycle, the
Committee, or such persons as the Committee shall designate, shall determine
in accordance with Section 6 the extent to which the Performance Goals have
been achieved and authorize the cash payment of an award, if any, to each
Participant. Each award shall equal the Final Value of the Performance Units
times the number of the Performance Units awarded. The Committee shall
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review and ratify the award determinations and shall certify such award
determinations in writing. Payment of awards shall be made as soon as
practical after the certification of awards by the Committee. Each award
shall be paid in cash after deducting the amount of applicable Federal,
State, or Local withholding taxes of any kind required by law to be withheld
by the Corporation. All awards, whether paid currently or paid under any
plan which defers payment, shall be payable out of the Corporation's general
assets. Each Participant's claim, if any, for the payment of an award,
whether made currently or made under any plan which defers payment, shall not
be superior to that of any general and unsecured creditor of the Corporation.
If an error or omission is discovered in any of the determinations, the
Committee shall cause an appropriate equitable adjustment to be made in order
to remedy such error or omission.
B. Notwithstanding the terms of any award, the Committee in its sole
and absolute discretion, may reduce the amount of the award payable to any
Participant for any reason, including the Committee's judgment that the
Performance Goals have become an inappropriate measure of achievement, a
change in the employment status, position or duties of the Participant,
unsatisfactory performance of the Participant, or the Participant's service
for less than the Performance Measurement Cycle.
C. In accordance with the procedures set forth in the SunTrust Banks,
Inc.'s Performance Unit Plan Deferred Compensation Fund, a Participant may
elect to defer receipt of one hundred (100%) percent of the Final Value of
his award, if any, for each Performance Measurement Cycle or fifty (50%)
percent of said amount, rounded to the nearest One Hundred ($100.00) Dollars,
and the amount so deferred shall be credited by the Corporation to the
Participant's Fund Accounts established under such Fund.
Section 8. Participation for Less than a Full Performance Measurement Cycle
A. Except as otherwise provided in this Section 8, Performance
Units awarded to a Participant shall be forfeited if the Participant's
Employment terminates during any Performance Measurement Cycle and no
payments shall be due the Participant for any forfeited Performance Units.
B. If a Participant's Employment terminates prior to the end of
any Performance Measurement Cycle on account of his death, the Committee
shall waive the Employment condition and shall authorize the payment of an
award to such Participant at the end of such cycle based on the Proportionate
Final Value, if any, of his Performance Units, unless the Committee in its
discretion feels the award should be forfeited.
C. If a Participant's Employment terminates prior to the end of any
Performance Measurement Cycle on account of disability under a long-term
disability plan maintained by the Corporation or a Subsidiary, the Committee
shall waive the Employment condition and shall authorize, as of commencement
of disability benefits to such Participant, the payment of an award to such
Participant at the end of such cycle based on the Proportionate Final Value,
if any, of his Performance Units, unless the Committee in its discretion
feels the award should be forfeited.
D. If a Participant's Employment terminates prior to the end of
any Performance Measurement Cycle on account of his early or normal
retirement under any pension plan maintained by the Corporation or any
Subsidiary, the Committee
shall waive the Employment condition and shall authorize the payment of an
award to such Participant at the end of such cycle based on the Proportionate
Final Value, if any, of his Performance Units, unless the Committee in its
<PAGE>
discretion feels the award should be forfeited.
Section 9. Premature Satisfaction of Plan Conditions
A. In the event of a Change in Control of the Corporation prior
to the end of any Performance Measurement Cycle, the Committee shall waive
any and all Plan conditions and authorize the payment of an award immediately
to each Participant based on the Termination Value, if any, of his
Performance Units.
B. If a tender or exchange offer is made other than by the
Corporation for shares of the Corporation's stock prior to the end of any
Performance Measurement Cycle, the Committee may waive any and all Plan
conditions and authorize, at any time after the commencement of the tender or
exchange offer and within thirty (30) days following completion of such
tender or exchange offer, the payment of an award immediately to each
Participant based on the Termination Value, if any, of his Performance Units.
C. A Performance Measurement Cycle shall terminate upon the
Committee's authorization of the payment of an award during such cycle
pursuant to this Section 9 and no further payments shall be made for such
Cycle.
Section 10. Non-Transferabilitv of Rights and Interests
A. A Participant may not alienate, assign, transfer or otherwise
encumber his rights and interests under this Plan and any attempt to do so
shall be null and void.
B. In the event of a Participant's death and subject to the terms
of Section 8(B), the Committee shall authorize payment of any award due a
Participant to the Participant's designated beneficiary as specified or, in
the absence of such written designation or its ineffectiveness, then to his
estate. Any such designation may be revoked and a new beneficiary designated
by the Participant by written instrument delivered to the Committee.
Section 11. Limitation of Rights
Nothing in this Plan shall be construed to give any employee of the
Corporation or a Subsidiary any right to be selected as a Participant or to
receive an award or to be granted Performance Units other than as is provided
herein. Nothing in this Plan or any agreement executed pursuant hereto shall
be construed to limit in any way the right of the Corporation or a Subsidiary
to terminate a Participant's employment at any time, without regard to the
effect of such termination on any rights such Participant would otherwise
have under this Plan, or give any right to a Participant to remain employed
by the Corporation or a Subsidiary in any particular position or at any
particular rate of remuneration.
Section 12. Shareholder Approval
Notwithstanding anything in this Plan to the contrary, no awards shall
be paid to Covered Employees until such shareholder approval as is required
under Section 162(m) of the Code, if any, is obtained.
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Executed this 4th day of January, 1995.
SUNTRUST BANKS, INC.
Attest: By:
Title: Title:
(CORPORATE SEAL)
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SUNTRUST BANKS, INC. MANAGEMENT INCENTIVE PLAN
Amended and Restated as of January 4, 1995
Section 1. Name and Purpose
The name of this Plan is the SunTrust Banks, Inc. Management Incentive
Plan. The purpose of the Plan is to promote the interests of the Corporation
and its stockholders through the granting of Awards to key executive
employees of the Corporation and its Subsidiaries in order to motivate and
retain superior executives who contribute in a significant manner to the
actual financial performance of the Corporation as measured against
pre-established goals for the Corporation's profits.
Section 2. Effective Date, Term and Amendments
The effective date of the amended and restated Plan shall be November 8,
1994, and the amended and restated Plan shall apply to all Awards granted on
or after such date. The Plan shall continue for an indefinite term until
terminated by the Board; provided, however, that the Corporation and the
Committee after such termination shall continue to have full administrative
power to take any and all action contemplated by the Plan which is necessary
or desirable and to make payment of any Awards earned by Participants during
any then unexpired Plan Year. The Board or the Committee may amend the Plan
in any respect from time to time. The Plan as in effect on November 7, 1994
shall continue in effect for Awards granted on or before such date.
Section 3. Definitions and Construction
A. As used in this Plan, the following terms shall have the meanings
indicated, unless the context clearly requires another meaning:
1. "Award" means the right to receive a cash payment which represents
a percentage of a Participant's Base Wages determined by the Committee in
accordance with Section 5 hereof in the event the Corporation or a Subsidiary
achieves the Financial Goals established pursuant to Section 5.
2. "Base Wages" means the base salary paid to a Participant by the
Corporation or a Subsidiary during a Plan Year, excluding bonuses, overtime,
commissions and other extra compensation, reimbursed expenses and
contributions made by the Corporation or a Subsidiary to this or any other
employee benefit plan maintained by the Corporation or a Subsidiary.
3. "Calendar Year Report" means the report prepared for each calendar
year by the Controller's office of the Corporation entitled "SunTrust Banks,
Inc. Contribution to Consolidated Net Income for the Calendar Year", which is
prepared in accordance with generally accepted accounting principles, or any
successor to such report.
4. "Code" means the Internal Revenue Code of 1986, as amended.
5. "Committee" shall mean the Compensation Committee of the Board or
any other Committee of the Board to which the responsibility to administer
this Plan is delegated by the Board; such Committee shall consist of at least
two members of the Board, who shall not be eligible to receive an Award under
the Plan and each of whom shall be a "disinterested" person within the
<PAGE>
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and shall be
or be treated as an "outside director" for purposes of Section 162(m) of
the Code.
6. "Corporation" means SunTrust Banks, Inc. and any successor thereto.
7. "Covered Employee" means for each calendar year the Chief Executive
Officer of the Corporation and the four other executive officers whose
compensation would be reportable on the "summary compensation table" under
the Securities and Exchange Commission's executive compensation disclosure
rules, as set forth in Item 402 of Regulation S-K, 17 C.F.R. 229.402, under
the Securities Exchange Act of 1934, if the report was prepared as of the
last day of such calendar year.
8. "Change in Control" means a change in control of the Corporation of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
of 1934 ("34 Act") as in effect on the effective date of this Plan, provided
that such a change in control shall be deemed to have occurred at such time
as (i) any "person" (as that term is used in Sections 13(d) and 14(d)(2) of
the 34 Act), is or becomes the beneficial owner (as defined in Rule 13d-3
under the 34 Act) directly or indirectly, of securities representing 20% or
more of the combined voting power for election of directors of the then
outstanding securities of the Corporation or any successor of the
Corporation; (ii) during any period of two consecutive years or less,
individuals who at the beginning of such period constitute the Board cease,
for any reason, to constitute at least a majority of the Board, unless the
election or nomination for election of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; (iii) the shareholders of the
Corporation approve any merger, consolidation or share exchange as a result
of which the common stock of the Corporation shall be changed, converted or
exchanged (other than a merger with a wholly-owned subsidiary of the
Corporation) or any dissolution or liquidation of the Corporation or any sale
or the disposition of 50% or more of the assets or business of the
Corporation; or (iv) the shareholders of the Corporation approve any merger
or consolidation to which the Corporation is a party or a share exchange in
which the Corporation shall exchange its shares for shares of another
corporation as a result of which the persons who were shareholders of the
Corporation immediately prior to the effective date of the merger,
consolidation or share exchange shall have beneficial ownership of less than
50% of the combined voting power for election of directors of the surviving
corporation following the effective date of such merger, consolidation or
share exchange; provided, however, and notwithstanding the occurrence of any
of the events previously described in this definition, that no "change in
control" shall be deemed to have occurred under this definition if, prior to
such time as a "change in control" would otherwise be deemed to have occurred
under this definition, the Board determines otherwise.
9. "Employment" means continuous employment with the Corporation or a
Subsidiary from the beginning to the end of each Plan Year, which continuous
employment shall not be considered to be interrupted by transfers between the
Corporation and a Subsidiary or between Subsidiaries.
10. "Final Value" means the value of an Award determined in accordance
with Sections 5 and 6 as the basis for payments to Participants at the end of
a Plan Year.
11. "Net Income" means for each calendar year the Corporation's
consolidated net income with respect to the Corporation (as set forth in the
<PAGE>
Calendar Year Report for such year) and, with respect to each designated
Subsidiary, either its net income or certain components of its net income,
as specified by the Committee prior to the commencement of each Plan Year
(which net income or components thereof are as set forth in the Calendar Year
Report for such year), adjusted to exclude items which should be excluded as
being extraordinary in nature as determined by the Committee; provided,
however, no such adjustment shall be made with respect to a Covered Employee
if the Committee determines that such adjustment shall cause an Award to such
Covered Employee to fail to qualify as "performance-based compensation" under
Section 162(m) of the Code.
12. "Participant" means any key executive employee of the Corporation
and/or its Subsidiaries who is selected by the Committee or the Committee's
delegate to participate in the Plan based upon the employee's substantial
contributions to the future growth and future profitability of the
Corporation and/or its Subsidiaries.
13. "Financial Goals" means the financial objectives of the Corporation
and its Subsidiaries which are established pursuant to Section 5 by the
Committee for each Plan Year prior to the beginning of each Plan Year (or
such later time as may be permitted for Awards paid for such year to be
treated as performance-based compensation under Section 162(m)) as the basis
for determining the Final Value of the Award.
14. "Plan Year" means a single calendar year period as set by the
Committee which commences on the first day of such period.
15. "Plan" means the SunTrust Banks, Inc. Management Incentive Plan
as amended and restated in this document and all amendments thereto.
16. "Proportionate Final Value" means the product of a fraction, the
numerator of which is the actual number of full months in a Plan Year that an
employee was a Participant in the Plan and the denominator of which is the
total number of months in that Plan Year, multiplied by the Final Value of
an Award.
17. "Subsidiary" means any bank, corporation or entity which the
Corporation controls either directly or indirectly through ownership of fifty
percent (50%) or more of the total combined voting power of all classes of
stock of such bank, corporation or entity, except for such direct or indirect
ownership by the Corporation while the Corporation or a Subsidiary is acting
in a fiduciary capacity with respect to any trust, probate estate,
conservatorship, guardianship or agency.
18. "Termination Value" means the value of an Award as determined by
the Committee, in its absolute discretion, upon the early termination of a
Plan Year or upon a Participant's termination of Employment before the end of
such Plan Year, which value shall be the basis for the payment of an Award to
a Participant, in accordance with Sections 7(B), 7(C), 8(A) or 8(B) of the
Plan based on the Participant's Employment prior to his termination of
Employment or the early termination of such Plan Year.
B. In the construction of the Plan, the masculine
shall include the feminine and the singular shall include the
plural in all instances in which such meanings are appropriate.
The Plan and all agreements executed pursuant to the Plan shall
be governed by the laws of Georgia.
<PAGE>
Section 4. Committee Responsibilities
A. The Committee may, from time to time, adopt rules and regulations
and prescribe forms and procedures for carrying out the purposes and
provisions of the Plan. The Committee shall have the sole and final
authority to designate Participants, determine Awards, designate the Plan
Year, determine Financial Goals, determine Final Value of Awards, and answer
all questions arising under the Plan, including questions on the proper
construction and interpretation of the Plan. Any interpretation, decision or
determination made by the Committee shall be final, binding and conclusive
upon all interested parties, including the Corporation and its Subsidiaries,
Participants and other employees of the Corporation or any Subsidiary, and
the successors, heirs and representatives of all such persons. The Committee
shall use its best efforts to ensure that Awards to Covered Employees under
the Plan qualify as "performance-based compensation" for purposes of
Section 162(m) of the Code.
B. Subject to the express provisions of the Plan and prior to the
beginning of a calendar year (or such later time as may be permitted for
Awards paid for such year to be treated as performance-based compensation
under Section 162(m)), the Committee shall:
1. Designate the Plan Year which shall begin on the first day of
such year.
2. Designate the Participants for each such Plan Year.
3. Establish the Financial Goals for the Corporation and designated
Subsidiaries for each such Plan Year.
4. Establish the method of calculating the Final Value of each Award.
5. Authorize management (a) to notify each Participant that he has
been selected as a Participant, inform him of the Financial Goal that has
been established for such Plan Year and (b) to obtain from him such
agreements and powers and designations of beneficiaries as it shall
reasonably deem necessary for the administration of the Plan.
C. During any Plan Year, the Committee may, if it determines that it
will promote the purpose of the Plan, designate as additional Participants
any key executive employees of the Corporation and its Subsidiaries who have
been hired, transferred or promoted into a position eligible for
participation in the Plan. The individual's designation as a Participant
shall be subject to the same restrictions, limitations, Financial Goals and
other conditions as those held by other Participants for the same Plan Year
and their participation may be made retroactive to the first day of such Plan
Year; provided, however, no Participant who is added will be paid an Award
for any calendar year to the extent such payment, when added to all his other
compensation for such year, would be nondeductible under Section 162(m) of
the Code.
D. During any Plan Year, the Committee may, if it determines it will
promote the purpose of the Plan, revoke the Committee's prior designation of
a key executive employee as a Participant under the Plan for a Plan Year.
E. The Committee may revise the Financial Goals for any Plan Year to
the extent the Committee, in the exercise of its absolute discretion,
believes necessary to achieve the purpose of the Plan in light of any
unexpected or unusual circumstances or events, including, but not limited to,
changes in accounting rules, accounting practices, tax laws and regulations,
<PAGE>
or in the event of mergers, acquisitions, divestitures, unanticipated
increases in Federal Deposit Insurance premiums, and extraordinary or
unanticipated economic circumstances; provided, however, no change will be
effective for any participant who at the time of payment of the Award is a
Covered Employee, to the extent the Committee determines that such change
might make the amount of the Award to such Participant nondeductible under
Section 162(m).
Section 5. Financial Goals
For each Plan Year, the Committee shall establish separate Financial
Goals for the Corporation and each of the Subsidiaries based on each such
organization's Net Income which shall then determine the Final Value of each
Award as a specified percent of the Participant's Base Wages based on the
attainment by the Participant's employer of such goals for the Plan Year.
With respect to the Corporation and each Subsidiary, the Committee shall fix
a minimum Net Income objective for the Plan Year, and the Final Value of such
Awards shall be equal to zero if actual Net Income falls below the minimum
Net Income objective of the Corporation or, where appropriate, such
Subsidiary. The Committee shall also fix a maximum Net Income objective and
such other Net Income objectives which fall between the maximum and minimum
Net Income objectives as the Committee shall deem appropriate, with
corresponding Final Values for such Awards with respect to the Corporation
and each Subsidiary. Awards will be determined based upon achieving or
exceeding the Financial Goals set by the Committee. Straight line
interpolation will be used to calculate Awards when Net Income falls between
any two specified Net Income objectives. No Participant may receive an
Award in excess of $1 million for any given Plan Year.
Section 6. Payment of an Award
A. Promptly after the date on which the necessary information for a
particular Plan Year becomes available, the Committee, or such persons as the
Committee shall designate, shall determine in accordance with Section 5 the
extent to which the Financial Goals have been achieved for such Plan Year and
authorize the cash payment of the Final Value of an Award, if any, to each
Participant. The Committee shall review and ratify the Award determinations
and shall certify such Award determinations in writing. Payment of Awards
shall be made as soon as practical after the certification of Awards by the
Committee. Each Award shall be paid in cash after deducting the amount of
applicable Federal, State, or Local withholding taxes of any kind required by
law to be withheld by the Corporation. All Awards, whether paid currently or
paid under any plan which defers payment, shall be payable out of the
Corporation's general assets. Each Participant's claim, if any, for the
payment of an Award, whether made currently or made under any plan which
defers payment, shall not be superior to that of any general and unsecured
creditor of the Corporation. If an error or omission is discovered in any of
the determinations, the Committee shall cause an appropriate equitable
adjustment to be made in order to remedy such error or omission.
B. Notwithstanding the terms of any Award, the Committee in its sole
and absolute discretion, may reduce the amount of the Award payable to any
Participant for any reason, including the Committee's judgment that the
Financial Goals have become an inappropriate measure of achievement, a change
in the employment status, position or duties of the Participant,
unsatisfactory performance of the Participant, or the Participant's service
for less than the entire Plan Year.
C. In accordance with the procedures set forth in the SunTrust Banks,
Inc.'s Management Incentive Plan Deferred Compensation Fund, a Participant
<PAGE>
may elect to defer receipt of one hundred (100%) percent of the Final Value
of his Award, if any, for each Plan Year or fifty (50%) percent of said
amount, rounded to the nearest One Hundred ($100.00) Dollars, and the amount
so deferred shall be credited by the Corporation to the Participant's Fund
Accounts established under such Fund.
Section 7. Participation for Less Than a Full Plan Year
A. Except as otherwise provided in this Section 7, an Award to a
Participant shall be forfeited if the Participant's Employment terminates
during any Plan Year and no payment shall be due the Participant for any
forfeited Award.
B. If a Participant's Employment terminates prior to the end of any
Plan Year on account of his death, the Committee shall waive the Employment
condition and shall authorize the payment of an Award to such Participant at
the end of such Plan Year based on the Proportionate Final Value, if any, of
his Award, unless the Committee in its discretion feels the Award should be
forfeited.
C. If a Participant's Employment terminates prior to the end of any
Plan Year on account of disability under a long-term disability plan
maintained by the Corporation or a Subsidiary, the Committee shall waive the
Employment condition and shall authorize, as of commencement of disability
benefits to such Participant, the payment of an Award to such Participant at
the end of such Plan Year based on the Proportionate Final Value, if any, of
his Award, unless the Committee in its discretion feels the Award should be
forfeited.
D. If a Participant's Employment terminates prior to the end of any
Plan Year on account of his early or normal retirement under any pension plan
maintained by the Corporation or any Subsidiary, the Committee shall waive
the Employment condition and shall authorize the payment of an Award to such
Participant at the end of such Plan Year based on the Proportionate Final
Value, if any, of his Award, unless the Committee in its discretion feels the
Award should be forfeited.
Section 8. Premature Satisfaction of Plan Conditions
A. In the event of a Change in Control of the Corporation prior to
the end of any Plan Year, the Committee shall waive any and all Plan
conditions and shall authorize the payment of an Award immediately to each
Participant based on the Termination Value, if any, of his Award.
B. If a tender or exchange offer is made other than by the Corporation
for shares of the Corporation's stock prior to the end of any Plan Year, the
Committee may waive any and all Plan conditions and authorize, at any time
after the commencement of the tender or exchange offer and within thirty (30)
days following completion of such tender or exchange offer, the payment of an
Award immediately to each Participant based on the Termination Value, if any,
of his Award.
C. A Plan Year shall terminate upon the Committee's authorization of
the payment of an Award during such Year pursuant to this Section 8 and no
further payments shall be made for such Year.
Section 9. Non-Transferability of Rights and Interests
A. A Participant may not alienate, assign, transfer or otherwise
encumber his rights and interests under this Plan and any attempt to do so
<PAGE>
shall be null and void.
B. In the event of a Participant's death and subject to the terms of
Section 7(B), the Committee shall authorize payment of any Award due a
Participant to the Participant's designated beneficiary as specified or, in
the absence of such written designation or its effectiveness, then to his
estate. Any such designation may be revoked and a new beneficiary designated
by the Participant by written instrument delivered to the Committee.
Section 10. Limitation of Rights
Nothing in this Plan shall be construed to give any employee of the
Corporation or a Subsidiary any right to be selected as a Participant or to
receive an Award or to be granted an Award other than as is provided herein.
Nothing in this Plan or any agreement executed pursuant hereto shall be
construed to limit in any way the right of the Corporation or a Subsidiary
to terminate a Participant's employment at any time, without regard to the
effect of such termination on any rights such Participant would otherwise
have under this Plan, or give any right to a Participant to remain employed
by the Corporation or a Subsidiary in any particular position or at any
particular rate of remuneration.
Section 11. Shareholder Approval
Notwithstanding anything in this Plan to the contrary, no Awards shall
be paid to Covered Employees until such shareholder approval as is required
under Section 162(m) of the Code, if any, is obtained.
Section 12. Miscellaneous.
In the event the Committee deems it in the best interest of the
Corporation to make Awards based on the performance of a division of either
the Corporation or a Subsidiary, or a combination of divisions of the
Corporation and/or Subsidiaries, the Committee shall have the authority to
adopt such rules, regulations and procedures for granting such Awards as it
deems appropriate, which rules, regulations and procedures shall be otherwise
consistent with the rules and procedures set forth in this Plan for granting
Awards based on the Financial Goals of the Corporation and its
Subsidiaries.
Executed this 4th day of Janaury, 1995.
(CORPORATE SEAL)
SUNTRUST BANKS, INC.
Attest: By:
Title: Title:
<PAGE>
SUNTRUST BANKS, INC. 1995 EXECUTIVE STOCK PLAN
SECTION 1. BACKGROUND AND PURPOSE
The name of this Plan is the SunTrust Banks, Inc. 1995 Executive
Stock Plan. The purpose of this Plan is to promote the interest of SunTrust
and its Subsidiaries through grants to Key Employees of Options to purchase
Stock, grants of stock appreciation rights and grants of Restricted Stock in
order (1) to attract and retain Key Employees, (2) to provide an additional
incentive to each Key Employee to work to increase the value of Stock and
(3) to provide each Key Employee with a stake in the future of SunTrust which
corresponds to the stake of each of SunTrust's shareholders.
SECTION2 . DEFINITIONS
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall
include the singular.
2.1. Board -- means the Board of Directors of SunTrust.
2.2. Change in Control -- means a change in control of SunTrust
of a nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Exchange Act as in
effect on January 1, 1995, provided that such a change in control shall be
deemed to have occurred at such time as (i) any "person" (as that term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly
or indirectly, of securities representing 20% or more of the combined voting
power for election of directors of the then outstanding securities of
SunTrust or any successor of SunTrust; (ii) during any period of two
consecutive years or less, individuals who at the beginning of such period
constitute the Board cease, for any reason, to constitute at least a majority
of the Board, unless the election or nomination for election of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period; (iii) the
shareholders of SunTrust approve any merger, consolidation or share exchange
as a result of which the common stock of SunTrust shall be changed, converted
or exchanged (other than a merger with a wholly-owned subsidiary of
SunTrust), or any dissolution or liquidation of SunTrust or any sale or the
disposition of 50% or more of the assets or business of SunTrust; or (iv) the
shareholders of SunTrust approve any merger or consolidation to which
SunTrust is a party or a share exchange in which SunTrust shall exchange its
shares for shares of another corporation as a result of which the persons who
were shareholders of SunTrust immediately prior to the effective date of the
merger, consolidation or share exchange shall have beneficial ownership of
less than 50% of the combined voting power for election of directors of the
surviving corporation following the effective date of such merger,
consolidation or share exchange; provided, however, and notwithstanding the
occurrence of any of the events previously described in this definition, that
no "Change in Control" shall be deemed to have occurred under this definition
<PAGE>
if, prior to such time as a "Change in Control" would otherwise be deemed to
have occurred under this definition, the Board determines otherwise.
