<PAGE>
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, 1996
Commission file number 1-8918
SunTrust Banks, Inc.
Incorporated in the State of Georgia
I.R.S. Employer Identification Number 58-1575035
Address: 303 Peachtree Street, N.E., Atlanta, GA 30308
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, 1996, SunTrust had 219,341,647 shares of common stock
outstanding. The aggregate market value of SunTrust common stock held by
non-affiliates on January 31, 1997 was approximately $9.8 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]
Documents Incorporated By Reference
Part III information is incorporated herein by reference, pursuant to
Instruction G to Form 10-K, from SunTrust's Proxy Statement for its 1997
Annual Shareholders' Meeting, which will be filed with the Commission by
April 30, 1997. 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.
FORM 10-K CROSS-REFERENCE INDEX
<TABLE>
<CAPTION>
Page
----------------------------------
FORM Annual Proxy
10-K Report Statement
---- ------ ---------
<C> <C> <C>
PART I
Item 1. Business -- 1,4-5,11-40 --
Item 2. Properties -- 43
Item 3. Legal Proceedings -- 42
Item 4. Not Applicable
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters -- 2,11,35,41,42 --
Item 6. Selected Financial Data -- 11 --
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- 4-5,11-40 --
Item 8. Financial Statements and Supplementary Data -- 34-38,44-69 --
Item 9. Not Applicable
PART III
Item 10. Directors and Executive Officers of the
Registrant -- -- 2-6
Item 11. Executive Compensation -- -- 8-20
Item 12. Security Ownership of Certain Beneficial
Owners and Management -- -- 2-7
Item 13. Certain Relationships and Related Transactions -- -- 19-20
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 3-4 -- --
SIGNATURES 5-6 -- --
</TABLE>
Exhibits, Financial Statement Schedules and Reports on Form 8-K
Financial Statements Filed. See "Index to Consolidated Financial
Statements" on page 37 of the Annual Report to Shareholders in Exhibit 13.
All financial statement schedules are omitted because the data is either
not applicable or is discussed in the financial statements or related
footnotes. No reports on Form 8-K were filed during the last quarter of 1996.
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.
3. Exhibit Index
Exhibit Description
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 Form
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 Form 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,
incorporated by reference to Exhibit 10.3 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.4 SunTrust Banks, Inc. Management Incentive Plan dated January 4,
1995, incorporated by reference to Exhibit 10.3 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994.
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 Performance Unit Plan Deferred Compensation Fund, amended and
restated as of February 19, 1996
10.7 SunTrust Banks, Inc. Executive Stock Plan, incorporated by reference
to Exhibit 10.5 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994.
10.8 SunTrust Banks, Inc. 1995 Executive Stock Plan incorporated by
reference to Exhibit 10.7 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994.
10.9 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.
12 Ratio of Earnings to Fixed Charges.
13 SunTrust's 1995 Annual Report to Shareholders.
21 SunTrust Subsidiaries.
23 Consent of Independent Public Accountants.
27 Financial Data Schedule
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.
Certain statistical data required by the Securities and Exchange Commission
are included on pages 39-68.
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 13, 1996 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 13, 1996 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/ A.W. Dahlberg Director
A.W. Dahlberg
/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.
/s/ H.G. Patillo Director
H.G. Patillo
/s/ Larry L. Prince Director
Larry L. Prince
/s/ Scott L. Probasco, Jr. Director
Scott L. Probasco, Jr.
/s/ R. Randall Rollins Director
R. Randall Rollins
/s/ James H. Williams Director
James H. Williams
<PAGE>
SUNTRUST BANKS, INC.
PERFORMANCE UNIT PLAN
DEFERRED COMPENSATION FUND
AMENDED AND RESTATED AS OF FEBRUARY 16, 1996
SECTION I. GENERAL PROVISIONS
1.1 Name and Purpose. The name of this Fund is the SunTrust Banks, Inc.
Performance Unit Plan Deferred Compensation Fund (the "Fund"). The purpose
of this Fund is to provide an unfunded deferred compensation mechanism
whereby Participants in the SunTrust Banks, Inc. Performance Unit Plan and
all amendments thereto (the "Plan"), may defer receipt of all or a portion
of their Awards until they retire or otherwise terminate employment with
the Corporation or its Subsidiaries.
1.2 Effective Date, Term and Amendments. The Fund was effective as of
January 1, 1987, and is amended and restated as of February 16, 1996. The
Fund 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 Fund under this Agreement. The Board or
the Committee may amend this Agreement in any respect from time to time.
1.3 Definitions. Terms used herein shall have the same meaning and
application as set forth in the Plan, unless the context clearly indicates
to the contrary.
SECTION II. DEFERRAL ELECTION
2.1 Election. If a Participant elects to defer receipt of all or a
portion of an Award granted under the Plan with respect to a Performance
Measurement Cycle ("Cycle"), the Participant must file a written deferral
election (the "Deferral Election") with the Fund Committee no later than
5:00 P.M. on the last business day of the calendar year prior to the first
year of the Cycle for which an Award may be granted. Notwithstanding the
foregoing, a Participant may elect to defer receipt of all or a portion of
the Award, if any, payable in 1997 if the Participant files a Deferral
Election with the Committee no later than 5:00 P.M. on or before
February 29, 1996 and if the Participant was a Covered Employee for 1995.
The portion of an Award which may be deferred shall be specified in the
Plan. Only one (1) Deferral Election may be made with respect to a Cycle
and said election shall become irrevocable once the deadline for filing
such elections has expired.
2.2 Date and Amount of Deferral. An Award granted pursuant to the Plan
shall not be subject to the provisions of this Fund unless the Participant
properly files a Deferral Election in accordance with Section 2.1 herein.
Thereafter, only the portion of the Award which is vested and is subject to
the Deferral Election shall be controlled by, and benefit from, this Fund.
SECTION III. EARNINGS ON DEFERRED AWARDS
3.1 Earnings. Interest shall accrue on the average daily balance in each
Participant's Fund account ("Fund Account") during each calendar quarter at
the Fund Rate. The "Fund Rate" shall change on the first day of each
quarter, shall remain in effect during that calendar quarter and shall be
equal to the average of the average auction yield, on a bond equivalent
basis, of three-month U.S. Treasury bills for each auction held during the
immediately preceding calendar quarter, as determined in good faith by the
Fund Committee. Interest on Fund Accounts will be credited to each Fund
Account at the end of the calendar quarter in accordance with normal
banking practices and any other policies or practices adopted by the Fund
Committee.
3.2 Vesting in Earnings. A Participant shall always be fully
vested in his Fund Account and all earnings properly accrued pursuant to this
Fund.
SECTION IV. PAYMENT OF DEFERRED AWARD
4.1 Normal Form of Payment. Amounts deferred pursuant to this Fund plus
earnings thereon shall be paid to the Participant or, in the event of his
death,
to his beneficiary determined pursuant to Section 4.3, in accordance with
the payment method(s) selected by the Participant in his Deferral Election,
as defined in Sections 2.1 and 4.1. The Participant may select different
payment methods in succeeding Plan Years, but he may select only (1) method
for payment on an Award granted with respect to any particular Cycle. The
selection of a payment method for a particular Cycle shall become
irrevocable once the deadline for filing the Participant's Deferral
Election has expired. If the Participant fails to properly select a
payment method in his Deferral Election for a particular Plan Year, the
Participant shall be deemed to have selected the payment method set forth
in Section 4.1(b) for that Cycle. The Fund Committee shall establish up to
two (2) accounts for each Participant who elects to defer all or any
portion of an Award granted under the Plan. The first account shall be
known as the "Lump Sum Account" which shall be credited with the portion of
any deferred Award, including Fund earnings thereon, which is to be paid
pursuant to Section 4.1(a) below. The second account shall be known as the
"Installment Account" which shall be credited with the portion of any
deferred Award, including Fund earnings thereon, which is to be paid
pursuant to Section 4.1(b) below. The available payment methods are as
follows:
(a) One (1) lump-sum payment of the Participant's entire Lump Sum Account
which shall be payable in January of the year following the year in which
the Participant separates from service with the Corporation and its
Subsidiaries for any reason, or
(b) Five (5) approximately equal annual installments, as determined by the
Fund Committee, of the Participant's entire Installment Account which shall
be payable in January of each year for five (5) consecutive years
commencing during January of the year following the year in which the
Participant separates from service with the Corporation and its
Subsidiaries for any reason.
4.2 Death, Disability or Financial Hardship. Any amounts in the Partici-
pant's Fund Account may be paid earlier than specified in Section 4.1 at
the Fund Committee's discretion due to the immediate financial needs of the
Participant or his beneficiary if the Participant dies, becomes disabled,
as said term is defined in the Corporation's Employee Benefit Plan, or
suffers an extreme financial hardship, as determined by the Fund Committee.
An extreme financial hardship means an immediate, catastrophic financial
need occasioned by (i) a tragic event, such as the death, total disability,
serious injury or illness of a spouse, parent or dependent or (ii) an
extreme financial reversal or other impending catastrophic event which has
resulted in, or will result in harm to the Participant, his spouse, his
parents or a dependent. Distributions for extreme financial hardship may
not exceed the amount required to meet the hardship and may be made only if
the Fund Committee finds that the extreme financial hardship may not be met
from other resources reasonably available to the Participant including,
without limitation, liquidation of investment assets or luxury assets or
loans from financial institutions or other sources. The Fund Committee
shall use uniform and nondiscriminatory standards in reviewing any requests
for distributions to meet an extreme financial hardship. If the Fund
Committee does not exercise its discretion under this Section 4.2, amounts
deferred hereunder shall be paid in accordance with Section 4.1 following a
Participant's death or disability.
4.3 Designation of Beneficiary. In the event of a Participant=s death,
the Committee shall authorize payment of any benefit due to a Participant
to the Participant=s designated beneficiary as specified or, in the absence
of such written designation or its ineffectiveness, then to his or her
estate. Any such designation may be revoked and a new beneficiary
designated by the Participant by written instrument delivered to the
Committee. Such payment, to the extent thereof, will discharge all
liability for such payment under the Fund.
SECTION V. FUND ADMINISTRATION
5.1 Responsibility of the Fund Committee. The Plan shall be administered
by a Fund Committee of not less than three (3) persons to be appointed by
and serve at the discretion of the Committee. Each member of the Fund
Committee 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. In addition to the implied
powers and duties which may be needed to carry out the administration of
the Fund, the Fund Committee shall have the following specific powers and
responsibilities:
(a) To establish and enforce rules and regulations as required for the
efficient administration of the Fund.
(b) To determine a Participant's or beneficiary's eligibility for benefits
from the Fund.
(c) To authorize disbursement of benefits to a retired, terminated or
otherwise eligible Participant or beneficiary.
(d) To review, interpret and remedy Fund provisions that are ambiguous or
inconsistent. All determinations and actions of the Fund Committee will be
conclusive and binding upon all persons, except as otherwise provided
herein or by law, and except that the Fund Committee may revoke or modify a
determination or action previously made in error. The Fund Committee will
exercise all powers and authority given to it in a nondiscriminatory
manner, and will apply uniform administrative rules of general application
to insure that persons in similar circumstances are treated similarly.
5.2 Books, Records and Expenses. The books and records to be maintained
for the purpose of this Fund shall be maintained by the Fund Committee and
subject to the supervision and control of the Committee. All expenses of
administering this Fund shall be paid by the Corporation.
5.3 Fund Committee Action. Action may be taken by the Fund Committee at
any meeting where a majority of its members are present and at any such
meeting any action may be taken which shall be approved by a majority of
the members present. The Fund Committee may also take any action without a
meeting that is approved by a majority of the Fund Committee members and is
evidenced by a written document signed by a member of Fund Committee. The
Fund Committee may delegate any of its rights, powers and duties to any one
or more of its members, or to any other person, by written action as
provided herein, acknowledged in writing by the delegate or delegates.
Such delegation may include without limitation, the power to execute any
document on behalf of the Fund Committee and of the Fund for the service of
legal process at the principal office of the Corporation.
5.4 Compensation. No member of the Fund Committee shall receive any
compensation from the Fund for his services as a Fund Committee member.
SECTION VI. MISCELLANEOUS
6.1 Non-Alienability of Benefits. Neither the Participant nor any bene-
ficiary entitled to payments after the death of the Participant shall have
the power to alienate, transfer, assign, or otherwise encumber in advance
any of the payments that may become due hereunder and any attempt to do so
shall be null and void; nor shall any such payments be subject to
attachment, garnishment or execution, or be transferable by operation of
law in the event of bankruptcy, insolvency, or otherwise.
6.2 Agreement Not Contract of Employment. Nothing in this Agreement shall
be construed to give any employee of the corporation or a Subsidiary any
right to be selected as a Participant or to be granted an Award under the
Plan other than as is provided herein. Nothing in the 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 the Plan or this
Agreement, 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.
6.3 Liability. No member of the Board, the Fund Committee or the
Committee and no officer or employee of the Corporation shall be liable to
any person for any action taken or omitted in connection with the
administration of this Fund unless attributable to his own fraud or willful
misconduct; nor shall the Corporation be liable to any person for any such
action unless attributable to fraud or willful misconduct on the part of a
director, officer or employee of the Corporation.
6.4 Nonfunding of Benefits. Should the Corporation invest in any assets
or set aside any funds in connection with the obligations assumed by it
under this Fund, it is expressly understood and agreed that neither the
Participant nor his beneficiary or beneficiaries shall have any rights or
claims with respect to any such assets or funds.
6.5 Binding Effect. This Fund shall be binding upon and inure to the
benefit of any successor of the Corporation and any successor shall be
deemed substituted for the Corporation under the terms of this Agreement.
As used in this Agreement, the term "successor" shall include any person,
firm, corporation or other business entity or related group of such
persons, firms, corporations, or other business entities which at any time,
whether by merger, purchase, reorganization, liquidation or otherwise, or
by means of a series of such transactions, acquire all or substantially all
of the assets or business of the Corporation.
6.6 Governing Law. The Fund and all actions taken pursuant to the Fund
shall be governed by the laws of Georgia.
Executed this 16th day of February, 1996.
SUNTRUST BANKS, INC.
Attest:
/s/ Margaret U. Hodgson By: /s/ Mary T. Steele
Title: Assistant Secretary Title: Group Vice President
(CORPORATE SEAL)
<PAGE>
Statement re: Computation of Per Share Earnings
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Primary:
Net income $616,615 $565,476 $522,744 $473,729 $404,397 $377,322
Average common shares outstanding 220,363 226,666 229,408 235,057 239,283 241,584
Incremental shares outstanding <F1> 3,123 2,878 2,670 2,748 2,358 1,958
Average primary common shares 223,486 229,544 232,078 237,805 241,641 243,542
Earnings per common share - Primary $2.76 $2.47 $2.25 $1.99 $1.67 $1.55
Fully Diluted:
Net income $616,615 $565,476 $522,744 $473,729 $404,397 $377,322
Average common shares outstanding 220,363 226,666 229,408 235,057 239,283 241,584
Incremental shares outstanding <F1> 3,156 2,906 2,704 2,780 2,362 2,060
Average fully diluted common shares 223,519 229,572 232,112 237,837 241,645 243,644
Earnings per common share - Fully Diluted $2.76 $2.47 $2.25 $1.99 $1.67 $1.55
<FN>
<F1> Includes the incremental effect of stock options and restricted stock
outstanding computed under the treasury stock method.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Ratio 1 - including deposit interest
Earnings:
Income before income taxes $903,200 $825,925 $781,965 $700,662 $575,768 $514,139
Fixed charges 1,476,392 1,363,702 946,283 804,281 988,111 1,480,435
Total $2,379,592 $2,189,627 $1,728,248 $1,504,943 $1,563,879 $1,994,574
Fixed charges:
Interest on deposits $1,083,035 $988,725 $704,803 $632,307 $832,372 $1,270,435
Interest on funds purchased 245,502 239,080 122,055 87,900 87,038 135,314
Interest on other short-term borrowings 48,264 54,843 42,519 21,623 7,027 10,104
Interest on long-term debt 85,031 68,114 63,119 48,839 48,560 47,664
Portion of rents representative of the
interest factor (1/3) of rental expense 14,560 12,940 13,787 13,612 13,114 16,918
Total $1,476,392 $1,363,702 $946,283 $804,281 $988,111 $1,480,435
Earnings to fixed charges 1.61 x 1.61 x 1.83 x 1.87 x 1.58 x 1.35 x
Ratio 2 - excluding deposit interest
Earnings:
Income before income taxes $903,200 $825,925 $781,965 $700,662 $575,768 $514,139
Fixed charges 393,357 374,977 241,480 171,974 155,739 210,000
Total $1,296,557 $1,200,902 $1,023,445 $872,636 $731,507 $724,139
Fixed charges:
Interest on funds purchased $245,502 $239,080 $122,055 $87,900 $87,038 $135,314
Interest on other short-term borrowings 48,264 54,843 42,519 21,623 7,027 10,104
Interest on long-term debt 85,031 68,114 63,119 48,839 48,560 47,664
Portion of rents representative of the
interest factor (1/3) of rental expense 14,560 12,940 13,787 13,612 13,114 16,918
Total $393,357 $374,977 $241,480 $171,974 $155,739 $210,000
Earnings to fixed charges 3.30 x 3.20 x 4.24 x 5.07 x 4.70 x 3.45 x
</TABLE>
<PAGE>
CORPORATE PROFILE
SunTrust Banks, Inc., is a premier financial company based in the Southeastern
United States. Through its 689 full-service banking offices in Florida,
Georgia, Tennessee and Alabama. It 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. The Company also provides mortgage banking, corporate finance,
credit cards, factoring, discount brokerage, credit-related insurance, and
data processing and information services. At year-end 1996, SunTrust had
total assets of $52.5 billion, discretionary trust assets of $53.4 billion
and a mortgage servicing portfolio of $13.8 billion.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Year Ended December 31
(Dollars in millions except per share data) 1996 1995 1994
<S> <C> <C> <C>
For the Year
Net income $ 616.6 $ 565.5 $ 522.7
Common dividends paid 183.9 168.7 157.1
Per Common Share
Net income 2.76 2.47 2.25
Dividends paid 0.83 0.74 0.66
Market price:
High 52.50 35.44 25.69
Low 32.00 23.63 21.75
Close 49.25 34.25 23.88
Book value 22.13 18.91 15.13
Financial Ratios
Return on average assets (ROA) 1.35% 1.36% 1.32%
Return on average realized
shareholders' equity (ROE) 18.89 18.53 17.66
Net interest margin
(taxable-equivalent) 4.36 4.49 4.64
Efficiency ratio 59.9 59.5 58.9
Tier 1 capital ratio 7.46 7.78 7.95
Total capital ratio 10.87 9.71 10.05
Tier 1 leverage ratio 6.40 6.71 6.68
Selected Average Balances
Total assets $47,718.8 $43,072.6 $40,489.2
Earning assets 41,831.0 38,401.4 36,111.0
Loans 32,792.5 29,709.3 26,412.6
Deposits 34,241.3 31,808.7 30,877.8
Realized shareholders' equity 3,263.9 3,052.3 2,960.1
Total shareholders' equity 4,621.5 3,905.2 3,571.5
Common equivalent shares (thousands) 223,486 229,544 232,078
At December 31
Total assets $52,468.2 $46,471.5 $42,709.1
Earning assets 45,182.1 40,530.0 38,045.6
Loans 35,404.2 31,301.4 28,548.9
Reserve for loan losses 725.8 698.9 647.0
Deposits 36,890.4 33,183.2 32,218.4
Realized shareholders' equity 3,278.2 3,111.0 2,883.3
Total shareholders' equity 4,880.0 4,269.6 3,453.3
Common shares outstanding (thousands) 220,469 225,726 228,211
Market value of common stock of
The Coca-Cola Company (48,266,496 shares) $ 2,540 $ 1,792 $ 1,243
</TABLE>
In this report, for 1993 - 1996, investment securities, total assets and
total shareholders' equity include the net unrealized securities gain.