2.3 Code -- means the Internal Revenue Code of 1986, as amended.
2.4 Committee --means a Committee of the Board to which the
responsibility to administer this Plan is delegated by the Board and
which shall consist of at least two members of the Board (i) none of
whom shall be eligible to receive grants of Options, SARs or Restricted
Stock and (ii) each of whom shall be a "disinterested" person within
the meaning of Rule 16b-3 under the Exchange Act and each of whom shall
be (or be treated as) an "outside director" for purposes of Section
162(m) of the Code.
2.5 Covered Employee -- means a Key Employee who the Committee on
the date he or she is granted an Option, a SAR or Restricted Stock deems
likely to be a "covered employee" (within the meaning of Section 162(m) of
the Code) as of any date on or after the date of such grant.
2.6 Exchange Act -- means the Securities Exchange Act of 1934, as
amended.
2.7 Fair Market Value -- means (1) the closing price on any date
for a share of Stock as reported by The Wall Street Journal under the New
York Stock Exchange Composite Transactions quotation system (or under any
successor quotation system) or, if Stock is no longer traded on the New York
Stock Exchange, under the quotation system under which such closing price is
reported or, if The Wall Street Journal no longer reports such closing price,
such closing price as reported by a newspaper or trade journal selected by
the Committee or, if no such closing price is available on such date,
(2) such closing price as so reported in accordance with Section 2.7(1) for
the immediately preceding business day, or, if no newspaper or trade journal
reports such closing price, (3) the price which the Committee acting in good
faith determines through any reasonable valuation method that a share of
Stock might change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both having
reasonable knowledge of the relevant facts.
2.8 ISO -- means an option granted under this Plan to purchase
Stock which is evidenced by an Option Agreement which provides that the
option is intended to satisfy the requirements for an incentive stock
option under Section 422 of the Code.
2.9 Key Employee -- means any employee of SunTrust or any
Subsidiary who, in the judgment of the Committee acting in its absolute
discretion, is a key to the success of SunTrust or such Subsidiary and
who is not a Ten Percent Shareholder.
2.10. NQO -- means an option granted under this Plan to purchase
Stock which is evidenced by an Option Agreement which provides that the
option shall not be treated as an incentive stock option under Section 422
of the Code.
2.11. Option -- means an ISO or a NQO.
2.12. Option Agreement -- means the written agreement or instrument
which sets forth the terms of an Option granted to a Key Employee under
Section 7 of this Plan.
<PAGE>
2.13. Option Price -- means the price which shall be paid to
purchase one share of Stock upon the exercise of an Option granted under
this Plan.
2.14. Parent Corporation -- means any corporation which is a parent
of SunTrust within the meaning of Section 424(e) of the Code.
2.15. Plan -- means this SunTrust Banks, Inc. 1995 Executive Stock
Plan, as amended from time to time.
2.16. Restricted Stock -- means Stock granted to a Key Employee
under Section 8 of this Plan.
2.17. Restricted Stock Agreement -- means the written agreement
or instrument which sets forth the terms of a Restricted Stock grant to a
Key Employee under Section 8 of this Plan.
2.18. Rule 16b-3 -- means the exemption under Rule 16b-3 to Section
16b of the Exchange Act or any successor to such rule.
2.19. Stock -- means the One Dollar ($1.00) par value common stock
of SunTrust.
2.20. SAR -- means a right which is granted pursuant to the terms
of Section 7 of this Plan to the appreciation in the Fair Market Value of a
share of Stock in excess of the SAR Share Value for such a share.
2.21. SAR Agreement -- means the written agreement or instrument
which sets forth the terms of a SAR granted to a Key Employee under Section
7 of this Plan.
2.22. SAR Share Value -- means the figure which is set forth in
each SAR Agreement and which is no less than the Fair Market Value of a
share of Stock on the date the related SAR is granted.
2.23. Subsidiary -- means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) of SunTrust
except a corporation which has subsidiary corporation status under Section
424(e) of the Code exclusively as a result of SunTrust or a SunTrust
subsidiary holding stock in such corporation as a fiduciary with respect to
any trust, estate, conservatorship, guardianship or agency.
2.24. SunTrust -- means SunTrust Banks, Inc., a Georgia corporation,
and any successor to such corporation.
2.25. Ten Percent Shareholder -- means a person who owns (after
taking into account the attribution rules of Section 424(d) of the Code) more
than ten percent of the total combined voting power of all classes of stock
of either SunTrust, a Subsidiary or a Parent Corporation.
SECTION 3. SHARES RESERVED UNDER PLAN
There shall be 5,000,000 shares of Stock reserved for use under this
Plan. All such shares of Stock shall be reserved to the extent that SunTrust
deems appropriate from authorized but unissued shares of Stock and from shares
of Stock which have been reacquired by SunTrust. Furthermore, any shares of
Stock subject to an Option which remain unissued after the cancellation,
expiration or exchange of such Option and any Restricted Shares which are
forfeited thereafter shall again become available for use under this Plan,
<PAGE>
but any shares of Stock used to satisfy a withholding obligation under
Section 14.3 shall not again become available for use under this Plan. The
exercise of a SAR or a surrender right in an Option with respect to any
shares of Stock shall be treated for purposes of this Section 3 the same as
the exercise of an Option for the same number of shares of Stock.
SECTION 4. EFFECTIVE DATE
This Plan shall be effective on January 1, 1995, provided the
shareholders of SunTrust (acting at a duly called meeting of such
shareholders) approve this Plan within twelve (12) months after such date
and such approval satisfies the requirements for shareholder approval under
Rule 16b-3 and Code Section 422(b)(1). Any Restricted Stock, any Option
and any SAR granted under this Plan before such shareholder approval
automatically shall be granted subject to such shareholder approval.
SECTION 5. COMMITTEE
This Plan shall be administered by the Committee. The Committee acting
in its absolute discretion shall exercise such powers and take such action as
expressly called for under this Plan and, further, the Committee shall have
the power to interpret this Plan and (subject to Section 11, Section 12 and
Section 13) to take such other action in the administration and operation of
this Plan as the Committee deems equitable under the circumstances, which
action shall be binding on SunTrust, on each affected Key Employee and on
each other person directly or indirectly affected by such action. The
Committee shall use its best efforts to grant Options, SARs and Restricted
Stock under this Plan to a Covered Employee which will qualify as
"performance-based compensation" for purposes of Section 162(m) of the Code,
except where the Committee deems that SunTrust's interests when viewed
broadly will be better served by a grant which is free of the conditions
required to so qualify any such grant for purposes of Section 162(m) of the
Code.
SECTION 6. ELIGIBILITY
Only Key Employees shall be eligible for the grant of Options, SARs or
Restricted Stock under this Plan.
SECTION 7. OPTIONS AND SARs
7.1 Options. The Committee acting in its absolute discretion
shall have the right to grant Options to Key Employees under this Plan from
time to time to purchase shares of Stock. Each grant of an Option shall be
evidenced by an Option Agreement, and each Option Agreement shall set forth
whether the Option is an ISO or a NQO and shall set forth such other terms
and conditions of such grant as the Committee acting in its absolute
discretion deems consistent with the terms of this Plan.
7.2 $100,000 Limit. The aggregate Fair Market Value of ISOs
granted to a Key Employee under this Plan and incentive stock options granted
to such Key Employee under any other stock option plan adopted by SunTrust,
a Subsidiary or a Parent Corporation which first become exercisable in any
calendar year (which begins on or after January 1, 1995) shall not exceed
$100,000. Such Fair Market Value figure shall be determined by the Committee
on the date the ISO or other incentive stock option is granted, and the
Committee shall interpret and administer the limitation set forth in this
Section 7.2 in accordance with Section 422(d) of the Code.
<PAGE>
7.3 Share Limitation.
a) A Key Employee (other than a Key Employee who is SunTrust's
chief executive officer) may be granted in any calendar year one or more
Options, or one or more SARs, or one or more Options and SARs in any
combination which, individually or in the aggregate, relate to no more than
60,000 shares of Stock.
b) A Key Employee who is SunTrust's chief executive officer may
be granted in any calendar year one or more Options, or one or more SARs,
or one or more Options and SARs in any combination which, individually or
in the aggregate, relate to no more than 100,000 shares of Stock.
7.4 Option Price. The Option Price for each share of Stock
subject to an Option shall be no less than the Fair Market Value of a share
of Stock on the date the Option is granted. The Option Price shall be
payable in full upon the exercise of any Option, and an Option Agreement at
the discretion of the Committee can provide for the payment of the Option
Price (a) in cash or by a check acceptable to the Committee, (b) in Stock
which has been held by the Key Employee for a period acceptable to the
Committee and which Stock is otherwise acceptable to the Committee, (c)
through a broker facilitated exercise procedure acceptable to the Committee
or (d) in any combination of the three methods described in this Section 7.4
which is acceptable to the Committee. Any payment made in Stock shall be
treated as equal to the Fair Market Value of such Stock on the date the
properly endorsed certificate for such Stock is delivered to the Committee.
7.5 Exercise Period. Each Option granted under this Plan shall
be exercisable in whole or in part at such time or times as set forth in the
related Option Agreement, but no Option Agreement shall make an Option
exercisable before the date such Option is granted or after the earlier of:
a) the date such Option is exercised in full, or
b) the date which is the tenth anniversary of the date such
Option is granted.
An Option Agreement may provide for the exercise of an Option after the
employment of a Key Employee has terminated for any reason whatsoever,
including death or disability.
7.6 Nontransferability. Except to the extent the Committee deems
permissible under Section 422(b) of the Code and Rule 16b-3 and consistent
with the best interests of SunTrust, neither an Option granted under this
Plan nor any related surrender rights nor any SAR shall be transferable by
a Key Employee other than by will or by the laws of descent and distribution,
and such Option and any such surrender rights and any such SAR shall be
exercisable during a Key Employee's lifetime only by the Key Employee. The
person or persons to whom an Option or a SAR is transferred by will or by the
laws of descent and distribution thereafter shall be treated as the Key
Employee under this Plan.
7.7 SARs and Surrender Rights.
(a) SARs. The Committee acting in its absolute discretion may
grant a Key Employee a SAR which will give the Key Employee the right to the
appreciation in one, or more than one, share of Stock, and any such
appreciation shall be measured from the related SAR Share Value. The
Committee shall have the right to make any such grant subject to such
<PAGE>
additional terms as the Committee deems appropriate, and such terms shall
be set forth in the related SAR Agreement.
(b) Option Surrender Rights. The Committee acting in its
absolute discretion also may incorporate a provision in an Option Agreement
to give a Key Employee the right to surrender his or her Option in whole or
in part in lieu of the exercise (in whole or in part) of that Option to
purchase Stock on any date that
(1) the Fair Market Value of the Stock subject to such Option
exceeds the Option Price for such Stock, and
(2) the Option to purchase such Stock is otherwise exercisable.
(c) Procedure. The exercise of a SAR or a surrender right in an
Option shall be effected by the delivery of the related SAR Agreement or
Option Agreement to the Committee (or to its delegate) together with a
statement signed by the Key Employee which specifies the number of shares
of Stock as to which the Key Employee, as appropriate, exercises his or her
SAR or exercises his or her right to surrender his or her Option and (at
the Key Employee's option) how he or she desires payment to be made with
respect to such shares.
(d) Payment. A Key Employee who exercises his or her SAR or
right to surrender his or her Option shall (to the extent consistent with
the exemption under Rule 16b-3) receive a payment in cash or in Stock, or
in a combination of cash and Stock, equal in amount on the date such exercise
is effected to (i) the number of shares of Stock with respect to which, as
applicable, the SAR or the surrender right is exercised times (ii) the excess
of the Fair Market Value of a share of Stock on such date over, as
applicable, the SAR Share Value for a share of Stock subject to the SAR or
the Option Price for a share of stock subject to an Option. The Committee
acting in its absolute discretion shall determine the form and timing of
such payment, and the Committee shall have the right (1) to take into
account whatever factors the Committee deems appropriate under the
circumstances, including any written request made by the Key Employee and
delivered to the Committee (or to its delegate) and (2) to forfeit a Key
Employee's right to payment of cash in lieu of a fractional share of stock
if the Committee deems such forfeiture necessary in order for the surrender
of his or her Option under this Section 7.7 to come within the exemption
under Rule 16b-3. Any cash payment under this Section 7.7 shall be made
from SunTrust's general assets, and a Key Employee shall be no more than a
general and unsecured creditor of SunTrust with respect to such payment.
(e) Restrictions. Each SAR Agreement and each Option Agreement
which incorporates a provision to allow a Key Employee to surrender his
or her Option shall incorporate such additional restrictions on the exercise
of such SAR or surrender right as the Committee deems necessary to satisfy
the conditions to the exemption under Rule 16b-3.
SECTION 8. RESTRICTED STOCK
8.1 Committee Action. The Committee acting in its absolute
discretion shall have the right to grant Restricted Stock to Key Employees
under this Plan from time to time. However, no more than 2,500,000 shares
of Stock shall be granted as Restricted Stock from the shares otherwise
available for grants under this Plan. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement, and each Restricted Stock
Agreement shall set forth the conditions, if any, which will need to be
timely satisfied before the grant will be effective and the conditions, if
<PAGE>
any, under which the Key Employee's interest in the related Stock will be
forfeited.
8.2 Effective Date. A Restricted Stock grant shall be effective
(a) as of the date set by the Committee when the grant is made or, if the
grant is made subject to one, or more than one, condition, (b) as of the date
the Committee determines that such conditions have been timely satisfied.
8.3 Conditions.
(a) Grant Conditions. The Committee acting in its absolute
discretion may make the grant of Restricted Stock to a Key Employee subject
to the satisfaction of one, or more than one, objective employment,
performance or other grant condition which the Committee deems appropriate
under the circumstances for Key Employees generally or for a Key Employee
in particular, and the related Restricted Stock Agreement shall set forth
each such condition and the deadline for satisfying each such grant
condition. If a Restricted Stock grant will become effective only upon the
satisfaction of one, or more than one, condition, the related shares of
Stock shall be unavailable under Section 3 for the period which begins on
the date as of which such grant is made and, if a Restricted Stock grant
fails to become effective in whole or in part under Section 8.2, such period
shall end on the date of such failure (i) for the related shares of Stock
subject to such grant (if the entire grant fails to become effective) or (ii)
for the related shares of Stock subject to that part of the grant which fails
to become effective (if only part of the grant fails to become effective).
If such period ends for any such shares of Stock, such shares shall be
treated under Section 3 as forfeited at the end of such period and shall
again become available under Section 3.
(b) Forfeiture Conditions. The Committee may make each Restricted
Stock grant (if, when and to the extent that the grant becomes effective)
subject to one, or more than one, objective employment, performance or other
forfeiture condition which the Committee acting in its absolute discretion
deems appropriate under the circumstances for Key Employees generally or for
a Key Employee in particular, and the related Restricted Stock Agreement
shall set forth each such condition and the deadline for satisfying each such
forfeiture condition. A Key Employee's nonforfeitable interest in the shares
of Stock related to a Restricted Stock grant shall depend on the extent to
which each such condition is timely satisfied. Each share of Stock related
to a Restricted Stock grant shall again become available under Section 3
after such grant becomes effective if such share is forfeited as a result of
a failure to timely satisfy a forfeiture condition, in which event such share
of Stock shall again become available under Section 3 as of the date of such
failure. A Stock certificate shall be issued (subject to the conditions, if
any, described in this Section 8.3(b) and Section 8.4) to, or for the
benefit of, the Key Employee with respect to the number of shares for which
a grant has become effective as soon as practicable after the date the grant
becomes effective.
8.4 Dividends and Voting Rights.
(a) Each Restricted Stock Agreement shall state whether the Key
Employee shall have a right to receive any cash dividends which are paid
with respect to his or her Restricted Stock after the date his or her
Restricted Stock grant has become effective and before the first day that
the Key Employee's interest in such stock is forfeited completely or becomes
completely nonforfeitable. If a Restricted Stock Agreement provides that a
Key Employee has no right to receive a cash dividend when paid, such
agreement shall set forth the conditions, if any, under which the Key
<PAGE>
Employee will be eligible to receive one, or more than one, payment in the
future to compensate the Key Employee for the fact that he or she had no
right to receive any cash dividends on his or her Restricted Stock when such
dividends were paid. If a Restricted Stock Agreement calls for any such
payments to be made, SunTrust shall make such payments from SunTrust's
general assets, and the Key Employee shall be no more than a general and
unsecured creditor of SunTrust with respect to such payments.
(b) If a Stock dividend is declared on such a share of Stock
after the grant is effective but before the Key Employee's interest in
such Stock has been forfeited or has become nonforfeitable, such Stock
dividend shall be treated as part of the grant of the related
Restricted Stock, and a Key Employee's interest in such Stock dividend
shall be forfeited or shall become nonforfeitable at the same time as
the Stock with respect to which the Stock dividend was paid is
forfeited or becomes nonforfeitable.
(c) If a dividend is paid other than in cash or Stock, the
disposition of such dividend shall be made in accordance with such
rules as the Committee shall adopt with respect to each such dividend.
(d) A Key Employee shall have the right to vote the Stock related
to his or her Restricted Stock grant after the grant is effective with
respect to such Stock but before his or her interest in such Stock has
been forfeited or has become nonforfeitable.
8.5 Satisfaction of Forfeiture Conditions. A share of Stock
shall cease to be Restricted Stock at such time as a Key Employee's
interest in such Stock becomes nonforfeitable under this Plan, and the
certificate representing such share shall be reissued as soon as
practicable thereafter without any further restrictions related to
Section 8.3(b) or Section 8.4 and shall be transferred to the Key
Employee.
SECTION 9. SECURITIES REGISTRATION
Each Option Agreement, SAR Agreement and Restricted Stock Agreement
shall provide that, upon the receipt of shares of Stock as a result of
the exercise of an Option (or any related surrender right) or a SAR or the
satisfaction of the forfeiture conditions under a Restricted Stock
Agreement, the Key Employee shall, if so requested by SunTrust, hold such
shares of Stock for investment and not with a view of resale or distribution
to the public and, if so requested by SunTrust, shall deliver to SunTrust a
written statement satisfactory to SunTrust to that effect. As for Stock
issued pursuant to this Plan, SunTrust at its expense shall take such action
as it deems necessary or appropriate to register the original issuance of
such Stock to a Key Employee under the Securities Act of 1933, as amended,
or under any other applicable securities laws or to qualify such Stock for
an exemption under any such laws prior to the issuance of such Stock to a
Key Employee; however, SunTrust shall have no obligation whatsoever to take
any such action in connection with the transfer, resale or other disposition
of such Stock by a Key Employee.
SECTION 10. LIFE OF PLAN
No Option or SAR or Restricted Stock shall be granted under this Plan
after the earlier of
(1) December 31, 2004, in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Options (and
<PAGE>
any related surrender rights) and SARs have been exercised in full or
no longer are exercisable and all Restricted Stock grants under this
Plan have been forfeited or the forfeiture conditions on the related
Stock have been satisfied in full, or
(2) the date on which all of the Stock reserved under Section 3
of this Plan has (as a result of the exercise of all Options (and any
related surrender rights) and all SARs granted under this Plan or the
satisfaction of the forfeiture conditions on Restricted Stock) been
issued or no longer is available for use under this Plan, in which
event this Plan also shall terminate on such date.
SECTION 11. ADJUSTMENT
The number of shares of Stock reserved under Section 3 of this Plan,
the number of shares of Stock related to Restricted Stock grants under this
Plan and any related grant conditions and forfeiture conditions, the number
of shares of Stock subject to Options granted under this Plan and the Option
Price of such Options and the SAR Grant Value and the number of shares of
Stock related to any SAR all shall be adjusted by the Board in an equitable
manner to reflect any change in the capitalization of SunTrust, including,
but not limited to, such changes as stock dividends or stock splits.
Furthermore, the Board shall have the right to adjust (in a manner which
satisfies the requirements of Section 424(a) of the Code) the number of
shares of Stock reserved under Section 3 of this Plan, the number of shares
of Stock related to Restricted Stock grants under this Plan and any related
grant conditions and forfeiture conditions, the number of shares subject to
Options granted under this Plan and the Option Price of such Options and the
SAR Grant Value and the number of shares of Stock related to any SAR in the
event of any corporate transaction described in Section 424(a) of the Code
which provides for the substitution or assumption of such Options, SARs or
Restricted Stock grants. If any adjustment under this Section 11 would
create a fractional share of Stock or a right to acquire a fractional share
of Stock, such fractional share shall be disregarded and the number of shares
of Stock reserved under this Plan and the number subject to any Options or
related to any SARs or Restricted Stock grants under this Plan shall be the
next lower number of shares of Stock, rounding all fractions downward. An
adjustment made under this Section 11 by the Board shall be conclusive and
binding on all affected persons and, further, shall not constitute an
increase in "the number of shares reserved under Section 3" within the
meaning of Section 13(1) of this Plan.
SECTION 12. CHANGE IN CONTROL
If there is a Change in Control and the Board determines that no
adequate provision has been made as part of such Change in Control for
either the assumption of the Options, SARs and Restricted Stock grants
outstanding under this Plan or for the granting of comparable, substitute
stock options, stock appreciation rights and restricted stock grants, (1)
each outstanding Option and SAR at the direction and discretion of the Board
(a) may (subject to such conditions, if any, as the Board deems appropriate
under the circumstances) be cancelled unilaterally by SunTrust in exchange
for the number of whole shares of Stock (and cash in lieu of a fractional
share), if any, which each Key Employee would have received if on the date
set by the Board he or she had exercised his or her SAR in full or if he or
she had exercised a right to surrender his or her outstanding Option in full
under Section 7.7 of this Plan or (b) may be cancelled unilaterally by
SunTrust if the Option Price or SAR Share Value equals or exceeds the Fair
Market Value of a share of Stock on such date and (2) the grant conditions,
if any, and forfeiture conditions on all outstanding Restricted Stock grants
<PAGE>
may be deemed completely satisfied on the date set by the Board.
SECTION 13. AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate; provided, however, no such
amendment shall be made absent the approval of the shareholders of SunTrust
(1) to increase the number of shares reserved under Section 3, (2) to extend
the maximum life of the Plan under Section 10 or the maximum exercise period
under Section 7.5, (3) to decrease the minimum option price under Section 7.4
or the minimum SAR Share Value, (4) to change the class of employees eligible
for Options, SARs or Restricted Stock grants under Section 6 or to otherwise
materially modify (within the meaning of Rule 16b-3) the requirements as to
eligibility for participation in this Plan or (5) to otherwise materially
increase (within the meaning of Rule 16b-3) the benefits accruing to Key
Employees under this Plan. The Board also may suspend the granting of
Options, SARs and Restricted Stock under this Plan at any time and may
terminate this Plan at any time; provided, however, SunTrust shall not have
the right to modify, amend or cancel any Option, SAR or Restricted Stock
granted before such suspension or termination unless (1) the Key Employee
consents in writing to such modification, amendment or cancellation or (2)
there is a dissolution or liquidation of SunTrust or a transaction described
in Section 11 or Section 12 of this Plan.
SECTION 14. MISCELLANEOUS
14.1 Shareholder Rights. No Key Employee shall have any rights as a
shareholder of SunTrust as a result of the grant of an Option or a SAR under
this Plan or his or her exercise of such Option or SAR pending the actual
delivery of the Stock subject to such Option to such Key Employee. Subject to
Section 8.4, a Key Employee's rights as a shareholder in the shares of Stock
related to a Restricted Stock grant which is effective shall be set forth in
the related Restricted Stock Agreement.
14.2 No Contract of Employment. The grant of an Option, SAR or
Restricted Stock to a Key Employee under this Plan shall not constitute
a contract of employment and shall not confer on a Key Employee any rights
upon his or her termination of employment in addition to those rights, if
any, expressly set forth in the Option Agreement which evidences his or her
Option, the SAR Agreement which evidences his or her SAR or the Restricted
Stock Agreement related to his or her Restricted Stock.
14.3 Withholding. The exercise of any Option or SAR granted under
this Plan and the acceptance of a Restricted Stock grant shall constitute a
Key Employee's full and complete consent to whatever action the Committee
deems necessary to satisfy the federal and state tax withholding
requirements, if any, which the Committee acting in its discretion deems
applicable to such exercise or such Restricted Stock. The Committee also
shall have the right to provide in an Option Agreement, SAR Agreement or
Restricted Stock Agreement that a Key Employee may elect to satisfy federal
and state tax withholding requirements through a reduction in the number of
shares of Stock actually transferred to him or to her under this Plan, and
any such election and any such reduction shall be effected so as to satisfy
the conditions to the exemption under Rule 16b-3.
<PAGE>
14.4 Construction. This Plan shall be construed under the laws of the
State of Georgia.
Executed this 8th day of November 1994.
SUNTRUST BANKS, INC.
By: /s/ Mary T. Steele
Title: First Vice President
ATTEST:
/s/ Margaret U. Hodgson
Title: Assistant Secretary
(CORPORATE SEAL)
<PAGE>
Exhibit 11.1
Statement re: Computation of Per Share Earnings
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Primary:
Net income $522,744 $473,729 $404,397 $377,322 $355,184 $343,277
Average common shares outstanding 118,298 124,282 128,128 129,985 130,469 132,075
Incremental shares outstanding <F1> 1,335 1,374 1,179 979 80 344
Average primary common shares 119,633 125,656 129,307 130,964 130,549 132,419
Earnings per common share - Primary $4.37 $3.77 $3.13 $2.88 $2.72 $2.59
Fully Diluted:
Net income $522,744 $473,729 $404,397 $377,322 $355,184 $343,277
Average common shares outstanding 118,298 124,282 128,128 129,985 130,469 132,075
Incremental shares outstanding <F1> 1,352 1,390 1,181 1,030 98 367
Average fully diluted common shares 119,650 125,672 129,309 131,015 130,567 132,442
Earnings per common share - Fully Diluted $4.37 $3.77 $3.13 $2.88 $2.72 $2.59
<FN>
<F1> Includes the incremental effect of stock options and restricted stock
outstanding computed under the treasury stock method.