However, earnings assets exclude this gain as do the calculations of ROA, ROE
and the net interest margin because the gain is not included in income.
All share and per share data in this report have been adjusted to reflect the
stock dividend paid on May 21, 1996.
<PAGE>
TO FELLOW SHAREHOLDERS
As SunTrust shareholders we benefited from excellent stock price performance
again in 1996. Including reinvested dividends, the total return on our
investment was 47%, the same outstanding performance we enjoyed in 1995. The
stock market has rewarded our consistently strong earnings record and rich
balance sheet, which includes 48.3 million shares of common stock in The
Coca-Cola Company. Since the Company's formation in 1985, the average annual
total return on SunTrust stock has been 19.3%. In November the SunTrust Board
approved a 12.5% increase in the dividend rate.
Banking involves providing for the financial needs of our customers. As
customers change, so do their financial needs. Change has been the byword in
the banking industry for a number of years and the pace appears to be
accelerating. SunTrust has been and continues to be ready for this changing
environment. Our readiness over the past eleven years produced consistenfly
strong performance with earnings per share increasing at an average annual
rate of 11.4%.
As we look back at 1996, net income totaled $616.6 million, or $2.76 per
share, an 11.7% increase in earnings per share. Excellent growth in both
loans and noninterest income generated the highest level of earnings in our
Company's history. The solid earnings for the year were reflected in our
performance ratios. The return on average assets was 1.35%, just below our
1995 record high of 1.36%, and the return on average realized shareholders'
equity was 18.89%, a record high. Both ratios compared favorably with our
peers.
Improved revenue was the hallmark of 1996. As I mentioned in my last two
annual letters, SunTrust is engaged in growth initiatives to build upon our
strengths and to remain a superior financial services provider The strong
revenue growth in 1996 is a clear indication that our initiatives are
beginning to be realized in positive ways throughout the Company. The largest
component of our revenue, net interest income, grew 5.7%, compared with the
3.0% increase in the previous year. Noninterest income increased 14.7%, a
significant improvement over the 1.9% gain in 1995. Preparing for the future
requires investment as evidenced by the 9.1% increase in noninterest
expenses.
Not only did revenue growth accelerate but also our balance sheet reflected
our growth efforts and a strong regional economy. Average loans grew 10.4%,
earning assets 8.9% and deposits 7.6%. Assets exceeded $50 billion for the
first time and closed the year at $52.5 billion. Even after buying back 7.5
million shares of contrnon stock during t996, realized shareholders' equity
ended the year up 5.4%. Unrealized shareholders' equity, which primarily
reflects the after-tax market appreciation of our holdings in The Coca-Cola
Company, increased to $1.6 billion, providing additional strength for
SunTrust.
Credit quality remained particularly strong. Our net loan charge-off ratio
was 0.27%, one of the lowest among our peers. Although nonperforming assets
increased slightly from $251.0 million to $255.8 million at year-end, the
ratio to loans and other real estate owned declined for the fifth consecutive
year.
Focused on generating growth internally and on implementing new strategies to
meet the challenges of providing our customers superior products and 24 hour-
a-day service, we enter the new year with confidence and optimism. In a
relationship business like banking, success is dependent on a strong team of
employees. I am convinced that the SunTrust team matches up well against
others. As a team we pledge our best efforts to serve our customers in ways
that maximize their economic well-being and to enhance the value of our
shareholders' investment in SunTrust.
Sincerely,
James B Williams
Chairman of the Board and
Chief Executive Officer
February, 11 1997
<PAGE>
BUSINESS REVIEW
RESULTS
The ongoing expansion of the Southeast's economy to produce an ever-increasing
population for us to serve. The area is also building a healthy international
reputation that is attracting a diverse mix of interests and opportuuities
from around the globe. Tourism continues to thrive, creating an infusion of
immediate monetary and economic benefits, while offering numerous
opportunities for marketing the area in the future.
The summation of all of this activity is increased demand and
opportunities for SunTrust banks - an increase in the demand for our services
and products, and the opportunity to share in the success of the region.
Strategicaily positioned in key markets in the Southeast, SunTrust
continues to capitalize on the opportunities and demands presented by the
region's strong economic growth. With an increased sales force, ongoing
investments in technology, and enhanced products and services, we have not
only established a significant number of relationships with new clients, but
have effectively expanded existing ones.
An example is the success of our First Rate and Advantage Rate accounts,
aimed primarily at attracting deposits from mutual fund accounts. By offering
these prernium rate products, we quickly increased our deposit base with new
and existing customers, while generating cross-selling, fee-income
opportunities.
We are pleased to be firmly entrenched as a leader and partner with the
communities we serve, because our future success is dependent upon the
success of their future - and the future looks bright. We have positioned our
Company to move forward without losing sight of those characteristics and
strengths that have served us well in the past.
At SunTrust, we are ready to continue seizing upon, and contributing to,
the economic strength of our region to benefit our customers and shareholders
alike. We're ready for continued results.
GROWTH
Providing financial services is about fulfilling needs ... offering solutions
... nurturing relationships. Providing financial services is about helping
our clients be ready for life. Whether it's a mortgage loan for the first
home or financing an expansion for a growing business, we want to play an
integral role in helping meet the challenges and achieve goals throughout
life.
But in today's competitive marketplace, building and maintaining long-
term relationships takes more than just offering superior customer service.
You also have to anticipate and meet customers changing needs with
convenient, innovative products and services that are competitively priced.
RETAIL
In the retail arena, as in others, we continue to look at ways to attract new
clients and build upon our existing relationships. After careful review of
existing deposit products, we selected 12 extremely competitive products and
offered them systemwide last yean Not only does the customer benefit from
having access to the best we have to offer, but we become even more efficient
with increasingly well-defined, flexible common product lines. SunTrust is
also committed to increasing customer convenience by such initiatives as PC
Banking, an Internet website and 30 new in-store branches with plans for an
additional 30 locations in 1997.
From a lending standpoint, the most important purchase for most
consumers is a home. A partnership in this process can present numerous other
future opportunities. To stand out as a leader in this area, we committed
significant resources to increase our mortgage presence. We hired some of the
best, experienced people in the industry and then provided them with the
technology and marketing support to get the job done. We also introduced
convenient, innovative services and products, such as our StepOne phone-based
pre-qualification service. As a result, mortgage loan originations increased
more than 50% in 1996.
TRUST AND INVESTMENTS
We continued our position as the largest provider of trust services in the
Southeast. The addition of more personnel in the trust and investment
services areas, coupled with the strength of our investment advisory
performance helped generate healthy revenue growth. The personal trust area,
in particular, posted double-digit growth last year, and retail, corporate
and institutional investment revenues were exceptional. We anticipate this
trend to continue as we further increase our emphasis on internal referrals.
Our new Active Investor Account, three additional STI Classic funds, and
other new trust and investment products allow us to compete even more
effectively in the asset management arena.
CORPORATE
In order to build upon our corporate banking strength, we have concentrated
on enhancing our relationships to better serve clients' specific needs. This
has been achieved in-part through more strategic lending initiatives, an
increased focus on key industries we service, and a continuing investment in
our treasury management technology and capabilities. Additionally, we
significantly increased our investment in our capital markets business,
adding resources in both origination and distribution. When combined, this
comprehensive array of services allows us to further integrate our resources
with a client's business to help provide solutions rather than just products.
While we will continue to take advantage of the excellent growth
opportunities within our region, we also will monitor and move outside our
traditional market area as opportunities are identified that match up well
with our corporate expertise.
READY
These are just a few of the highlights of our Company's efforts last year. We
think the numbers reflected throughout our annual report speak for
themselves. As we enhance our strengths and take advantage of opportunities
in all areas, we will continue to focus on building, maintaining and
expanding long-term relationships.
At SunTrust, we are ready to exceed the expectations of our customers
and continue adding value to our shareholders' investment in our Company.
We're ready for growth. We're ready for the future.
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
Year Ended December 31
(Dollars in millions except per share data) 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Interest and dividend income $ 3,246.0 $ 3,027.2 $ 2,552.3 $ 2,362.3 $ 2,537.6 $ 2,856.4
Interest expense 1,461.8 1,350.8 932.5 790.7 975.0 1,463.5
Net interest income 1,784.2 1,676.4 1,619.8 1,571.6 1,562.6 1,392.9
Provision for loan losses 115.9 112.1 137.8 189.1 234.2 209.6
Net interest income after provision for loan losses 1,668.3 1,564.3 1,482.0 1,382.5 1,328.4 1,183.3
Noninterest income 818.0 713.1 699.9 726.5 672.7 612.9
Noninterest expense 1,583.1 1,451.5 1,400.0 1,408.4 1,425.3 1,282.1
Income before provision for income taxes 903.2 825.9 781.9 700.6 575.8 514.1
Provision for income taxes 286.6 260.4 259.2 226.9 171.4 136.8
Net income $ 616.6 $ 565.5 $522.7 $473.7 $404.4 $377.3
Net interest income (taxable-equivalent) $ 1,824.3 $ 1,726.0 $ 1,675.6 $ 1,634.4 $ 1,632.9 $ 1,470.5
Per common share
Net income $ 2.76 $ 2.47 $ 2.25 $ 1.99 $ 1.67 $ 1.55
Dividends paid 0.83 0.74 0.66 0.58 0.52 0.47
Common dividend payout ratio 29.8% 29.8% 30.1% 30.6% 32.7% 32.4%
Market price:
High $ 52.50 $ 35.44 $ 25.69 $ 24.81 $ 22.81 $ 20.00
Low 32.00 23.63 21.75 20.69 16.75 10.25
Close 49.25 34.25 23.88 22.50 21.88 19.94
Selected Average Balances
Total assets $47,718.8 $43,072.6 $40,489.2 $37,524.9 $35,356.5 $33,892.0
Earning assets 41,831.0 38,401.4 36,111.0 34,047.3 32,008.6 30,544.4
Loans 32,792.5 29,709.3 26,412.6 24,162.8 22,489.1 22,144.6
Deposits 34,241.3 31,808.7 30,877.8 29,683.3 28,609.6 27,533.0
Realized shareholders' equity 3,263.9 3,052.3 2,960.1 2,875.1 2,697.9 2,509.5
Total shareholders' equity 4,621.5 3,905.2 3,571.5 2,877.2 2,697.9 2,509.5
At December 31
Total assets $52,468.2 $46,471.5 $42,709.1 $40,728.4 $37,789.3 $35,682.6
Earning assets 45,182.1 40,530.0 38,045.6 35,904.5 34,167.7 31,854.3
Loans 35,404.2 31,301.4 28,548.9 25,292.1 23,493.5 22,251.5
Reserve for loan losses 725.8 698.9 647.0 561.2 474.2 381.0
Deposits 36,890.4 33,183.2 32,218.4 30,485.8 29,883.0 29,011.5
Long-term debt 1,565.3 1,002.4 930.4 630.4 554.0 477.3
Realized shareholders' equity 3,278.2 3,111.0 2,883.3 2,845.8 2,769.7 2,622.8
Total shareholders' equity 4,880.0 4,269.6 3,453.3 3,609.6 2,769.7 2,622.8
Ratios and Other Data
ROA 1.35 % 1.36 % 1.32 % 1.26 % 1.14 % 1.11
ROE 18.89 18.53 17.66 16.48 14.99 15.04
Net interest margin 4.36 4.49 4.64 4.80 5.10 4.81
Efficiency ratio 59.9 59.5 58.9 59.7 61.8 61.5
Tier 1 capital ratio 7.46 7.78 7.95 8.88 9.37 9.42
Total capital ratio 10.87 9.71 10.05 10.55 11.35 11.97
Tier 1 leverage ratio 6.40 6.71 6.68 6.82 7.27 7.14
Total shareholders' equity to assets 9.30 9.19 8.09 8.86 7.33 7.35
Nonperforming assets to total loans plus
other real estate owned 0.72 0.80 0.96 1.61 2.30 3.07
Full-service banking offices 689 652 658 656 654 662
ATMs 917 778 739 738 683 663
Full-time equivalent employees 20,863 19,415 19,408 19,532 19,539 19,703
Average common equivalent shares (thousands) 223,486 229,544 232,078 237,805 241,641 243,542
</TABLE>
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 11.7% in 1996 to $2.76, up from
$2.47 per common share in 1995. Net income of the Company amounted to $616.6
million, an increase of 9.0% over $565.5 million in 1995.
Operating results in 1996 reflected strong loan demand and continued strong
credit quality. Net interest income was $1,824.3 million in
1996, up $98.3 million from 1995. The net interest margin was 13 basis points
lower than last year but the decline was more than offset by a 8.9% increase
in average earning assets. Average loans increased 10.4% and average deposits
increased 7.6%. The 1996 loan loss provision of $115.9 million was 3.4%
higher than in 1995, and $25.7 million above 1996 net charge-offs.
Noninterest income increased 14.7% with service charges on deposit accounts
up 9.3% and trust fees up 7.1%. Noninterest expense was $1,583.1 million for
1996, 9.1% more than in 1995. Total personnel expense, the single largest
component of noninterest expense, was up $95.1 million, or 12.2%, from 1995
levels. Marketing and customer development increased $26.4 million which was
52.9% more than was expended in 1995. Both of these increases were the result
of the Company's ongoing growth initiatives. Per share earnings were aided by
the repurchase during 1996 of approximately 7.5 million shares of the
Company's common stock.
<TABLE>
TABLE 1 - CONTRIBUTIONS TO NET INCOME
<CAPTION>
Year Ended December 31
1996 1995
(Dollars in millions) Contribution % of Total Contribution % of Total
<S> <C> <C> <C> <C>
Principal banking subsidiaries' net income <F1>:
SunTrust Banks of Florida, Inc. <F2> $341.2 55.3 % $300.5 53.1 %
SunTrust Banks of Georgia, Inc. 253.8 41.2 226.3 40.0
SunTrust Banks of Tennessee, Inc. 100.1 16.2 88.5 15.6
Total prinicpal banking subsidiaries' net income 695.1 112.7 615.3 108.7
Other banks and nonbanking net income (expense):
Other banks and nonbank subsidiaries <F2> (10.5) (1.7) 4.7 0.8
Parent Company (68.0) (11.0) (54.5) (9.5)
Total other banks and nonbanking net income (expense) (78.5) (12.7) (49.8) (8.7)
Net income $616.6 100.0 % $565.5 100.0 %
<FN>
<F1> Additional information on the performance of banking subsidiaries can be
found on pages 32 and 33.
<F2> The 1996 contribution from SunTrust Banks of Florida, Inc. is
overstated and the contribution from Other banks and nonbank subsidiaries
is understated by $9 million because ofloan
loss reserve from SunTrust Bank, Miami, N.A. to SunTrust BankCard, N.A.
</TABLE>
Net Interest Income/Margin
Net interest income for 1996 was $1,824.3 million or 5.7% higher than the
prior year. Average earning assets were up 8.9% and the net interest margin
declined to 4.36% in 1996 from 4.49% in 1995. The average rate on earning
assets decreased 15 basis points to 7.86% while the average rate on interest-
bearing liabilities declined 6 basis points to 4.30%.
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, the same impact as in 1995. Table 5 contains more detailed
information concerning average balances, yields earned and rates paid.
<TABLE>
TABLE 2 - ANALYSIS OF CHANGES IN NET INTEREST INCOME <F1>
<CAPTION>
1996 Compared to 1995 1995 Compared to 1994
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 $257.7 $(77.0) $180.7 $273.0 $208.9 $481.9
Tax-exempt <F2> (1.9) (5.7) (7.6) (4.5) 6.2 1.7
Investment securities:
Taxable 16.2 28.0 44.2 (46.1) 40.2 (5.9)
Tax-exempt <F2> (9.5) (5.3) (14.8) (15.5) (2.5) (18.0)
Funds sold 9.7 (3.7) 6.0 11.0 6.8 17.8
Other short-term investments <F2> 0.8 0.0 0.8 (12.7) 3.9 (8.8)
Total interest income 273.0 (63.7) 209.3 205.2 263.5 468.7
Interest Expense
NOW/Money market accounts 24.0 4.7 28.7 (8.8) 42.6 33.8
Savings deposits 56.1 45.3 101.4 (18.8) 9.5 (9.3)
Consumer time deposits (30.8) (8.5) (39.3) 56.9 87.7 144.6
Other time deposits 5.9 (2.4) 3.5 38.1 76.7 114.8
Funds purchased 31.5 (25.1) 6.4 56.6 60.4 117.0
Other short-term borrowings (3.4) (3.2) (6.6) (7.2) 19.6 12.4
Long-term debt 20.8 (3.9) 16.9 3.7 1.3 5.0
Total interest expense 104.1 6.9 111.0 120.5 297.8 418.3
Net change in net interest income $168.9 $(70.6) $ 98.3 $ 84.7 $(34.3) $ 50.4
<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 previous rate
while rate change is change in rate times the previous 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% and, where applicable, state income taxes, to
increase tax-exempt interest income to a taxable-equivalent basis.
</TABLE>
Provision for Loan Losses
The Company increased its provision for loan losses in 1996 $3.8 million to
$115.9 million, which exceeded net charge-offs by $25.7 million. Net loan
charge-offs were $90.2 million in 1996, representing 0.27% of average loans.
The comparable net charge-off amount for 1995 was $66.5 million or 0.22% of
average loans. As shown in Table 8, the largest increase in charge-offs
occurred in credit card and other consumer loans while the dollar amount of
recoveries remained relatively stable in most categories except for a small
decrease in commercial loans. Recoveries decreased to 36.5% of total charge-
offs in 1996 compared with 44.9% in 1995.
The Company's reserve for loan losses increased to $725.8 million at
December 31, 1996, which was 2.05% of year-end loans and 342.0% of total
nonperforming loans. The comparable ratios at December 31, 1995 were 2.23%
and 363.6%, 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 and
other factors 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 increased $104.9 million, or 14.7% with trust income, our
largest source of noninterest income, up $18.6 million or 7.1%. Service
charges on deposit accounts rose $19.8 million or 9.3%. Mortgage fees were up
$10.2 million or 44.3%. Also other charges and fees were up $29.3 million or
26.9%. All of these increases reflect the Company's ongoing growth
initiatives. Securities gains totaled $14.2 million, primarily because of a
gain on the sale of a long-held minority position in a Florida bank.
<TABLE>
TABLE 3 - NONINTEREST INCOME
<CAPTION>
Year Ended December 31
(In millions) 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Trust income $278.3 $259.7 $250.3 $247.0 $226.1 $200.5
Service charges on deposit accounts 232.4 212.6 218.4 225.9 215.6 201.7
Other charges and fees 138.1 108.8 98.4 112.8 98.9 106.9
Credit card fees 66.3 62.6 57.2 57.8 58.8 60.2
Mortgage fees<F1> 33.2 23.0 22.7 29.3 22.7 -
Securities gains (losses) 14.2 (6.6) (2.7) 2.0 5.1 3.7
Trading account profits and commissions 13.3 10.3 8.0 11.3 8.2 10.3
Other income 42.2 42.7 47.6 40.4 37.3 29.6
Total noninterest income $818.0 $713.1 $699.9 $726.5 $672.7 $612.9
<FN>
<F1> Mortgage fees for 1991 are included in Other charges and fees.
</TABLE>
Noninterest Expense
Noninterest expense increased 9.1% in 1996; however, strong revenue growth
kept the efficiency ratio below 60%. Total personnel expense increased 12.2%
or $95.1 million, as the Company added 1,448 full-time equivalent employees.
Marketing and customer development showed the largest percentage increase at
52.9% or $26.4 million. The Company's growth initiatives were responsible for
the increases.
<TABLE>
TABLE 4 - NONINTEREST EXPENSE
<CAPTION>
Year Ended December 31
(Dollars in millions) 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 635.0 $ 578.1 $ 550.4 $ 529.1 $ 511.7 $ 491.3
Other compensation 128.5 95.3 96.1 107.4 107.9 70.1
Employee benefits 110.6 105.6 100.7 98.5 92.8 82.4
Total personnel expense 874.1 779.0 747.2 735.0 712.4 643.8
Net occupancy expense 138.2 130.1 126.9 128.4 134.8 119.5
Equipment expense 115.4 105.1 103.3 103.1 102.9 98.1
FDIC premiums 18.1 36.4 66.6 66.2 64.5 56.6
Marketing and customer development 76.4 50.0 57.2 48.0 51.9 41.5
Postage and delivery 40.5 36.4 34.1 32.4 32.5 31.5
Operating supplies 38.0 32.2 29.4 30.5 30.6 30.5
Communications 32.4 27.7 26.1 26.3 25.8 24.9
Consulting and legal 25.5 20.8 22.6 20.2 27.7 25.9
Other real estate expense (0.4) (9.0) (2.2) 16.7 36.0 21.9
Amortization of intangible assets 26.7 21.4 20.6 19.7 17.0 15.7
Other expense 198.2 221.4 168.2 181.9 189.2 172.2
Total noninterest expense $1,583.1 $1,451.5 $1,400.0 $1,408.4 $1,425.3 $1,282.1
Efficiency ratio 59.9 % 59.5 % 58.9 % 59.7 % 61.8 % 61.5 %
</TABLE>
Provision for Income Taxes
The provision for income taxes covers federal and state income taxes. For
1996, the provision was $286.6 million, an increase of $26.2 million or 10.0%
from 1995. Higher taxable income was responsible for the increase. For
additional information see Note 10 of the Notes to Consolidated Financial
Statements on pages 49 and 50.
<TABLE>
TABLE 5A - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE AND AVERAGE
YIELDS EARNED AND RATES PAID
<CAPTION>
1996 1995 1994
(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 $32,132.5 $2,642.2 8.22 % $29,028.1 $2,461.5 8.48 % $25,678.3 $1,979.6 7.71 %
Tax-exempt <F2> 660.0 54.2 8.22 681.2 61.8 9.05 734.3 60.1 8.18
Total loans 32,792.5 2,696.4 8.22 29,709.3 2,523.3 8.49 26,412.6 2,039.7 7.72
Investment securities:
Taxable 7,429.0 476.1 6.41 7,167.8 431.9 6.03 7,968.4 437.8 5.50
Tax-exempt <F2> 768.7 67.9 8.83 873.7 82.7 9.47 1,035.5 100.7 9.72
Total investment securities 8,197.7 544.0 6.64 8,041.5 514.6 6.40 9,003.9 538.5 5.98
Funds sold 759.0 40.9 5.39 582.4 34.9 5.98 380.9 17.1 4.49
Other short-term investments <F2><F3> 81.8 4.8 5.84 68.2 4.0 5.80 313.6 12.8 4.07
Total earning assets 41,831.0 3,286.1 7.86 38,401.4 3,076.8 8.01 36,111.0 2,608.1 7.22
Reserve for loan losses (717.2) (675.8) (608.0)
Cash and due from banks 2,240.1 2,114.4 2,228.8
Premises and equipment 746.3 721.5 713.7
Other assets 1,425.2 1,132.1 1,060.1
Unrealized gains on
investment securities 2,193.4 1,379.0 983.6
Total assets $47,718.8 $43,072.6 $40,489.2
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW/Money market accounts $10,296.2 $ 286.2 2.78 % $ 9,425.2 $ 257.5 2.73 % $ 9,798.9 $ 223.7 2.28 %
Savings 5,374.0 196.7 3.66 3,619.4 95.3 2.63 4,364.5 104.6 2.40
Consumer time 7,282.3 377.1 5.18 7,875.0 416.4 5.29 6,626.2 271.8 4.10
Other time <F4> 4,084.9 223.0 5.46 3,978.0 219.5 5.52 3,054.1 104.7 3.43
Total interest-bearing deposits 27,037.4 1,083.0 4.01 24,897.6 988.7 3.97 23,843.7 704.8 2.96
Funds purchased 4,821.1 245.5 5.09 4,228.8 239.1 5.65 3,050.0 122.1 4.00
Other short-term borrowings 860.6 48.3 5.61 918.1 54.9 5.97 1,083.2 42.5 3.93
Long-term debt 1,268.7 85.0 6.70 960.3 68.1 7.09 908.4 63.1 6.95
Total interest-bearing liabilities 33,987.8 1,461.8 4.30 31,004.8 1,350.8 4.36 28,885.3 932.5 3.23
Noninterest-bearing deposits 7,203.9 6,911.1 7,034.1
Other liabilities 1,905.6 1,251.5 998.3
Realized shareholders' equity 3,263.9 3,052.3 2,960.1
Net unrealized gains on
investment securities 1,357.6 852.9 611.4
Total liabilities and
shareholders' equity $47,718.8 $43,072.6 $40,489.2
Interest rate spread 3.56 % 3.65 % 3.99 %
NET INTEREST INCOME $1,824.3 $1,726.0 $1,675.6
NET INTEREST MARGIN <F4> 4.36 % 4.49 % 4.64 %
<FN>
<F1>Interest income includes loan fees of $95.3, $86.5, $93.5, $88.6, $80.8
and $72.4 in the six years ended December 31, 1996. Nonaccrual loans
are included in average balances and income on such loans, if
recognized, is recorded on a cash basis.
<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 1996, 1995, 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 $40.1, $49.6,
$55.8, $62.8, $70.3 and $77.6 in the six years ended December 31, 1996.
<F3>Stated rate for 1992 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 increased interest expense by $1.0 in 1996
and reduced interest expense by $10.1,$30.6, $43.6 and $36.3 in 1995, 1994,
1993, and 1992. Without these swaps, the rate on Other time deposits and
the Net Interest Margin would have been 5.42% and 4.36% in 1996, 5.77% and
4.47% in 1995, 4.43% and 4.56% in 1994, 4.04% and 4.67% in 1993 and 5.12%
and 4.99% in 1992, respectively.
</TABLE>
<TABLE>
TABLE 5B - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE AND AVERAGE
YIELDS EARNED AND RATES PAID
<CAPTION>
1993 1992 1991
(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 $23,362.8 $1,765.1 7.56 % $21,628.4 $1,821.5 8.42 % $21,190.7 $2,113.3 9.97 %
Tax-exempt <F2> 800.0 62.0 7.75 860.7 69.7 8.10 953.9 92.7 9.72
Total loans 24,162.8 1,827.1 7.56 22,489.1 1,891.2 8.41 22,144.6 2,206.0 9.96
Investment securities:
Taxable 7,844.6 451.2 5.75 7,079.2 515.3 7.28 5,258.3 472.4 8.98
Tax-exempt <F2> 1,128.7 115.8 10.26 1,271.3 134.5 10.58 1,396.8 150.4 10.77
Total investment securities 8,973.3 567.0 6.32 8,350.5 649.8 7.78 6,655.1 622.8 9.36
Funds sold 334.4 10.6 3.17 439.9 16.8 3.83 797.3 44.7 5.61
Other short-term investments <F2><F3> 576.8 20.4 3.53 729.1 50.1 4.40 947.4 60.5 6.39
Total earning assets 34,047.3 2,425.1 7.12 32,008.6 2,607.9 8.15 30,544.4 2,934.0 9.61
Reserve for loan losses (521.9) (421.6) (384.0)
Cash and due from banks 2,200.0 2,007.0 1,974.3
Premises and equipment 710.1 693.0 692.2
Other assets 1,086.0 1,069.5 1,065.1
Unrealized gains on
investment securities 3.4 - -
Total assets $37,524.9 $35,356.5 $33,892.0
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW/Money market accounts $ 9,655.0 $ 211.8 2.19 % $8,900.8 $ 246.2 2.77 % $ 7,710.2 $ 348.9 4.53 %
Savings 4,515.0 108.8 2.41 4,316.1 130.4 3.02 3,632.7 180.4 4.97
Consumer time 6,799.4 276.8 4.07 7,350.0 382.8 5.21 8,448.8 584.8 6.92
Other time <F4> 1,940.6 34.9 1.80 2,132.8 73.0 3.42 2,518.9 156.3 6.21
Total interest-bearing deposits 22,910.0 632.3 2.76 22,699.7 832.4 3.67 22,310.6 1,270.4 5.69
Funds purchased 3,102.7 87.9 2.83 2,664.5 87.0 3.27 2,527.2 135.3 5.36
Other short-term borrowings 632.0 21.7 3.42 192.6 7.0 3.65 174.0 10.1 5.79
Long-term debt 611.4 48.8 7.99 534.5 48.6 9.09 480.1 47.7 9.93
Total interest-bearing liabilities 27,256.1 790.7 2.90 26,091.3 975.0 3.74 25,491.9 1,463.5 5.74
Noninterest-bearing deposits 6,773.3 5,909.9 5,222.4
Other liabilities 618.3 657.4 668.2
Realized shareholders' equity 2,875.1 2,697.9 2,509.5
Net unrealized gains on
investment securities 2.1 - -
Total liabilities and
shareholders' equity $37,524.9 $35,356.5 $33,892.0
Interest rate spread 4.22 % 4.41 % 3.87 %
NET INTEREST INCOME $1,634.4 $1,632.9 $1,470.5
NET INTEREST MARGIN <F4> 4.80 % 5.10 % 4.81 %
<FN>
<F1>See footnote 1 in Table 3A.
<F2>See footnote 2 in Table 3A.
<F3>See footnote 3 in Table 3A.
<F4>See footnote 4 in Table 3A.
</TABLE>
<TABLE>
TABLE 5C - CONSOLIDATED GROWTH RATE IN AVERAGE BALANCES
<CAPTION>
Growth Rate in
Average Balances
Annualized
(Dollars in millions; yields on 1996- 1996-
taxable-equivalent basis) 1995 1991
<S> <C> <C>
Assets
Loans
Taxable 10.7 % 8.7 %
Tax-exempt (3.1) (7.1)
Total loans 10.4 8.2
Investment securities:
Taxable 3.6 7.2
Tax-exempt (12.0) (11.3)
Total investment securities 1.9 4.3
Funds sold 30.3 (1.0)
Other short-term investments 20.0 (38.7)
Total earning assets 8.9 6.5
Reserve for loan losses 6.1 13.3
Cash and due from banks 5.9 2.6
Premises and equipment 3.4 1.5
Other assets 25.9 6.0
Unrealized gains on
investment securities - -
Total assets 10.8 7.1
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts 9.2 % 6.0 %
Savings 48.5 8.1
Consumer time (7.5) (2.9)
Other time 2.7 10.2
Total interest-bearing deposits 8.6 3.9
Funds purchased 14.0 13.8
Other short-term borrowings (6.3) 37.7
Long-term debt 32.1 21.5
Total interest-bearing liabilities 9.6 5.9
Noninterest-bearing deposits 4.2 6.6
Other liabilities 52.3 23.3
Realized shareholders' equity 6.9 5.4
Net unrealized gains on
investment securities - -
Total liabilities and
shareholders' equity 10.8 7.1
</TABLE>
Loans
Loan demand was the strong in 1996 as average loans increased 10.4% over the
prior year. 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, 1996 occurred in loans secured by
real estate which totaled $17.3 billion. However, this amount is not
concentrated in any specific geographic area or type of loan, except for
adjustable rate residential mortgages. At year-end 1996, residential
mortgages in STI of Florida were $7.5 billion, or 43% of total loans; $2.4
billion in STI of Georgia, or 20%; and $1.5 billion, or 28%, in STI of
Tennessee. Of the $11.5 billion in residential mortgages, $643.2 million were
home equity loans. The average loan-to-deposit ratio increased to 95.8% in
1996 compared with 93.4% in 1995.
At December 31, 1996, international outstandings, which include loans,
acceptances, deposits in other banks, foreign guarantees and accrued interest,
totaled $273.5 million, a decrease of 31.1% from $396.8 million at December
31, 1995. Most of the balances were temporary investments in Canada and
Western Europe and trade financing.
<TABLE>
TABLE 6 - LOAN PORTFOLIO BY TYPES OF LOANS
<CAPTION>
Year Ended December 31
(In millions) 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Commercial:
Domestic $11,725.5 $10,222.5 $ 9,279.2 $ 8,190.3 $ 7,933.4 $ 7,324.3
International 240.6 337.5 273.2 197.8 167.3 119.4
Real estate:
Construction 1,384.8 1,216.6 1,151.1 1,083.2 1,034.7 1,121.7
Residential mortgages 11,508.2 9,732.8 8,380.5 7,013.8 5,911.6 5,488.4
Other 4,585.8 4,477.7 4,516.3 4,456.8 4,495.5 4,161.8
Lease financing 607.5 561.2 411.0 328.1 355.4 363.7
Credit card 946.8 774.0 690.5 698.2 725.7 745.2
Other consumer loans 4,405.0 3,979.1 3,847.1 3,323.9 2,869.9 2,927.0
Loans $35,404.2 $31,301.4 $28,548.9 $25,292.1 $23,493.5 $22,251.5
</TABLE>
<TABLE>
TABLE 7 - RESERVE FOR LOAN LOSSES
<CAPTION>
Year Ended December 31
(Dollars in millions) 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Allocation of Reserve for Loan Losses
by Loan Type
Commercial $143.8 $137.7 $138.7 $139.4 $155.2 $147.1
Real estate 145.1 167.0 200.6 189.6 164.0 105.2
Lease financing 4.8 5.4 2.8 2.8 2.6 4.4
Consumer loans 107.8 86.2 74.6 88.7 82.5 78.5
Unallocated 324.3 302.6 230.3 140.7 69.9 45.8
Total $725.8 $698.9 $647.0 $561.2 $474.2 $381.0
Allocation of Reserve for Loan Losses
as a Percent of Total Reserve
Commercial 19.8 % 19.7 % 21.4 % 24.8 % 32.7 % 38.6 %
Real estate 20.0 23.9 31.0 33.8 34.7 27.6
Lease financing 0.7 0.8 0.4 0.5 0.5 1.2
Consumer loans 14.8 12.3 11.5 16.0 17.4 20.6
Unallocated 44.7 43.3 35.7 24.9 14.7 12.0
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Year-end Loan Types as a Percent of
Total Loans
Commercial 33.8 % 33.7 % 33.5 % 33.1 % 34.3 % 33.2 %
Real estate 49.4 49.3 49.2 49.6 48.5 48.2
Lease financing 1.7 1.8 1.4 1.5 1.5 1.6
Consumer loans 15.1 15.2 15.9 15.8 15.7 17.0
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
</TABLE>
<TABLE>
TABLE 8 - SUMMARY OF LOAN LOSS EXPERIENCE
<CAPTION>
Year Ended December 31
(Dollars in millions) 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Reserve for Loan Losses
Balance - beginning of year $ 698.9 $ 647.0 $ 561.2 $ 474.2 $ 381.0 $ 366.9
Reserve of purchased banks 1.2 6.3 8.3 8.0 6.4 0.4
Provision for loan losses 115.9 112.1 137.8 189.1 234.2 209.6
Charge-offs
Domestic:
Commercial (36.2) (29.7) (28.1) (47.8) (61.3) (96.1)
Real estate:
Construction (1.4) (0.4) (0.7) (7.6) (7.3) (7.9)
Residential mortgages (6.3) (7.1) (7.3) (10.9) (10.3) (6.1)
Other (8.2) (16.3) (20.5) (35.1) (44.5) (26.2)
Lease financing (1.2) (0.9) (0.7) (1.0) (3.0) (6.5)
Credit card (40.8) (27.7) (26.3) (28.9) (33.6) (37.3)
Other consumer loans (47.9) (38.7) (30.1) (31.9) (42.0) (62.0)
International - - - - - -
Total charge-offs (142.0) (120.8) (113.7) (163.2) (202.0) (242.1)
Recoveries
Domestic:
Commercial 15.6 20.0 18.6 20.9 22.1 16.3
Real estate:
Construction 0.4 0.8 0.7 0.5 0.7 0.4
Residential mortgages 1.5 1.5 1.5 1.3 1.1 0.9
Other 7.5 5.5 6.3 5.2 3.0 1.4
Lease financing 0.5 0.5 0.6 1.0 1.1 2.0
Credit card 6.9 7.3 7.3 5.7 6.8 6.1
Other consumer loans 19.4 18.1 18.3 18.4 19.5 17.6
International - 0.6 0.1 0.1 0.3 1.5
Total recoveries 51.8 54.3 53.4 53.1 54.6 46.2
Net charge-offs (90.2) (66.5) (60.3) (110.1) (147.4) (195.9)
Balance - end of year $ 725.8 $ 698.9 $ 647.0 $ 561.2 $ 474.2 $ 381.0
Year-end loans outstanding:
Domestic $35,154.8 $30,948.4 $28,260.3 $25,078.0 $23,326.2 $22,117.5
International 249.4 353.0 288.6 214.1 167.3 134.0
Total $35,404.2 $31,301.4 $28,548.9 $25,292.1 $23,493.5 $22,251.5
Average loans $32,792.5 $29,709.3 $26,412.6 $24,162.8 $22,489.1 $22,144.6
Ratios
Reserve to year-end loans 2.05 % 2.23 % 2.27 % 2.22 % 2.02 % 1.71 %
Net charge-offs to average loans 0.27 0.22 0.23 0.46 0.66 0.89
Provision to average loans 0.35 0.38 0.52 0.78 1.04 0.95
Recoveries to total charge-offs 36.5 44.9 47.0 32.5 27.0 19.1
</TABLE>
Nonperforming Assets
Nonperforming assets increased $4.8 million, or 1.9%, from year-end 1995 with
nonperforming loans increasing $20.0 million, primarily from one loan, and
other real estate owned decreasing $15.2 million. At December 31, 1996, the
ratio of nonperforming assets to total loans plus other real estate owned was
the lowest year-end ratio in the Company's history. Included in nonperforming
loans are loans aggregating $29.3 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 known material potential problem loans are
included in Table 9.