</TABLE>
<PAGE>
Exhibit 12.1
<TABLE>
Ratio of Earnings to Fixed Charges (In thousands)
<CAPTION>
Year Ended December 31
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Ratio 1 - including deposit interest
Earnings:
Income before income taxes $781,965 $700,662 $575,768 $514,139 $449,865 $448,792
Fixed charges 946,283 804,281 988,111 1,480,435 1,669,412 1,645,010
Total $1,728,248 $1,504,943 $1,563,879 $1,994,574 $2,119,277 $2,093,802
Fixed charges:
Interest on deposits $704,803 $632,307 $832,372 $1,270,435 $1,409,855 $1,389,293
Interest on funds purchased 122,055 87,900 87,038 135,314 183,431 177,421
Interest on other short-term borrowings 42,519 21,623 7,027 10,104 14,537 15,033
Interest on long-term debt 63,119 48,839 48,560 47,664 46,183 47,119
Portion of rents representative of the
interest factor (1/3) of rental expense 13,787 13,612 13,114 16,918 15,406 16,144
Total $946,283 $804,281 $988,111 $1,480,435 $1,669,412 $1,645,010
Earnings to fixed charges 1.83 x 1.87 x 1.58 x 1.35 x 1.27 x 1.27 x
Ratio 2 - excluding deposit interest
Earnings:
Income before income taxes $781,965 $700,662 $575,768 $514,139 $449,865 $448,792
Fixed charges 241,480 171,974 155,739 210,000 259,557 255,717
Total $1,023,445 $872,636 $731,507 $724,139 $709,422 $704,509
Fixed charges:
Interest on funds purchased $122,055 $87,900 $87,038 $135,314 $183,431 $177,421
Interest on other short-term borrowings 42,519 21,623 7,027 10,104 14,537 15,033
Interest on long-term debt 63,119 48,839 48,560 47,664 46,183 47,119
Portion of rents representative of the
interest factor (1/3) of rental expense 13,787 13,612 13,114 16,918 15,406 16,144
Total $241,480 $171,974 $155,739 $210,000 $259,557 $255,717
Earnings to fixed charges 4.24 x 5.07 x 4.70 x 3.45 x 2.73 x 2.76 x
</TABLE>
<PAGE>
CORPORATE PROFILE
SunTrust Banks, Inc. is a leading financial services company based in
the Southeastern United States. Its three principal subsidiaries - SunBanks,
Inc., Trust Company of Georgia and Third National Corporation - operate 658
full-service banking offices in Florida, Georgia, Tennessee and Alabama. At
year-end 1994, total assets were $42.7 billion. SunTrust provides a wide range
of financial services to a growing customer base. The Company's primary
businesses include traditional deposit and credit services as well as trust
and investment services. Additionally, SunTrust provides corporate finance,
mortgage banking, factoring, credit cards, discount brokerage, credit-related
insurance, and data processing and information services.
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<PAGE>
FINANCIAL HIGHLIGHTS
Year Ended December 31
(Dollars in millions except per share data) 1994 1993 1992
For the Year
Net income $522.7 $473.7 $404.4
Common dividends paid 157.1 144.8 132.1
Per Common Share
Net income 4.37 3.77 3.13
Dividends paid 1.32 1.16 1.03
Market price:
High 51 3/8 49 5/8 45 5/8
Low 43 1/2 41 3/8 33 1/2
Close 47 3/4 45 43 3/4
Book value 29.85 29.47 21.65
Financial Ratios
Return on average assets (ROA) 1.32 % 1.26 % 1.14 %
Return on average realized
shareholders' equity (ROE) 17.66 16.48 14.99
Net interest margin
(taxable-equivalent) 4.64 4.80 5.10
Selected Average Balances
Total assets $40,489.2 $37,524.9 $35,356.5
Earning assets 36,111.0 34,047.3 32,008.6
Loans 26,412.6 24,162.8 22,489.1
Deposits 30,877.8 29,683.3 28,609.6
Realized shareholders' equity 2,960.1 2,875.1 2,697.9
Total shareholders' equity 3,571.5 2,877.2 2,697.9
Common equivalent shares (thousands) 119,633 125,656 129,307
At December 31
Total assets 42,709.1 40,728.4 37,789.3
Earning assets 38,045.6 35,904.5 34,167.7
Loans 28,548.9 25,292.1 23,493.5
Reserve for loan losses 647.0 561.2 474.2
Deposits 32,218.4 30,485.8 29,883.0
Realized shareholders' equity 2,883.3 2,845.8 2,769.7
Total shareholders' equity 3,453.3 3,609.6 2,769.7
Common shares outstanding (thousands) 115,679 122,468 127,953
In this report, for 1994 and 1993, investment securities, total assets and
total shareholders' equity include net unrealized securities gain. However,
earning assets exclude this gain as do the calculation of ROA, ROE and the
net interest margin because the gain is not included in income.
AR-2
TO OUR SHAREHOLDERS
We set tough goals for SunTrust in l994. I am pleased to report that our
efforts to attain these resulted in a very good year for the Company,
including another record earnings per share. For this we thank our loyal and
dedicated employees, customers and shareholders.
Financial Performance
Net income for the year totaled $522.7 million, or $4.37 per share-a 15.9%
increase from last year. Contributing to record earnings performance were
increased loan growth, reduced expenses, lower provision for loan losses, as
well as fewer shares outstanding. The annualized return on average assets was
1.32%, while the return on average realized shareholders' equity was 17.66%,
up from the 1993 returns of 1.26% and 16.48%, respectively.
Net interest income increased in 1994 as loan demand grew. Despite
rising interest rates, the net interest margin remained relatively stable
during 1994 after starting the year below the 1993 level. While noninterest
income was lower than planned, we are confident that our trust and investment
services businesses--key elements of noninterest income growth--will grow
this year.
An important element of our overall business plan is expense control. In
1994 we managed our noninterest expenses to a lower level, resulting in an
efficiency ratio of 58.9%. While this number compares favorably with those of
our peers, we expect it to be even better over time. Refinements in behind-
the-scenes functions will enable us to become an even lower cost provider of
high-quality services.
Credit quality, which has been strong, keeps getting better. Our
nonperforming assets were $275.3 million at year-end, down 33% from $410.7
million in 1993. Although our loan losses are low, we continue to build a
conservative loan loss reserve. We believe it is appropriate to add reserves
during periods of robust loan growth.
Few financial institutions manage their capital as capital carefully as
SunTrust. In fact, the Company has been putting its capital to work by buying
back common shares. From October 1993 through the end of 1994, we had
repurchased 10 million shares, nearly 84% of the 12 million share repurchase
program. This strategy of reducing outstanding shares not only elevates
shareholder value, but clearly conveys confidence in our Company as a good
investment opportunity. At its November 1994 meeting, the Board of Directors
raised the indicated annual dividend rate to $1.44 per share from $1.28 per
common share, a 12.5% increase.
Growth Initiatives
While we are proud of our accomplishments during 1994, I can assure you that
we are not complacent with these achievements. The new era in the financial
services industry being ushered in by nationwide interstate banking greatly
widens the competitive financial services marketplace.
To maintain our leadership position, we have expanded our vision and
commitment to growth and prosperity for our Company. Last year we began
reshaping the focus of our core businesses--corporate banking, community
banking, and trust and investment services--through initiatives which
concentrate on strengthening relationships with existing customers,
developing solid relationships with new customers, and continuing the
company's technological growth.
These initiatives call for SunTrust to be even more aggressive in
pursuing new business, more creative in developing new products and more
innovative in applying new technology. In an industry characterized by
constant change, our growth initiatives complement the banking basics we know
best, building on our strengths as a superior financial services provider.
AR-3
<PAGE>
For each of SunTrust's principal lines of business, we have examined the
way products are delivered, the associated costs and the expertise of our
employees. Based on these findings, we are devising alternate delivery
systems, investing in new technology to streamline processes and assuring
that talented people with the right skills are matched with the right
positions.
With consolidations reducing the number of direct competitors and
interstate banking widening the field, future winners in our industry will be
those who can effectively maximize their strengths, operate efficiently and
increase profitability. The initiatives outlined above will help SunTrust
continue to be one of the nation's top financial services companies.
Looking Forward to 1995
Since the founding of SunTrust in 1985, our subsidiary banking units have
maintained their respective names showing our commitment to the local
communities we serve. Now, with interstate banking moving closer to reality,
1995 is the right time to initiate a company-wide name change resulting in
all our banks adopting the name "SunTrust."
The SunTrust name already carries strong name recognition in financial
markets. A common identity shared by all our banks will benefit both
customers and shareholders. Sharing a common name will enable SunTrust to be
better recognized as a symbol of strength and growth. It will also help
eliminate customers' confusion as they utilize our services across state
lines, presenting a clear connection to a thriving financial institution.
While the bank names are changing, our commitment to local banking will
remain constant.
We fondly remember SunTrust's retired Chairman and CEO Robert
Strickland, who died in early November, and the influence he had on this
Company. The SunTrust family lost a great friend, but his legacy of high
professional standards, hard work and commitment to service lives on.
Thank you for your support and confidence in SunTrust We look forward to
another good year in 1995.
Sincerely,
James B. Williams
Chairman of the Board
and Chief Executive Officer
February 14,1995
AR-4
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
Year Ended December 31
(Dollars in millions except per share data) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Interest and dividend income $2,552.3 $2,362.3 $2,537.6 $2,856.4 $2,956.6 $2,880.3
Interest expense 932.5 790.7 975.0 1,463.5 1,654.0 1,628.8
Net interest income 1,619.8 1,571.6 1,562.6 1,392.9 1,302.6 1,251.5
Provision for loan losses 137.8 189.1 234.2 209.6 201.6 180.5
Net interest income after provision for loan losses 1,482.0 1,382.5 1,328.4 1,183.3 1,101.0 1,071.0
Noninterest income 699.9 726.5 672.7 612.9 556.8 516.9
Noninterest expense 1,400.0 1,408.4 1,425.3 1,282.1 1,207.9 1,139.1
Income before provision for income taxes 781.9 700.6 575.8 514.1 449.9 448.8
Provision for income taxes 259.2 226.9 171.4 136.8 94.7 105.5
Net income $522.7 $473.7 $404.4 $377.3 $355.2 $343.3
Net interest income (taxable-equivalent) $1,675.6 $1,634.4 $1,632.9 $1,470.5 $1,392.2 $1,346.6
Per Common Share
Net income $4.37 $3.77 $3.13 $2.88 $2.72 $2.59
Dividends paid 1.32 1.16 1.03 0.94 0.86 0.78
Common dividend payout ratio 30.1 % 30.6 % 32.7 % 32.4 % 31.3 % 29.9 %
Market price:
High $ 51 3/8 $ 49 5/8 $ 45 5/8 $ 40 $ 24 1/4 $ 26 7/8
Low 43 1/2 41 3/8 33 1/2 20 1/2 16 1/2 19 3/4
Close 47 3/4 45 43 3/4 39 7/8 22 3/4 22 7/8
Selected Average Balances
Total assets $40,489.2 $37,524.9 $35,356.5 $33,892.0 $31,935.0 $30,089.7
Earning assets 36,111.0 34,047.4 32,008.6 30,544.4 28,671.2 26,820.9
Loans 26,412.6 24,162.8 22,489.1 22,144.6 22,058.4 21,175.0
Deposits 30,877.8 29,683.3 28,609.6 27,533.0 25,971.7 24,721.9
Realized shareholders' equity 2,960.1 2,875.1 2,697.9 2,509.5 2,266.9 2,067.1
Total shareholders' equity 3,571.5 2,877.2 2,697.9 2,509.5 2,266.9 2,067.1
At December 31
Total assets $42,709.1 $40,728.4 $37,789.3 $35,682.6 $34,479.4 $32,064.8
Earning assets 38,045.6 35,904.5 34,167.7 31,854.3 30,262.3 28,319.8
Loans 28,548.9 25,292.1 23,493.5 22,251.5 22,770.3 21,754.2
Reserve for loan losses 647.0 561.2 474.2 381.0 366.9 347.5
Deposits 32,218.4 30,485.8 29,883.0 29,011.5 27,787.9 25,870.0
Long-term debt 930.4 630.4 554.0 477.3 482.4 489.9
Realized shareholders' equity 2,883.3 2,845.8 2,769.7 2,622.8 2,377.1 2,159.3
Total shareholders' equity 3,453.3 3,609.6 2,769.7 2,622.8 2,377.1 2,159.3
Ratios and Other
ROA 1.32 % 1.26 % 1.14 % 1.11 % 1.11 % 1.14
ROE 17.66 16.48 14.99 15.04 15.67 16.61
Net interest margin 4.64 4.80 5.10 4.81 4.86 5.02
Total shareholders' equity to assets 8.09 8.86 7.33 7.35 6.90 6.74
Nonperforming assets to total loans plus
other real estate owned 0.96 1.61 2.30 3.07 2.70 1.65
Number of full-service banking offices 658 656 654 662 654 647
Number of full-time equivalent employees 19,408 19,532 19,539 19,703 20,339 20,623
Average common equivalent shares (thousands) 119,633 125,656 129,307 130,964 130,549 132,419
</TABLE>
AR-5
<PAGE>
FINANCIAL REVIEW
The following analysis reviews important factors affecting the financial
condition and results of operations of SunTrust Banks, Inc. (SunTrust or
Company) for the periods shown. This review should be read in conjunction
with the consolidated financial statements and related notes. In the
Financial Review, net interest income and net interest margin are presented
on a taxable-equivalent (FTE) basis.
EARNINGS OVERVIEW
SunTrust's earnings per common share rose 15.9% in 1994 to $4.37, up
from $3.77 per common share in 1993. Net income of the Company
amounted to $522.7 million, an increase of 10.3% over $473.7 million in
1993.
Operating results in 1994 reflected strong loan demand and steady
improvement in credit quality. The 1994 loan loss provision of $137.8 million
was 27.1% lower than in 1993, and $77.5 million above 1994 net charge-offs.
Net interest income was $1,675.6 million in 1994, up $41.2 million from 1993.
The net interest margin was 16 basis points lower than last year but the
decline was more than offset by a 6.1% increase in average earning assets.
Average loans increased 9.4% and average deposits increased 4.0%. Noninterest
income decreased 3.7% with other charges and fees having the largest decline.
Noninterest expense was $1,400.0 million for 1994, 0.6% less than in 1993.
Employee-related expenses constituted the single largest increase in
noninterest expense, up $12.2 million, or 1.7%, from 1993 levels while other
real estate expenses had the largest decline, $18.9 million. Per share
earnings were aided by the repurchase during 1994 of 7.2 million shares of
the Company's common stock.
<TABLE>
TABLE 1 - CONTRIBUTIONS TO NET INCOME
<CAPTION>
Year Ended December 31
1994 1993
(Dollars in millions) Contribution % of Total Contribution % of Total
<S> <C> <C> <C> <C>
Banking subsidiaries' net income <F1>:
Florida $279.5 53.5 % $249.9 52.8 %
Georgia 210.8 40.3 190.8 40.3
Tennessee/Alabama 81.5 15.6 70.7 14.9
Total banking subsidiaries' net income 571.8 109.4 511.4 108.0
Nonbanking net income (expense):
Nonbank subsidiaries 2.7 0.5 7.1 1.5
Parent Company (51.8) (9.9) (44.8) (9.5)
Total nonbanking net income (expense) (49.1) (9.4) (37.7) (8.0)
Net income $522.7 100.0 % $473.7 100.0 %
<FN>
<F1> Additional information on the performance of banking subsidiaries can
be found on pages AR-33 and AR-34.
</TABLE>
AR-6
<PAGE>
NET INTEREST INCOME/MARGIN
Net interest income for 1994 was $1,675.6 million or 2.5% higher than the
prior year. Average earning assets were up 6.1% and the net interest margin
was 4.64% in 1994 compared to 4.80% in 1993. During the year the quarterly
margin remained relatively stable, ranging between 4.60% and 4.68% and equal
to or higher than the 1993 fourth quarter margin of 4.60%. The average rate
on earning assets increased 10 basis points to 7.22% while the average rate
on interest-bearing liabilities climbed 33 basis points to 3.23%.
Interest income that the Company was unable to recognize on nonperforming
loans had a negative impact of two basis points on the net interest margin
as compared to four basis points in 1993. Table 5 contains more detailed
information concerning average balances, yields earned and rates paid.
<TABLE>
TABLE 2 - ANALYSIS OF CHANGES IN NET INTEREST INCOME
<CAPTION>
1994 Compared to 1993 1993 Compared to 1992
Increase (Decrease) Due to Increase (Decrease) Due to
(In millions on a taxable-equivalent basis) Volume Rate Net Volume Rate Net
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Loans:
Taxable $181.0 $33.5 $214.5 $138.9 ($195.3) ($56.4)
Tax-exempt <F2> (5.2) 3.3 (1.9) (4.8) (2.9) (7.7)
Investment securities:
Taxable 6.9 (20.3) (13.4) 51.8 (115.9) (64.1)
Tax-exempt <F2> (9.2) (5.9) (15.1) (14.7) (4.0) (18.7)
Funds sold 0.8 5.7 6.5 (3.6) (2.6) (6.2)
Other short-term investments <F2> (10.4) 2.8 (7.6) (8.9) (20.8) (29.7)
Total interest income 163.9 19.1 183.0 158.7 (341.5) (182.8)
Interest Expense
NOW/Money market accounts 3.2 8.7 11.9 19.8 (54.2) (34.4)
Savings deposits (3.7) (0.5) (4.2) 5.8 (27.4) (21.6)
Consumer time deposits (7.1) 2.1 (5.0) (27.0) (79.0) (106.0)
Other time deposits 27.1 42.7 69.8 (6.1) (32.0) (38.1)
Funds purchased (1.5) 35.7 34.2 13.4 (12.5) 0.9
Other short-term borrowings 17.2 3.6 20.8 15.2 (0.5) 14.7
Long-term debt 21.3 (7.0) 14.3 6.5 (6.3) 0.2
Total interest expense 56.5 85.3 141.8 27.6 (211.9) (184.3)
Net change in net interest income $107.4 ($66.2) $41.2 $131.1 ($129.6) $1.5
<FN>
<F1> Changes in net interest income are attributed to either changes in average
balances (volume change) or changes in average rates (rate change) for
earning assets and sources of funds on which interest is received or paid.
Volume change is calculated as change in volume times the old rate while
rate change is change in rate times the old volume. The rate/volume
change, change in rate times change in volume, is allocated between volume
change and rate change at the ratio each component bears to the absolute
value of their total.
<F2> Interest income includes the effects of taxable-equivalent adjustments
(reduced by the nondeductible portion of interest expense) using a federal
income tax rate of 35% in 1994 and 1993 and 34% in prior years and, where
applicable, state income taxes, to increase tax-exempt interest income to
a taxable-equivalent basis.
</TABLE>
AR-7
<PAGE>
PROVISION FOR LOAN LOSSES
As a result of improving credit quality, the Company lowered its provision
for loan losses in 1994 by $51.3 million to $137.8 million, yet the provision
still exceeded net charge-offs by $77.5 million. Net loan charge-offs were
$60.3 million in 1994, representing 0.23% of average loans, which is the
lowest annual charge-off ratio since SunTrust was formed in 1985. The
comparable net charge-off amount for 1993 was $110.1 million or 0.46% of
average loans. As shown in Table 8, total charge-offs declined in all major
categories in 1994 while recoveries remained relatively stable. Recoveries
were 47.0% of total charge-offs in 1994 compared with 32.5% in 1993.
The Company's reserve for loan losses totaled $647.0 million at
December 31, 1994, which was 2.27% of year-end loans and 344.9% of total
nonperforming loans. The comparable ratios at December 31, 1993 were 2.22%
and 214.4%, respectively.
The Company maintains a reserve for loan losses to absorb possible
losses in the loan portfolio. The reserve consists of three elements;
(i) reserves established on specific loans, (ii) reserves based on historical
loan loss experience, and (iii) reserves based on economic conditions in the
Company's individual markets. The specific reserve element is based on a
regular analysis of all loans and commitments over a fixed dollar amount
where the internal credit rating is at or below a pre-determined
classification. The historical loan loss element represents a projection of
future credit problems and is determined statistically using a loss migration
analysis that examines loss experience and the related internal gradings of
loans charged-off. The general economic condition element is determined by
management at the individual subsidiary banks and is based on knowledge of
specific economic factors in their markets that might affect the
collectibility of loans. SunTrust is committed to the early recognition of
possible problems and to a strong, conservative reserve.
NONINTEREST INCOME
Noninterest income declined $26.6 million as the rising interest rate
environment reduced sales of mutual funds and drastically curtailed the
refinancing of mortgages. Additionally, rising rates produced poor
performance for fixed income securities retarding growth in trust fees.
Service charges collected on commercial deposit accounts were also
negatively impacted by rising rates since these charges are reduced by an
earnings credit on collected balances based on a market-based interest rate.
<TABLE>
TABLE 3 - NONINTEREST INCOME
<CAPTION>
Year Ended December 31
(In millions) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Trust income $250.3 $247.0 $226.1 $200.5 $177.6 $156.8
Service charges on deposit accounts 218.4 225.9 215.6 201.7 174.1 157.2
Other charges and fees 121.1 142.1 121.9 106.9 100.5 83.7
Credit card fees 57.2 57.8 58.8 60.2 62.2 56.3
Securities gains (losses) (2.7) 2.0 5.1 3.7 0.8 0.5
Gain on sale of equity investment 0.0 0.0 0.0 0.0 0.0 10.2
Trading account profits and commissions 8.0 11.3 8.2 10.3 4.7 4.7
Other income 47.6 40.4 37.0 29.6 36.9 47.5
Total noninterest income $699.9 $726.5 $672.7 $612.9 $556.8 $516.9
</TABLE>
AR-8
<PAGE>
NONINTEREST EXPENSE
For the second year in a row noninterest expenses declined, reducing the
efficiency ratio to a record 58.9%. Net recoveries from the sale of other
real estate was the primary reason for the 1994 decline. Most other areas of
expense approximated their 1993 levels. The exception was marketing and
community relations which increased $9.2 million. During the year, SunTrust
accrued $13.1 million for committed expenses associated with strategic
initiatives including changing the names of all our banks to SunTrust.
<TABLE>
TABLE 4 - NONINTEREST EXPENSE
<CAPTION>
Year Ended December 31
(In millions) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Salaries $550.4 $529.1 $511.7 $491.3 $480.0 $464.9
Other compensation 96.1 107.4 107.9 70.1 52.3 63.7
Employee benefits 100.7 98.5 92.8 82.4 76.6 73.7
Net occupancy expense 126.9 128.4 134.8 119.5 116.0 108.3
Equipment expense 103.3 103.1 102.9 98.1 92.7 94.6
FDIC premiums 66.6 66.2 64.5 56.6 30.5 19.7
Marketing and community relations 57.2 48.0 51.9 41.5 39.4 40.4
Postage and delivery 34.1 32.4 32.5 31.5 29.6 29.7
Operating supplies 29.4 30.5 30.6 30.5 31.6 32.1
Communications 26.1 26.3 25.8 24.9 23.7 21.8
Consulting and legal 22.6 20.2 27.7 25.9 26.8 20.1
Other real estate expense (2.2) 16.7 36.0 21.9 29.4 5.0
Amortization of intangible assets 20.6 19.7 17.0 15.7 13.6 13.9
Other expense 168.2 181.9 189.2 172.2 165.7 151.2
Total noninterest expense $1,400.0 $1,408.4 $1,425.3 $1,282.1 $1,207.9 $1,139.1
Efficiency ratio 58.9 % 59.7 % 61.8 % 61.5 % 62.0 % 61.1 %
</TABLE>
PROVISION FOR INCOME TAXES
The provision for income taxes covers federal and state income taxes. For
1994, the provision was $259.2 million, an increase of $32.3 million or
14.2% from 1993. Higher taxable income was responsible for the increase.
AR-9
<PAGE>
<TABLE>
TABLE 5A - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE AND AVERAGE
YIELDS EARNED AND RATES PAID
<CAPTION>
1994 1993 1992
(Dollars in millions; yields on Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
taxable-equivalent basis) Balances Expense Rates Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:<F1>
Taxable $25,678.3 $1,979.6 7.71 % $23,362.8 $1,765.1 7.56 % $21,628.4 $1,821.5 8.42 %
Tax-exempt <F2> 734.3 60.1 8.18 800.0 62.0 7.75 860.7 69.7 8.10
Total loans 26,412.6 2,039.7 7.72 24,162.8 1,827.1 7.56 22,489.1 1,891.2 8.41
Investment securities:
Taxable 7,968.4 437.8 5.50 7,844.6 451.2 5.75 7,079.2 515.3 7.28
Tax-exempt <F2> 1,035.5 100.7 9.72 1,128.7 115.8 10.26 1,271.3 134.5 10.58
Total investment securities 9,003.9 538.5 5.98 8,973.3 567.0 6.32 8,350.5 649.8 7.78
Funds sold 380.9 17.1 4.49 334.4 10.6 3.17 439.9 16.8 3.83
Other short-term investments <F2> 313.6 12.8 4.07 576.8 20.4 3.53 <F3 729.1 50.1 4.40
Total earning assets 36,111.0 2,608.1 7.22 34,047.3 2,425.1 7.12 32,008.6 2,607.9 8.15
Reserve for loan losses (608.0) (521.9) (421.6)
Cash and due from banks 2,228.8 2,200.0 2,007.0
Premises and equipment 713.7 710.1 693.0
Other assets 1,060.1 1,086.0 1,069.5
Unrealized gains(losses) on
investment securities 983.6 3.4 -
Total assets $40,489.2 $37,524.9 $35,356.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW/Money market accounts $9,798.9 $223.7 2.28 % $9,655.0 $211.8 2.19 % $8,900.8 $246.2 2.77 %
Savings 4,364.5 104.6 2.40 4,515.0 108.8 2.41 4,316.1 130.4 3.02
Consumer time 6,626.2 271.8 4.10 6,799.4 276.8 4.07 7,350.0 382.8 5.21
Other time <F4> 3,054.1 104.7 3.43 1,940.6 34.9 1.80 2,132.8 73.0 3.42
Total interest-bearing deposits 23,843.7 704.8 2.96 22,910.0 632.3 2.76 22,699.7 832.4 3.67
Funds purchased 3,050.0 122.1 4.00 3,102.7 87.9 2.83 2,664.5 87.0 3.27
Other short-term borrowings 1,083.2 42.5 3.93 632.0 21.7 3.42 192.6 7.0 3.65
Long-term debt 908.4 63.1 6.95 611.4 48.8 7.99 534.5 48.6 9.09
Total interest-bearing
liabilities 28,885.3 932.5 3.23 27,256.1 790.7 2.90 26,091.3 975.0 3.74
Noninterest-bearing deposits 7,034.1 6,773.3 5,909.9
Other liabilities 998.3 618.3 657.4
Realized shareholders' equity 2,960.1 2,875.1 2,697.9
Net unrealized gains(losses) on
investment securities 611.4 2.1 -
Total liabilities and
shareholders' equity $40,489.2 $37,524.9 $35,356.5
Interest rate spread 3.99 % 4.22 % 4.41 %
NET INTEREST INCOME $1,675.6 $1,634.4 $1,632.9
NET INTEREST MARGIN <F4> 4.64 % 4.80 % 5.10 %
<FN>
<F1>Interest income includes loan fees of $93.5, $88.6, $80.8, $72.4, $74.6
and $78.8 in the six years ended December 31, 1994. Nonaccrual loans
are included in average balances and income on such loans, if
recognized, is recorded on a cash basis.