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 1996, the gross amount of interest income that would have
been recorded on nonaccrual loans and restructured loans at December 31,
1996, if all such loans had been accruing interest at the original
contractual rate, was $19.3 million. Interest payments recorded in 1996 as
interest income (excluding reversals of previously accrued interest) for all
such nonperforming loans at December 31, 1996, were $9.1 million.
<TABLE>
TABLE 9 - NONPERFORMING ASSETS AND ACCRUING LOANS
PAST DUE 90 DAYS OR MORE
<CAPTION>
Year Ended December 31
(Dollars in millions) 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Nonperforming Assets
Nonaccrual loans:
Commercial $ 45.6 $ 28.3 $ 27.9 $ 41.3 $ 49.6 $ 83.7
Real Estate:
Construction 13.3 4.9 16.0 29.9 45.4 60.0
Residential mortgages 49.6 45.7 45.3 53.1 45.5 49.5
Other 81.0 99.3 82.0 116.8 160.2 207.1
Lease financing 2.3 0.1 0.2 0.1 0.9 2.7
Consumer loans 10.5 11.0 11.6 9.3 18.1 23.8
Total nonaccrual loans 202.3 189.3 183.0 250.5 319.7 426.8
Restructured loans 9.9 2.9 4.6 11.3 4.6 17.3
Total nonperforming loans 212.2 192.2 187.6 261.8 324.3 444.1
Other real estate owned 43.6 58.8 87.7 148.9 220.3 245.9
Total nonperforming assets $255.8 $251.0 $275.3 $410.7 $544.6 $690.0
Ratios
Nonperforming loans to total loans 0.60 % 0.61 % 0.66 % 1.03 % 1.38 % 2.00 %
Nonperforming assets to total loans
plus other real estate owned 0.72 0.80 0.96 1.61 2.30 3.07
Reserve to nonperforming loans 342.0 363.6 344.9 214.4 146.2 85.8
Accruing Loans Past Due 90 Days or More $ 34.2 $ 24.3 $ 19.2 $ 24.4 $ 27.6 $ 30.4
</TABLE>
Investment Securities
The investment portfolio is managed to maximize yield over an entire interest
rate cycle while providing liquidity and minimizing market risk. The
portfolio yield improved from an average of 6.40% in 1995 to 6.64% in 1996.
On an amortized cost basis, the portfolio increased by $158.5 million from
December 31, 1995 to December 31, 1996. Portfolio turnover from sales totaled
$758.8 million in 1996, representing approximately 9.3% of the average
portfolio size. The average life of the portfolio declined to approximately
2.5 years at year-end 1996. Adjustable-rate securities in the portfolio
reduced the duration (the average time until receipt of the present value of
the portfolio's cash flow) to 2.1 years.
The Company classifies 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, 1996 reflected $2.6 billion in
unrealized gains, including a $2.5 billion unrealized gain on the Company's
investment in common stock of The Coca-Cola Company. The market value of this
common stock investment increased $748.1 million during 1996, which was not
reflected in net income of the Company
<TABLE>
TABLE 10 - INVESTMENT SECURITIES
<CAPTION> At December 31
Amortized Fair Unrealized Unrealized
(In millions) Cost Value Gains Losses
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. government
agencies and corporations:
1996 $3,277.8 $ 3,290.9 $ 24.3 $11.2
1995 3,286.7 3,308.4 32.5 10.8
1994 3,575.4 3,386.2 1.2 190.4
States and political subsidivions:
1996 $ 749.1 $ 773.2 $ 25.2 $ 1.1
1995 831.2 865.8 36.1 1.5
1994 958.1 972.1 29.1 15.1
Mortgage-backed securities:
1996 $3,750.5 $ 3,748.6 $ 27.0 $28.9
1995 3,508.4 3,516.2 26.4 18.6
1994 3,661.9 3,500.7 3.4 164.6
Other securities:<F1>
1996 $ 184.9 $ 2,738.5 $2,555.0 $ 1.4
1995 177.5 1,986.5 1,810.1 1.1
1994 206.5 1,459.7 1,255.2 2.0
Total investment securities
1996 $7,962.3 $10,551.2 $2,631.5 $42.6
1995 7,803.8 9,676.9 1,905.1 32.0
1994 8,401.9 9,318.7 1,288.9 372.1
<FN>
<F1> Includes the Company's investment in 48,266,496 shares of common stock of
The Coca-Cola Company.
</TABLE>
Deposits
Average interest-bearing deposits increased 8.6% in 1996 and comprised 79.0%
and 78.3% of average total deposits in 1996 and 1995. Savings deposits had
the largest increase at 48.5%, the result of an aggressive marketing effort
of a premium rate savings product in the early part of 1996. Consumer time
deposits decreased 7.5%.
<TABLE>
TABLE 11 - COMPOSITION OF AVERAGE DEPOSITS
<CAPTION>
Year Ended December 31 Percent of Total
(Dollars in millions) 1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing $ 7,203.9 $ 6,911.1 $ 7,034.1 21.0 % 21.7 % 22.8 %
NOW/Money market accounts 10,296.2 9,425.2 9,798.9 30.1 29.6 31.7
Savings 5,374.0 3,619.4 4,364.5 15.7 11.4 14.1
Consumer time 7,282.3 7,875.0 6,626.2 21.3 24.8 21.5
Other time 4,084.9 3,978.0 3,054.1 11.9 12.5 9.9
Total $34,241.3 $31,808.7 $30,877.8 100.0 % 100.0 % 100.0 %
</TABLE>
Funds Purchased
Average funds purchased increased $592.3 million or 14.0% in 1996. Also,
average net purchased funds (average funds purchased less average funds sold)
increased $415.7 million in 1996. Average net purchased funds were 9.7% of
earning assets for 1996 compared to 9.5% in 1995.
<TABLE>
TABLE 12 - FUNDS PURCHASED<F1>
<CAPTION> Maximum
Outstanding
At December 31 Daily Average at Any
(Dollars in millions) Balance Rate Balance Rate Month-end
<S> <C> <C> <C> <C> <C>
1996 $6,047.7 5.91 % $4,821.1 5.09 % $6,409.2
1995 5,483.8 5.08 4,228.8 5.65 5,483.8
1994 4,351.9 4.90 3,050.0 4.00 4,351.9
<FN>
<F1> 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.
</TABLE>
Capital Resources
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 common
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 ratio (Tier 1 capital to risk-weighted
assets) of 4%, total capital ratio (Tier 1 plus Tier 2 to risk-weighted
assets) of 8% and Tier 1 leverage ratio (Tier 1 to average quarterly assets)
of 3%. To be considered a "well capitalized" institution, the Tier 1 capital
ratio, the total risk-based ratio, and the Tier 1 leverage ratio must equal
or exceed 6%, 10% and 5%, respectively. Regulatory agencies preclude banks
from including unrecognized securities gains and losses in calculating Tier 1
capital; therefore, the appreciation of $2.5 billion in the Company's
48,266,496 shares of common stock of The Coca-Cola Company is not included in
risk-adjusted capital. At December 31, 1996 all SunTrust banks were
considered to be "well-capitalized."
In 1995, the Board of Directors authorized the Company to repurchase up
to 20,000,000 shares of SunTrust common stock. In 1996, the Company
repurchased 7,464,500 shares. At December 31, 1996, the Company may
repurchase an additional 9,329,518 shares under this authorization.
<TABLE>
TABLE 13 - CAPITAL RATIOS
<CAPTION>
At December 31
(Dollars in millions) 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital:
Realized shareholders' equity $ 3,278.2 $ 3,111.0 $ 2,883.3 $ 2,845.8 $ 2,769.7 $ 2,622.8
Intangible assets other than
servicing rights (244.1) (252.3) (222.2) (194.0) (174.6) (173.3)
Tier 1 capital 3,034.1 2,858.7 2,661.1 2,651.8 2,595.1 2,449.5
Tier 2 capital:
Allowable reserve for loan losses 510.8 462.2 420.9 378.1 349.8 327.9
Allowable long-term debt 877.1 246.8 281.4 120.4 200.0 336.3
Tier 2 capital 1,387.9 709.0 702.3 498.5 549.8 664.2
Total capital $ 4,422.0 $ 3,567.7 $ 3,363.4 $ 3,150.3 $ 3,144.9 $ 3,113.7
Risk-weighted assets $40,651.0 $36,742.0 $33,444.3 $29,871.4 $27,684.4 $26,005.7
Risk-based ratios:
Tier 1 capital 7.46 % 7.78 % 7.95 % 8.88 % 9.37 % 9.42 %
Total capital 10.87 9.71 10.05 10.55 11.35 11.97
Tier 1 leverage ratio 6.40 6.71 6.68 6.82 7.27 7.14
Total shareholders' equity to assets 9.30 9.19 8.09 8.86 7.33 7.35
</TABLE>
Liquidity
Liquidity is managed to ensure there is sufficient cash flow to satisfy
demand for credit, deposit withdrawals and attractive investment
opportunities. A large stable, core deposit base, strong capital position and
excellent credit ratings are the solid foundation for the Company's liquidity
position. Liquidity is enhanced by an investment portfolio structured to
provide liquidity as needed, with a short duration of 2.1 years. 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.
<TABLE>
TABLE 14 - LOAN MATURITY
<CAPTION> At December 31, 1996
Remaining Maturities of Selected Loans
Within 1-5 After
(In millions) Total 1 Year Years 5 Years
<S> <C> <C> <C> <C>
Loan Maturity
Commercial $11,966.1 $6,161.5 $3,760.6 $2,044.0
Real estate - construction 1,384.8 1,002.4 382.4 -
Total $13,350.9 $7,163.9 $4,143.0 $2,044.0
Interest Rate Sensitivity
Selected loans with:
Predetermined interest rates $1,316.5 $ 372.6
Floating or adjustable interest rates 2,826.5 1,671.4
Total $4,143.0 $2,044.0
</TABLE>
<TABLE>
TABLE 15 - MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
<CAPTION>
At December 31, 1996
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 $439.2 $2,832.0 $ 6.6 $ - $3,277.8 2.1
States and political subdivisions 149.8 421.5 165.4 12.4 749.1 3.1
Mortgage-backed securities <F1> 341.5 2,991.3 364.4 53.3 3,750.5 2.8
Total debt securities $930.5 $6,244.8 $536.4 $65.7 $7,777.4 2.5
Fair Value
U.S. Treasury and other U.S. government
agencies and corporations 439.8 2,844.2 6.9 - 3,290.9
States and political subdivisions 151.4 434.4 174.7 12.7 773.2
Mortgage-backed securities <F1> 340.3 2,988.6 366.2 53.5 3,748.6
Total debt securities $931.5 $6,267.2 $547.8 $66.2 $7,812.7
Weighted average yield (FTE):
U.S. Treasury and other U.S. government
agencies and corporations 5.97 % 6.00 % 7.50 % - % 6.00 %
States and political subdivisions 8.69 8.44 8.68 8.07 8.54
Mortgage-backed securities <F1> 4.99 6.47 6.12 6.44 6.30
Total debt securities 6.04 6.39 6.92 6.74 6.39
<FN>
<F1> Distribution of maturities is based on expected cash flows which may be
different from the contractual terms.
</TABLE>
<TABLE>
<CAPTION>
TABLE 16 - MATURITY OF CONSUMER TIME AND OTHER
TIME DEPOSITS IN AMOUNTS OF $100,000 OR MORE
At December 31, 1996
Other
Consumer Time
Time Deposits Total
(In millions)
<S> <C> <C> <C>
Months to maturity:
3 or less $1,138.3 $2,387.0 $3,525.3
Over 3 through 6 552.0 0.1 552.1
Over 6 through 12 498.5 0.1 498.6
Over 12 392.7 0.0 392.7
Total $2,581.5 $2,387.2 $4,968.7
</TABLE>
Interest Rate Sensitivity
The SunTrust asset/liability management process is designed to manage 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. Simulation modeling is 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 reflect the complexities of the interest sensitivity of the
Company as reflected in its simulation modeling process. SunTrust utilizes
interest rate swap transactions to a very limited extent in the overall
management of its interest sensitivity position. Table 18 contains summary
information about these swap transactions.
<TABLE>
TABLE 17 - INTEREST RATE SENSITIVITY ANALYSIS
<CAPTION> At December 31, 1996
Repricing Within<F1>
0-30 31-90 91-180 181-365 Over 1
(Dollars in millions) Days Days Days Days Year Total
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Loans <F2> $12,343.4 $4,402.0 $2,072.4 $3,745.5 $12,400.8 $34,964.1
Debt securities <F3> 263.0 358.2 472.4 660.3 6,152.0 7,905.9
Interest-bearing deposits 11.9 - 0.2 - 1.4 13.5
Funds sold 1,606.6 - - - - 1,606.6
Total earning assets 14,224.9 4,760.2 2,545.0 4,405.8 18,554.2 44,490.1
INTEREST-BEARING LIABILITIES
Interest-bearing deposits <F4> 19,596.1 1,772.9 2,064.8 2,488.4 2,067.9 27,990.1
Funds purchased 6,522.5 - - - - 6,522.5
Other short-term borrowings 831.2 20.2 10.0 5.2 1.4 868.0
Long-term debt 12.1 4.2 21.3 20.3 1,507.4 1,565.3
Total interest-bearing liabilities 26,961.9 1,797.3 2,096.1 2,513.9 3,576.7 36,945.9
Off-balance sheet financial instruments 480.3 136.1 (56.0) 1,063.7 (1,624.1) -
Interest-sensitivity gap ($12,256.7) $3,099.0 $392.9 $2,955.6 $13,353.4 $ 7,544.2
Cumulative gap (12,256.7) (9,157.7) (8,764.8) (5,809.2) 7,544.2
Ratio of cumulative gap to total earning assets 27.5 % 20.6 % 19.7 % 13.1 % 17.0 %
Ratio of interest-sensitive assets to
interest-sensitive liabilities 52.8 264.9 121.4 175.3 518.8
Cumulative gap at December 31, 1995 ($8,215.5) ($7,687.5) ($7,233.8) ($4,597.4) $ 6,972.4
Cumulative gap at December 31, 1994 (8,997.6) (8,802.1) (8,277.8) (5,407.9) 6,969.4
<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 overdrafts and nonaccrual loans.
<F3> Includes trading account, but does not include net unrealized gains of
$2,588.9.
<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>
Derivative Instruments
Derivative financial instruments, such as interest rate swaps, options,
futures and forward contracts, are components 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 the
Company's exposure to interest rate risk.
The Company monitors its sensitivity to changes in interest rates and
uses interest rate swap contracts to limit the volatility of net interest
income. Interest rate swaps increased interest expense by $1.0 million in
1996 and decreased interest expense by $10.1 million and $30.6 million for
1995 and 1994. Included in those amounts are $2.3 million, $0.5 million and
$0.4 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, 1996.
<TABLE>
TABLE 18 - INTEREST RATE SWAPS
<CAPTION> At December 31, 1996
Average Average Average
(Dollars in millions) Notional Fair Maturity Rate Rate
Value Value In Months Paid Received
<S> <C> <C> <C> <C> <C>
Gain position:
Receive fixed $ 600.5 $16.6 91.5 5.64 % 6.92 %
Pay fixed 147.0 3.1 93.6 5.90 5.60
Total gain position 747.5 19.7
Loss position:
Receive fixed 1,337.9 (10.1) 17.5 5.53 5.41
Pay fixed 169.3 (1.6) 70.0 6.56 5.66
Total loss position 1,507.2 (11.7)
Total $2,254.7 $ 8.0
</TABLE>
Earnings and Balance Sheet Analysis 1995 vs. 1994
Net income was $565.5 million in 1995 compared with $522.7 million in 1994.
This increase amounted to $42.8 million or 8.2%. Earnings per common share in
1995 were $2.47, a 9.8% increase over the preceding year.
Net interest income, at $1,726.0 million for 1995, was slightly higher
than the $1,675.6 million in 1994 primarily because of a 6.4% growth in
average assets. The Company's net interest margin declined from 4.64% in 1994
to 4.49% in 1995.
The provision for loan losses decreased $25.7 million from $137.8
million to $112.1 million while the reserve for loan losses as a percentage
of loans decreased from 2.27% to 2.23%. Net charge-offs were 0.22% of loans
in 1995 versus 0.23% in 1994. Nonperforming assets decreased $24.3 million
from $275.3 million at December 31, 1994 to $251.0 million at December 31,
1995.
Noninterest income increased $13.2 million from $699.9 million in 1994
to $713.1 million in 1995. Other charges and fees were up as a result of
increased investment banking activity. Service charges collected on
commercial deposit accounts were down for the second straight year due to
higher average interest rates, since these charges are reduced by an earnings
credit on collected balances based on market interest rates. Noninterest
expense was up $51.5 million or 3.7%.
Loans at December 31, 1995, were $31.3 billion or 9.6% greater than at
year-end 1994. At December 31, 1995, deposits were $33.2 billion, an increase
of $1.0 billion or 3.0% from 1994 year-end.
Fourth Quarter Results
Net income per common share for the fourth quarter of 1996 was $0.72, an
increase of 12.5% from $0.64 per share in the fourth quarter of 1995. Net
income increased from $144.9 million in the 1995 fourth quarter to $158.5
million in the 1996 fourth quarter.
The 1996 provision for loan losses of $34.7 million was $3.4 million
higher than the $31.3 million in 1995. Net loan charge-offs for the
current period were higher at $33.6 million versus $29.1 million in the
1995 fourth quarter.
Average earning assets were $43.8 billion in the 1996 fourth quarter,
11.1% higher than in 1995. This gain, offset somewhat by an 18 basis point
decline in the net interest margin, produced an increase of $28.3 million
in net interest income on a taxable-equivalent basis.
Noninterest income increased by $27.6 million in the 1996 fourth quarter
compared to the fourth quarter of 1995. Service charges on deposit
accounts were up $6.2 million or 11.5% over the 1995 fourth quarter, and
trust income was up $4.4 million or 6.7%.
Noninterest expense increased 4.9% from year-ago levels. Marketing and
customer development was up $10.9 million or 88.9% and personnel expense
was up $24.7 million or 12.1%. These increases are directly attributable
to the Company's growth initiatives.
<TABLE>
TABLE 19 - QUARTERLY FINANCIAL DATA
<CAPTION>
(Dollars in millions except 1996 1995
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 $ 846.5 $ 820.4 $ 798.6 $ 780.5 $ 782.4 $ 759.9 $ 758.4 $ 726.5
Interest expense 384.2 366.0 354.3 357.3 350.2 342.0 343.9 314.7
Net interest income 462.3 454.4 444.3 423.2 432.2 417.9 414.5 411.8
Provision for loan losses 34.7 30.0 26.2 25.0 31.3 29.1 26.2 25.5
Net interest income after
provision for loan losses 427.6 424.4 418.1 398.2 400.9 388.8 388.3 386.3
Noninterest income 207.0 197.2 200.1 213.7 179.4 182.6 174.2 176.9
Noninterest expense 399.1 389.6 393.4 401.0 380.6 363.1 349.7 358.1
Income before provision
for income taxes 235.5 232.0 224.8 210.9 199.7 208.3 212.8 205.1
Provision for income taxes 77.0 76.4 72.7 60.5 54.8 64.6 71.9 69.1
Net income $ 158.5 $ 155.6 $ 152.1 $ 150.4 $ 144.9 $ 143.7 $ 140.9 $ 136.0
Net interest income,
(taxable-equivalent) $ 472.2 $ 464.2 $ 454.2 $ 433.7 $ 443.9 $ 430.1 $ 427.1 $ 424.9
PER COMMON SHARE
Net income $ 0.72 $ 0.70 $ 0.68 $ 0.66 $ 0.64 $ 0.63 $ 0.61 $ 0.59
Dividends declared 0.23 0.20 0.20 0.20 0.20 0.18 0.18 0.18
Book value 22.13 21.43 20.73 19.60 18.91 17.99 17.58 16.24
Market Price:
High 52.50 41.50 38.00 38.38 35.44 33.88 29.94 27.69
Low 40.88 34.88 33.25 32.00 31.69 28.50 26.56 23.63
Close 49.25 41.00 37.00 35.00 34.25 33.06 29.13 26.75
SELECTED AVERAGE BALANCES
Total assets $50,061.1 $48,122.6 $47,019.5 $45,641.9 $44,616.4 $43,072.4 $42,762.2 $41,808.4
Earning assets 43,763.9 42,179.2 41,241.8 40,114.0 39,391.9 38,198.8 38,344.3 37,653.9
Loans 34,416.9 33,029.6 32,265.2 31,437.9 30,688.7 29,771.1 29,582.1 28,773.8
Total deposits 34,840.7 34,652.8 34,378.8 33,081.9 31,925.4 31,516.5 31,852.5 31,943.7
Realized shareholders' equity 3,334.0 3,281.7 3,232.0 3,206.8 3,081.8 3,092.9 3,043.8 2,989.1
Total shareholders' equity 4,841.3 4,713.7 4,522.2 4,405.3 4,163.4 4,090.3 3,797.4 3,561.2
Common equivalent shares
(thousands) 221,840 222,683 224,061 225,388 227,574 229,515 230,781 230,336
Ratios (Annualized)
ROA 1.32 % 1.35 % 1.36 % 1.38 % 1.34 % 1.38 % 1.36 % 1.35 %
ROE 18.91 18.86 18.93 18.87 18.65 18.43 18.56 18.46
Net interest margin 4.29 4.38 4.43 4.35 4.47 4.47 4.47 4.58
</TABLE>
<TABLE>
TABLE 20 - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE
AND AVERAGE YIELDS EARNED AND RATES PAID
<CAPTION>
Quarter Ended
December 31, 1996 December 31, 1995
(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 $33,669.4 $688.4 8.13 % $30,033.9 $638.9 8.44 %
Tax-exempt <F2> 747.5 14.5 7.75 654.8 14.8 9.02
Total loans 34,416.9 702.9 8.13 30,688.7 653.7 8.45
Investment securities:
Taxable 7,330.4 120.1 6.52 7,029.8 108.7 6.14
Tax-exempt <F2> 733.8 16.0 8.69 836.9 19.2 9.11
Total investment securities 8,064.2 136.1 6.71 7,866.7 127.9 6.45
Funds sold 1,177.5 15.9 5.36 735.9 11.0 5.88
Other short-term investments <F2> 105.3 1.5 5.57 100.6 1.5 5.61
Total earning assets 43,763.9 856.4 7.78 39,391.9 794.1 8.00
Reserve for loan losses (724.8) (695.8)
Cash and due from banks 2,320.1 2,221.3
Premises and equipment 759.4 722.9
Other assets 1,506.4 1,227.2
Unrealized gains on
investment securities 2,436.1 1,748.9
Total assets $50,061.1 $44,616.4
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts $10,369.1 $ 70.4 2.70 % $ 9,544.2 $ 64.1 2.66 %
Savings 5,437.8 48.9 3.57 3,469.9 22.1 2.54
Consumer time 7,062.1 91.3 5.15 8,007.2 109.4 5.42
Other time <F3> 4,487.4 60.7 5.39 3,824.6 54.0 5.61
Total interest-bearing deposits 27,356.4 271.3 3.95 24,845.9 249.6 3.99
Funds purchased 5,788.3 74.3 5.11 4,925.5 68.8 5.54
Other short-term borrowings 874.8 12.3 5.58 998.0 14.1 5.56
Long-term debt 1,568.4 26.3 6.67 1,010.1 17.7 6.97
Total interest-bearing liabilities 35,587.9 384.2 4.30 31,779.5 350.2 4.37
Noninterest-bearing deposits 7,484.3 7,079.5
Other liabilities 2,147.6 1,594.0
Shareholders' equity 3,334.0 3,081.8
Net unrealized gains on
investment securities 1,507.3 1,081.6
Total liabilities and shareholders' equity $50,061.1 $44,616.4
Interest rate spread 3.48 % 3.63 %
Net Interest Income $472.2 $443.9
Net Interest Margin 4.29 % 4.47 %
<FN>
<F1> Interest income includes loan fees of $24.7 and $21.9 in the quarters ended
December 31, 1996 and 1995. Nonaccrual loans are included in average balances
and income on such loans, if recognized, is recorded on a cash basis.
<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
aggregated $9.9 and $11.7 in the quarters ended December 31, 1996 and 1995.
<F3> Interest rate swap transactions used to help balance the Company's
interest-sensitivity position reduced interest expense by $0.1 and $1.2 in
the fourth quarter of 1996 and 1995, respectively. Without these swaps,
the rate on Other time deposits and the Net interest margin would have been
5.40% and 4.28% in 1996 and 5.73% and 4.46% in 1995.
</TABLE>
<TABLE>
TABLE 21 - QUARTERLY NONINTEREST INCOME AND EXPENSE
<CAPTION>
1996 1995
(In millions) 4 3 2 1 4 3 2 1
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest Income
Trust income $ 69.0 $ 68.1 $ 70.5 $ 70.7 $ 64.6 $ 64.7 $ 65.3 $ 65.1
Service charges on deposit accounts 60.7 57.9 58.1 55.7 54.5 54.0 50.5 53.8
Corporate and institutional
investment income 4.8 3.4 3.3 2.8 4.9 2.4 1.1 1.0
Retail investment income 5.1 6.3 6.2 4.6 3.6 3.3 4.2 4.0
Credit card fees 17.0 15.7 16.6 17.0 15.6 15.1 15.7 16.2
Mortgage fees 8.2 7.7 9.0 8.3 6.8 6.5 5.3 4.5
Other charges and fees 26.5 24.8 26.4 23.9 21.6 21.1 20.7 20.8
Securities gains (losses) (0.4) (0.5) (2.2) 17.3 (7.2) 1.0 (0.1) (0.3)
Trading account profits and commissions 4.1 3.5 3.1 2.6 3.3 2.5 2.4 2.4
Other income 12.0 10.3 9.1 10.8 11.7 12.0 9.1 9.4
Total noninterest income $207.0 $197.2 $200.1 $213.7 $179.4 $182.6 $174.2 $176.9
Noninterest Expense
Salaries $165.6 $161.7 $156.0 $151.7 $149.7 $144.8 $143.1 $140.5
Other compensation 34.2 32.9 32.3 29.1 27.0 25.3 21.1 21.9
Employee benefits 28.8 26.0 26.4 29.4 27.2 25.1 24.8 28.5
Total personnel expense 228.6 220.6 214.7 210.2 203.9 195.2 189.0 190.9
Net occupancy expense 35.2 34.9 34.4 33.7 33.2 33.6 31.8 31.5
Equipment expense 30.4 29.5 28.0 27.5 26.4 25.7 26.5 26.5
FDIC premiums 1.4 14.1 1.4 1.2 3.9 (0.6) 16.6 16.5
Marketing and customer development 23.3 19.2 18.7 15.2 12.4 10.3 13.3 14.0
Postage and delivery 10.3 10.5 9.7 10.0 9.3 8.8 8.8 9.5
Operating supplies 9.4 8.9 9.9 9.7 8.5 8.1 7.7 7.9
Other real estate expense (1.1) 0.4 (0.5) 0.8 (3.9) (1.1) (2.3) (1.7)
Communications 8.6 8.3 7.8 7.7 6.6 7.3 7.1 6.7
Consulting and legal 8.5 5.8 6.1 5.1 5.0 5.5 5.5 4.8
Amortization of intangible assets 7.3 6.8 6.5 6.1 6.0 5.4 5.0 5.0
Other expense 37.2 30.6 56.7 73.8 69.3 64.9 40.7 46.5
Total noninterest expense $399.1 $389.6 $393.4 $401.0 $380.6 $363.1 $349.7 $358.1
</TABLE>
<TABLE>
TABLE 22 - SUMMARY OF LOAN LOSS EXPERIENCE, NONPERFORMING ASSETS AND
ACCRUING LOANS PAST DUE 90 DAYS OR MORE
<CAPTION>
Quarters
1996 1995
(Dollars in millions) 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 $724.7 $722.6 $712.4 $698.9 $692.8 $676.9 $661.0 $647.0
Reserve of purchased bank - - - 1.2 3.9 0.7 1.7 -
Provision for loan losses 34.7 30.0 26.2 25.0 31.3 29.1 26.2 25.5
Charge-offs (45.9) (40.9) (28.6) (26.6) (40.9) (27.3) (25.7) (26.9)
Recoveries 12.3 13.0 12.6 13.9 11.8 13.4 13.7 15.4
Balance - End of quarter $725.8 $724.7 $722.6 $712.4 $698.9 $692.8 $676.9 $661.0
RATIOS
Reserve to loans outstanding - Quarter-end 2.05 % 2.14 % 2.23 % 2.24 % 2.23 % 2.31 % 2.25 % 2.26 %
Net loan charge-offs (annualized)
to average loans 0.39 0.34 0.20 0.16 0.38 0.18 0.16 0.16
Provison to average loans (annualized) 0.40 0.36 0.33 0.32 0.40 0.39 0.36 0.36
NONPERFORMING ASSETS
Nonaccrual loans $202.3 $184.9 $192.0 $187.7 $189.3 $174.3 $179.4 $181.9
Restructured loans 9.9 2.7 2.8 2.9 2.9 3.0 3.2 4.3
Total nonperforming loans 212.2 187.6 194.8 190.6 192.2 177.3 182.6 186.2
Other real estate owned 43.6 51.9 53.5 58.8 58.8 66.2 70.1 83.8
Total nonperforming assets $255.8 $239.5 $248.3 $249.4 $251.0 $243.5 $252.7 $270.0
RATIOS
Nonperforming loans to total loans 0.60 % 0.55 % 0.60 % 0.60 % 0.61 % 0.59 % 0.61 % 0.64 %
Nonperforming assets to total loans
plus other real estate owned 0.72 0.71 0.77 0.78 0.80 0.81 0.84 0.92
Reserve to nonperforming loans 342.0 386.2 371.0 373.8 363.6 390.8 370.6 355.0
Accruing Loans Past Due 90 Days or More $ 34.2 $ 28.0 $ 29.9 $ 26.0 $ 24.3 $ 26.0 $ 19.0 $ 19.5
</TABLE>
Banking Income
<TABLE>
TABLE 23 - SELECTED FINANCIAL DATA OF BANKING SUBSIDIARIES
<CAPTION>
SunTrust Banks of SunTrust Banks of SunTrust Banks of
Florida, Inc. Georgia, Inc. Tennessee, Inc.
(Dollars in Millions) 1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net interest income (FTE) $949.1 $934.6 $603.9 $575.1 $277.0 $278.3
Provision for loan losses 30.3 69.7 26.7 30.0 8.9 12.1
Trust income 142.0 137.9 100.5 89.3 35.5 32.5
Other noninterest income 269.5 228.0 175.3 147.1 77.1 64.8
Personnel expense 324.0 296.3 204.2 181.7 103.8 95.0
Other noninterest expense 449.3 451.2 255.6 248.8 114.4 124.5
Net income $341.2 $300.5 $353.8 $226.3 $100.1 $ 88.5
Selected Average Balances
Total assets 23,058 21,309 17,673 15,005 6,877 6,552
Earning assets 21,583 19,987 14,065 12,478 6,599 6,250
Loans 16,363 15,364 11,218 9,715 4,973 4,573
Total deposits 18,275 17,034 10,485 9,693 5,528 5,132
Realized shareholders' equity 1,978 1,863 1,351 1,211 565 543
At December 31
Total assets 24,783 22,567 20,068 16,854 7,489 6,776
Earning assets 22,885 20,818 15,698 13,528 7,094 6,464
Loans 17,267 16,024 12,287 10,316 5,370 4,824
Reserve for loan losses 369 381 196 199 114 119
Total deposits 19,316 17,794 11,703 10,185 5,837 5,240
Realized shareholders' equity 2,048 1,931 1,404 1,302 585 553
Total shareholders' equity 2,058 1,952 2,982 2,419 590 561
Credit Quality
Net loan charge-offs<F1> 23.5 34.3 23.0 23.4 9.7 8.5
Nonperforming loans<F2> 117.4 125.1 73.6 56.0 20.7 10.9
Other real estate owned<F2> 24.4 32.7 5.3 8.0 13.9 18.1
Ratios and Other Data
ROA 1.48 % 1.41 % 1.64 % 1.67 % 1.46 % 1.35 %
ROE 17.25 16.13 18.79 18.68 17.71 16.30
Net interest margin 4.40 4.68 4.29 4.61 4.20 4.45
Efficiency ratio 56.8 57.5 52.3 53.1 56.0 58.4
Total shareholders' equity/assets 8.30 8.65 14.86 14.35 7.88 8.28
Net loan charge-offs to average loans 0.15 0.22 0.21 0.24 0.20 0.19
Nonperforming loans to total loans 0.70 0.78 0.61 0.54 0.39 0.22
Nonperforming assets to total loans plus
other real estate owned 0.84 0.98 0.65 0.62 0.66 0.60
Reserve to loans 2.19 2.37 1.62 1.92 2.17 2.46
Reserve to nonperforming loans 314.5 304.3 266.1 354.5 550.5 1,094.4
Full-service banking offices 372 366 201 175 116 111
ATMs 496 455 292 209 129 114
<FN>
<F1> In 1996, $33.9 in charge-offs on credit cards are recorded in a separate
credit card bank and are not included in the principal banking subsidiaries.
<F2> At December 31.
</TABLE>
<TABLE>
<CAPTION>
TABLE 24 - FINANCIAL HIGHLIGHTS OF PRINCIPAL BANKING SUBSIDIARIES Total Assets at
Net Income ROA December 31
(Dollars in millions) 1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C>
SunTrust Banks of Florida, Inc.
SunTrust Bank, Central Florida, N.A. $ 86.6 $ 79.3 1.53 % 1.51 % $ 6,460 $ 5,670
SunTrust Bank, East Central Florida 16.9 14.1 1.58 1.36 1,056 1,052
SunTrust Bank, Gulf Coast 17.9 15.7 0.99 0.91 1,822 1,728
SunTrust Bank, Miami, N.A. <F1> 47.4 33.6 1.83 1.37 2,849 2,643
SunTrust Bank, Mid-Florida, N.A. 11.9 14.5 1.21 1.56 984 930
SunTrust Bank, Nature Coast 16.2 14.5 1.31 1.27 1,292 1,182
SunTrust Bank, North Central Florida 12.2 10.5 1.54 1.41 822 768
SunTrust Bank, North Florida, N.A. 9.5 7.3 1.08 1.07 972 703
SunTrust Bank, South Florida, N.A. 53.0 45.4 1.70 1.57 3,353 3,093
SunTrust Bank, Southwest Florida 16.6 14.5 1.46 1.48 1,255 1,035
SunTrust Bank, Tallahassee, N.A. 5.0 4.2 1.06 0.86 445 499
SunTrust Bank, Tampa Bay 31.8 29.7 1.57 1.55 2,106 2,033
SunTrust Bank, Treasure Coast, N.A. 7.6 9.6 1.02 1.48 760 705
SunTrust Bank, West Florida 7.9 7.3 1.51 1.52 565 495
SunTrust Banks of Georgia, Inc.