AR-10
<PAGE>
<F2>Interest income includes the effects of taxable-equivalent adjustments
(reduced by the nondeductible portion of interest expense) using a
federal income tax rate of 35% for 1994 and 1993 and 34% in prior years,
and, where applicable, state income taxes, to increase tax-exempt interest
income to a taxable-equivalent basis. The net taxable-equivalent
adjustment amounts included in the above table were $55.8, $62.8, $70.3,
$77.6, $89.6 and $95.1 in the six years ended December 31, 1994.
<F3>Stated rate is calculated after reducing interest income by $18.0 in
1992 representing earnings from investment in an employee benefit trust.
<F4>Interest rate swap transactions used to help balance the Company's
interest-sensitivity position reduced interest expense by $30.6, $43.6 and
$36.3 in 1994, 1993 and 1992. Without these swaps, the rate on other time
deposits and the net interest margin would have been 4.43% and 4.56% in
1994, 4.04% and 4.67% in 1993 and 5.12% and 4.99% in 1992, respectively.
</TABLE>
AR-11
<PAGE>
<TABLE>
TABLE 5B - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE AND AVERAGE
YIELDS EARNED AND RATES PAID
<CAPTION>
1991 1990 1989
(Dollars in millions; yields on Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
taxable-equivalent basis) Balances Expense Rates Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:<F1>
Taxable $21,190.7 $2,113.3 9.97 % $21,092.4 $2,306.0 10.93 % $20,207.7 $2,304.5 11.40 %
Tax-exempt <F2> 953.9 92.7 9.72 966.0 111.0 11.49 967.3 122.5 12.67
Total loans 22,144.6 2,206.0 9.96 22,058.4 2,417.0 10.96 21,175.0 2,427.0 11.46
Investment securities:
Taxable 5,258.3 472.4 8.98 4,135.7 385.5 9.32 3,115.9 281.2 9.03
Tax-exempt <F2> 1,396.8 150.4 10.77 1,510.7 164.2 10.87 1,531.5 170.2 11.12
Total investment securities 6,655.1 622.8 9.36 5,646.4 549.7 9.74 4,647.4 451.4 9.71
Funds sold 797.3 44.7 5.61 570.9 46.4 8.13 583.8 57.7 9.88
Other short-term investments <F2> 947.4 60.5 6.39 395.5 33.1 8.36 414.7 39.3 9.48
Total earning assets 30,544.4 2,934.0 9.61 28,671.2 3,046.2 10.62 26,820.9 2,975.4 11.09
Reserve for loan losses (384.0) (360.4) (332.2)
Cash and due from banks 1,974.3 2,029.4 2,060.0
Premises and equipment 692.2 687.1 691.8
Other assets 1,065.1 907.7 849.2
Unrealized gains(losses) on
investment securities - - -
Total assets $33,892.0 $31,935.0 $30,089.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW/Money market accounts $7,710.2 $348.9 4.53 % $7,139.0 $381.2 5.34 % $7,121.3 $404.4 5.68 %
Savings 3,632.7 180.4 4.97 2,739.6 159.9 5.83 1,706.7 87.4 5.12
Consumer time 8,448.8 584.8 6.92 8,074.9 636.6 7.88 7,519.4 619.2 8.24
Other time <F4> 2,518.9 156.3 6.21 2,928.4 232.2 7.93 3,212.6 278.3 8.66
Total interest-bearing deposits 22,310.6 1,270.4 5.69 20,881.9 1,409.9 6.75 19,560.0 1,389.3 7.10
Funds purchased 2,527.2 135.3 5.36 2,371.1 183.4 7.74 1,962.7 177.4 9.04
Other short-term borrowings 174.0 10.1 5.79 182.6 14.5 7.96 169.4 15.0 8.88
Long-term debt 480.1 47.7 9.93 485.7 46.2 9.51 495.5 47.1 9.51
Total interest-bearing
liabilities 25,491.9 1,463.5 5.74 23,921.3 1,654.0 6.91 22,187.6 1,628.8 7.34
Noninterest-bearing deposits 5,222.4 5,089.8 5,161.9
Other liabilities 668.2 657.0 673.1
Realized shareholders' equity 2,509.5 2,266.9 2,067.1
Net unrealized gains(losses) on
investment securities - - -
Total liabilities and
shareholders' equity 33,892.0 $31,935.0 $30,089.7
Interest rate spread 3.87 % 3.71 % 3.75 %
NET INTEREST INCOME $1,470.5 $1,392.2 $1,346.6
NET INTEREST MARGIN <F4> 4.81 % 4.86 % 5.02 %
<FN>
<F1>See footnote 1 in Table 5A.
<F2>See footnote 2 in Table 5A.
<F3>See footnote 3 in Table 5A.
<F4>See footnote 4 in Table 5A.
</TABLE>
AR-12
<PAGE>
TABLE 5C - CONSOLIDATED GROWTH RATE IN AVERAGE BALANCES
Growth Rate in
Average Balances
Five Year
One Year Annualized
(Dollars in millions; yields on 1994- 1994-
taxable-equivalent basis) 1993 1989
Assets
Loans
Taxable 9.9 % 4.9 %
Tax-exempt (8.2) (5.4)
Total loans 9.3 4.5
Investment securities:
Taxable 1.6 20.7
Tax-exempt (8.3) (7.5)
Total investment securities 0.3 14.1
Funds sold 13.9 (8.2)
Other short-term investments (45.6) (5.4)
Total earning assets 6.1 6.1
Reserve for loan losses 16.5 12.8
Cash and due from banks 1.3 1.6
Premises and equipment 0.5 0.6
Other assets (2.4) 4.5
Unrealized gains(losses) on
investment securities - -
Total assets 7.9 % 6.1 %
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts 1.5 % 6.6 %
Savings (3.3) 20.7
Consumer time (2.5) (2.5)
Other time 57.4 (1.0)
Total interest-bearing deposits 4.1 4.0
Funds purchased (1.7) 9.2
Other short-term borrowings 71.4 44.9
Long-term debt 48.6 12.9
Total interest-bearing liabilities 6.0 5.4
Noninterest-bearing deposits 3.8 6.4
Other liabilities 61.4 8.2
Realized shareholders' equity 3.0 7.4
Net unrealized gains(losses) on
investment securities - -
Total liabilities and
shareholders' equity 7.9 % 6.1 %
AR-13
<PAGE>
LOANS
Loan demand was the strongest in several years and showed an improving trend
in the second half of the year. Average loans increased 9.4% over the prior
year with growth of 10.1% in Florida, 9.4% in Georgia and 8.1% in
Tennessee/Alabama. An increased emphasis by our banks produced strong growth
in adjustable-rate residential mortgage loans. The Company's only significant
concentration of credit at December 31, 1994 occurred in loans secured by
real estate which totaled $14.0 billion. However, this amount is not
concentrated in any specific type of loan or geographic area. At year-end
1994, real estate loans in Florida banks were $9.1 billion, or 61% of total
loans, $3.1 billion in Georgia banks, or 33%, and $1.8 billion, or 42%, in
Tennessee/Alabama banks. Of the $8.4 billion in mortgage loans for 1-4 family
dwellings, $580.3 million were home equity loans. The average loan-to-deposit
ratio increased to 85.6% in 1994 compared with 81.4% in 1993.
At December 31, 1994, international outstandings, which include loans,
acceptances, deposits in other banks, foreign guarantees and accrued
interest, net of write-downs, totaled $328.8 million, a decrease of 51.0%
from $670.6 million at December 31, 1993. Most of the balances were temporary
investments and trade financing in Canada and Western Europe. Mexican loans
at year-end totaled $15 million which were reduced to $11 million by a
$4 million payment in early 1995.
<TABLE>
TABLE 6 - LOAN PORTFOLIO BY TYPES OF LOANS
<CAPTION>
(In millions) At December 31 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Commercial:
Domestic $9,279.2 $8,190.3 $7,933.4 $7,324.3 $7,656.6 $7,063.9
International 273.2 197.8 167.3 119.4 79.3 38.0
Real estate:
Construction 1,151.1 1,083.2 1,034.7 1,121.7 1,367.3 1,509.6
Mortgage, 1-4 family 8,380.5 7,013.8 5,911.6 5,488.4 5,221.7 4,589.0
Other 4,516.3 4,456.8 4,495.5 4,161.8 3,912.3 3,662.2
Lease financing 411.0 328.1 355.4 363.7 383.3 401.1
Credit card 690.5 698.2 725.7 745.2 775.6 711.0
Other consumer loans 3,847.1 3,323.9 2,869.9 2,927.0 3,374.2 3,779.4
Loans $28,548.9 $25,292.1 $23,493.5 $22,251.5 $22,770.3 $21,754.2
</TABLE>
AR-14
<PAGE>
<TABLE>
TABLE 7 - RESERVE FOR LOAN LOSSES
<CAPTION>
(Dollars in millions) At December 31 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Allocation of Reserve for Loan Losses
by Loan Type
Commercial $138.7 $139.4 $155.2 $147.1 $130.7 $122.4
Real estate 200.6 189.6 164.0 105.2 106.6 77.4
Lease financing 2.8 2.8 2.6 4.4 6.5 4.2
Consumer loans 74.6 88.7 82.5 78.5 63.3 58.6
Unallocated 230.3 140.7 69.9 45.8 59.8 84.9
Total $647.0 $561.2 $474.2 $381.0 $366.9 $347.5
Allocation of Reserve for Loan Losses
as a Percent of Total Reserve
Commercial 21.4 % 24.8 % 32.7 % 38.6 % 35.5 % 35.2 %
Real estate 31.0 33.8 34.7 27.6 29.1 22.3
Lease financing 0.4 0.5 0.5 1.2 1.8 1.2
Consumer loans 11.5 16.0 17.4 20.6 17.3 16.9
Unallocated 35.7 24.9 14.7 12.0 16.3 24.4
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Year-end Loan Types as a Percent of
Total Loans
Commercial 33.5 % 33.1 % 34.3 % 33.2 % 33.7 % 32.2 %
Real estate 49.2 49.6 48.5 48.2 45.6 44.3
Lease financing 1.4 1.5 1.5 1.6 1.7 1.8
Consumer loans 15.9 15.8 15.7 17.0 19.0 21.7
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
</TABLE>
AR-15
<PAGE>
<TABLE>
TABLE 8 - SUMMARY OF LOAN LOSS EXPERIENCE
<CAPTION>
Year Ended December 31
(Dollars in millions) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Reserve for Loan Losses
Balance - beginning of year $561.2 $474.2 $381.0 $366.9 $347.5 $306.5
Reserve of purchased banks 8.3 8.0 6.4 0.4 1.0 0.1
Provision for loan losses 137.8 189.1 234.2 209.6 201.6 180.5
Charge-offs:
Domestic:
Commercial (28.1) (47.8) (61.3) (96.1) (76.8) (57.5)
Real estate:
Construction (0.7) (7.6) (7.3) (7.9) (18.1) (16.8)
Mortgage, 1-4 family (7.3) (10.9) (10.3) (6.1) (2.6) (3.1)
Other (20.5) (35.1) (44.5) (26.2) (29.8) (5.0)
Lease financing (0.7) (1.0) (3.0) (6.5) (4.2) (4.5)
Credit card (26.3) (28.9) (33.6) (37.3) (28.1) (23.3)
Other consumer loans (30.1) (31.9) (42.0) (62.0) (66.2) (63.1)
International - - - - (0.1) (8.4)
Total charge-offs (113.7) (163.2) (202.0) (242.1) (225.9) (181.7)
Recoveries:
Domestic:
Commercial 18.6 20.9 22.1 16.3 13.7 14.5
Real estate:
Construction 0.7 0.5 0.7 0.4 0.9 0.2
Mortgage, 1-4 family 1.5 1.3 1.1 0.9 0.5 0.6
Other 6.3 5.2 3.0 1.4 1.2 0.8
Lease financing 0.6 1.0 1.1 2.0 1.0 1.0
Credit card 7.3 5.7 6.8 6.1 5.4 5.2
Other consumer loans 18.3 18.4 19.5 17.6 18.0 16.0
International 0.1 0.1 0.3 1.5 2.0 3.8
Total recoveries 53.4 53.1 54.6 46.2 42.7 42.1
Net charge-offs (60.3) (110.1) (147.4) (195.9) (183.2) (139.6)
Balance - end of year $647.0 $561.2 $474.2 $381.0 $366.9 $347.5
Year-end loans outstanding:
Domestic $28,260.3 $25,078.0 $23,326.2 $22,117.5 $22,687.8 $21,714.0
International 288.6 214.1 167.3 134.0 82.5 40.2
Total $28,548.9 $25,292.1 $23,493.5 $22,251.5 $22,770.3 $21,754.2
Average loans $26,412.6 $24,162.8 $22,489.1 $22,144.6 $22,058.4 $21,175.0
Ratios
Reserve to year-end loans 2.27 % 2.22 % 2.02 % 1.71 % 1.61 % 1.60 %
Net charge-offs to average loans 0.23 0.46 0.66 0.89 0.84 0.64
Provision to average loans 0.52 0.78 1.04 0.95 0.91 0.85
Recoveries to total charge-offs 47.0 32.5 27.0 19.1 18.9 23.2
</TABLE>
AR-16
<PAGE>
NONPERFORMING ASSETS
Nonperforming assets consist of nonaccrual loans, restructured loans and
other real estate owned. Nonperforming assets decreased $135.4 million, or
33.0%, from year-end 1993 and down $46.1 million from the third quarter of
1994. Over half of the 1994 decline occurred in our Florida banks, cutting
their ratio of nonperforming assets to total loans plus other real estate
owned to 1.02% at December 31, 1994. Included in nonperforming loans are
loans aggregating $43.8 million that are current as to the payment of
principal and interest but have been placed in nonperforming status because
of uncertainty as to the borrower's ability to make future payments. In
management's opinion, all material potential problem loans are included in
Table 9.
Statements of Financial Accounting Standards No. 114 (FAS 114)
"Accounting by Creditors for Impairment of a Loan" and No. 118 (FAS 118)
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures" are effective for fiscal years beginning after December 15,
1994. FAS 114 and FAS 118 address the accounting by creditors for impairment
of a loan and loans that are restructured in a troubled debt restructuring.
SunTrust will adopt these standards in the first quarter of 1995. It is
estimated that such adoption will have no material effect on the earnings or
financial condition of the Company.
Interest income on nonaccrual loans, if recognized, is recorded on a
cash basis. When a loan is placed on nonaccrual, unpaid interest is reversed
against interest income if it was accrued in the current year and is charged
to reserve for loan losses if it was accrued in prior years. When a
nonaccrual loan is returned to accruing status, any unpaid interest is
recorded as interest income after all principal has been collected.
For the year 1994, the gross amount of interest income that would have
been recorded on nonaccrual loans and restructured loans at December 31,
1994, if all such loans had been accruing interest at the original
contractual rate, was $18.5 million. Interest payments recorded in 1994 as
interest income (excluding reversals of previously accrued interest) for all
such nonperforming loans at December 31, 1994, were $10.5 million.
AR-17
<PAGE>
<TABLE>
TABLE 9 - NONPERFORMING ASSETS AND ACCRUING LOANS
PAST DUE 90 DAYS OR MORE
<CAPTION>
(Dollars in millions) At December 31 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Nonperforming Assets
Nonaccrual loans:
Commercial $27.9 $41.3 $49.6 $83.7 $102.4 $73.2
Real Estate:
Construction 16.0 29.9 45.4 60.0 48.7 83.4
Mortgage, 1-4 family 45.3 53.1 45.5 49.5 37.3 19.9
Other 82.0 116.8 160.2 207.1 159.4 68.3
Lease financing 0.2 0.1 0.9 2.7 3.2 4.0
Consumer loans 11.6 9.3 18.1 23.8 14.0 13.5
Total nonaccrual loans 183.0 250.5 319.7 426.8 365.0 262.3
Restructured loans 4.6 11.3 4.6 17.3 8.9 19.5
Total nonperforming loans 187.6 261.8 324.3 444.1 373.9 281.8
Other real estate owned 87.7 148.9 220.3 245.9 246.8 78.2
Total nonperforming assets $275.3 $410.7 $544.6 $690.0 $620.7 $360.0
Ratios
Nonperforming loans to total loans 0.66 % 1.03 % 1.38 % 2.00 % 1.64 % 1.30 %
Nonperforming assets to total loans
plus other real estate owned 0.96 1.61 2.30 3.07 2.70 1.65
Reserve to nonperforming loans 344.9 214.4 146.2 85.8 98.1 123.3
Accruing Loans Past Due 90 Days or More $19.2 $24.4 $27.6 $30.4 $42.5 $39.6
</TABLE>
INVESTMENT SECURITIES
The investment portfolio continues to be managed to maximize yield over an
entire interest rate cycle while providing liquidity and minimizing market
risk. The portfolio yield declined from an average of 6.32% in 1993 to 5.98%
in 1994. However, the yield has begun to rise in response to higher market
rates and was higher at the end of the year than the average for 1994. The
portfolio size declined by $1.0 billion from December 31, 1993 to December
31, 1994 as a portion of maturities were used to meet loan demand. Portfolio
turnover from sales totaled $1.4 billion in 1994, representing approximately
16% of the average portfolio size. The sales resulted in a pre-tax loss of
$2.7 million but reinvesting at higher yields will improve future income. The
average life of the portfolio was approximately 3.5 years at year-end 1994;
however, adjustable-rate securities in the portfolio reduced the average time
to repricing to 2.4 years.
The Company classified all of its investment securities as "available-
for-sale" which is consistent with the Company's investment philosophy of
maintaining flexibility to manage the securities portfolio. The carrying
value of investment securities at December 31, 1994 reflected $916.6 million
in unrealized gains, including a $1,242.8 million unrealized gain on the
Company's investment in common stock of The Coca-Cola Company.
AR-18
<PAGE>
<TABLE>
TABLE 10 - INVESTMENT SECURITIES BY CATEGORY
<CAPTION>
Amortized Fair Unrealized Unrealized
(In millions) At December 31 Cost Value Gains Losses
<S> <C> <C> <C> <C>
U.S. Treasury:
1994 $2,508.1 $2,378.4 $0.8 $130.5
1993 2,952.7 2,985.8 34.0 0.9
1992 2,802.1 2,858.0 58.8 2.9
U.S. government agencies and corporations:
1994 $1,067.3 $1,007.8 $0.4 $59.9
1993 821.7 828.2 6.6 0.1
1992 1,068.6 1,080.0 11.5 0.1
States and political subsidivions:
1994 $958.1 $972.1 $29.1 $15.1
1993 1,080.3 1,157.6 78.0 0.7
1992 1,165.8 1,234.0 69.5 1.3
Mortgage-backed securities:
1994 $3,661.9 $3,500.7 $3.4 $164.6
1993 4,319.3 4,343.3 36.8 12.8
1992 3,464.5 3,503.3 45.7 6.9
Common stock of The Coca-Cola Company:
1994 $0.1 $1,242.9 $1,242.8 $-
1993 0.1 1,076.9 1,076.8 -
1992 0.1 1,010.6 1,010.5 -
Other securities:
1994 $206.4 $216.8 $12.4 $2.0
1993 234.5 252.1 18.4 0.8
1992 213.9 223.6 11.2 1.5
Total investment securities
1994 $8,401.9 $9,318.7 $1,288.9 $372.1
1993 9,408.6 10,643.9 1,250.6 15.3
1992 8,715.0 9,909.5 1,207.2 12.7
</TABLE>
AR-19
<PAGE>
DEPOSITS
Average deposits increased 4.0% in 1994. Other time deposits (primarily
commercial time deposits over $100,000) posted the largest increase at 57.4%.
Noninterest-bearing demand deposits increased 3.8% and consumer time deposits
were down 2.5%. Interest-bearing deposits comprised 77.2% of average total
deposits in both 1994 and 1993.
<TABLE>
TABLE 11 - COMPOSITION OF AVERAGE DEPOSITS
<CAPTION>
Year Ended December 31 Percent of Total
(Dollars in millions) 1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing $7,034.1 $6,773.3 $5,909.9 22.8 % 22.8 % 20.6 %
NOW/Money market accounts 9,798.9 9,655.0 8,900.8 31.7 32.5 31.2
Savings 4,364.5 4,515.0 4,316.1 14.1 15.2 15.1
Consumer time 6,626.2 6,799.4 7,350.0 21.5 23.0 25.6
Other time 3,054.1 1,940.6 2,132.8 9.9 6.5 7.5
Total $30,877.8 $29,683.3 $28,609.6 100.0 % 100.0 % 100.0 %
</TABLE>
FUNDS PURCHASED
Average funds purchased, which are composed of federal funds purchased
and securities sold under agreements to repurchase, decreased $52.7 million
or 1.7% in 1994. Also, average net purchased funds (average funds purchased
less average funds sold) decreased $99.2 million in 1994. Average net
purchased funds were 7.4% of earning assets for 1994 compared to 8.1% in 1993.
TABLE 12 - FUNDS PURCHASED(1)
Maximum
Outstanding
At December 31 Daily Average at Any
(Dollars in millions) Balance Rate Balance Rate Month-end
1994 $4,351.9 4.90 % $3,050.0 4.00 % $4,351.9
1993 3,795.4 2.65 3,102.7 2.83 3,795.4
1992 3,789.7 2.83 2,664.5 3.27 3,789.7
(1) Consists of federal funds purchased and securities sold under agreements
to repurchase that mature either overnight or at a fixed maturity
generally not exceeding three months. Rates on overnight funds reflect
current market rates. Rates on fixed maturity borrowings are set at the
time of the borrowings.
CAPITAL RESOURCES
Consistent with the objective of operating a sound financial organization,
SunTrust maintains capital ratios well above regulatory requirements. The
rate of internal capital generation has been more than adequate to support
asset growth. Table 13 presents capital ratios for the six most recent years.
Regulatory agencies measure capital adequacy within a framework that
makes capital requirements sensitive to the risk profiles of individual
banking companies. The guidelines define capital as either Tier 1 (primarily
shareholders' equity) or Tier 2 (certain debt instruments and a portion of
the reserve for loan losses). The Company and its subsidiary banks are
subject to a minimum Tier 1 capital to risk-weighted assets ratio of 4% and
a minimum total capital (Tier 1 plus Tier 2) to risk-weighted assets ratio of
8%. The Federal Reserve Board (Board) has also established an additional
AR-20
<PAGE>
capital adequacy guideline referred to as the Tier 1 leverage ratio that
measures the ratio of Tier 1 capital to average quarterly assets. Regulatory
agencies preclude banks from formally including FAS 115 unrecognized gains
and losses in calculating Tier 1 capital; therefore, the appreciation of $1.2
billion in the Company's 24,133,248 shares of common stock of The Coca-Cola
Company is not included in our risk-adjusted capital.
The Federal Deposit Insurance Corporation Improvement Act of 1992
(FDICIA) required the establishment of a capital-based supervisory system of
prompt corrective action for all depository institutions. The Board's
implementation of FDICIA defines "well capitalized" institutions as those
whose capital ratios equal or exceed the following minimum ratios: Tier 1
capital ratio of 6%, total risk-based ratio of 10%, and a Tier 1 leverage
ratio of 5%. At December 31, 1994, the Company's Tier 1 capital, total
risk-based capital and Tier 1 leverage ratios were 7.95%, 10.05% and 6.68%,
respectively.
<TABLE>
TABLE 13 - CAPITAL
<CAPTION>
At December 31
(Dollars in millions) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital:
Realized shareholders' equity $2,883.3 $2,845.8 $2,769.7 $2,622.8 $2,377.1 $2,159.3
Intangible assets other than
servicing rights (222.2) (194.0) (174.6) (173.3) (163.9)
Total Tier 1 capital 2,661.1 2,651.8 2,595.1 2,449.5 2,213.2
Tier 2 capital:
Allowable reserve for loan losses 420.9 378.1 349.8 327.9 327.5
Allowable long-term debt 281.4 120.4 200.0 336.3 269.5
Total Tier 2 capital 702.3 498.5 549.8 664.2 597.0
Total capital $3,363.4 $3,150.3 $3,144.9 $3,113.7 $2,810.2
Risk-weighted assets $33,444.3 $29,871.4 $27,684.4 $26,005.7 $25,993.4
Risk-based ratios:
Tier 1 capital 7.95 % 8.88 % 9.37 % 9.42 % 8.51 %
Total capital 10.05 10.55 11.35 11.97 10.81
Tier 1 leverage ratio 6.68 6.82 7.27 7.14 6.97
Total shareholders' equity to assets 8.09 8.86 7.33 7.35 6.90 6.74 %
</TABLE>
In October 1993, the Board of Directors authorized the Company to
repurchase up to 12,000,000 shares of SunTrust common stock. Through December
31, 1994, the Company had repurchased 10,135,241 shares of SunTrust common
stock with authority remaining to purchase an additional 1,864,759 shares.
LIQUIDITY
Liquidity is managed to ensure there is sufficient cash flow to satisfy
demand for credit, deposit withdrawals and other attractive market
opportunities. A large stable, core deposit base, strong capital position
and excellent credit ratings are the solid foundation for the Company's
liquidity position. It is enhanced by an investment portfolio structured to
provide liquidity as needed, which occurred in 1994 when loan demand exceeded
deposit growth. It is also strengthened by ready access to regional and
national wholesale funding sources including fed funds purchased, securities
sold under agreements to repurchase, negotiable certificates of deposit and
offshore deposits, as well as an active bank deposit note program, commercial
paper issuance by the Parent Company, and Federal Home Loan Bank (FHLB)
advances for several subsidiary banks who are FHLB members.
AR-21
<PAGE>
<TABLE>
TABLE 14 - LOAN MATURITY
<CAPTION>
Remaining Maturities of Selected Loans
Within 1-5 After
(In millions) At December 31, 1994 Total 1 Year Years 5 Years
<S> <C> <C> <C> <C>
Loan Maturity
Commercial $9,552.4 $5,458.8 $3,088.2 $1,005.4
Real estate - construction 1,151.1 971.5 179.0 0.6
Total $10,703.5 $6,430.3 $3,267.2 $1,006.0
Interest Rate Sensitivity
Selected loans with:
Predetermined interest rates $1,987.8 $275.8
Floating or adjustable interest rates 1,279.4 730.2
Total $3,267.2 $1,006.0
</TABLE>
<TABLE>
TABLE 15 - MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
<CAPTION>
At December 31, 1994
Average
1 Year 1-5 5-10 After 10 Maturity
(Dollars in millions) or Less Years Years Years Total in Years
<S> <C> <C> <C> <C> <C> <C>
Distribution of Maturities:
Amortized Cost
U.S. Treasury and other U.S. government
agencies and corporations $347.8 $3,223.8 $3.8 $ - $3,575.4 2.7
States and political subdivisions 205.3 458.8 246.5 47.5 958.1 3.8
Mortgage-backed securities <F1> 61.5 3,079.1 518.7 2.6 3,661.9 4.3
Total debt securities $614.6 $6,761.7 $769.0 $50.1 $8,195.4 3.5
Fair Value:
U.S. Treasury and other U.S. government
agencies and corporations $345.0 $3,037.5 $3.7 $ - $3,386.2
States and political subdivisions 213.4 460.0 250.0 48.7 972.1
Mortgage-backed securities <F1> 60.7 2,966.2 471.4 2.4 3,500.7
Total debt securities $619.1 $6,463.7 $725.1 $51.1 $7,859.0
Weighted average yield(FTE):
U.S. Treasury and other U.S. government
agencies and corporations 5.90 % 5.35 % 6.76 % - % 5.41 %
States and political subdivisions 10.19 8.74 9.69 10.22 9.36
Mortgage-backed securities <F1> 5.49 5.78 5.09 - 5.68
Total debt securities 7.34 5.79 6.68 10.22 6.02
<FN>
<F1> Distribution of maturities is based on expected cash flows which may be different
from the contractual terms.
</TABLE>
AR-22
<PAGE>
TABLE 16 - MATURITY OF CERTIFICATES OF DEPOSIT AND OTHER
TIME DEPOSITS IN AMOUNTS OF $100,000 OR MORE
Other
Certificates Time
of Deposit Deposits Total
(In millions) At December 31, 1994
Months to maturity:
3 or less $764.5 $1,926.5 $2,691.0
Over 3 through 6 372.8 7.8 380.6
Over 6 through 12 395.6 9.9 405.5
Over 12 415.6 55.3 470.9
Total $1,948.5 $1,999.5 $3,948.0
INTEREST RATE SENSITIVITY
SunTrust asset/liability management is charged with managing the balance
sheet structure of the Company to optimize net interest income while
minimizing the effect of interest rate changes on the net interest margin.
SunTrust's objective is to maintain a neutral position relative to changes in
interest rates. This is evidenced by the relative stability of the net
interest margin in 1994, a period when interest rates increased dramatically.
Simulation modeling is the tool used by SunTrust to evaluate its level of
interest rate sensitivity, as well as to analyze balance sheet strategies.
Table 17 represents a snapshot of the balance sheet structure as of year-end,
but does not fully reflect the complexities of the interest sensitivity of
the Company as reflected in its simulation modeling process. SunTrust
utilizes interest rate swap transactions in a very limited fashion in the
overall management of its interest sensitivity position. Table 19 contains
summary information about these swap transactions.
AR-23
<PAGE>
<TABLE>
TABLE 17 - INTEREST RATE SENSITIVITY ANALYSIS
<CAPTION>
Repricing Within<F1>
0-30 31-90 91-180 181-365 Over 1
(Dollars in millions) At December 31, 1994 Days Days Days Days Year Total
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Loans <F2> $11,457.8 $2,170.7 $1,984.6 $3,972.9 $8,636.9 $28,222.9
Investment securities <F3> 432.7 222.9 320.2 1,020.2 6,386.4 8,382.4
Interest-bearing deposits 47.9 0.9 - 0.6 6.6 56.0
Funds sold 940.7 - - - - 940.7
Total earning assets 12,879.1 2,394.5 2,304.8 4,993.7 15,029.9 37,602.0
INTEREST-BEARING LIABILITIES
Interest-bearing deposits <F4> 16,882.9 1,369.5 1,794.6 2,017.9 2,499.7 24,564.6
Funds purchased 4,351.9 - - - - 4,351.9
Other short-term borrowings 375.1 305.2 35.0 61.9 8.5 785.7
Long-term debt 16.8 2.3 0.9 24.0 886.4 930.4
Total interest-bearing liabilities 21,626.7 1,677.0 1,830.5 2,103.8 3,394.6 30,632.6
Off-balance sheet financial instruments (250.0) (522.0) 50.0 (20.0) 742.0 -
Interest-sensitivity gap ($8,997.6) $195.5 $524.3 $2,869.9 $12,377.3 $6,969.4
Cumulative gap ($8,997.6) ($8,802.1) ($8,277.8) ($5,407.9) $6,969.4
Ratio of cumulative gap to total earning assets 23.9 % 23.4 % 22.0 % 14.4 % 18.5 %
Ratio of interest-sensitive assets to
interest-sensitive liabilities 59.6 142.8 125.9 237.4 442.8
Cumulative gap at December 31, 1993 ($7,570.7) ($5,881.7) ($5,296.6) ($2,466.2) $7,280.5
Cumulative gap at December 31, 1992 (6,531.3) (6,354.1) (5,979.7) (3,373.1) 6,305.6
<FN>
<F1> The repricing dates (which may differ from maturity dates) for various
assets and liabilities do not consider external factors that might
affect the interest rate sensitivity of assets and liabilities.
<F2> Excludes nonaccrual loans.
<F3> Includes trading account, does not include net unrealized gain of $916.6.
<F4> Savings, NOW and money market accounts can be repriced at any time;
therefore, all such balances are included in 0-30 days. Consumer time
and other time deposit balances are classified according to their
remaining maturities.
</TABLE>
AR-24
<PAGE>
OFF-BALANCE SHEET INSTRUMENTS
The Company uses off-balance sheet financial instruments in managing interest
rate and other market risks. Certain instruments are also created as a
service to customers. The Company controls the credit risk of these off-
balance sheet instruments by limiting the total amount of arrangements
outstanding by individual counterparty; by monitoring the size and maturity
structure of the portfolio; by obtaining collateral based on management's
credit assessment of the counterparty; and by applying uniform credit
standards maintained for all activities with credit risk. Collateral held
varies but may include accounts receivable, inventory, property, plant and
equipment, and income-producing commercial properties. In addition, the
Company enters into master netting agreements which incorporate the right to
net settlements of covered contracts with the same counterparty in the event
of default or other termination of the agreement. The two major classes of
instruments are derivative instruments and credit-related arrangements.
<TABLE>
TABLE 18 - OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
<CAPTION>
At December 31, 1994 At December 31, 1993
Contract or Notional Amount Contract or Notional Amount
Credit Credit
For Risk For Risk
(In millions) End User Customers Amount End User Customers Amount
<S> <C> <C> <C> <C> <C> <C>
Derivatives contracts:
Interest rate contracts:
Swaps $1,838 $888 $53 $2,188 $989 $85
Futures and forwards - - - 477 - -
Options written - 370 - - 416 -
Options purchased - 360 - - 401 4
Total interest rate contracts 1,838 1,618 53 2,665 1,806 89
Foreign exchange rate contracts 170 - 22 117 - 16
Total derivatives contracts $2,008 $1,618 75 $2,782 $1,806 105
Credit-related arrangements:
Commitments to extend credit $12,670 12,670 $10,826 10,826
Standby letters of credit and similar
arrangements 2,618 2,618 2,243 2,243
Total credit-related arrangements $15,288 15,288 $13,069 13,069
When-issued securities:
Commitments to sell $16 - $353 -
Commitments to purchase 6 - 395 395
Total credit risk amount $15,363 $13,569
</TABLE>
Derivative Instruments
Derivative financial instruments, such as interest rate swaps, options,
futures and forward contracts, are an important component of the Company's
risk management profile. The Company also enters into such instruments as a
service to corporate banking customers. Where contracts have been created
for customers, the Company enters into offsetting positions to eliminate its
exposure to interest rate risk.
AR-25
<PAGE>
The Company monitors its sensitivity to changes in interest rates and
uses interest rate swap contracts to limit the volatility of net interest
income. Due to the characteristics of the Company's funding sources, the
majority of interest rate swaps involve the Company receiving a fixed rate
and paying a floating rate. Of the "receive fixed" swaps in Table 19, $250
million is to hedge fixed rate bank notes and $1,365 million is to hedge the
fixed rate funding source of floating rate commercial loans. The Company
records all swap income and expense as interest expense. The total reduction
of interest expense for 1994, 1993 and 1992 related to interest rate swaps
was $30.6 million, $43.6 million and $36.3 million. Included in those
amounts is $0.4 million, $0.5 million and $0.3 million representing income
from swaps entered into for customers. For interest rate swaps entered into
by the Company as an end user, the following table shows the weighted average
rate received and weighted average rate paid by maturity and corresponding
notional amounts at December 31, 1994.
<TABLE>
TABLE 19 - INTEREST RATE SWAPS
<CAPTION>
Average Average Average
(Dollars in millions) Notional Fair Maturity Rate Rate
At December 31, 1994 Value Value In Months Paid Received
<S> <C> <C> <C> <C> <C>
Gain position:
Receive fixed $510.0 $7.9 4.0 6.40 % 9.23 %
Pay fixed 156.6 11.3 57.8 6.11 8.42
Total gain position 666.6 19.2
Loss position:
Receive fixed 1,105.0 (16.2) 19.3 7.59 6.17
Pay fixed 66.0 - 3.2 6.58 6.40
Total loss position 1,171.0 (16.2)
Total $1,837.6 $3.0
</TABLE>
Credit-Related Arrangements
In meeting the financing needs of its customers, the Company issues
commitments to extend credit, standby and other letters of credit and
guarantees, and also provides securities lending services. For these
instruments, the contractual amount of the financial instrument represents
the maximum potential credit risk if the counterparty does not perform
according to the terms of the contract. A large majority of these contracts
expire without being drawn upon. As a result, total contractual amounts do
not represent future credit exposure or liquidity requirements.
Unfunded commitments to extend credit are agreements to lend to a
customer who has complied with predetermined contractual conditions.
Commitments generally have fixed expiration dates.
Standby letters of credit and guarantees are conditional commitments
issued by the Company generally to guarantee the performance of a customer
to a third party in borrowing arrangements, such as commercial paper, bond
financing, construction and similar transactions. The credit risk involved in
issuing standby letters of credit is essentially the same as that involved in
extending loan facilities to customers and may be reduced by selling
participations to third parties. The Company holds collateral to support
those standby letters of credit and guarantees for which collateral is
deemed necessary.
AR-26
<PAGE>
EARNINGS AND BALANCE SHEET ANALYSIS 1993 VS. 1992
Net income was $473.7 million in 1993 compared with $404.4 million in
1992. This increase amounted to $69.3 million or 17.1%. Earnings per
common share in 1993 were $3.77, a 20.4% increase over the preceding
year.
Net interest income for 1993 was relatively unchanged from 1992
despite a 6.4% growth in average assets. The Company's net interest margin
declined from 5.16% in the fourth quarter of 1992 to 4.60% in the fourth
quarter of 1993.
The provision for loan losses decreased $45.1 million from $234.2
million to $189.1 million while the reserve for loan losses as a percentage
of loans increased from 2.02% to 2.22%. Net charge-offs were 0.46% of loans
in 1993 versus 0.66% in 1992. Nonperforming assets decreased $133.9 million
from $544.6 million at December 31, 1992 to $410.7 million at December 31,
1993. The largest decrease in nonperforming assets in 1993 occurred in real
estate loans - other, primarily commercial real estate, which was down $43.4
million or 27.1%.
Noninterest income in 1993 was $726.5 million compared with $672.7
million in 1992. This represented an 8.0% growth with trust income and other
charges and fees, both up by more than $20 million. The growth in other
charges and fees was aided by the success of the STI Classic Funds.
Noninterest expense was $1,408.4 million in 1993 versus $1,425.3 million in
1992. The Company's efficiency ratio was below 60% for the first time since
SunTrust was formed in 1985. Personnel expense was up only 3.2% from 1992
levels, and other noninterest expenses were down as a result of a special
program to control costs.
Loans at December 31, 1993, were $25.3 billion or 7.7% greater than at
year-end 1992. At December 31, 1993, deposits were $30.5 billion, an
increase of $0.6 billion or 2.0% from 1992 year-end.
AR-27
<PAGE>
FOURTH QUARTER RESULTS
Net income per common share for the fourth quarter of 1994 was $1.13, an
increase of 16.5% from $0.97 per share in the fourth quarter of 1993. Net
income increased from $119.2 million in the 1993 fourth quarter to $132.3
million in the 1994 fourth quarter.
The main factors influencing these results were:
* The 1994 provision for loan losses of $35.2 million was $11.8 million
lower than the $47.0 million in 1993. Net loan charge-offs for the current
period were lower at $22.4 million versus $33.7 million in the 1993
fourth quarter.
* Average earning assets were $36.8 billion in the 1994 fourth quarter,
4.9% higher than in 1993. This gain, combined with a five basis point
increase in the net interest margin, produced an increase of $25.2 million
in net interest income on a taxable-equivalent basis.
* Noninterest income decreased by $13.1 million in the 1994 fourth
quarter compared to the fourth quarter of 1993. Other charges and fees,
including commissions on the sale of mutual funds, were down $8.9
million or 22.8%. Trust income was up $0.7 million or 1.2% over the
1993 fourth quarter.
* Improved returns from the sale of other real estate as part of the
reduction of nonperforming assets were more than enough to explain a
$0.3 million decrease in noninterest expense to $353.6 million. The
decrease would have been more if not for a $9.4 million accrual in the
fourth quarter of 1994 for committed expenses associated with strategic
initiatives including changing the names of all our banks to "SunTrust."
* The provision for income taxes of $65.6 million was $12.2 million higher
in the fourth quarter of 1994 than in the 1993 fourth quarter. The
increase was the result of higher taxable income.
AR-28
<PAGE>
<TABLE>
TABLE 20 - QUARTERLY FINANCIAL DATA
<CAPTION>
(Dollars in millions) except 1994 1993
per share data 4 3 2 1 4 3 2 1
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest and dividend income $691.9 $652.7 $621.1 $586.6 $588.6 $591.1 $588.9 $593.7
Interest expense 274.2 244.9 216.2 197.2 197.2 198.4 195.5 199.6
Net interest income 417.7 407.8 404.9 389.4 391.4 392.7 393.4 394.1
Provision for loan losses 35.2 34.8 33.9 33.9 47.0 49.6 46.3 46.2
Net interest income after
provision for loan losses 382.5 373.0 371.0 355.5 344.4 343.1 347.1 347.9
Noninterest income 169.0 173.1 177.2 180.6 182.1 181.8 181.9 180.7
Noninterest expense 353.6 349.0 351.4 346.0 353.9 346.9 353.9 353.7
Income before provision
for income taxes 197.9 197.1 196.8 190.1 172.6 178.0 175.1 174.9
Provision for income taxes 65.6 65.2 65.4 63.0 53.4 57.7 56.4 59.4
Net income $132.3 $131.9 $131.4 $127.1 $119.2 $120.3 $118.7 $115.5
Net interest income
(taxable-equivalent) $431.4 $421.7 $419.0 $403.5 $406.2 $409.4 $409.0 $409.8
PER COMMON SHARE
Net income $1.13 $1.11 $1.09 $1.04 $0.97 $0.96 $0.94 $0.90
Dividends declared 0.36 0.32 0.32 0.32 0.32 0.28 0.28 0.28
Book value 29.85 29.79 28.61 28.74 29.47 23.06 22.40 22.05
Market Price:
High 51 1/8 51 3/8 50 1/2 47 1/8 46 48 48 3/4 49 5/8
Low 46 3/8 47 1/8 43 1/2 44 1/4 42 1/2 41 3/8 42 3/8 42
Close 47 3/4 48 3/4 48 3/8 44 5/8 45 44 1/2 47 1/8 46 5/8
SELECTED AVERAGE BALANCES
Total assets $40,991.2 $40,391.4 $40,340.6 $40,226.5 $38,690.7 $37,552.5 $37,098.0 $36,736.4
Earning assets 36,790.8 36,161.2 35,941.1 35,536.6 35,071.4 34,141.0 33,650.5 33,306.0
Loans 27,614.0 26,746.4 25,991.6 25,269.1 24,786.6 24,283.6 24,093.8 23,471.4
Total deposits 31,338.2 31,338.4 30,755.0 30,060.4 30,091.6 29,551.1 29,732.3 29,351.5
Realized shareholders' equity 2,964.7 2,991.2 2,956.2 2,927.6 2,916.2 2,902.6 2,845.4 2,835.1
Total shareholders' equity 3,555.0 3,557.3 3,527.0 3,648.2 2,924.5 2,902.6 2,845.4 2,835.1
Common equivalent shares (thousands) 117,054 119,271 120,602 121,657 123,435 125,241 126,135 127,867
Ratios (Annualized)
ROA 1.31 % 1.33 % 1.34 % 1.32 % 1.22 % 1.27 % 1.28 % 1.27 %
ROE 17.71 17.49 17.84 17.60 16.22 16.44 16.74 16.52
Net interest margin 4.65 4.63 4.68 4.60 4.60 4.76 4.87 4.99
</TABLE>
AR-29
<PAGE>
<TABLE>
TABLE 21 - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE
AND AVERAGE YIELDS EARNED AND RATES PAID
<CAPTION>
Quarter Ended
December 31, 1994 December 31, 1993
(Dollars in millions; yields on Average Income/ Yields/ Average Income/ Yields/
taxable-equivalent basis) Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans: <F1>
Taxable $26,887.1 $547.7 8.08 % $24,034.9 $443.3 7.32 %
Tax-exempt <F2> 726.9 16.4 8.93 751.7 14.1 7.46
Total loans 27,614.0 564.1 8.11 24,786.6 457.4 7.32
Investment securities:
Taxable 7,631.8 109.7 5.71 8,082.0 109.0 5.35
Tax-exempt <F2> 974.6 23.6 9.60 1,105.5 27.7 9.98
Total investment securities 8,606.4 133.3 6.15 9,187.5 136.7 5.91
Funds sold 469.2 6.7 5.69 526.3 4.3 3.25
Other short-term investments <F2> 101.2 1.5 5.78 571.0 5.0 3.43
Total earning assets 36,790.8 705.6 7.61 35,071.4 603.4 6.83
Reserve for loan losses (640.3) (556.0)
Cash and due from banks 2,155.6 2,313.8
Premises and equipment 712.4 715.5
Other assets 1,025.1 1,132.6
Unrealized gains(losses) on
investment securities 947.6 13.4
Total assets $40,991.2 $38,690.7
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts $9,698.2 $62.6 2.56 % $9,814.6 $52.8 2.13 %
Savings 4,123.0 26.9 2.58 4,515.6 25.9 2.28
Consumer time 6,833.8 76.2 4.43 6,528.9 64.5 3.92
Other time <F3> 3,585.0 39.7 4.40 2,077.1 9.3 1.78
Total interest-bearing deposits 24,240.0 205.4 3.36 22,936.2 152.5 2.64
Funds purchased 3,270.1 42.3 5.13 3,382.6 24.2 2.84
Other short-term borrowings 902.2 10.4 4.60 934.9 7.9 3.32
Long-term debt 919.1 16.1 6.96 629.5 12.6 7.97
Total interest-bearing liabilities 29,331.4 274.2 3.71 27,883.2 197.2 2.81
Noninterest-bearing deposits 7,098.2 7,155.4
Other liabilities 1,006.6 727.6
Shareholders' equity 2,964.7 2,916.2
Net unrealized gains(losses) on
investment securities 590.3 8.3
Total liabilities and shareholders' equity $40,991.2 $38,690.7
Interest rate spread 3.90 % 4.02 %
Net Interest Income $431.4 $406.2
Net Interest Margin <F3> 4.65 % 4.60 %
<FN>
<F1> Interest income includes loan fees of $24.5 and $22.7 in the quarters ended
December 31, 1994 and 1993. Nonaccrual loans are included in average balances
and income on such loans, if recognized, is recorded on a cash basis.
AR-30
<PAGE>
<F2> Interest income includes the effects of taxable-equivalent adjustments using
a Federal income tax rate of 35% and, where applicable, state income taxes
to increase tax-exempt interest income to a taxable-equivalent basis.
The net taxable-equivalent adjustment amounts included in the above table
were $13.7 and $14.8 in the quarters ended December 31, 1994 and 1993.
<F3> Interest rate swap transactions used to help balance the Company's interest-
sensitivity position reduced interest expense by $4.9 and $11.2 in the
fourth quarter of 1994 and 1993, respectively. Without these swaps, the
rate on Other time deposits and the net interest margin would have been
4.94% and 4.60% in 1994 and 3.91% and 4.47% in 1993.
</TABLE>
<TABLE>
TABLE 22 - QUARTERLY NONINTEREST INCOME AND EXPENSE
<CAPTION>
Quarters
1994 1993
(In millions) 4 3 2 1 4 3 2 1
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest Income
Trust income $61.4 $61.6 $63.4 $63.9 $60.7 $61.5 $63.0 $61.8
Service charges on deposit accounts 53.7 54.3 54.2 56.2 56.6 57.5 55.9 55.9
Other charges and fees 30.0 28.6 30.8 31.7 38.9 36.4 34.3 32.5
Credit card fees 14.5 14.0 14.7 14.0 13.6 13.8 15.5 14.9
Securities gains (losses) (4.7) (0.9) 0.1 2.8 0.2 0.4 0.4 1.0
Trading account profits and commissions 2.3 1.8 1.8 2.1 2.2 2.7 3.1 3.3
Other income 11.8 13.7 12.2 9.9 9.9 9.5 9.7 11.3
Total noninterest income $169.0 $173.1 $177.2 $180.6 $182.1 $181.8 $181.9 $180.7
Noninterest Expense
Salaries $138.1 $138.5 $137.5 $136.3 $134.7 $133.1 $131.2 $130.1
Other compensation 22.6 25.1 23.9 24.5 26.1 26.2 28.0 27.1
Employee benefits 26.9 23.6 23.6 26.6 26.0 22.6 23.3 26.6
Net occupancy expense 30.0 32.8 33.0 31.1 32.1 32.6 31.8 31.9
Equipment expense 25.9 25.7 25.8 25.9 26.1 25.6 25.3 26.1
FDIC premiums 16.6 16.8 16.7 16.5 16.0 16.6 17.0 16.6
Marketing and community relations 19.7 11.0 14.1 12.4 11.2 11.6 12.2 13.0
Postage and delivery 8.5 8.5 8.4 8.7 8.2 8.2 8.0 8.0
Operating supplies 7.2 7.0 7.7 7.5 7.6 7.7 7.5 7.7
Other real estate expense (2.0) (0.9) 1.5 (0.8) 2.4 0.4 5.5 8.4
Communications 6.3 6.7 6.7 6.4 6.6 6.7 6.6 6.4
Consulting and legal 5.7 4.7 8.0 4.2 5.2 4.6 5.0 5.4
Amortization of intangible assets 5.1 5.2 5.4 4.9 5.2 5.1 4.8 4.6
Other expense 43.0 44.3 39.1 41.8 46.5 45.9 47.7 41.8
Total noninterest expense $353.6 $349.0 $351.4 $346.0 $353.9 $346.9 $353.9 $353.7
</TABLE>
AR-31
<PAGE>
<TABLE>
TABLE 23 - SUMMARY OF LOAN LOSS EXPERIENCE, NONPERFORMING ASSETS AND
ACCRUING LOANS PAST DUE 90 DAYS OR MORE (DOLLARS IN MILLIONS)
<CAPTION>
Quarters
1994 1993
4 3 2 1 4 3 2 1
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESERVE FOR LOAN LOSSES
Balance - Beginning of quarter $634.2 $610.2 $588.1 $561.2 $547.9 $519.7 $501.0 $474.2
Reserve of purchased bank - - - - - - - 8.0
Provision for loan losses 35.2 34.8 33.9 33.9 47.0 49.6 46.3 46.2
Charge-offs (33.7) (25.8) (25.0) (29.2) (46.3) (35.5) (41.5) (39.9)
Recoveries 11.3 15.0 13.2 13.9 12.6 14.1 13.9 12.5
Balance - End of quarter $647.0 $634.2 $610.2 $588.1 $561.2 $547.9 $519.7 $501.0
RATIOS
Reserve to loans outstanding - Quarter end 2.27 % 2.32 % 2.28 % 2.27 % 2.22 % 2.22 % 2.14 % 2.08 %
Net loan charge-offs (annualized)
to average loans 0.32 0.16 0.18 0.25 0.54 0.35 0.46 0.47
Provison to average loans (annualized) 0.50 0.52 0.52 0.54 0.75 0.81 0.77 0.80
NONPERFORMING ASSETS
Nonaccrual loans $183.0 $206.7 $218.3 $232.5 $250.5 $281.9 $306.3 $339.5
Restructured loans 4.6 5.1 2.3 3.4 11.3 11.7 12.6 5.0
Total nonperforming loans 187.6 211.8 220.6 235.9 261.8 293.6 318.9 344.5
Other real estate owned 87.7 109.6 119.6 144.1 148.9 174.4 190.2 209.8
Total nonperforming assets $275.3 $321.4 $340.2 $380.0 $410.7 $468.0 $509.1 $554.3
RATIOS
Nonperforming loans to total loans 0.66 % 0.77 % 0.82 % 0.91 % 1.03 % 1.19 % 1.31 % 1.43 %
Nonperforming assets to total loans
plus other real estate owned 0.96 1.17 1.27 1.46 1.61 1.88 2.08 2.28
Reserve to nonperforming loans 344.9 299.4 276.6 249.3 214.4 186.6 163.0 145.5
Accruing Loans Past Due 90 Days or More $19.2 $19.0 $19.3 $21.9 $24.4 $29.1 $23.4 $28.6
</TABLE>
AR-32
<PAGE>
BANKING INCOME
FLORIDA
Net income for SunBanks, Inc. increased 11.9% to $279.5 million in 1994.