SunTrust Bank, Atlanta $179.1 $162.5 1.52 % 1.60 % $14,978 $12,496
SunTrust Bank, Augusta, N.A. 7.5 6.5 1.58 1.50 483 459
SunTrust Bank, Middle Georgia, N.A. 9.8 7.8 1.65 1.44 631 557
SunTrust Bank, Northeast Georgia, N.A. 10.5 8.8 1.72 1.42 612 595
SunTrust Bank, Northwest Georgia, N.A. 5.7 4.6 1.68 1.67 376 283
SunTrust Bank, Savannah, N.A. 9.6 8.4 1.89 1.84 519 524
SunTrust Bank, South Georgia, N.A. 9.5 8.0 1.59 1.46 622 612
SunTrust Bank, Southeast Georgia, N.A. 6.3 5.4 1.51 1.36 452 398
SunTrust Bank, West Georgia, N.A. 6.6 5.4 1.49 1.45 476 404
SunTrust Banks of Tennessee, Inc.
SunTrust Bank, Chattanooga, N.A. $ 21.5 $ 19.4 1.57 % 1.41 % $ 1,399 $ 1,363
SunTrust Bank, East Tennessee, N.A. 16.1 14.2 1.39 1.34 1,218 1,103
SunTrust Bank, Nashville, N.A. 49.5 43.0 1.46 1.36 3,899 3,386
SunTrust Bank, Northeast Tennessee 4.3 4.4 1.19 1.31 382 361
SunTrust Bank, South Central Tennessee, N.A. 4.9 4.4 1.49 1.35 332 334
SunTrust Bank, Alabama, N.A. 3.7 3.0 1.12 0.88 348 341
<FN>
<F1> See Table 1 note 2 on page 13.
</TABLE>
Supervision and Regulation
As a bank holding company, the Company is subject to the regulation and
supervision of the Board of Governors of the Federal Reserve System (the
"Federal Reserve"). The Company's subsidiary banks (the "Subsidiary Banks")
are subject to supervision and regulation by applicable state and federal
banking agencies, including the Federal Reserve, 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 as it attempts to control the money supply and credit
availability in order to influence the economy.
Previously, federal law generally prohibited the Federal Reserve from
approving an application from a bank holding company to acquire shares of a
bank located outside the state in which the operations of the holding
company's banking subsidiaries were principally conducted, unless such an
acquisition was specifically authorized by statute of the state in which the
bank whose shares were to be acquired was located. However, the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 removed this
restriction on interstate bank acquisitions effective September 1995, and
now, bank holding companies from any state may acquire banks located in any
other state, subject to certain conditions, including nationwide and state
concentration limits. Banks also will be able to have branches across state
lines through mergers beginning June 1, 1997 (unless state law would permit
such interstate mergers at an earlier date or would prohibit such interstate
mergers entirely), providing certain conditions are met. In addition, the
legislation permits interstate branching through de novo branches if
expressly permitted by applicable state law and certain other conditions are
met.
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 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 and 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,"
"undercapitalized", "significantly undercapitalized" or "critically
undercapitalized "as such terms are defined under regulations issued by each
of the federal banking agencies.
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.
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. is a broker-dealer registered with the
Securities and Exchange Commission and is a member of the National
Association of Securities Dealers, Inc. It engages in investment banking
activities, including 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. During 1996
SunTrust bankers focused their community reinvestment efforts on residential,
small business and small farm lending. A senior executive has been
designated in each bank to oversee these efforts and to ensure that the
appropriate resources are brought to bear on the particular needs of the
local market. Local bankers and line-of-business managers are actively
seeking out new lending opportunities in targeted areas.
Our performance in 1996 reflects our strong commitment to our
communities. In 1996 SunTrust banks approved 4,451 home mortgage loans
totaling $264 million to residents of low-and moderate-income neighborhoods,
and 9,453 loans for $413 million to low-and moderate-income borrowers. The
Company also made 29,229 loans for $2.7 billion which qualify as small
business or small farm loans under the new federal reporting requirements.
SunTrust continues to seek ways to serve these markets profitably and
prudently, and to ensure that all qualified applicants receive the loans they
need.
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 are located in Atlanta, Georgia. As of December
31, 1996, bank subsidiaries of the Company owned 474 of their 689 full-
service banking offices, and leased the remaining banking offices. See Note 6
of the Notes to Consolidated Financial Statements.
Consolidated Financial Statements
Contents
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flow
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
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,
1996, 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, 1996, 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
SunTrust Banks of Florida, Inc. - STI of Florida
SunTrust Banks of Georgia, Inc. - STI of Georgia
SunTrust Banks of Tennessee, Inc. - STI of Tennessee
SunTrust Banks, Inc. Parent Company - Parent Company
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME<F2>
<CAPTION>
Year Ended December 31
(Dollars in thousands except per share data) 1996 1995 1994
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $2,678,566 $2,501,536 $2,017,969
Interest and dividends on investment securities:
Taxable interest 442,497 403,133 412,728
Tax-exempt interest 46,092 55,611 66,984
Dividends<F1> 33,302 28,292 25,137
Interest on funds sold 40,881 34,857 17,098
Interest on deposits in other banks 1,011 1,053 9,805
Other interest 3,693 2,722 2,656
Total interest income 3,246,042 3,027,204 2,552,377
INTEREST EXPENSE
Interest on deposits 1,083,035 988,725 704,804
Interest on funds purchased 245,502 239,080 122,054
Interest on other short-term borrowings 48,264 54,843 42,519
Interest on long-term debt 85,031 68,114 63,119
Total interest expense 1,461,832 1,350,762 932,496
NET INTEREST INCOME 1,784,210 1,676,442 1,619,881
Provision for loan losses - Note 5 115,916 112,108 137,841
Net interest income after provision for loan losses 1,668,294 1,564,334 1,482,040
NONINTEREST INCOME
Trust income 278,294 259,742 250,296
Service charges on deposit accounts 232,426 212,582 218,420
Other charges and fees 171,289 131,826 121,135
Credit card fees 66,309 62,572 57,154
Securities gains(losses) - Note 3 14,168 (6,649) (2,692)
Other noninterest income 55,503 52,997 55,614
Total noninterest income 817,989 713,070 699,927
NONINTEREST EXPENSE
Salaries and other compensation - Note 11 763,461 673,417 646,529
Employee benefits - Note 11 110,588 105,573 100,660
Net occupancy expense 138,186 130,124 126,855
Equipment expense 115,423 105,122 103,342
Marketing and customer development 76,409 49,966 57,210
Postage and delivery 40,515 36,392 34,129
Operating supplies 37,938 32,157 29,421
Other noninterest expense 300,563 318,728 301,856
Total noninterest expense 1,583,083 1,451,479 1,400,002
Income before provision for income taxes 903,200 825,925 781,965
Provision for income taxes - Note 10 286,585 260,449 259,221
NET INCOME $ 616,615 $ 565,476 $ 522,744
Net income per average common share $ 2.76 $ 2.47 $ 2.25
Dividends paid per common share 0.83 0.74 0.66
Average common equivalent shares 223,486,311 229,543,890 232,077,767
<FN>
<F1> Includes dividends on 48,266,496 shares
of common stock of The Coca-Cola Company $ 24,133 $ 21,237 $ 18,824
<F2> See notes to consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS<F4>
<CAPTION>
At December 31
(Dollars in thousands) <F1> 1996 1995
<S> <C> <C>
ASSETS
Cash and due from banks $ 3,037,309 $ 2,641,365
Interest-bearing deposits in other banks 13,461 28,787
Trading account 80,377 96,613
Investment securities<F1> - Note 3 10,551,166 9,676,934
Funds sold 1,721,845 1,299,407
Loans - Notes 4,12 and 13 35,404,171 31,301,389
Reserve for loan losses - Note 5 (725,849) (698,864)
Net loans 34,678,322 30,602,525
Premises and equipment - Note 6 768,266 729,731
Intangible assets 277,736 271,926
Customers' acceptance liability 507,554 234,809
Other assets - Note 11 832,213 889,375
Total assets $52,468,249 $46,471,472
LIABILITIES
Noninterest-bearing deposits $ 8,900,260 $ 7,821,377
Interest-bearing deposits 27,990,129 25,361,817
Total deposits 36,890,389 33,183,194
Funds purchased 6,047,692 5,483,751
Other short-term borrowings - Note 7 867,961 894,470
Long-term debt - Note 8 1,565,341 1,002,397
Acceptances outstanding 507,554 234,809
Other liabilities - Notes 10 and 11 1,709,332 1,403,270
Total liabilities 47,588,269 42,201,891
Commitments and contingencies - Notes 6, 8, 11, 12 and 15
SHAREHOLDERS' EQUITY - Notes 9 and 11
Preferred stock, no par value; 50,000,000 shares
authorized; none issued - -
Common stock, $1.00 par value; 350,000,000 shares authorized<F2> 225,608 243,644
Additional paid in capital 310,612 321,541
Retained earnings 2,972,900 3,417,801
Treasury stock and other<F3> (230,918) (871,953)
Realized shareholders' equity 3,278,202 3,111,033
Unrealized gains on investment securities,
net of taxes - Note 3 1,601,778 1,158,548
Total shareholders' equity 4,879,980 4,269,581
Total liabilities and shareholders' equity $52,468,249 $46,471,472
<F1> Includes unrealized gains on investment securities $2,588,907 $1,873,141
<F2> Common shares outstanding 220,469,001 225,725,779
<F3> Treasury shares of common stock 5,139,056 17,918,505
<F4> See notes to consolidated financial statements
<FN>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY<F2>
<CAPTION>
Unrealized
Additional Treasury Gains on
Common Paid in Retained Stock and Securities,
(In thousands) Stock Capital Earnings Other <F1> Net of Taxes Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $130,461 $444,941 $2,655,357 ($384,951) $ 763,775 $3,609,583
Stock dividend 113,183 (113,183) - - - -
Balance, January 1, 1994, adjusted 243,644 331,758 2,655,357 (384,951) 763,775 3,609,583
Net income - - 522,744 - - 522,744
Cash dividends paid on common stock,
$0.66 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
Forfeitures of restricted stock - (6) - (1,023) - (1,029)
Compensation element from forfeitures 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 of taxes - - - - (193,700) (193,700)
BALANCE, DECEMBER 31, 1994 243,644 325,126 3,020,985 (706,499) 570,075 3,453,331
Net income - - 565,476 - - 565,476
Cash dividends paid on common stock,
$0.74 per share - - (168,660) - - (168,660)
Proceeds from exercise of stock options - (8,332) - 13,146 - 4,814
Acquisition of treasury stock - - - (204,824) - (204,824)
Issuance of treasury stock for acquisitions - - - 13,695 - 13,695
Issuance of treasury stock for 401(k) - 1,385 - 9,759 - 11,144
Issuance (net of forfeitures) of treasury
stock as restricted stock - 3,362 - 13,518 - 16,880
Compensation element from issuance of
restricted stock - - - (16,880) - (16,880)
Amortization of compensation element
of restricted stock - - - 6,132 - 6,132
Change in unrealized gains(losses) on securities,
net of taxes - - - - 588,473 588,473
BALANCE, DECEMBER 31, 1995 243,644 321,541 3,417,801 (871,953) 1,158,548 4,269,581
Net income - - 616,615 - - 616,615
Cash dividends paid on common stock,
$0.825 per share - - (183,892) - - (183,892)
Proceeds from exercise of stock options - (13,733) - 19,198 - 5,465
Acquisition of treasury stock - - - (297,319) - (297,319)
Retirement of treasury stock (18,036) - (877,624) 895,660 - -
Issuance of treasury stock for acquisitions - - - 5,636 - 5,636
Issuance of treasury stock for 401(k) - 1,831 - 7,848 - 9,679
Issuance (net of forfeitures) of treasury
stock as restricted stock - 973 - 18,523 - 19,496
Compensation element from issuance of
restricted stock - - - (19,496) - (19,496)
Amortization of compensation element
of restricted stock - - - 10,985 - 10,985
Change in unrealized gains(losses) on securities,
net of taxes - - - - 443,230 443,230
BALANCE, DECEMBER 31, 1996 $225,608 $310,612 $2,972,900 ($230,918) $1,601,778 $4,879,980
<FN>
<F1> Balance at December 31, 1996 includes $181,454 for treasury stock and
$49,464 for compensation element of restricted stock.
<F2> See notes to consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOW<F1>
<CAPTION>
Year Ended Ended December 31
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 616,615 $ 565,476 $ 522,744
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 130,555 133,771 133,018
Provision for loan losses 115,916 112,108 137,841
Provision for losses on other real estate 3,524 3,870 14,138
Deferred income tax benefit (5,068) (19,918) (4,716)
Amortization of compensation element of
restricted stock 10,985 6,132 5,062
Securities (gains) losses, net (14,168) 6,649 2,692
(Gains) losses on sale of loans, equipment, other
real estate and repossessed assets, net (14,738) (13,385) (21,556)
Recognition of unearned loan income (217,475) (127,440) (195,978)
Origination of loans for sale (2,897,590) (822,054) (509,702)
Proceeds from sale of loans 2,646,706 667,216 600,909
Change in period-end balances of:
Trading account 16,236 1,497 14,412
Interest receivable (4,332) (14,359) (38,163)
Prepaid expenses (35,582) (11,545) (51,129)
Other assets 82,252 (87,556) (842)
Taxes payable (7,898) 5,605 (8,123)
Interest payable (11,847) 43,802 31,999
Other accrued expenses 61,918 81,086 (18,713)
Net cash provided by operating activities 476,009 530,955 613,893
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from maturities of investment securities 1,945,278 1,482,138 2,400,350
Proceeds from sales of investment securities 758,751 1,206,904 1,422,078
Purchases of investment securities (2,837,598) (1,977,136) (2,826,867)
Net increase in loans (3,635,956) (2,334,133) (2,900,890)
Capital expenditures (138,061) (133,292) (105,420)
Proceeds from sale of equipment, other real estate
and repossessed assets 7,675 103,248 131,538
Net funds paid in acquisitions (987) (57,939) (33,411)
Other (22,646) (9,480) 23,215
Net cash used by investing activities (3,923,544) (1,719,690) (1,889,407)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase in deposits 3,628,816 734,135 1,401,591
Net increase in funds purchased and other
short-term borrowings 534,525 1,129,112 239,826
Proceeds from issuance of long-term debt 671,319 160,936 580,572
Repayment of long-term debt (108,323) (88,986) (308,022)
Proceeds from the exercise of stock options 5,465 4,814 4,023
Payments to acquire treasury stock (297,319) (204,824) (348,540)
Dividends paid (183,892) (168,660) (157,116)
Net cash provided by financing activities 4,250,591 1,566,527 1,412,334
Net increase in cash and cash equivalents 803,056 377,792 136,820
Cash and cash equivalents at beginning of year 3,969,559 3,591,767 3,454,947
Cash and cash equivalents at end of year $4,772,615 $3,969,559 $3,591,767
SUPPLEMENTAL DISCLOSURE
Interest paid $1,473,679 $1,306,960 $ 900,497
Income taxes paid 294,618 261,997 275,465
<FN>
<F1> See notes to consolidated financial statements
</TABLE>
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.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could vary from these estimates;
however, in the opinion of management, such variances would not be material.
Purchase Accounting: Following the purchase method of accounting, assets and
liabilities of purchased banks are stated at estimated fair values at the
date of acquisition.
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. Trading account securities are carried at market
value with the gains and losses, determined using the specific identification
method, recognized currently in the statement of income.
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 that result in loans are deferred 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.
Reserve for Loan Losses: The Company's reserve is that amount considered
adequate to absorb possible losses in the portfolio based on management's
evaluations of the size and current risk characteristics of the loan
portfolio. Such evaluations consider the balance of impaired loans (which are
defined as all nonperforming loans except residential mortgages and groups of
small homogeneous loans), prior loan loss experience as well as the impact of
current economic conditions. Specific provision for loan losses is made for
impaired loans based on a comparison of the recorded carrying value in the
loan to either the present value of the loan's expected cash flow, the loan's
estimated market price or the estimated fair value of the underlying
collateral. Specific and general provisions for loan losses are also made
based on other considerations.
Long-lived Assets: 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 consist primarily of goodwill and mortgage servicing
rights. Goodwill associated with purchased banks is being amortized on the
straight-line method over various periods ranging from fifteen to forty
years. Mortgage servicing rights, including those purchased as well as
originated, are amortized over the estimated period of the related net
servicing revenues.
Long-lived assets are evaluated regularly for other-than-temporary
impairment. If circumstances suggest that their value may be impaired and the
write-down would be material, an assessment of recoverability is performed
prior to any write-down of the asset. Impairment on intangibles is evaluated
at each balance sheet date or whenever events or changes in circumstances
indicate that the carrying amount should be assessed. Impairment for mortgage
servicing rights is determined based on the fair value of the rights
stratified on the basis of interest rate and type of related loan.
Impairment, if any, is recognized through a valuation allowance with a
corresponding charge recorded in the income statement.
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 cash and due from banks, interest-bearing deposits in other banks and
funds sold (only those items with an original maturity of three months or
less.)
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
During the three year period ended December 31, 1996, the Company has
consummated the following acquisitions:
<TABLE>
<CAPTION>
(Dollars in millions)
Accounting Assets
Date Entity Method Consideration Acquired
<S> <C> <C> <C> <C>
2/96 Ponte Vedra Banking Corporation Purchase $7.7 in cash and 170,148 $ 88
(Ponte Vedra, Florida) shares of Company stock
10/95 Stephens Diversified Leasing, Inc. Purchase $35.0 in cash $129
(Little Rock, Arkansas)
8/95 Key Biscayne, Bankcorp, Inc. Purchase $29.6 in cash $152
(Key Biscayne, Florida)
5/95 Peoples State Bank Purchase $3.0 in cash and 490,198 $127
(New Port Richey, Florida) shares of Company stock
2/94 Regional Investment Corporation, Purchase $65.1 in cash $437
parent of Andrew Jackson Savings
Bank (Tallahassee, Florida)
</TABLE>
Note 3 - Investment Securities
Investment securities were as follows at December 31:
<TABLE>
<CAPTION>
1996
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 $3,277,833 $3,290,850 $24,306 $11,289
States and political subdivisions 749,077 773,197 25,183 1,063
Mortgage-backed securities 3,750,505 3,748,583 27,043 28,965
Common stock of
The Coca-Cola Company 110 2,540,024 2,539,914 0
Other securities 184,734 198,512 15,108 1,330
Total investment securities $7,962,259 $10,551,166 $2,631,554 $42,647
</TABLE>
<TABLE>
<CAPTION>
1995
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 $3,286,640 $3,308,434 $ 32,609 $10,815
States and political subdivisions 831,218 865,832 36,070 1,456
Mortgage-backed securities 3,508,409 3,516,150 26,368 18,627
Common stock of
The Coca-Cola Company 110 1,791,894 1,791,784 0
Other securities 177,416 194,624 18,314 1,106
Total investment securities $7,803,793 $9,676,934 $1,905,145 $32,004
</TABLE>
The amortized cost and fair value of investments in debt securities at
December 31, 1996, 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.