ROA in 1994 was 1.37%, 9 basis points higher than 1993. Major factors in
improved earnings were an increase in loan demand, a decrease of $28.5
million in the provision for loan losses and a $13.0 million reduction in
noninterest expense. The seven banks in Florida with more than $1 billion
in assets contributed 76% of the net income of SunBanks, Inc.
<TABLE>
Banks With Assets Exceeding $1 Billion
<CAPTION>
Net Income ROA
(Dollars in millions) 1994 1993 % Change 1994 1993
<S> <C> <C> <C> <C> <C>
SunBank, N.A. (Orlando) $72.5 $68.8 5.4 % 1.47 % 1.44 %
SunBank/South Florida, N.A. (Fort Lauderdale) 42.0 36.7 14.5 1.48 1.28
SunBank/Miami, N.A. 30.1 26.6 13.1 1.26 1.09
SunBank of Tampa Bay 27.0 21.2 27.5 1.44 1.13
SunBank of Volusia County (Daytona Beach) 14.0 13.3 5.4 1.38 1.45
SunBank/Gulf Coast (Sarasota) 13.1 14.0 (6.7) 0.77 0.83
SunBank and Trust Company (Brooksville) 12.9 9.1 41.1 1.24 1.02
</TABLE>
GEORGIA
Trust Company of Georgia continued its long history of excellent returns
with an ROA of 1.62%. Net income rose 10.5% to $210.8 million in 1994. The
26.1% decline in the provision for loan losses was a major factor in the
earnings improvement. Noninterest expense was down by 1.7%. Average earning
assets rose 8.7% during the year with most of the increase attributable to
loans which grew 9.4%.
<TABLE>
Banks With Assets Exceeding $1 Billion
<CAPTION>
Net Income ROA
(Dollars in millions) 1994 1993 % Change 1994 1993
<S> <C> <C> <C> <C> <C>
Trust Company Bank (Atlanta) $159.0 $144.3 10.2 % 1.63 % 1.63 %
</TABLE>
TENNESSEE/ALABAMA
Third National Corporation's earnings were up in 1994, with net income
increasing 15.4% to $81.5 million. ROA in 1994 was 1.29% compared to 1.15%
in 1993. A $9.0 million decrease in the provision for loan losses in 1994
was the major contributor to the increase in net income.
<TABLE>
Banks With Assets Exceeding $1 Billion
<CAPTION>
Net Income ROA
(Dollars in millions) 1994 1993 % Change 1994 1993
<S> <C> <C> <C> <C> <C>
Third National Bank in Nashville $35.6 $29.4 21.3 % 1.19 % 1.00 %
American National Bank and Trust
Company of Chattanooga 18.8 17.2 9.1 1.36 1.32
Third National Bank of East Tennessee (Knoxville) 13.1 11.2 16.9 1.37 1.22
</TABLE>
AR-33
<PAGE>
<TABLE>
TABLE 24 - FINANCIAL HIGHLIGHTS OF BANKING SUBSIDIARIES
<CAPTION>
Trust Company Third National
SunBanks, Inc. of Georgia Corporation
(Dollars in Millions) 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net interest income (FTE) $905.0 $880.4 $552.2 $529.8 $268.0 $264.2
Provision for loan losses 82.0 110.5 39.4 53.3 15.9 24.9
Trust income 136.2 136.4 81.9 78.8 32.2 31.8
Other noninterest income 216.4 230.8 151.0 165.3 66.9 71.8
Personnel expense 296.2 312.5 176.9 183.2 94.6 96.3
Other noninterest expense 431.1 427.8 242.3 243.3 122.9 131.8
Net income 279.5 249.9 210.8 190.8 81.5 70.7
Selected Average Balances
Total assets 20,352 19,585 14,060 12,066 6,306 6,120
Earning assets 18,881 18,000 12,012 11,052 5,911 5,668
Loans 13,943 12,660 8,450 7,722 3,997 3,696
Total deposits 16,746 16,782 9,139 7,972 5,065 4,984
Realized shareholder's equity 1,735 1,572 1,113 1,046 522 502
At December 31
Total assets 21,006 20,041 14,880 14,185 6,605 6,332
Earning assets 19,646 18,264 12,473 12,044 6,213 5,892
Loans 14,963 13,215 9,260 8,060 4,299 3,908
Reserve for loan losses 343 293 188 164 115 103
Total deposits 16,774 16,926 10,219 8,466 5,231 5,090
Realized shareholder's equity 1,809 1,619 1,173 1,079 524 499
Total shareholders' equity 1,702 1,663 1,879 1,769 488 517
Credit Quality
Net loan charge-offs 40.8 66.7 15.7 26.8 3.4 16.3
Nonperforming loans<F1> 113.5 168.1 56.6 72.3 17.0 20.8
Other real estate owned<F1> 40.3 54.7 13.7 31.0 33.8 63.1
Ratios
ROA 1.37 % 1.28 % 1.62 % 1.58 % 1.29 % 1.15 %
ROE 16.11 15.90 18.94 18.24 15.61 14.08
Net interest margin 4.79 4.89 4.60 4.79 4.53 4.66
Efficiency ratio 57.8 59.3 53.4 55.1 59.3 62.0
Total shareholders' equity to assets 8.10 8.30 12.63 12.47 7.39 8.16
Net loan charge-offs to average loans 0.29 0.53 0.19 0.35 0.09 0.44
Nonperforming loans to total loans 0.76 1.27 0.61 0.90 0.39 0.53
Nonperforming assets to total loans plus
other real estate owned 1.02 1.68 0.76 1.28 1.17 2.11
Reserve to loans 2.29 2.22 2.03 2.04 2.68 2.63
Reserve to nonperforming loans 302.0 174.5 332.1 227.1 679.5 493.7
<FN>
<F1>At December 31.
</TABLE>
AR-34
<PAGE>
SUPERVISION AND REGULATION
As a bank holding company, the Company is subject to the regulation and
supervision of the Federal Reserve Board. The Companpy's subsidiary banks
(the "Subsidiary Banks") are subject to supervision and regulation by
applicable state and federal banking agencies, including the Federal Reserve
Board, the Office of the Comptroller of the Currency (the "Comptroller")
and the Federal Deposit Insurance Corporation (the "FDIC"). The
Subsidiary Banks are also subject to various requirements and restrictions
under federal and state law, including requirements to maintain reserves
against deposits, restrictions on the types and amounts of loans that may be
granted and the interest that may be charged thereon, and limitations on the
types of investments that may be made and the types of services that may be
offered. Various consumer laws and regulations also affect the operations of
the Subsidiary Banks. In addition to the impact of regulation, commercial
banks are affected significantly by the actions of the Federal Reserve Board
as it attempts to control be money supply and credit availability in order to
influence the economy.
The Bank Holding Company Act currently prohibits the Federal Reserve
Board from approving an application from a bank holding company to acquire
shares of a bank holding company outside the state in which the operations of
the holding company's banking subsidiaries are principally conducted, unless
such an acquisition is specifically authorized by statute of the state in
which the bank whose shares are to be acquired is located. However, under
recently enacted federal legislation, the restriction on interstate
acquisitions will be abolished effective September 1995, and thereafter, bank
holding companies from any state will be able to acquire banks and bank
holding companies located in any other state, subject to certain conditions,
including nationwide and state imposed concentration limits. Banks also will
be able to branch across state lines by acquisition, merger or de novo,
effective June 1, 1997 (unless state law would permit such interstate
branching at an earlier date), providing certain conditions are met including
that applicable state law must expressly permit de novo interstate branching.
There are a number of obligations and restrictions imposed on bank
holding companies and their depository institution subsidiaries by federal
law and regulatory policy that are designed to reduce potential loss exposure
to the depositors of such depository institutions and to the FDIC insurance
fund in the event the depository institution becomes in danger of default or
is in default. For example, under a policy of the Federal Reserve Board with
respect to bank holding company operations, a bank holding company is
required to serve as a source of financial strength to its subsidiary
depository institutions to commit resources to support such institutions in
circumstances where it might not do so absent such policy, In addition, the
"cross-guarantee" provisions of federal law require insured depository
institutions under common control to reimburse the FDIC for any loss suffered
or reasonably anticipated as a result of the default of a commonly controlled
insured depository institution or for any assistance provided by the FDIC to
a commonly controlled insured depository institution in danger of default.
The federal banking agencies have broad powers under current federal law
to take prompt corrective action to resolve problems of insured depository
institutions. The extent of these powers depends upon whether the
institutions in question are "well capitalized," "adequately capitalized,"
or "significantly undercapitalized" as such terms are defined under uniform
regulations defining such capital levels issued by each of the federal
banking agencies.
AR-35
<PAGE>
There are various legal and regulatory limits on the extent to which
the Company's subsidiary banks may pay dividends or otherwise supply funds to
the Company. In addition, federal and state regulatory agencies also have the
authority to prevent a bank or bank holding company from paying a dividend or
engaging in any other activity that, in the opinion of the agency, would
constitute an unsafe or unsound practice.
There have been a number of legislative and regulatory proposals that
would have an impact on the operation of bank holding companies and their
banks. It is impossible to predict whether or in what form these proposals
may be adopted in the future and, if adopted, what their effect will be on
the Company.
FDIC regulations require that management report on its institution's
responsibility for preparing financial statements, and establishing and
maintaining an internal control structure and procedures for financial
reporting and compliance with designated laws and regulations concerning
safety and soundness; and that independent auditors attest to and report
assertions in management's reports concerning compliance with such laws and
regulations, using FDIC-approved audit procedures.
SunTrust Securities, Inc. is a broker-dealer registered with the
Securities and Exchange Commission and is a member of the National
Association of Securities Dealers, Inc. Trusco Capital Management, Inc. is
registered with the Securities and Exchange Commission and is an investment
adviser pursuant to the Investment Advisers Act of 1940, as amended.
SunTrust Capital Markets, Inc. (STCM) is a broker-dealer registered with
the Securities and Exchange Commission and is a member of the National
Association of Securities Dealers, Inc. and the Securities Investor
Protection Corporation. It serves as the investment banking arm of SunTrust
Banks, Inc. The business activities of STCM include public finance, corporate
finance and the sale of investment securities to corporations, institutions
and governmental entities.
COMMUNITY REINVESTMENT
Our banks have prospered by operating on the philosophy - "Build your
community, and you build your bank." This commitment to our communities
includes efforts to serve the credit needs of low- and moderate-income, and
other disadvantaged communities as well as small businesses. SunTrust bankers
make thousands of calls in our communities each year. Our banks advertise in
minority and non-English media to reach potential customers who may not be
reached by more traditional marketing efforts. We participate, and often play
a leading role, in lending consortia, community development corporations and
other cooperative efforts with other financial institutions, local
governments and non-profit organizations to help make credit available where
it may be impossible to extend traditional loans.
Our performance in 1994 shows a strong commitment to our communities.
SunTrust's banks in 1994 approved more than 3,000 mortgage loans totaling
$134 million to residents of low- and moderate-income neighborhoods. SunTrust
also made nearly 19,000 consumer loans totaling $323 million to residents of
these areas, and we made 32,000 small business loans under $100,000, totaling
nearly $900 million. We continue to seek ways to serve these markets
profitably and prudently, and to ensure that all qualified applicants receive
the loans they need.
AR-36
<PAGE>
LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to numerous claims and lawsuits
arising in the course of their normal business activities, some of which
involve claims for substantial amounts. Although the ultimate outcome of
these suits cannot be ascertained at this time, it is the opinion of
management that none of these matters, when resolved, will have a material
effect on the Company's consolidated results of operations or financial
position.
COMPETITION
All aspects of the Company's business are highly competitive. The Company
faces aggressive competition from other domestic and foreign lending
institutions and from numerous other providers of financial services. The
ability of nonbanking financial institutions to provide services
previously reserved for commercial banks has intensified competition.
Because nonbanking financial institutions are not subject to the same
regulatory restrictions as banks and bank holding companies, they can often
operate with greater flexibility.
PROPERTIES
The Company's headquarters and the main offices of Trust Company of Georgia
and Trust Company Bank are located in Atlanta, primarily in three office
buildings owned by Trust Company Bank. These buildings contain a total of
547,120 square feet of office space. As of December 31, 1994, bank
subsidiaries of the Company owned 476 of their 658 full-service banking
offices, and leased the remaining banking offices. See Notes 6 and 15 of the
Notes to Consolidated Financial Statements.
AR-37
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS Annual Report Page #
Consolidated Statements of Income AR-39
Consolidated Balance Sheets AR-40
Consolidated Statements of Shareholders' Equity AR-41
Consolidated Statements of Cash Flow AR-42,AR-43
Notes to Consolidated Financial Statements AR-44 through AR-62
Report of Independent Public Accountants AR-63
MANAGEMENT'S STATEMENT OF RESPONSIBILITY FOR FINANCIAL INFORMATION
Financial statements and information in this Annual Report were prepared in
conformity with generally accepted accounting principles. Management is
responsible for the integrity and objectivity of the financial statements and
related information. Accordingly, it maintains an extensive system of
internal controls and accounting policies and procedures to provide
reasonable assurance of the accountability and safeguarding of Company
assets, and of the accuracy of financial information. These procedures
include management evaluations of asset quality and the impact of economic
events, organizational arrangements that provide an appropriate division of
responsibility, and a program of internal audits to evaluate independently
the adequacy and application of financial and operating controls and
compliance with Company policies and procedures.
The Company's independent public accountants, Arthur Andersen LLP,
express their opinion as to the fairness of the financial statements
presented. Their opinion is based on an audit conducted in accordance with
generally accepted auditing standards as described in the second paragraph
of their report.
The Board of Directors, through its Audit Committee, is responsible for
ensuring that both management and the independent public accountants fulfill
their respective responsibilities with regard to the financial statements.
The Audit Committee, composed entirely of directors who are not officers or
employees of the Company, meets periodically with both management and the
independent public accountants to ensure that each is carrying out its
responsibilities. The independent public accountants have full and free
access to the Audit Committee and meet with it, with and without management
present, to discuss auditing and financial reporting matters.
The Company assessed its internal control system as of December 31,
1994, in relation to criteria for effective internal control over financial
reporting described in "Internal Control - Integrated Framework" issued by
the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, the Company believes that, as of December 31, 1994,
its system of internal controls over financial reporting met those criteria.
James B. Williams John W. Spiegel William P. O'Halloran
Chairman of the Board Executive Vice Senior Vice President
of Directors President and Controller
and Chief Executive and Chief Financial
Officer Officer
ABBREVIATIONS
Within the consolidated financial statements and the notes thereto, the
following references will be used:
SunTrust Banks, Inc. - Company or SunTrust
SunBanks, Inc. - Sun
Trust Company of Georgia - TCG
Third National Corporation - TNC
SunTrust Banks, Inc. Parent Company - Parent Company
AR-38
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Year Ended December 31
(Dollars in thousands except per share data)<F1> 1994 1993 1992
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $2,017,967 $1,804,814 $1,867,403
Interest and dividends on investment securities:
Taxable interest 412,728 430,470 498,709
Tax-exempt interest 66,984 75,948 88,451
Dividends(1) 25,137 20,727 16,596
Interest on funds sold 17,100 10,589 16,843
Interest on deposits in other banks 9,805 16,038 27,867
Other interest 2,656 3,781 21,687
Total interest income 2,552,377 2,362,367 2,537,556
INTEREST EXPENSE
Interest on deposits 704,803 632,307 832,372
Interest on funds purchased 122,055 87,900 87,038
Interest on other short-term borrowings 42,519 21,623 7,027
Interest on long-term debt 63,119 48,839 48,560
Total interest expense 932,496 790,669 974,997
NET INTEREST INCOME 1,619,881 1,571,698 1,562,559
Provision for loan losses - Note 5 137,841 189,064 234,242
Net interest income after provision for loan losses 1,482,040 1,382,634 1,328,317
NONINTEREST INCOME
Trust income 250,296 246,963 226,051
Service charges on deposit accounts 218,420 225,900 215,557
Other charges and fees 121,137 142,108 121,898
Credit card fees 57,154 57,835 58,847
Securities gains(losses) (2,692) 2,001 5,140
Other noninterest income 55,612 51,649 45,258
Total noninterest income 699,927 726,456 672,751
NONINTEREST EXPENSE
Salaries and other compensation - Notes 11 and 12 646,529 636,444 619,593
Employee benefits - Note 11 100,660 98,516 92,761
Net occupancy expense 126,855 128,355 134,764
Equipment expense 103,342 103,082 102,894
FDIC premiums 66,635 66,231 64,516
Marketing and community relations 57,210 48,042 51,944
Postage and delivery 34,129 32,402 32,471
Operating supplies 29,421 30,539 30,623
Other noninterest expense 235,221 264,817 295,734
Total noninterest expense 1,400,002 1,408,428 1,425,300
Income before provision for income taxes 781,965 700,662 575,768
Provision for income taxes - Note 10 259,221 226,933 171,371
NET INCOME $522,744 $473,729 $404,397
Average common equivalent shares 119,632,524 125,656,064 129,306,731
Net income per average common share $4.37 $3.77 $3.13
Dividends paid per common share 1.32 1.16 1.03
(1) Includes dividends on common stock of
The Coca-Cola Company 18,824 16,411 13,515
<FN>
<F1> See notes to consolidated financial statements.
</TABLE>
AR-39
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
At December 31
(Dollars in thousands) <F1> 1994 1993
<S> <C> <C>
ASSETS
Cash and due from banks $2,595,071 $2,363,694
Interest-bearing deposits in other banks 56,040 475,856
Trading account 98,110 112,522
Investment securities(1) - Note 3 9,318,521 10,643,953
Funds sold 940,656 615,397
Loans - Notes 4,12 and 13 28,548,887 25,292,078
Reserve for loan losses - Note 5 (647,016) (561,191)
Net loans 27,901,871 24,730,887
Premises and equipment - Note 6 714,666 715,868
Intangible assets 237,416 206,460
Customers' acceptance liability 39,813 95,788
Other assets 806,921 767,952
Total assets $42,709,085 $40,728,377
LIABILITIES
Noninterest-bearing deposits $7,653,776 $7,610,644
Interest-bearing deposits 24,564,640 22,875,161
Total deposits 32,218,416 30,485,805
Funds purchased 4,351,896 3,795,373
Other short-term borrowings - Note 7 785,653 1,060,792
Long-term debt - Note 8 930,447 630,350
Acceptances outstanding 39,813 95,788
Other liabilities - Notes 9 and 10 929,529 1,050,686
Total liabilities 39,255,754 37,118,794
Commitments and contingencies - Notes 2, 8, 11, 12, 15 and 16
SHAREHOLDERS' EQUITY - Note 11
Preferred stock, no par value; 50,000,000 shares
authorized; none issued
Common stock, $1.00 par value; 350,000,000 shares authorized(2) 130,461 130,461
Additional paid in capital 438,309 444,941
Retained earnings 3,020,985 2,655,357
Treasury stock and other(3) (706,499) (384,951)
Realized shareholders' equity 2,883,256 2,845,808
Unrealized gains(losses) on investment securities,
net of taxes - Note 3 570,075 763,775
Total shareholders' equity 3,453,331 3,609,583
Total liabilities and shareholders' equity $42,709,085 $40,728,377
(1) Includes unrealized gains(losses) on investment securities $916,578 $1,235,344
(2) Common shares outstanding 115,679,426 122,468,085
(3) Treasury shares of common stock 14,781,218 7,992,559
<FN>
<F1> See notes to consolidated financial statements
</TABLE>
AR-40
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
Unrealized
Gains
Additional Treasury (Losses) on
Common Paid in Retained Stock and Securities,
(In thousands) <F1> Stock Capital Earnings Other <F2> Net of Taxes Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1992 $130,819 $469,482 $2,054,098 ($31,569) $2,622,830
Net income - - 404,397 - 404,397
Cash dividends paid on common stock, $1.03 per share - - (132,100) - (132,100)
Proceeds from exercise of stock options 50 (3,300) - 9,545 6,295
Retirement of issued shares (467) (25,905) - 26,372 -
Acquisition of treasury stock - - - (139,072) (139,072)
Issuance of treasury stock for ESOP - 648 - 1,267 1,915
Issuance (net of forfeitures) of treasury
stock as restricted stock - 3,921 - 5,628 9,549
Compensation element of restricted stock - - - (9,549) (9,549)
Amortization of compensation element
of restricted stock - - - 5,438 5,438
BALANCE, DECEMBER 31, 1992 130,402 444,846 2,326,395 (131,940) 2,769,703
Net income - - 473,729 - 473,729
Cash dividends paid on common stock, $1.16 per share - - (144,767) - (144,767)
Proceeds from exercise of stock options 32 (4,393) - 8,863 4,502
Conversion of debentures 27 643 - - 670
Acquisition of treasury stock - - - (285,669) (285,669)
Issuance of treasury stock for 401(k) - 2,238 - 19,770 22,008
Issuance (net of forfeitures) of treasury
stock as restricted stock - 1,607 - 5,775 7,382
Compensation element of restricted stock - - - (7,382) (7,382)
Amortization of compensation element
of restricted stock - - - 5,632 5,632
Change in unrealized gains(losses) on securities, net - - - - 763,775 763,775
BALANCE, DECEMBER 31, 1993 130,461 444,941 2,655,357 (384,951) 763,775 3,609,583
Net income - - 522,744 - 522,744
Cash dividends paid on common stock, $1.32 per share - - (157,116) - (157,116)
Proceeds from exercise of stock options - (7,092) - 11,115 4,023
Acquisition of treasury stock - - - (348,540) (348,540)
Issuance of treasury stock for 401(k) - 466 - 10,809 11,275
Issuance (net of forfeitures) of treasury
stock as restricted stock - (6) - (1,023) (1,029)
Compensation element of restricted stock - - - 1,029 1,029
Amortization of compensation element
of restricted stock - - - 5,062 5,062
Change in unrealized gains(losses) on securities, net - - - - (193,700) (193,700)
BALANCE, DECEMBER 31, 1994 $130,461 $438,309 $3,020,985 ($706,499) $570,075 $3,453,331
<FN>
<F1> See notes to consolidated financial statements.
<F2> Balance at December 31, 1994 includes $675,160 for treasury stock and
$31,339 for compensation element of restricted stock.
</TABLE>
AR-41
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
Year Ended Ended December 31
(In thousands)<F1> 1994 1993 1992
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $522,744 $473,729 $404,397
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 133,018 140,170 133,388
Provision for loan losses 137,841 189,064 234,242
Provision for losses on other real estate 14,138 19,534 29,364
Deferred income tax benefit (4,716) (11,402) (40,934)
Amortization of compensation element of
restricted stock 5,062 5,632 5,438
Securities (gains) losses, net 2,692 (2,001) (5,140)
(Gains) losses on sale of loans, equipment, other
real estate and repossessed assets, net (21,556) (9,821) (6,660)
Recognition of unearned loan income (195,978) (198,273) (140,088)
Origination of loans for sale (509,702) (1,124,544) (871,554)
Proceeds from sale of loans 600,909 1,107,561 838,796
Change in period-end balances of:
Trading account 14,412 175,351 51,712
Interest receivable (38,163) 19,315 37,682
Prepaid expenses (51,129) (24,904) (10,671)
Other assets (842) 9,098 (23,763)
Taxes payable (8,123) 21,549 (1,811)
Interest payable 31,999 (7,179) (37,346)
Other accrued expenses (18,713) 35,458 61,598
Net cash provided by operating activities 613,893 818,337 658,650
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from maturities of investment securities 2,400,350 3,684,592 3,607,500
Proceeds from sales of investment securities 1,422,078 266,348 122,198
Purchases of investment securities (2,826,867) (4,389,985) (4,787,736)
Net (increase) decrease in loans (2,900,890) (1,173,242) (1,114,795)
Capital expenditures (105,420) (118,391) (100,398)
Proceeds from sale of equipment, other real estate
and repossessed assets 131,538 195,303 168,252
Net funds (paid) received in acquisitions (33,411) 102,617 (8,112)
Other 23,215 (24,980) 3,149
Net cash used by investing activities (1,889,407) (1,457,738) (2,109,942)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 1,401,591 (329,376) 529,619
Net increase (decrease) in funds purchased
and other short-term borrowings 239,826 838,179 1,001,507
Proceeds from issuance of long-term debt 580,572 42,865 208,938
Repayment of long-term debt (308,022) (54,494) (131,522)
Proceeds from the exercise of stock options 4,023 4,502 6,295
Payments to acquire treasury stock (348,540) (285,669) (139,072)
Dividends paid (157,116) (144,767) (132,100)
Net cash provided by financing activities 1,412,334 71,240 1,343,665
Net increase (decrease) in cash and cash equivalents 136,820 (568,161) (107,627)
Cash and cash equivalents at beginning of year 3,454,947 4,023,108 4,130,735
Cash and cash equivalents at end of year $3,591,767 $3,454,947 $4,023,108
<FN>
<F1> See notes to consolidated financial statements
</TABLE>
AR-42
<PAGE>
<TABLE>
SUPPLEMENTAL DISCLOSURE
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
Year Ended Ended December 31
(In thousands)<F1> 1994 1993 1992
<S> <C> <C> <C>
Interest paid $900,497 $797,359 $1,011,806
Income taxes paid 275,465 255,273 216,663
<FN>
<F1> See notes to consolidated financial statements
</TABLE>
AR-43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
Accounting policies that significantly affect the determination of results of
operations, financial position, and cash flow are summarized below.
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated. Results of
operations of companies purchased are included from the dates of
acquisition.
Purchase Accounting: Following the purchase method of accounting, the
assets and liabilities of purchased banks are stated at estimated fair values
at the date of acquisition.
Trading Account: Trading account assets are carried at market value.
Gains and losses are determined using the specific identification method.
Investment Securities: Investment securities are classified as available-for-
sale and are carried at market value with unrealized gains and losses, net of
any tax effect, added to or deducted from realized shareholders' equity to
determine total shareholders' equity.
Loans: Interest income on all classifications of loans is accrued based upon
the outstanding principal amounts except those classified as nonaccrual
loans. Interest accrual is discontinued when it appears that future
collection of principal or interest according to the contractual terms may be
doubtful. Interest income on nonaccrual loans is recognized on a cash basis,
if there is no doubt of future collection of principal. Fees and incremental
direct costs associated with the loan origination and pricing process are
deferred and amortized as level yield adjustments over the respective loan
terms. Fees received for providing loan commitments and letters of credit
facilities are deferred until the loan is advanced and then recognized over
the term of the loan as an adjustment of the yield. Fees on commitments and
letters of credit that are not expected to be funded are amortized into
noninterest income by the straight-line method over the commitment period.
Statements of Financial Accounting Standards No. 114 (FAS 114)
"Accounting by Creditors for Impairment of a Loan" and No. 118 (FAS 118)
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures" are effective for fiscal years beginning after December 15,
1994. FAS 114 and FAS 118 address the accounting by creditors for impairment
of a loan and loans that are restructured in a troubled debt restructuring.
SunTrust will adopt these standards in the first quarter of 1995. It is
estimated that such adoption will have no material effect on the earnings or
financial condition of the Company.
Reserve for Loan Losses: The reserve is that amount considered adequate
to absorb possible losses in the portfolio based on management's evaluation
of the size and current risk characteristics of the loan portfolio, the fair
value of underlying collateral and prior loan loss experience as well as the
impact of current economic conditions. A provision for loan losses is charged
to operations based on management's periodic evaluation of these risks.
AR-44
<PAGE>
Premises and Equipment: Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation has been calculated
primarily using the straight-line method over the assets' estimated useful
lives. Certain leases are capitalized as assets for financial reporting
purposes. Such capitalized assets are amortized, using the straight-line
method, over the terms of the leases. Maintenance and repairs are charged
to expense and betterments are capitalized.
Intangible Assets: Intangible assets consist primarily of goodwill
associated with purchased banks which is being amortized on the straight-
line method over various periods ranging from fifteen to forty years.
Intangible assets are evaluated regularly for other-than-temporary
impairment. If circumstances suggest that their value may be impaired and
the writedown would be material, an assessment of recoverability is performed
prior to any writedown of the asset.
Income Taxes: Deferred income tax assets and liabilities result from
temporary differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements that will result in
taxable or deductible amounts in future years.
Earnings per Share: Earnings per common share are based on the weighted
average number of common shares outstanding during each period, plus common
shares calculated for stock options and restricted stock outstanding using
the treasury stock method. Fully diluted per common share data are not
materially different than the primary per common share data presented.
Cash Flow: For purposes of reporting cash flow, cash and cash equivalents
include only those items with an original maturity of three months or less
which includes cash and due from banks, interest-bearing deposits in other
banks and funds sold.
Interest Rate Contracts: Amounts receivable or payable under interest rate
contracts used to manage interest rate risks arising from the Company's
financial assets and financial liabilities are accounted for on the accrual
basis of accounting and recognized as an adjustment to interest income or
expense depending on the specific instrument being hedged. Gains and losses
on early terminations of contracts are included in the carrying amount of the
related asset or liability and amortized as yield adjustments over their
remaining terms.
NOTE 2 - ACQUISITIONS
On February 17, 1994, the Company purchased all the issued and outstanding
stock of Regional Investment Corporation (RIC), the parent of Andrew
Jackson Savings Bank located in Tallahassee, Florida for approximately $65.1
million in cash. At the date of purchase RIC had total assets of $436.8
million. The acquisition was accounted for as a purchase. The results of
operations of RIC from the date of acquisition are included in the Company's
financial statements.
On March 15, 1993, the Company merged The Flagler Bank Corporation
(Flagler), located in West Palm Beach, Florida, into a subsidiary of SunTrust
and issued 1,230,183 shares of SunTrust common stock for all the outstanding
shares of Flagler. The merger was accounted for as a pooling-of-interests. At
December 31, 1992, Flagler had assets of $452.2 million.
On February 22, 1993, the Company purchased all the issued and
outstanding stock of Coast Federal Savings Bank (Coast) located in Sarasota,
Florida in exchange for approximately $46 million in cash. At the date of
AR-45
<PAGE>
purchase Coast had total assets of $1.1 billion. The acquisition was
accounted for as a purchase and the results of operations of Coast are
included in the Company's financial statements from the date of acquisition.
On January 30, 1993, the Company merged First United Bancorp, Inc.
(First United) located in Florence, Alabama with a subsidiary of SunTrust and
issued 1,214,466 shares of SunTrust common stock for all the outstanding
shares of First United. The merger was accounted for as a pooling-of-
interests. At December 31, 1992, First United had assets of $384.1 million.
First United was merged into TNC in December 1994.
On January 1, 1993, the Company merged HomeTrust Bank of Georgia
(HomeTrust) located in Gainesville, Georgia into a subsidiary of SunTrust and
issued 709,028 shares of SunTrust common stock for all the outstanding shares
of HomeTrust. At December 31, 1992, HomeTrust had assets of $309.5 million.
The merger was accounted for as a pooling-of-interests.
At December 31, 1994, the Company had an agreement to purchase all
the issued and outstanding stock of Peoples State Bank (Peoples) located in
New Port Richey, Florida in exchange for a combination of SunTrust common
stock and cash. At December 31, 1994, Peoples had total assets of $123.2
million. The acquisition will be accounted for as a purchase.
NOTE 3 - INVESTMENT SECURITIES
Investment securities were as follows at December 31:
<TABLE>
<CAPTION>
1994
Amortized Fair Unrealized Unrealized
(In thousands) Cost Value Gains Losses
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S.
government agencies and
corporations $3,575,391 $3,386,107 $1,153 $190,437
States and political subdivisions 958,201 972,181 29,090 15,110
Mortgage-backed securities 3,661,832 3,500,596 3,366 164,602
Common stock of
The Coca-Cola Company 110 1,242,862 1,242,752 -
Other securities 206,409 216,775 12,374 2,008
Total investment securities $8,401,943 $9,318,521 $1,288,735 $372,157
</TABLE>
<TABLE>
<CAPTION>
1993
Amortized Fair Unrealized Unrealized
(In thousands) Cost Value Gains Losses
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S.
government agencies and
corporations $3,774,360 $3,813,946 $40,615 $1,029
States and political subdivisions 1,080,277 1,157,602 77,974 649
Mortgage-backed securities 4,319,345 4,343,360 36,780 12,765
Common stock of
The Coca-Cola Company 110 1,076,946 1,076,836 -
Other securities 234,517 252,099 18,389 807
Total investment securities $9,408,609 $10,643,953 $1,250,594 $15,250
</TABLE>
AR-46
<PAGE>
The amortized cost and fair value of debt securities at December 31,
1994, by contractual maturities are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Amortized Fair
(In thousands) Cost Value
Due in one year or less $553,114 $558,428
Due in one year through five years 3,682,575 3,497,458
Due after five years through ten years 250,438 253,677
After ten years 47,465 48,725
Mortgage-backed securities 3,661,832 3,500,596
Total $8,195,424 $7,858,884
Proceeds from sale of investments in debt securities were $1,422.1
million, $266.3 million and $122.2 million in 1994, 1993 and 1992. Gross
realized gains were $4.6 million, $2.1 million and $5.2 million and gross
realized losses on such sales were $7.3 million, $0.1 million and $0.1
million in 1994, 1993 and 1992.
The fair value of investment securities pledged to secure public
deposits, trust and other funds was $4.5 billion and $5.3 billion at December
31, 1994 and 1993, respectively.
NOTE 4 - LOANS
The composition of the Company's loan portfolio at December 31, 1994 and
1993 was as follows:
(In thousands) 1994 1993
Commercial, financial and agricultural:
Domestic $9,279,163 $8,190,274
International 273,235 197,783
Real estate:
Construction 1,151,114 1,083,220
Mortgage, 1-4 family 8,380,510 7,013,757
Other 4,516,304 4,456,788
Lease financing 411,001 328,062
Credit card 690,462 698,186
Other consumer loans 3,947,098 3,324,008
Loans $28,548,887 $25,292,078
The gross amount of interest income that would have been recorded in 1994,
1993 and 1992 on nonaccrual and restructured loans at December 31 of each
year, if all such loans had been accruing interest at the contractual rate,
was $18.5, $23.8, and $31.3 million, while interest income actually
recognized was $10.5, $10.7, and $11.8 million. Total nonaccrual and
restructured loans at December 31, 1994 and 1993 were $187.6 and $261.8
million, respectively.
In the normal course of business, the Company's banking subsidiaries
have made loans at prevailing interest rates and terms to directors and
executive officers of the Company and its subsidiaries, and to their
affiliates. The aggregate dollar amount of these loans, as defined, was
$104.4 million at December 31, 1994 and $108.1 million at December 31, 1993.
During 1994, $266.0 million of such loans were made and repayments totaled
$269.7 million. None of these loans has been restructured, nor were any
related party loans charged off during 1994.
AR-47
<PAGE>
NOTE 5 - RESERVE FOR LOAN LOSSES
Activity in the reserve for loan losses is summarized as follows:
(In thousands) 1994 1993 1992
Balance at beginning of year $561,191 $474,179 $380,982
Reserve of purchased banks 8,274 7,995 6,362
Provision charged to operating expense 137,841 189,064 234,242
Loan charge-offs (113,677) (163,149) (201,996)
Loan recoveries 53,387 53,102 54,589
Balance at end of year $647,016 $561,191 $474,179
It is the opinion of management that the reserve was adequate at December 31,
1994, based on conditions reasonably known to management; however, the
reserve may be increased or decreased based on loan growth, changes in
internally generated credit quality ratings of the loan portfolio, or changes
in general economic conditions.
NOTE 6 - PREMISES AND EQUIPMENT
Premises and equipment at December 31, 1994 and 1993 were as follows:
(In thousands) Useful Life 1994 1993
Land $206,125 $201,577
Buildings and improvements 3-55 years 547,203 540,071
Leasehold improvements 5-30 years 104,588 99,114
Furniture and equipment 3-20 years 571,704 538,584
Construction in progress 19,057 15,514
1,448,677 1,394,860
Less accumulated depreciation
and amortization 734,011 678,992
Total $714,666 $715,868
Net premises and equipment include $23.8 million and $24.5 million at
December 31, 1994 and 1993, respectively, related to capital leases. The
carrying amounts of premises and equipment subject to mortgage indebtedness
(included in long-term debt) were $2.4 million and $4.4 million at December
31, 1994 and 1993, respectively.
NOTE 7 - OTHER SHORT-TERM BORROWINGS
Other short-term borrowings at December 31, 1994 and 1993 consisted of
the following:
1994 1993
(In thousands)
Commercial paper, 1994 interest rates from
5.128% to 6.743% $202,072 $221,324
Bank notes, 1994 interest rate of 3.50% 250,000 700,000
Other 333,581 139,468
Total $785,653 $1,060,792
At December 31, 1994, $240.0 million of unused borrowings under unsecured
lines of credit from non-affiliated banks were available to the Parent
Company to support the outstanding commercial paper and provide for general
liquidity needs.
AR-48
<PAGE>
NOTE 8 - LONG-TERM DEBT
A summary of long-term debt at December 31, 1994 and 1993 is as follows:
(In thousands) 1994 1993
PARENT COMPANY
8.875% notes due 1994 - $100,000
8.375% notes due 1996 74,500 74,500
8.875% notes due 1998 94,500 100,000
Floating rate notes due 1999 200,000 -
7.375% notes due 2002 200,000 200,000
7.50% debentures due 2002 12,168 12,973
6.125% notes due 2004 200,000 -
Capital lease obligation 6,568 6,888
Total Parent Company 787,736 494,361
SUBSIDIARIES
Capital lease obligations 23,992 24,634
FHLB advances and other 118,719 111,355
Total subsidiaries 142,711 135,989
Total long-term debt $930,447 $630,350
Principal amounts due for the next five years on long-term debt at
December 31, 1994 are: 1995 - $43.9 million; 1996 - $90.9 million; 1997 -
$18.8 million; 1998 - $110.8 million; 1999 - $209.8 million.
The 7.50% debentures can be redeemed in varying amounts prior to
their scheduled maturity dates, subject to payment of redemption premiums
in certain cases.
Restrictive provisions of several long-term debt agreements prevent
the Company from creating liens on, disposing of, or issuing (except to
related parties) voting stock of subsidiaries. Further, there are
restrictions on mergers, consolidations, certain leases, sales or transfers
of assets, minimum shareholders' equity and maximum borrowings by the
Company. As of December 31, 1994 the Company was in compliance with all
covenants and provisions of long-term debt agreements.
TNC is subject to certain debt agreements for which the outstanding
amounts are shown under "Parent Company" above. Under the most restrictive
covenants of these agreements, approximately $302.3 million was available for
dividend payments at December 31, 1994, by TNC to SunTrust. Sun and TCG have
no restrictive debt covenants.
In the summary table of long-term debt, $281.4 million in 1994 and
$120.4 million in 1993 qualify as Tier 2 capital as currently defined by
Federal bank regulators. At December 31, 1994 the Company's capital exceeded
all minimum regulatory requirements. Substantially all the Company's retained
earnings are undistributed earnings of its banking subsidiaries, which are
restricted by various regulations administered by Federal and state bank
regulatory authorities. Retained earnings available for payment of cash
dividends to Sun, TCG and TNC under these regulations were approximately
$389.4 million at December 31, 1994. In addition, banks and bank holding
companies are subject to minimum regulatory capital levels. SunTrust and
each of its subsidiary banks are in compliance with all capital requirements.
AR-49
<PAGE>
NOTE 9 - INCOME TAXES
The provision for income taxes for the three years ended December 31, 1994
consisted of the following:
(In thousands) 1994 1993 1992
Provision for federal income taxes:
Current $252,287 $226,447 $201,788
Prepaid (23,565) (22,494) (47,169)
Total provision for federal income taxes 228,722 203,953 154,619
Provision for state income taxes:
Current 11,650 11,888 10,517
Deferred 18,849 11,092 6,235
Total provision for state income taxes 30,499 22,980 16,752
Total $259,221 $226,933 $171,371
The Company's income before provision for income taxes from
international operations was not significant.
The Company's provision for income taxes for the three years ended
December 31, 1994 differs from the amount computed by applying the statutory
federal income tax rate of 35% in 1994 and 1993 and 34% in 1992 to income
before income taxes. A reconciliation of this difference is as follows:
(In thousands) 1994 1993 1992
Tax provision at federal statutory rate $273,689 $245,232 $195,761
Increase (decrease) resulting from:
Tax-exempt interest (36,997) (41,704) (46,695)
Disallowed interest deduction 3,183 3,061 4,136
Income tax credits (1,409) (970) (973)
State income taxes, net of federal benefit 19,796 14,937 10,910
Dividend exclusion (5,154) (4,341) (3,529)
Other 6,113 10,718 11,761
Provision for income taxes $259,221 $226,933 $171,371
Temporary differences create deferred tax assets and liabilities which
are detailed below for December 31, 1994 and 1993:
Deferred Tax
Assets (Liabilities)
1994 1993
(In thousands)
Loan loss reserve $243,585 $210,682
Depreciation (14,967) (15,522)
Employee benefits (54,568) (45,742)
Unrealized gains (losses) on
investment securities (346,505) (471,569)
Leasing (78,609) (72,106)
Other real estate 19,949 21,592
Other (16,164) (23,485)
Total deferred tax asset (liability) $(247,279) $(396,150)
SunTrust and its subsidiaries file consolidated income tax returns where
permissible. Each subsidiary remits current taxes to or receives current
refunds from the Parent Company based on what would be required had the
subsidiary filed an income tax return as a separate entity. The Company's
federal and state income tax returns are subject to review and examination
by government authorities. Various such examinations are now in progress
AR-50
<PAGE>
covering SunTrust's income tax returns for certain prior years. In the
opinion of management, any adjustments which may result from these
examinations will not have a material effect on the Company's consolidated
financial statements.
NOTE 10 - RETIREMENT PLANS AND EMPLOYEE BENEFITS
SunTrust maintains a noncontributory qualified retirement plan (Plan)
covering all employees meeting certain age and service requirements. The
Plan provides benefits based on salary and years of service. The Company
funds the Plan with at least the minimum amount required by ERISA. The
Plan's net periodic expense is summarized as follows:
Year Ended December 31
(In thousands) 1994 1993 1992
Service cost - benefits earned
during the period $21,754 $19,401 $18,200
Interest cost on projected
benefit obligations 21,860 19,670 18,446
Actual return on Plan assets 11,053 (31,515) (18,945)
Net amortization and deferral (48,184) (1,873) (12,340)
Net periodic Plan expense $6,483 $5,683 $5,361
The funded status of the Plan at December 31 was as follows:
(In thousands) 1994 1993
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $220,122 in 1994 and $202,674 in 1993 ($255,874) ($234,305)
Projected benefit obligation for service
rendered to date ($292,672) ($270,653)
Plan assets at fair value 347,408 350,075
Plan assets in excess of projected benefit obligation 54,736 79,422
Unrecognized net (gain)loss since transition 80,986 35,382
Unrecognized prior service cost (20,488) (23,378)
Unrecognized net asset at transition being
amortized over 14 years (25,797) (30,006)
Prepaid pension expense included in other assets $89,437 $61,420
At December 31, 1994, the Plan assets consisted of listed common stocks,
U.S. government and agency securities and units of certain trust funds
administered by subsidiary banks of the Company. No shares of SunTrust common
stock were included in the assets of the Plan. The weighted-average discount
rate and rate of increase in future compensation levels used in determining
the actuarial present value of the projected benefit obligation were 8.25%
and 4.5% in 1994, 7.5% and 4.5% in 1993 and 8.25% and 5.5% in 1992. The
expected long-term rate of return on assets was 9.25% in 1994 and 9% in 1993
and 1992.
SunTrust also has a nonqualified defined benefit plan that covers key
executives of the Company for which cost is accrued but is unfunded. At
December 31, 1994 and 1993, the projected benefit obligation for this plan
was $13.1 million and $10.9 million. Included in other liabilities at
December 31, 1994 and 1993, is $10.0 million and $8.3 million representing
accumulated benefit obligations. The expense of the nonqualified plan was
$3.2 million, $2.6 million, and $2.9 million in 1994, 1993 and 1992.
AR-51
<PAGE>
Although not under contractual obligation, SunTrust provides certain
health care and life insurance benefits to current and retired employees. As
currently structured, substantially all employees become eligible for
benefits upon full-time employment and, at the option of SunTrust, may
continue them if they reach retirement age while working for the Company.
Certain benefits are prefunded in taxable and tax-exempt trusts.
In the first quarter of 1993 SunTrust began charging postretirement
benefits to expense during the years that the employees render service. Prior
to this, SunTrust charged an amount to expense which was generally equal to
benefits paid during the year. The Accumulated Postretirement Benefit
Obligation was $61.2 million as of January 1, 1993 with an unrecognized net
transition obligation of $57.9 million which is being amortized to expense
over twenty years. The estimated annual expense is not significantly different
from the previous amounts.
The Retiree Health Plan provides medical benefits for retirees and
eligible dependents under an indemnity and managed care arrangement whose
costs are shared by SunTrust and the retiree. For employees who retired on
or prior to January 1, 1993, it is anticipated that future cost increases
will be shared by SunTrust and these retirees through increased deductibles,
co-insurance, and retiree contributions. For employees who retire after
January 1, 1993, SunTrust's cost sharing will remain fixed at the 1993 level
and future cost increases will be paid solely by these retirees.
The Retiree Life Plan provides a fixed life insurance amount to
eligible current retirees and current active employees who reach retirement
age while working for the Company. The cost of this benefit is entirely paid
for by the Company.
The Retiree Health and Life Plans' net periodic expense for the two
years ended December 31 were as follows:
(In thousands) 1994 1993
Service cost - benefits earned
during the period $1,809 $1,302
Interest cost on projected benefit obligations 5,239 4,887
Actual return on Plan assets 3,110 (5,589)
Deferral of asset gain (loss) (9,047) 71
Amortization of transition obligation 2,892 2,892
Net cost $4,003 $3,563
The funded status of the Retiree Health and Life Plan at December 31 was as
follows:
(In thousands) 1994 1993
Accumulated postretirement benefit obligation (APBO):
Fully eligible actives $(8,881) $(7,666)
Other actives (11,512) (12,663)
Retirees (47,214) (38,503)
Total APBO (67,607) (58,832)
Plan assets at fair value 93,063 80,899
Plan assets in excess of APBO 25,456 22,067
Unrecognized net (gain) or loss 14,031 9,932
Unrecognized prior service cost - -
Unrecognized net transition obligation 52,066 54,959
Prepaid postretirement benefit expense
included in other assets $91,553 $86,958
Incremental effect of 1% increase in the health care trend rate:
On APBO $(3,375) $(3,256)
On service cost plus interest 263 249
AR-52
<PAGE>
For the Retiree Health Plan, the weighted average discount rate used in
determining the accumulated postretirement benefit obligation was 8.25%
for 1994 and 7.5% for 1993. The assumed net health care cost trend rate
used to measure the expected cost of pre-Medicare eligible benefits under
the plan was 12% for 1995 and is assumed to decrease 0.75% per year beginning
in 1996 until the ultimate health care trend of 5.5% is reached in the year
2004. The assumed net health care cost trend rate used to measure the
expected cost of post-Medicare eligible benefits under the plan was 11.0%
for 1995 and is assumed to decrease 0.50% per year starting in 1996 until the
ultimate health care trend of 5.5% is reached in the year 2006. For the
Retiree Life Plan, the weighted average discount rate for determining the
accumulated postretirement benefit obligation was 8.25% for 1994 and 7.5%
for 1993.
The Retiree Health and Life benefits are prefunded in a Voluntary
Employees' Beneficiary Association (VEBA). As of December 31, 1994, these
Plan assets consist of common trust funds, U.S. government securities,
corporate bonds and notes and a cash equivalent cash reserve fund. The
assumed weighted average long-term rate of return on the assets was 6.5%.
Under various qualified plans, SunTrust provides profit sharing or
incentive compensation to eligible participating employees. Award amounts
are based on eligible compensation and earnings performance. The expense
under these plans, classified as salaries and other compensation, was $34.1
million for 1994, $42.8 million for 1993 and $52.1 million for 1992.
In addition SunTrust has a Management Incentive Plan for key executives
that provides for annual cash awards, if any, based on eligible compensation
and earnings performance. SunTrust also has a Performance Unit Plan for key
executives for which awards, if any, are based on multi-year earnings
performance in relation to earnings goals as established by the Compensation
Committee of the SunTrust Board of Directors. SunTrust's expenses under these
plans, classified as salaries and other compensation, were $16.1 million for
1994, $17.5 million for 1993 and $15.4 million for 1992.
NOTE 11 - EXECUTIVE STOCK PLAN
The Company has an Executive Stock Plan (Stock Plan) under which the
Compensation Committee of the Board of Directors has the authority to grant
stock options and restricted stock to key employees of the Company. Eight
million shares of common stock are reserved for issuance under the Stock Plan
of which no more than three million shares may be issued as restricted stock.