<TABLE>
<CAPTION>
Amortized Fair
(In thousands) Cost Value
<S> <C> <C>
Due in one year or less $ 589,081 $ 591,237
Due in one year through five years 3,253,452 3,278,521
Due after five years through ten years 172,002 181,589
After ten years 12,375 12,700
Mortgage-backed securities 3,750,505 3,748,583
Total $7,777,415 $7,812,630
</TABLE>
Proceeds from the sale of investments in debt securities were $736.5
million, $1,206.9 million and $1,422.1 million in 1996, 1995 and 1994. Gross
realized gains were $0.2 million, $1.4 million and $4.6 million and gross
realized losses on such sales were $3.2 million, $8.0 million and $7.3
million in 1996, 1995 and 1994.
The fair value of investment securities pledged to secure public
deposits, trust and other funds were $4.4 billion and $4.5 billion at
December 31, 1996 and 1995.
Note 4 - Loans
The composition of the Company's loan portfolio at December 31, 1996 and 1995
was as follows:
<TABLE>
(In thousands) 1996 1995
<S> <C> <C>
Commercial, financial and agricultural:
Domestic $11,725,503 $10,222,511
International 240,595 337,508
Real estate:
Construction 1,384,796 1,216,578
Residential mortgages 11,508,154 9,732,801
Other 4,585,803 4,477,659
Lease financing 607,470 561,243
Credit card 946,756 774,013
Other consumer loans 4,405,094 3,979,076
Loans $35,404,171 $31,301,389
</TABLE>
The gross amounts of interest income that would have been recorded in
1996, 1995, and 1994 on nonaccrual and restructured loans at December 31 of
each year, if all such loans had been accruing interest at the contractual
rate, were $19.3, $20.1, and $18.5 million, while interest income actually
recognized totaled $9.1, $11.0, and $10.5 million. Total nonaccrual and
restructured loans at December 31, 1996 and 1995 were $212.2 and $192.2
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
$529.2 million at December 31, 1996 and $367.2 million at December 31, 1995.
During 1996, $3,022.9 million of such loans were made and repayments totaled
$2,860.9 million. None of these loans has been restructured, nor were any
related party loans charged off during 1996 and 1995.
Note 5 - Reserve for Loan Losses
Activity in the reserve for loan losses is summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $698,864 $647,016 $561,191
Reserve of purchased banks 1,243 6,336 8,274
Provision charged to operating expense 115,916 112,108 137,841
Loan charge-offs (142,016) (120,766) (113,677)
Loan recoveries 51,842 54,170 53,387
Balance at end of year $725,849 $698,864 $647,016
</TABLE>
It is the opinion of management that the reserve was adequate at
December 31, 1996, based on conditions reasonably known to management;
however, the reserve may be increased or decreased in the future based on
loan balances outstanding, 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, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
(In thousands) Useful Life 1996 1995
<S> <C> <C> <C>
Land $ 212,211 $ 201,807
Buildings and improvements 3-55 years 584,348 551,584
Leasehold improvements 5-30 years 115,651 105,018
Furniture and equipment 3-20 years 642,531 573,981
Construction in progress 36,282 41,725
1,591,023 1,474,115
Less accumulated depreciation and amortization 822,757 744,384
Total $ 768,266 $ 729,731
</TABLE>
The carrying amounts of premises and equipment subject to mortgage
indebtedness (included in long-term debt) was not significant at December 31,
1996 and 1995.
Various Company facilities and equipment are also leased under both
capital and noncancelable operating leases with initial remaining terms in
excess of one year. Minimum payments, by year and in aggregate, as of
December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Operating Capital
<In thousands) Leases Leases
<S> <C> <C>
1997 $ 48,881 $ 4,457
1998 45,976 4,474
1999 43,550 4,475
2000 35,333 4,137
2001 32,300 4,111
Thereafter 114,587 46,775
Total minimum lease payments $320,627 68,429
Amounts representing interest 40,066
Present value of net minimum lease payments $28,363
</TABLE>
On December 31, 1996, the Company executed an agreement to purchase its
corporate headquarters building in Atlanta, Georgia which had previously been
leased under a long-term operating lease. The purchase was subsequently
closed on January 2, 1997. The net operating lease amounts shown above as of
December 31, 1996 have been reduced for the effects of this transaction.
Net premises and equipment include $21.4 million and $22.6 million at
December 31, 1996 and 1995, respectively, related to capital leases.
Aggregate rent expense for all operating leases (including contingent
rental expense and reduced by sublease rental income, both of which were not
significant) amounted to $44.9 million, $40.4 million and $41.5 million for
1996, 1995 and 1994.
Note 7 - Other Short-Term Borrowings
Other short-term borrowings at December 31, 1996 and 1995 consisted of the
following:
<TABLE>
<CAPTION>
1996 1995
(Dollars in thousands) Amount Rate Amount Rate
<S> <C> <C> <C> <C>
Commercial paper 364,624 5.3% - 6.1% 215,110 5.6% - 6.0%
Bank notes - - 200,000 6.5%
Federal funds purchased maturing in over one day 125,000 5.1% - 5.8% 135,000 5.7% - 5.8%
Short-term borrowing facility 216,481 5.3% - 6.9% 100,000 6.0%
Other 161,856 - 244,360 -
Total 867,961 - 894,470 -
</TABLE>
At December 31, 1996, $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.
Note 8 - Long-Term Debt
A summary of long-term debt at December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C> <C>
PARENT COMPANY
8.375% notes due 1996 $ - $ 74,500
Payment agreement due 1997 7,500 -
8.875% notes due 1998 94,500 94,500
Floating rate notes due 1999 200,000 200,000
Payment agreement due 2001 34,932 40,753
7.375% notes due 2002 200,000 200,000
7.50% debentures due 2002 10,573 11,373
6.125% notes due 2004 200,000 200,000
7.375% notes due 2006 200,000 -
6.0% notes due 2026 200,000 -
Capital lease obligation 5,789 6,217
Total Parent Company 1,153,294 827,343
SUBSIDIARIES
7.25% notes due 2006 250,000 -
Capital lease obligations 22,574 23,319
FHLB advances and other 139,473 151,735
Total subsidiaries 412,047 175,054
Total long-term debt $1,565,341 $1,002,397
</TABLE>
Principal amounts due for the next five years on long-term debt at
December 31, 1996 are: 1997 - $61.9 million; 1998 - $126.7 million; 1999 -
$229.7 million; 2000 - $42.1 million and 2001 - $18.5 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, 1996 the Company was in compliance with all covenants and
provisions of long-term debt agreements.
In the summary table of long-term debt, $877.1 million in 1996 and
$246.8 million in 1995 qualify as Tier 2 capital as currently defined by
federal bank regulators.
Note 9 - Capital
The Company is subject to various regulatory capital requirements which
involve quantitative measures of the Company's assets, liabilities, and
certain off-balance sheet items. The Company's capital requirements and
classification are ultimately subject to qualitative judgments by the
regulators about components, risk weightings, and other factors. Quantitative
measures established by regulation to ensure capital adequacy require that
the Company maintain amounts and ratios (set forth in the table on page 48)
of Tier 1 and total capital to risk-weighted assets, and of Tier 1 capital to
quarterly average total assets. Management believes, as of December 31, 1996,
that the Company meets all capital adequacy requirements to which it is
subject.
A summary of Tier 1 and total capital (actual, required, and to be well
capitalized) and the Tier 1 leverage ratio for the Company and its
significant subsidiaries as of December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Required Required
For Capital To Be Well
Actual Adequacy Purposes Well Capitalized
Amount Ratio Amount Ratio Amount Ratio
As of December 31, 1996:
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital:
SunTrust Banks, Inc. $3,034 7.46% $1,626 4.00% $2,439 6.00%
SunTrust Banks of Florida, Inc. 1,943 11.17 695 4.00 1,043 6.00
SunTrust Banks of Georgia, Inc. 1,383 8.16 677 4.00 1,016 6.00
SunTrust Banks of Tennessee, Inc. 584 9.75 240 4.00 359 6.00
SunTrust Bank, Atlanta 1,050 7.66 548 4.00 822 6.00
SunTrust Bank, Central Florida, N.A. 475 8.74 217 4.00 326 6.00
Total capital:
SunTrust Banks, Inc. 4,422 10.87 3,252 8.00 4,065 10.00
SunTrust Banks of Florida, Inc. 2,162 12.43 1,391 8.00 1,738 10.00
SunTrust Banks of Georgia, Inc. 1,848 10.91 1,354 8.00 1,693 10.00
SunTrust Banks of Tennessee, Inc. 659 11.00 479 8.00 599 10.00
SunTrust Bank, Atlanta 1,429 10.42 1,096 8.00 1,370 10.00
SunTrust Bank, Central Florida, N.A. 543 10.00 434 8.00 543 10.00
Tier 1 leverage:
SunTrust Banks, Inc. 6.40 3.00 5.00
SunTrust Banks of Florida, Inc. 8.23 3.00 5.00
SunTrust Banks of Georgia, Inc. 8.30 3.00 5.00
SunTrust Banks of Tennessee, Inc. 8.24 3.00 5.00
SunTrust Bank, Atlanta 8.17 3.00 5.00
SunTrust Bank, Central Florida, N.A. 7.96 3.00 5.00
As of December 31, 1995:
Tier 1 capital:
SunTrust Banks, Inc. $2,859 7.78% $1,470 4.00% $2,205 6.00%
SunTrust Banks of Florida, Inc. 1,827 11.03 662 4.00 994 6.00
SunTrust Banks of Georgia, Inc. 1,277 8.85 577 4.00 865 6.00
SunTrust Banks of Tennessee, Inc. 553 10.24 216 4.00 324 6.00
SunTrust Bank, Atlanta 974 8.48 459 4.00 688 6.00
SunTrust Bank, Central Florida, N.A. 438 8.74 201 4.00 301 6.00
Total capital:
SunTrust Banks, Inc. 3,568 9.71 2,939 8.00 3,674 10.00
SunTrust Banks of Florida, Inc. 2,038 12.30 1,325 8.00 1,656 10.00
SunTrust Banks of Georgia, Inc. 1,533 10.62 1,154 8.00 1,442 10.00
SunTrust Banks of Tennessee, Inc. 621 11.50 432 8.00 540 10.00
SunTrust Bank, Atlanta 1,181 10.29 918 8.00 1,147 10.00
SunTrust Bank, Central Florida, N.A. 501 9.99 401 8.00 502 10.00
Tier 1 leverage:
SunTrust Banks, Inc. 6.70 3.00 5.00
SunTrust Banks of Florida, Inc. 8.40 3.00 5.00
SunTrust Banks of Georgia, Inc. 9.05 3.00 5.00
SunTrust Banks of Tennessee, Inc. 8.32 3.00 5.00
SunTrust Bank, Atlanta 9.12 3.00 5.00
SunTrust Bank, Central Florida, N.A. 8.12 3.00 5.00
</TABLE>
On May 21, 1996, the Company paid a stock dividend of one share of
SunTrust common stock for each outstanding share of SunTrust common stock to
shareholders of record on May 1, 1996. The consolidated financial statements
for prior periods have been adjusted to reflect the effect of this stock
dividend. All references to common share and per share information and the
weighted average number of common and common equivalent shares outstanding
have been restated to reflect the stock dividend.
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 of bank subsidiaries available for payment of cash
dividends to STI of Florida, STI of Georgia and STI of Tennessee under these
regulations totaled approximately $441.8 million at December 31, 1996.
Note 10 - Income Taxes
The provision for income taxes for the three years ended December 31, 1996
consisted of the following:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Provision for federal income taxes:
Current $273,642 $268,718 $252,287
Prepaid (24,794) (41,857) (23,565)
Total provision for federal income taxes 248,848 226,861 228,722
Provision for state income taxes:
Current 18,011 11,649 11,650
Deferred 19,726 21,939 18,849
Total provision for state income taxes 37,737 33,588 30,499
Total $286,585 $260,449 $259,221
</TABLE>
The Company's income, before provision for income taxes, from international
operations was not significant.
The Company's provisions for income taxes for the three years ended
December 31, 1996 differ from the amounts computed by applying the statutory
federal income tax rate of 35% to income before income taxes. A
reconciliation of this difference is as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Tax provision at federal statutory rate $316,120 $289,074 $273,689
Increase (decrease) resulting from:
Tax-exempt interest (28,498) (33,017) (36,997)
Disallowed interest deduction 3,883 3,857 3,183
Income tax credits (2,455) (1,533) (1,409)
State income taxes, net of federal benefit 24,552 21,847 19,796
Dividend exclusion (6,430) (5,517) (5,154)
Favorable tax settlement (27,486) (20,177) -
Other 6,899 5,915 6,113
Provision for income taxes $286,585 $260,449 $259,221
</TABLE>
Temporary differences create deferred tax assets and liabilities which are
detailed below for December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Deferred Tax
Assets (Liabilities)
(In thousands) 1996 1995
<S> <C> <C>
Loan loss reserve $256,689 $266,403
Depreciation (17,429) (13,345)
Employee benefits (39,799) (62,559)
Unrealized gains on investment securities (987,129) (714,593)
Leasing (89,370) (86,915)
Other real estate 15,590 16,956
Other (12,053) (12,703)
Total deferred liability ($873,501) ($606,756)
</TABLE>
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
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 11 - Employee Benefit Plans
SunTrust sponsors various incentive plans for eligible, participating
employees. The 401(k) and Performance Bonus Plans are the profit sharing
plans which have the broadest participation among employees. The qualified
401(k) plan awards amounts to employees based on employee pre-tax
contributions, which are a percentage of compensation, and based on the
Company's earnings performance. The Performance Bonus Plan awards cash
amounts to employees based on compensation and earnings performance. A
Management Incentive Plan for key executives provides for annual cash
awards, if any, based on compensation and earnings performance. The
Performance Unit Plan for key executives provides awards, if any, based on
a multi-year earnings performance in relation to earnings goals as
established by the Compensation Committee (Committee) of the Company's Board
of Directors.
The Company also sponsors an Executive Stock Plan (Stock Plan) under
which the Committee has the authority to grant stock options and Performance
Restricted Stock (Performance Stock) to key employees of the Company. Ten
million shares of common stock are reserved for issuance under the plan of
which no more than five million shares may be issued as Performance 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. The Company does not record expense as a result of the
grant or exercise of any of the stock options. With respect to Performance
Stock, shares must be granted, awarded and vested before participants take
full title. After Performance Stock is granted by the Committee, 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 (which is deferred and shown as a reduction of
shareholders' equity) is equal to the fair market value of the shares at the
date of award and is 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.
Compensation expense related to the incentive plans for the three years
ended December 31 were as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
401(k) Plan and Performance Bonus Plan $28,737 $30,552 $34,049
Management Incentive Plan and
Performance Unit Plan 16,500 15,929 16,172
Performance Stock 10,985 6,132 5,062
</TABLE>
The following table presents information on stock options and
Performance Stock:
<TABLE> Stock Options Performance Stock
<CAPTION> Weighted
Average
Price Exercise Deferred
(In thousands) Shares Range Price Shares Compensation
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994 3,741,452 $ 6.81 - 21.63 $12.32 3,023,600 $37,430
Granted 325,200 23.56 - 24.69 24.66 - -
Exercised/Vested (694,260) 6.81 - 21.63 10.97 (120,400) -
Cancelled, expired/Forfeited (2,000) 21.63 21.63 (62,000) (1,029)
Amortization of compensation
for Performance Stock - (5,062)
Balance, December 31, 1994 3,370,392 8.19 - 24.69 13.78 2,841,200 31,339
Granted 1,167,500 30.25 - 33.19 32.01 578,000 16,879
Exercised/Vested (754,786) 8.19 - 24.69 12.08 (80,400) -
Cancelled, expired/Forfeited (7,000) 11.50 - 11.63 11.56 (60,800) (1,134)
Amortization of compensation
for Performance Stock - (6,132)
Balance, December 31, 1995 3,776,106 8.23 - 33.19 19.76 3,278,000 40,952
Granted 583,400 46.63 46.63 543,200 20,835
Exercised/Vested (906,121) 9.50 - 33.19 13.47 (35,200) -
Cancelled, expired/Forfeited (9,076) 8.23 - 33.19 16.29 (64,000) (1,338)
Amortization of compensation
for Performance Stock (10,985)
Balance, December 31, 1996 3,444,309 $ 9.50 - 46.63 $25.97 3,722,000 $49,464
</TABLE>
The Company has adopted Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation," issued in October
1995. As permitted by the provisions of SFAS No. 123, the Company applies APB
Opinion 25 and related interpretations in accounting for its stock option
plans and, accordingly, does not recognize compensation cost. If the Company
had elected to recognize compensation cost for options granted in 1995 and
1996, based on the fair value of the options granted at the grant date as
prescribed by SFAS No. 123, net income and earnings per share would have been
reduced to the pro forma amounts indicated below:
(In millions except per share data):
1996 1995
Net income - as reported $616.6 $565.5
Net income - pro forma 616.0 562.7
Earnings per share -
as reported 2.76 2.47
Earnings per share -
pro forma 2.76 2.46
The weighted average fair values of options granted during 1996 and 1995 were
$9.73 and $11.71 per share, respectively. The fair value of each option grant
is estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions:
1996 1995
Expected dividend yield 1.93% 2.40%
Expected stock price volatility 11.5% 11.5%
Risk-free interest rate 6.54% 6.24%
Expected life of options 5 years 5 years
At December 31, 1996, options for 2,860,909 shares were exercisable with
a weighted average exercise price of $21.76. The weighted average remaining
contractual life of all options at December 31, 1996 was 6.5 years.
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 federal regulations. The
Plan assets consist 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 are included in the assets
of the Plan. The Plan's net periodic expense is summarized as follows:
<TABLE>
<CAPTION> Year Ended December 31
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Service cost - benefits earned
during the period $23,990 $21,286 $21,754
Interest cost on projected
benefit obligations 27,735 25,364 21,860
Actual return on Plan assets (54,120) (89,162) 11,053
Net amortization and deferral 10,788 47,556 (48,184)
Net periodic Plan expense $8,393 $5,044 $6,483
Actuarial Assumptions:
Weighted average discount rate 7.75% 7.50% 8.25%
Rate of increase in future compensation levels 4.00 4.00 4.50
Long-term weighted average rate of return 9.25 9.25 9.25
</TABLE>
The funded status of the Plan at December 31 was as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $277,255 in 1996 and $258,104 in 1995 $(317,399) $(296,707)
Projected benefit obligation for service
rendered to date $(364,945) $(345,536)
Plan assets at fair value 493,694 437,576
Plan assets in excess of projected benefit obligation 128,749 92,040
Unrecognized net (gain)loss since transition 51,220 67,831
Unrecognized prior service cost (13,887) (17,188)
Unrecognized net asset at transition being
amortized over 14 years (17,381) (21,589)
Prepaid pension expense included in other assets $ 148,701 $ 121,094
</TABLE>
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, 1996 and 1995, the projected benefit obligation for this plan
was $14.7 million and $14.7 million. Included in other liabilities at
December 31, 1996 and 1995, is $12.4 million and $12.1 million representing
accumulated benefit obligations. The expense of the nonqualified plan was
$3.1 million, $3.5 million, and $3.2 million in 1996, 1995 and 1994.