Options granted are at no less than the fair market value of a share of
stock on the grant date and may be either tax qualified incentive stock
options or nonqualified options. There was no expense recorded as a result of
the grant or exercise of any of the stock options. The following table
presents information on stock options:
AR-53
<PAGE>
<TABLE>
<CAPTION>
Total Exercisable Option
Option Option Price
Shares Shares Range
<S> <C> <C> <C>
Options outstanding at January 1, 1992 2,383,368 2,127,068 $6.14 - 35.75
Granted 88,900 - 40.75
Options which became exercisable - 176,300 22.375 - 35.75
Exercised (454,078) (454,078) 6.14 - 35.75
Options outstanding at December 31, 1992 2,018,190 1,849,290 13.50 - 40.75
Granted 97,600 - 43.25
Options which became exercisable - 108,900 22.375 - 40.75
Exercised (245,026) (245,026) 13.50 - 40.75
Cancelled or expired (38) (38) 16.45
Options outstanding at December 31, 1993 1,870,726 1,713,126 13.625 - 43.25
Granted 162,600 - 47.125-49.375
Options which became exercisable - 227,400 22.375-49.375
Exercised (347,130) (347,130) 13.625-43.25
Cancelled or expired (1,000) (1,000) 43.25
Options outstanding at December 31, 1994 1,685,196 1,592,396 $16.375-49.375
</TABLE>
With respect to Performance Restricted Stock (Performance Stock),
shares must be granted, awarded and vested before participants take full
title to the Performance Stock. After Performance Stock is granted by the
Compensation Committee (Committee) of the Board of Directors, specified
portions are awarded based on increases in the average market value of
SunTrust common stock from the initial price specified by the Committee.
Awards vest on the earlier of: (i) fifteen years after the date shares are
awarded to participants; (ii) attaining age 64; (iii) death or disability of
a participant; or (iv) a change in control of the Company as defined in the
Stock Plan. Dividends are paid on awarded and unvested Performance Stock and
participants may exercise voting privileges on such shares. The compensation
element for Performance Stock is equal to the fair market value of the shares
at the date of award and is being amortized to compensation expense over the
period from the award date to age 64 or the 15th anniversary of the award
date, whichever comes first.
Amortization of the compensation element is included in salaries and
other compensation and the unamortized deferred compensation element is
included in treasury stock and other as a reduction of shareholders' equity.
The following table presents information on restricted stock:
AR-54
<PAGE>
Restricted Deferred
(In thousands) Shares Compensation
Balance at January 1, 1992 1,181,400 $31,569
Granted 271,600 10,558
Forfeited (27,000) -
Vested (32,000) (1,009)
Amortization of compensation element - (5,438)
Balance at December 31, 1992 1,394,000 35,680
Granted 154,400 7,508
Forfeited (4,000) (126)
Vested (32,600) -
Amortization of compensation element - (5,632)
Balance at December 31, 1993 1,511,800 37,430
Forfeited (31,000) (1,029)
Vested (60,200) -
Amortization of compensation element - (5,062)
Balance at December 31, 1994 1,420,600 $31,339
The SunTrust Banks, Inc. 1995 Executive Stock Plan ("the 1995 Stock
Plan") was adopted by the Board of Directors of the Company on November 8,
1994, subject to and effective upon approval by the shareholders at the 1995
Annual Meeting. Upon approval of the 1995 Stock Plan by the shareholders,
management anticipates that no further grants will be made under the Stock
Plan currently in place. Grants that may be made under the 1995 Stock Plan
are not currently determinable.
NOTE 12 - OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
In the normal course of business, the Company utilizes various financial
instruments to meet the needs of customers and to manage the Company's
exposure to interest rate and other market risks. These financial instruments,
which consist of derivatives contracts and credit-related arrangements,
involve, to varying degrees, elements of credit and market risk in excess of
the amount recorded on the balance sheet in accordance with generally
accepted accounting principles.
Credit risk represents the potential loss that may occur because a
party to a transaction fails to perform according to the terms of the
contract. Market risk is the possibility that a change in interest or
currency exchange rates will cause the value of a financial instrument to
decrease or become more costly to settle. The contract/notional amounts of
financial instruments, which are not included in the consolidated balance
sheet, do not necessarily represent credit or market risk. However, they can
be used to measure the extent of involvement in various types of financial
instruments.
The Company controls the credit risk of its off-balance sheet portfolio
by limiting the total amount of arrangements outstanding by individual
counterparty; by monitoring the size and maturity structure of the portfolio;
by obtaining collateral based on management's credit assessment of the
counterparty; and by applying uniform credit standards maintained for all
activities with credit risk. Collateral held varies but may include accounts
receivable, inventory, property, plant and equipment, and income-producing
commercial properties. In addition, the Company enters into master netting
agreements which incorporate the right of set-off to provide for the net
settlement of covered contracts with the same counterparty in the event of
default or other termination of the agreement.
AR-55
<PAGE>
<TABLE>
<CAPTION>
At December 31, 1994 At December 31, 1993
Contract or Notional Amount Contract or Notional Amount
Credit Credit
For Risk For Risk
(In millions) End User Customers Amount End User Customers Amount
<S> <C> <C> <C> <C> <C> <C>
Derivatives contracts:
Interest rate contracts:
Swaps $1,838 $888 $53 $2,188 $989 $85
Futures and forwards - - - 477 - -
Options written - 370 - - 416 -
Options purchased - 360 - - 401 4
Total interest rate contracts 1,838 1,618 53 2,665 1,806 89
Foreign exchange rate contracts 170 - 22 117 - 16
Total derivatives contracts $2,008 $1,618 75 $2,782 $1,806 105
Credit-related arrangements:
Commitments to extend credit $12,670 12,670 $10,826 10,826
Standby letters of credit and similar
arrangements 2,618 2,618 2,243 2,243
Total credit-related arrangements $15,288 15,288 $13,069 13,069
When issued securities:
Commitments to sell $16 - $353 -
Commitments to purchase 6 - 395 395
Total credit risk amount $15,363 $13,569
</TABLE>
Derivatives
The Company enters into various derivatives contracts in managing its
own interest rate risk and in a dealer capacity as a service for customers.
Where contracts have been created for customers, the Company enters into
offsetting positions to eliminate its exposure to market risk.
Interest rate swaps are contracts in which a series of interest rate
flows, based on a specific notional amount and a fixed and floating interest
rate, are exchanged over a prescribed period. Interest rate options, which
include caps and floors, are contracts which transfer, modify, or reduce
interest rate risk in exchange for the payment of a premium when the
contract is issued. The notional or contract amount of interest rate contracts
is not a measure of credit risk. The true measure of credit exposure is the
replacement cost of contracts which have become favorable to the Company,
the mark-to-market exposure amount.
The Company monitors its sensitivity to changes in interest rates and
uses interest rate swap contracts to limit the volatility of net interest
income. Due to the characteristics of the Company's funding sources, the
majority of swaps involve the Company receiving a fixed rate and paying a
floating rate. At December 31, 1994 and 1993 there were no deferred gains or
losses relating to terminated interest rate swap contracts. The Company
records all swap income and expense in the interest expense category. The
total reduction of interest expense for 1994, 1993 and 1992 related to
interest rate swaps was $30.6 million, $43.6 million, and $36.3 million.
Included in those amounts are $0.4 million, $0.5 million, and $0.3 million
representing income from swaps entered into for customers.
AR-56
<PAGE>
Futures and forwards are contracts for the delayed delivery of
securities or money market instruments in which the seller agrees to deliver
on a specified future date, a specified instrument, at a specified price or
yield. The credit risk inherent in futures is the risk that the exchange may
default. Futures contracts settle in cash daily; therefore, there is minimal
credit risk to the Company. The credit risk inherent in forwards arises from
the potential inability of counterparties to meet the terms of their
contracts. Both futures and forwards are also subject to the risk of
movements in interest rates or the value of the underlying securities or
instruments.
The Company also enters into transactions involving "when-issued
securities". When-issued securities are commitments to purchase or sell
securities authorized for issuance but not yet actually issued. Accordingly,
they are not recorded on the balance sheet until issued. The credit risk in
commitments to purchase is represented by the contract amount since the
underlying instrument that the Company is obligated to buy is subject to
credit risk.
Credit-Related Arrangements
In meeting the financing needs of its customers, the Company issues
commitments to extend credit, standby and other letters of credit and
guarantees, and also provides securities lending services. For these
instruments, the contractual amount of the financial instrument represents
the maximum potential credit risk if the counterparty does not perform
according to the terms of the contract. A large majority of these contracts
expire without being drawn upon. As a result, total contractual amounts do
not represent future credit exposure or liquidity requirements.
Unfunded commitments to extend credit are agreements to lend to a
customer who has complied with predetermined contractual conditions.
Commitments generally have fixed expiration dates.
Standby letters of credit and guarantees are conditional commitments
issued by the Company generally to guarantee the performance of a customer
to a third party in borrowing arrangements, such as commercial paper, bond
financing, construction and similar transactions. The credit risk involved
in issuing standby letters of credit is essentially the same as that involved
in extending loan facilities to customers and may be reduced by selling
participations to third parties. The Company holds collateral to support
those standby letters of credit and guarantees for which collateral is deemed
necessary.
NOTE 13 - CONCENTRATIONS OF CREDIT RISK
Credit risk represents the maximum accounting loss that would be recognized
at the reporting date if counterparties failed completely to perform as
contracted and any collateral or security proved to be of no value.
Concentrations of credit risk (whether on or off-balance sheet) arising
from financial instruments exist in relation to certain groups of customers.
A group concentration arises when a number of counterparties have similar
economic characteristics that would cause their ability to meet contractual
obligations to be similarly affected by changes in economic or other
conditions. The Company does not have a significant exposure to any
individual customer or counterparty. The major concentrations of credit risk
for the company arise by collateral type in relation to loans and credit
commitments. The only significant concentration that exists is in loans
secured by real estate. At December 31, 1994 the Company had $14.0 billion
in loans and an additonal $1.7 billion in commitments to extend credit for
loans secured by real estate. A geographic concentration arises because the
Company operates primarily in the southeastern region of the United States.
AR-57
<PAGE>
NOTE 14 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and fair values of the
Company's financial instruments at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term investments $3,591,767 $3,591,767 $3,454,947 $3,454,947
Trading account 98,110 98,110 112,522 112,522
Investment securities 9,318,521 9,318,521 10,643,953 10,643,953
Loans 28,548,887 28,317,927 25,292,078 25,403,676
Financial liabilities:
Deposits 32,218,416 32,193,724 30,485,805 30,552,911
Short-term borrowings 5,137,549 5,137,549 4,856,165 4,856,165
Long-term debt 930,447 890,041 630,350 674,933
Off-balance sheet financial instruments:
Interest rate swaps:
In a net receivable position 18,125 70,088
In a net payable position (16,383) (3,031)
Commitments to extend credit 6,837 7,592
Standby letters of credit 1,238 1,457
Other 22 16
</TABLE>
The following methods and assumptions were used by the Company in estimating
the fair value of financial instruments.
* Short-term financial instruments are valued at their carrying
amounts reported in the balance sheet, which are reasonable
estimates of fair value due to the relatively short period to
maturity of the instruments. This approach applies to cash and
short-term investments, trading account, short-term borrowings
and certain other liabilities.
* Investment securities and trading account assets are valued at
quoted market prices where available. If quoted market prices are
not available, fair values are based on quoted market prices of
comparable instruments except in the case of certain options and
swaps where pricing models are used.
* Loans are valued on the basis of estimated future receipts of
principal and interest, discounted at rates currently being offered
for loans with similar terms and credit quality. Loan prepayments
are assumed to occur at the same rate as in previous periods
when interest rates were at levels similar to current levels. The
fair values for certain mortgage loans and credit card loans are
based on quoted market prices of similar loans sold in
conjunction with securitization transactions, adjusted for
differences in loan characteristics. The carrying amount of
accrued interest approximates its fair value.
AR-58
<PAGE>
* Deposit liabilities with no defined maturity such as demand
deposits, NOW/money market accounts and savings accounts
have a fair value equal to the amount payable on demand at the
reporting date, i.e., their carrying amounts. Fair values for
certificates of deposit are estimated using a discounted cash flow
calculation that applies current interest rates to a schedule of
aggregated expected maturities. The intangible value of long-
term relationships with depositors is not taken into account in
estimating the fair values disclosed.
* Fair values for long-term debt are based on quoted market prices
for similar instruments or estimated using discounted cash flow
analyses and the Company's current incremental borrowing rates
for similar types of instruments.
* Fair values for off-balance-sheet instruments (futures, swaps,
forwards, options, guarantees, and lending commitments) are
based on quoted market prices, current settlement values, or
pricing models or other formulas.
NOTE 15 - LEASE COMMITMENTS
Minimum payments, by year and in aggregate, under capital leases and
noncancelable operating leases with initial or remaining terms in excess of
one year as of December 31, 1994, were as follows:
Capital Operating
(In thousands) Leases Leases
1995 $4,292 $45,109
1996 4,288 42,850
1997 4,457 40,579
1998 4,473 38,719
1999 4,475 39,166
Thereafter 56,009 195,991
Total minimum lease payments 77,994 $402,414
Amounts representing interest (47,434)
Present value of net minimum lease payments $30,560
Rental expense for all operating leases (including contingent rental
expense and reduced by sublease rental income, both of which were not
significant) amounted to $41.5 million, $38.4 million and $45.4 million for
1994, 1993 and 1992.
NOTE 16 - LITIGATION
The Company and its subsidiaries are parties to numerous claims and
lawsuits arising in the course of their normal business activities, some of
which involve claims for substantial amounts. Although the ultimate outcome
of these suits cannot be ascertained at this time, it is the opinion of
management that none of these matters, when resolved, will have a material
effect on the Company's consolidated results of operations or financial
position.
AR-59
<PAGE>
NOTE 17 - SUNTRUST BANKS, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
STATEMENTS OF INCOME
Year Ended December 31
(In thousands) 1994 1993 1992
OPERATING INCOME
From subsidiaries:
Dividends - substantially all from
banking subsidiaries $330,318 $336,250 $306,469
Service fees 41,327 41,263 39,645
Interest on loans 8,088 4,162 4,942
Other income 162 176 164
Other income 7,966 2,106 3,030
Total operating income 387,861 383,957 354,250
OPERATING EXPENSE
Interest on short-term borrowings 9,913 8,340 5,459
Interest on long-term debt 53,101 42,018 44,903
Salaries and employee benefits 27,957 26,358 25,883
Amortization of intangible assets 7,686 7,712 7,712
Service fees to subsidiaries 7,769 5,308 4,628
Other operating expense 26,404 11,952 13,794
Total operating expense 132,830 101,688 102,379
Income before income taxes and equity in
undistributed income of subsidiaries 255,031 282,269 251,871
Income tax benefit 23,499 9,174 9,503
Income before equity in undistributed income
of subsidiaries 278,530 291,443 261,374
Equity in undistributed income of subsidiaries 244,214 182,286 143,023
NET INCOME $522,744 $473,729 $404,397
AR-60
<PAGE>
<TABLE>
BALANCE SHEETS
<CAPTION>
December 31
(Dollars in thousands) 1994 1993
<S> <C> <C>
ASSETS
Cash in subsidiary banks $258 $210
Interest-bearing deposits in banks 6,525 693
Funds purchased - 1,750
Loans to subsidiaries 171,135 186,843
Investment in capital stock of subsidiaries stated on the basis
of the Company's equity in subsidiaries' capital accounts:
Banking subsidiaries 3,676,584 3,671,304
Nonbanking and holding company subsidiaries 480,520 388,003
Premises and equipment 14,530 10,302
Intangible assets 130,131 139,281
Other assets - Note 10 247,086 211,120
Total Assets $4,726,769 $4,609,506
LIABILITIES
Short-term borrowings from:
Subsidiaries $8,582 $9,447
Non-affiliated companies - Note 7 252,897 292,324
Long-term debt - Note 8 787,736 494,361
Other liabilities - Note 10 224,223 203,791
Total Liabilities 1,273,438 999,923
SHAREHOLDERS' EQUITY - Note 11
Preferred stock, no par value; 50,000,000 shares
authorized; none issued - -
Common stock, $1.00 par value; 350,000,000 shares authorized(1) 130,461 130,461
Additional paid in capital 438,309 444,941
Retained earnings 3,020,985 2,655,357
Treasury stock and other(2) (706,499) (384,951)
Realized shareholders' equity 2,883,256 2,845,808
Unrealized gains(losses) on investment securities, net of taxes 570,075 763,775
Total shareholders' equity 3,453,331 3,609,583
Total liabilities and shareholders' equity $4,726,769 $4,609,506
(1) Common shares outstanding 115,679,426 122,468,085
(2) Treasury shares of common stock 14,781,218 7,992,559
</TABLE>
AR-61
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOW
<CAPTION>
Year Ended December 31
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $522,744 $473,729 $404,397
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed income of subsidiaries (251,532) (182,286) (143,023)
Depreciation and amortization 9,869 15,225 14,807
Bond portfolio securities gains (3) - -
Deferred income tax benefit 4,917 11,012 13,254
Changes in period-end balances of:
Prepaid expenses (29,744) (26,936) (10,229)
Other assets (11,340) 413 (20,565)
Taxes payable (8,732) 48,841 18,756
Interest payable 1,387 202 3,582
Other accrued expenses 39,198 (16,178) 21,722
Net cash provided by operating activities 276,764 324,022 302,701
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of investment securities 71 118,924 24,205
Purchase of investment securities (111) (104,171) (33,286)
Net change in loans to subsidiaries 15,708 (72,381) (30,056)
Proceeds from sale of premises and equipment - 8 -
Net funds paid in acquisitions - (69,827) -
Capital expenditures (6,758) (1,521) (915)
Capital contributions to subsidiaries (120,094) (6,198) (41,524)
Other, net 87,100 (3,857) (2,731)
Net cash used in investing activities (24,084) (139,023) (84,307)
CASH FLOW FROM FINANCING ACTIVITIES:
Net change in short-term borrowings (40,292) 180,891 (14,405)
Proceeds from issuance of long-term debt 400,000 - 200,000
Repayment of long-term debt (106,625) (22,570) (129,094)
Proceeds from the exercise of stock options 4,023 4,502 6,295
Payments to acquire treasury stock (348,540) (285,669) (139,072)
Dividends paid (157,116) (144,767) (132,100)
Net cash used in financing activities (248,550) (267,613) (208,376)
Net increase (decrease) in cash and cash equivalents 4,130 (82,614) 10,018
Cash and cash equivalents at beginning of year 2,653 85,267 75,249
Cash and cash equivalents at end of year $6,783 $2,653 $85,267
SUPPLEMENTAL DISCLOSURE
Income taxes received from subsidiaries $288,394 $266,695 $240,521
Income taxes paid by Parent Company (266,064) (250,170) (210,434)
Net income taxes received by Parent Company 22,330 16,525 30,087
Interest paid $60,993 $49,667 $46,243
</TABLE>
AR-62
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of SunTrust Banks, Inc.
We have audited the accompanying consolidated balance sheets of SunTrust
Banks, Inc. (a Georgia corporation) and subsidiaries as of December 31,
1994 and 1993 and the related consolidated statements of income,
shareholders' equity and cash flow for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SunTrust
Banks, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and their cash flow for each of the three years
in the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements,
effective December 31, 1993, the Company changed its method of accounting
for investment securities.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 31, 1995
AR-63
<PAGE>
Corporate Headquarters Stock Trading
SunTrust Banks, Inc. SunTrust Banks, Inc. common stock is
25 Park Place, N.E. traded on the New York Stock
Atlanta, Georgia 30303-2917 Exchange under the symbol "STI".
(404) 588-7711
Shareholders of Record
Corporate Mailing Address SunTrust had 28,552 shareholders of
SunTrust Banks, Inc. record as of December 31, 1994.
P.O. Box 4418
Atlanta, Georgia 30302-4418 Financial Information
Analysts, investors, news media and
Notice of Annual Meeting others seeking financial information
The Annual Meeting of Shareholders should contact:
will be held on Tuesday, April 18,
1995, at 9:30 a.m. in Room 10 at James C. Armstrong
the Corporate Headquarters. (404) 588-7425
or
Shareholder Services Margaret L. Fisher
Shareholders desiring to change the (404) 586-6416
name, address, or ownership of stock,
to report lost certificates, or to Independent Public Accountants
consolidate accounts, should Arthur Andersen & Co.
contact the Transfer Agent: Atlanta, Georgia
Trust Company Bank Corporate Counsel
P. O. Box 4625 King & Spalding
Atlanta, Georgia 30302-4625 Atlanta, Georgia
(404) 588-7815
(800) 568-3476
Dividend Reinvestment SunTrust and its subsidiaries are
SunTrust offers a Dividend Equal Opportunity Employers.
Reinvestment Plan for automatic
reinvestment of dividends in the Banks in the SunTrust group are
stock of the Company. For details of members of the Federal Deposit
the Plan, including an authorization Insurance Corporation.
form, call (404) 588-7822 or
(404) 588-7822 or write to:
Corporate Trust Department
Trust Company Bank
P.O. Box 4625
Atlanta, Georgia 30302-4625
AR-64
<PAGE>
Subsidiaries of the Registrant as of February 14, 1995.
SunTrust Banks, Inc. (29 banks in total)
100% Sun Banks, Inc.
100% Sun Bank, N.A.
100% Sun Bank and Trust Company
100% Sun Bank/Gulf Coast
100% Beneva Investments
100% CFS Ventures
100% Coast Financial Incorporated
100% Sun Bank/Miami, N.A.
100% Florida Aviation, Inc.
100% Kasalta Miramar, Inc.
100% Sun Bank/South Florida, N.A.
100% Sun Bank of Tampa Bay
100% Sun Bank of Volusia County
100% Service of Volusia County, Inc.
100% Sun Bank/Mid-Florida, N.A.
100% Sun Bank/North Florida, N.A.
100% Sun Bank/North Central Florida
100% Sun Bank/Southwest Florida
50% Sun Bank/Tallahassee, N.A.
100% Ox Bottom Land Company
100% Sun Bank/Treasure Coast, N.A.
100% Sun Bank/West Florida
100% Premium Assignment Corporation
100% Trust Company of Georgia
100% Trust Company Bank
100% TCB Holdings, Inc.
100% Trusco Capital Management, Inc.
100% Trust Company Bank of South Georgia, N.A.
100% Trust Company Bank of Northeast Georgia, N.A.
100% Trust Company Bank of Augusta, N.A.
100% Trust Company Bank of Southeast Georgia, N.A.
100% Trust Company Bank of Columbus, N.A.
100% Trust Company Bank of Middle Georgia, N.A.
100% Trust Company Bank of Northwest Georgia, N.A.
100% Trust Company of Georgia Bank of Savannah, N.A.
100% Preferred Surety Holdings, Inc.
100% Preferred Surety Corporation
100% Third National Corporation
100% Third National Bank in Nashville
100% Third Lease Corporation
100% American National Bank and Trust Company of Chattanooga
100% Hamilton Bank of Upper East Tennessee
100% Third National Bank of East Tennessee
100% Acquisition and Equity Corporation
100% Third National Bank of South Central Tennessee
100% Trust Company of Tennessee (inactive)
100% The First National Bank of Florence
100% SBF Agency, Inc.
100% SunBank Capital Management, N.A.
100% STI Trust & Investment Operations, Inc.
100% SunTrust BankCard, N.A.
100% SunTrust Capital Markets, Inc.
<PAGE>
100% SunTrust Insurance Company
100% SunTrust International Services, Inc.
100% SunTrust Mortgage, Inc.
100% SunTrust Properties, Inc.
100% SunTrust Securities, Inc.
100% SunTrust Service Corporation*
* SunTrust Service Corporation is 100% owned by certain subsidiary banks of
SunTrust Banks, Inc. None of this nonbank subsidiary's stock is owned by
SunTrust Banks, inc. (Parent Company).
<PAGE>
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into the Registrant's previously filed
Registration Statement Nos. 2-92421, 33-5317 and 33-28250 on Form S-8 and
Registration Statement No. 33-54493 on Form S-3.
ARTHUR ANDERSEN & CO.
Atlanta, Georgia
February 15, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,595,071
<INT-BEARING-DEPOSITS> 56,040
<FED-FUNDS-SOLD> 940,656
<TRADING-ASSETS> 98,110
<INVESTMENTS-HELD-FOR-SALE> 9,318,521
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 28,548,887
<ALLOWANCE> 647,016
<TOTAL-ASSETS> 42,709,085
<DEPOSITS> 32,218,416
<SHORT-TERM> 5,137,549
<LIABILITIES-OTHER> 969,342
<LONG-TERM> 930,447
<COMMON> 130,461
0
0
<OTHER-SE> 3,322,870
<TOTAL-LIABILITIES-AND-EQUITY> 42,709,085
<INTEREST-LOAN> 2,017,967
<INTEREST-INVEST> 504,849
<INTEREST-OTHER> 29,561
<INTEREST-TOTAL> 2,552,377
<INTEREST-DEPOSIT> 704,803
<INTEREST-EXPENSE> 932,496
<INTEREST-INCOME-NET> 1,619,881
<LOAN-LOSSES> 137,841
<SECURITIES-GAINS> (2,692)
<EXPENSE-OTHER> 1,400,002
<INCOME-PRETAX> 781,965
<INCOME-PRE-EXTRAORDINARY> 522,744
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 522,744
<EPS-PRIMARY> 4.37
<EPS-DILUTED> 4.37
<YIELD-ACTUAL> 4.64
<LOANS-NON> 183,021
<LOANS-PAST> 19,164
<LOANS-TROUBLED> 4,570
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 561,191
<CHARGE-OFFS> 113,677
<RECOVERIES> 53,387
<ALLOWANCE-CLOSE> 647,016
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 647,016
</TABLE>