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.
The Retiree Health Plan provides medical benefits for retirees and
eligible dependents under indemnity and managed care arrangements with costs
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 retired 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 benefits are prefunded in a Voluntary
Employees' Beneficiary Association (VEBA). As of December 31, 1996, these
Plan assets consist of common trust funds, U.S. government securities,
corporate bonds and notes and a cash equivalent cash reserve fund. The
Retiree Health and Life Plans' net periodic expense for the three years ended
December 31 totaled:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Service cost - benefits earned during the period $1,505 $1,277 $1,809
Interest cost on projected benefit obligations 6,182 5,730 5,239
Actual return on plan assets (9,192) (16,128) 3,110
Deferral of asset gain (loss) 3,007 10,688 (9,047)
Amortization of transition obligation 2,893 2,892 2,892
Net cost $4,395 $4,459 $4,003
Actuarial assumptions:
Weighted average discount rate 7.75% 7.50% 8.25%
Health care cost trend rate:
Pre-medicare (for 1996, equal adjustments until
leveling out at 5.5% in 2004) 11.25 12.00% 12.00%
Post-medicare (for 1996, equal adjustments until
leveling out at 5.5% in 2006) 10.50 11.00 11.00
Long-term weighted average rate of return 6.50 6.50 6.50
</TABLE>
The funded status of the Retiree Health and Life Plan at December 31 was as
follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Fully eligible actives $(8,818) $(9,258)
Other actives (15,499) (14,894)
Retirees (57,202) (50,948)
Total APBO (81,519) (75,100)
Plan assets at fair value 105,171 103,382
Plan assets in excess of APBO 23,652 28,282
Unrecognized net (gain) or loss 12,766 9,638
Unrecognized prior service cost - -
Unrecognized net transition obligation 46,281 49,174
Prepaid postretirement benefit expense included in other assets $82,699 $87,094
Incremental effect of 1% increase in the health care trend rate
on total APBO $(4,364) $(4,134)
</TABLE>
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.
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.
<TABLE>
<CAPTION>
At December 31, 1996 At December 31, 1995
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 $ 2,255 $1,174 $ 36 $ 349 $ 855 $ 29
Futures and forwards - 20 - - - -
Options written - 468 - - 431
Options purchased - 471 - - 393
Total interest rate contracts 2,255 2,133 36 349 1,679 29
Foreign exchange rate contracts 257 - 3 164 - 2
Commodity and other contracts 9 - - - -
Total derivatives contracts $ 2,521 $2,133 39 $ 513 $1,679 $ 31
Credit-related arrangements:
Commitments to extend credit 19,134 19,134 $13,649 13,649
Standby letters of credit and similar
arrangements 3,195 3,195 2,905 2,905
Total credit-related arrangements $22,329 $22,329 $16,554 16,554
When-issued securities:
Commitments to sell 297 - 190 -
Commitments to purchase - 9 -
Total credit risk amount $22,368 $16,585
</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 interest rate 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. At December 31, 1996 and 1995 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
reductions of interest expense for 1996, 1995 and 1994 were ($1.0) million,
$10.1 million and $30.6 million. Included in those amounts are $2.3 million,
$0.5 million, and $0.4 million representing income from swaps entered into
for customers.
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. 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. The Company 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 actual future credit exposure or liquidity requirements.
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 of commercial paper, bond
financing 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 or types of collateral (whether on- or off-
balance sheet) arising from financial instruments exist in relation to
certain groups of customers or types of collateral. 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 concentration to any individual customer or counterparty except
for the U.S. government and its agencies. 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 residential real estate. At December 31, 1996 the Company had $11.5
billion in loans and an additional $2.1 billion in commitments to extend credit
for loans secured by residential real estate. A geographic concentration arises
because the Company operates primarily in the Southeastern United States.
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, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term investments $ 4,772,615 $ 4,772,615 $ 3,969,559 $ 3,969,559
Trading account 80,377 80,377 96,613 96,613
Investment securities 10,551,166 10,551,166 9,676,934 9,676,934
Loans 35,404,171 35,770,163 31,301,389 31,937,748
Financial liabilities:
Deposits 36,890,389 36,878,671 33,183,194 33,245,721
Short-term borrowings 6,915,653 6,915,653 6,378,221 6,378,221
Long-term debt 1,565,341 1,563,294 1,002,397 1,022,962
Off-balance sheet financial instruments:
Interest rate swaps:
In a net receivable position 19,658 7,170
In a net payable position (11,655) (6,806)
Commitments to extend credit 11,003 8,758
Standby letters of credit 1,418 1,295
Other 3 2
</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, 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.
* 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 values.
* 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- Contingencies
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.
Note 16 - SunTrust Banks, Inc. (Parent Company Only) Financial Information
<TABLE>
STATEMENTS OF INCOME
<CAPTION>
Year Ended December 31
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
OPERATING INCOME
From subsidiaries:
Dividends - substantially all from
banking subsidiaries $464,813 $417,255 $330,318
Service fees 74,812 46,649 41,327
Interest on loans 17,950 13,218 8,088
Other income 102 128 162
Other operating income<F1> 21,945 1,291 7,966
Total operating income 579,622 478,541 387,861
OPERATING EXPENSE
Interest on short-term borrowings 21,827 22,727 9,913
Interest on long-term debt 69,010 56,866 53,101
Salaries and employee benefits 48,236 39,972 27,957
Amortization of intangible assets 7,660 7,660 7,686
Service fees to subsidiaries 17,804 14,130 7,769
Other operating expense <F2> 102,176 30,758 26,404
Total operating expense 266,713 172,113 132,830
Income before income taxes and equity in
undistributed income of subsidiaries 312,909 306,428 255,031
Income tax benefit 83,949 56,365 23,499
Income before equity in undistributed income
of subsidiaries 396,858 362,793 278,530
Equity in undistributed income of subsidiaries 219,757 202,683 244,214
NET INCOME $616,615 $565,476 $522,744
<FN>
<F1> Other expense for 1996 contains expenses incurred on behalf of certain
banking subsidiaries in connection with the Company's growth
initiatives.
<F2> Other operating income for 1996 includes a $16.2 million securities
gain from the sale of a long-held minority position in a Florida bank.
</TABLE>
<TABLE>
BALANCE SHEETS
<CAPTION>
December 31
(Dollars in thousands) 1996 1995
<S> <C> <C>
ASSETS
Cash in subsidiary banks $ 9,376 $ 12,777
Interest-bearing deposits in banks 1,521 29,186
Loans to subsidiaries 337,503 268,390
Investment in capital stock of subsidiaries stated on the basis
of the Company's equity in subsidiaries' capital accounts:
Banking subsidiaries 4,848,750 4,375,941
Nonbanking and holding company subsidiaries 946,959 658,304
Premises and equipment 22,561 21,648
Intangible assets 114,812 122,471
Other assets - Note 11 474,998 264,520
Total Assets $6,756,480 $5,753,237
LIABILITIES
Short-term borrowings from:
Subsidiaries $ 83,197 $ 3,600
Non-affiliated companies - Note 7 417,224 398,610
Long-term debt - Note 8 1,153,294 827,343
Other liabilities - Notes 10 and 11 222,785 254,103
Total Liabilities 1,876,500 1,483,656
SHAREHOLDERS' EQUITY - Note 9
Preferred stock, no par value; 50,000,000 shares
authorized; none issued - -
Common stock, $1.00 par value; 350,000,000 shares authorized<F1> 225,608 243,644
Additional paid in capital 310,612 321,541
Retained earnings 2,972,900 3,417,801
Treasury stock and other<F2> (230,918) (871,953)
Realized Shareholders' Equity 3,278,202 3,111,033
Unrealized gains on investment securities, net of taxes 1,601,778 1,158,548
Total Shareholders' Equity 4,879,980 4,269,581
Total Liabilities and Shareholders' Equity $6,756,480 $5,753,237
<FN>
<F1> Common shares outstanding 220,469,001 225,725,779
<F2> Treasury shares of common stock 5,139,056 17,918,505
</TABLE>
<TABLE>
STATEMENTS OF CASH FLOW
<CAPTION>
Year Ended December 31
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $616,615 $565,476 $522,744
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed income of subsidiaries (219,757) (202,683) (251,532)
Depreciation and amortization 11,610 10,658 9,869
Securities gains (17,145) - (3)
Deferred income tax benefit 5,068 19,918 4,917
Changes in period end balances of:
Prepaid expenses (32,211) (31,511) (29,744)
Other assets (182,108) 468 (11,340)
Taxes payable (46,374) 12,439 (8,732)
Interest payable 5,838 (1,079) 1,387
Other accrued expenses 20,094 27,410 39,198
Net cash provided by operating activities 161,630 401,096 276,764
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sales and maturities of investment securities 23,494 6,000 71
Purchase of investment securities (219) (9) (111)
Net change in loans to subsidiaries (69,113) (97,255) 15,708
Net funds paid in acquisition 5,636 - -
Capital expenditures (8,231) (11,229) (6,758)
Capital contributions to subsidiaries (96,822) (90,355) (120,094)
Other, net 4,143 15,264 87,100
Net cash used in investing activities (141,112) (177,584) (24,084)
CASH FLOW FROM FINANCING ACTIVITIES:
Net change in short-term borrowings 98,211 140,731 (40,292)
Proceeds from issuance of long-term debt 407,500 42,330 400,000
Repayment of long-term debt (81,549) (2,723) (106,625)
Proceeds from the exercise of stock options 5,465 4,814 4,023
Payments to acquire treasury stock (297,319) (204,824) (348,540)
Dividends paid (183,892) (168,660) (157,116)
Net cash used in financing activities (51,584) (188,332) (248,550)
Net increase (decrease) in cash and cash equivalents (31,066) 35,180 4,130
Cash and cash equivalents at beginning of year 41,963 6,783 2,653
Cash and cash equivalents at end of year $ 10,897 $ 41,963 $ 6,783
SUPPLEMENTAL DISCLOSURE
Income taxes received from subsidiaries $336,898 $322,440 $288,394
Income taxes paid by Parent Company (290,450) (253,228) (266,064)
Net income taxes received by Parent Company 46,448 69,212 22,330
Interest paid $ 84,310 $ 80,077 $ 60,993
</TABLE>
<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, 1996
and 1995 and the related consolidated statements of income, shareholders'
equity and cash flow for each of the three years in the period ended December
31, 1996. 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, 1996 and 1995, and the
results of their operations and their cash flow for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 31, 1997
<PAGE>
Corporate Headquarters Shareholders of Record
SunTrust Banks, Inc. SunTrust has 27,943 shareholders of
303 Peachtree Street, N.E. record as of December 31, 1996. In
Atlanta, Georgia 30308-3201 addition, approximately 14,250
(404) 588-7711 SunTrust employees own stock through
the Company's 401(k) program.
Corporate Mailing Address
SunTrust Banks, Inc. Debt ratings
P.O. Box 4418 SunTrust Banks, Inc. debt ratings
Atlanta, Georgia 30302-4418 are as follows:
Senior Long-term debt
Notice of Annual Meeting Moody's Investors Service, Inc.: A1
The Annual Meeting of Shareholders Standard & Poor's Corp.: A+
will be held on Tuesday, April 15, Thomson BankWatch: AA
1997, at 9:30 a.m. in Room 10 of Commercial Paper
the SunTrust Bank, Atlanta Tower Moody's Investors Service, Inc.:P-1
at 25 Park Place, Atlanta Standard & Poor's Corp.: A-1
Thomson BankWatch: TNW-1
Stock Trading
SunTrust Banks, Inc. common stock is Financial Information
traded on the New York Stock Those seeking information should
Exchange under the symbol "STI". contact:
James C. Armstrong
Shareholder Services (404) 588-7425
Shareholders who wish to change the or
name, address, or ownership of stock, Margaret L. Fisher
to report lost certificates, or to (404) 586-6416
consolidate accounts, should
contact the Transfer Agent: Internet Information
To access information about STI,
SunTrust Bank, Atlanta including news releases and product
P. O. Box 4625 information, visit the SunTrust home
Atlanta, Georgia 30302-4625 page on the World Wide Web. The
(404) 588-7815 address is http://www.SunTrust.com
(800) 568-3476
Independent Public Accountants
Dividend Reinvestment Arthur Andersen & Co.
SunTrust offers a Dividend Atlanta, Georgia
Reinvestment Plan that provides
automatic reinvestment of dividends Corporate Counsel
in additional shares of SunTrust King & Spalding
common stock. For information, Atlanta, Georgia
contact:
SunTrust and its subsidiaries are
Stock Transfer Department Equal Opportunity Employers.
SunTrust Bank Atlanta
P.O. Box 4625 Banks in the SunTrust group are
Atlanta, Georgia 30302-4625 members of the Federal Deposit
(404) 588-7822 Insurance Corporation.
<PAGE>
Subsidiaries of the Registrant as of March 7, 1997.
SunTrust Banks, Inc. (29 banks in total)
100% SunTrust Banks of Florida, Inc.
100% SunTrust Bank, Central Florida, National Association
100% STB Management (Central Florida), Inc.
100% STB Receivables (Central Florida), Inc.
100% SunTrust Annuities, Inc.
100% SunTrust Bank, East Central Florida
100% Service of Volusia County, Inc.
100% SunTrust Bank, Gulf Coast
100% CFS Ventures, Inc.
100% STB Management (Gulf Coast), Inc.
100% SunTrust Bank, Miami, National Association
100% Florida Aviation, Inc.
100% Kasalta Miramar, Inc.
100% STB Management (Miami), Inc.
100% STB Receivables (Miami), Inc.
100% SunTrust Bank, Mid-Florida, National Association
100% SunTrust Bank, Nature Coast
100% SunTrust Bank, North Central Florida
100% SunTrust Bank, North Florida, National Association
100% SunTrust Bank, South Florida, National Association
100% STB Management (South Florida), Inc.
100% STB Receivables (South Florida), Inc.
100% SunTrust Bank, Southwest Florida
100% SunTrust Bank, Tallahassee, National Association
100% FSB Corporation
100% Ox Bottom Land Company
100% SunTrust Bank, Tampa Bay
100% STB Management (Tampa Bay), Inc.
100% STB Receivables (Tampa Bay), Inc.
100% SunTrust Bank, Treasure Coast, National Association
100% SunTrust Bank, West Florida
100% Premium Assignment Corporation
100% SunTrust Banks of Georgia, Inc.
100% SunTrust Bank, Atlanta
100% STB Management (Atlanta), Inc.
100% STI Credit Corporation
100% TCB Holdings, Inc.
100% SunTrust Bank, Augusta, National Association
100% SunTrust Bank, Middle Georgia, National Association
100% SunTrust Bank, Northeast Georgia, National Association
100% SunTrust Bank, Northwest Georgia, National Association
100% SunTrust Bank, Savannah, National Association
100% SunTrust Bank, South Georgia, National Association
100% SunTrust Bank, Southeast Georgia, National Association
100% SunTrust Bank, West Georgia, National Association
100% Personal Express Loans, Inc.
100% Preferred Surety Holdings, Inc.
100% Preferred Surety Corporation
100% Madison Insurance Company
100% SunTrust Banks of Tennessee, Inc.
100% SunTrust Bank, Nashville, National Association
100% STB Management (Nashville), Inc.
100% SunTrust Leasing of Tennessee, Inc.
100% SunTrust Bank, Alabama, National Association
100% SunTrust Bank, Chattanooga, National Association
100% STB Management (Chattanooga), Inc.
100% SunTrust of Chattanooga Mortgage Corporation
100% SunTrust Bank, East Tennessee, National Association
100% Acquisition and Equity Corporation
100% SunTrust Bank, Northeast Tennessee,
National Association
100% SunTrust Bank, South Central Tennessee, National Association
100% Trust Company of Tennessee (inactive)
<PAGE>
100% STI Capital Management, N.A.
100% STI Trust & Investment Operations, Inc.
100% SunTrust BankCard, National Association
100% SunTrust Capital Markets, Inc.
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*
100% Trusco Capital Management, Inc.
99.9% Peachtreee Limited Liability 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. 33-50756, 33-28250 and 33-58723 on Form S-8
and Registration Statement No. 333-10159 on Form S-3.
ARTHUR ANDERSEN & CO.
Atlanta, Georgia
January 31, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,037,309
<INT-BEARING-DEPOSITS> 13,461
<FED-FUNDS-SOLD> 1,721,845
<TRADING-ASSETS> 80,377
<INVESTMENTS-HELD-FOR-SALE> 10,551,166
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 35,404,171
<ALLOWANCE> 725,849
<TOTAL-ASSETS> 52,468,249
<DEPOSITS> 36,890,389
<SHORT-TERM> 6,915,653
<LIABILITIES-OTHER> 2,216,886
<LONG-TERM> 1,565,341
<COMMON> 225,608
0
0
<OTHER-SE> 4,654,372
<TOTAL-LIABILITIES-AND-EQUITY> 52,468,249
<INTEREST-LOAN> 2,678,566
<INTEREST-INVEST> 521,891
<INTEREST-OTHER> 45,585
<INTEREST-TOTAL> 3,246,042
<INTEREST-DEPOSIT> 1,083,035
<INTEREST-EXPENSE> 1,461,832
<INTEREST-INCOME-NET> 1,784,210
<LOAN-LOSSES> 115,916
<SECURITIES-GAINS> 14,168
<EXPENSE-OTHER> 1,583,083
<INCOME-PRETAX> 903,200
<INCOME-PRE-EXTRAORDINARY> 616,615
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 616,615
<EPS-PRIMARY> 2.76
<EPS-DILUTED> 2.76
<YIELD-ACTUAL> 4.36
<LOANS-NON> 202,311
<LOANS-PAST> 34,203
<LOANS-TROUBLED> 9,904
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 698,864
<CHARGE-OFFS> 142,016
<RECOVERIES> 51,842
<ALLOWANCE-CLOSE> 725,849
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 725,849
</TABLE>
