<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1997
Commission File Number 1-8918
SUNTRUST BANKS, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-1575035
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
303 Peachtree Street, N.E., Atlanta, Georgia 30308
(Address of principal executive offices) (Zip Code)
(404) 588-7711
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (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.
Yes __X__ No _____
At October 31, 1997, 210,860,396 shares of the Registrant's Common Stock,
$1.00 par value were outstanding.
Page 1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statement Description Page No.
Consolidated Statements of Income
Nine months ended September 30, 1997 and 1996 3
Consolidated Balance Sheets
September 30, 1997, December 31, 1996 and September 30, 1996 4
Consolidated Statements of Cash Flow
Nine months ended September 30, 1997 and 1996 5
Consolidated Statements of Shareholders' Equity
Nine months ended September 30, 1997 and 1996 6
The above mentioned financial statements have been prepared in accordance
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and
accordingly do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
However, in the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine months ended September 30, 1997 are
not necessarily indicative of the results that may be expected for the full
year 1997.
Fully diluted per common share data have not been presented because there
were no material differences between such amounts and the per common share
data as presented. Earnings per common share were based on the weighted
average common equivalent shares outstanding for the periods presented.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
MD&A of the Registrant is included on pages 9 through 20.
Page 2
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
(Dollars in thousands except per share data)<F1> 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $ 775,471 $ 675,845 $ 2,239,149 $ 1,980,203
Interest and dividends on investment securities
Taxable interest 119,478 115,108 344,447 331,496
Tax-exempt interest 9,967 11,148 30,895 35,188
Dividends (1) 9,379 7,927 27,955 24,256
Interest on funds sold 16,511 9,128 43,766 25,007
Interest on deposits in other banks 211 285 628 846
Other interest 3,850 917 9,551 2,400
Total interest income 934,867 820,358 2,696,391 2,399,396
Interest Expense
Interest on deposits 295,893 273,788 862,791 811,616
Interest on funds purchased 87,019 60,778 242,464 171,195
Interest on other short-term borrowings 27,650 9,327 70,965 36,003
Interest on long-term debt 47,577 22,076 111,208 58,737
Total interest expense 458,139 365,969 1,287,428 1,077,551
Net Interest Income 476,728 454,389 1,408,963 1,321,845
Provision for loan losses 29,003 29,933 84,439 81,155
Net interest income after provision for loan losses 447,725 424,456 1,324,524 1,240,690
Noninterest Income
Trust income 79,087 68,170 236,149 209,320
Service charges on deposit accounts 62,327 57,929 183,959 171,745
Other charges and fees 56,342 42,259 161,005 126,727
Credit card fees 17,515 15,720 54,704 49,298
Securities gains (losses) 61 (500) 1,090 14,593
Other noninterest income 17,603 13,720 49,931 39,365
Total noninterest income 232,935 197,298 686,838 611,048
Noninterest Expense
Salaries and other compensation 214,430 194,647 622,579 563,767
Employee benefits 27,506 25,999 89,364 81,757
Net occupancy expense 30,896 34,897 95,854 103,034
Equipment expense 30,651 29,526 91,089 85,022
Operating supplies 8,673 8,938 27,355 28,523
Marketing and community relations 15,924 19,227 49,576 53,087
Postage and delivery 10,093 10,490 31,886 30,143
Outside processing and software 17,996 14,126 49,038 38,656
Other noninterest expense 68,179 51,793 194,956 200,048
Total noninterest expense 424,348 389,643 1,251,697 1,184,037
Income before income taxes 256,312 232,111 759,665 667,701
Provision for income taxes 87,734 76,523 264,595 209,597
Net Income $ 168,578 $ 155,588 $ 495,070 $ 458,104
Average common equivalent shares 211,670,768 222,682,956 214,465,799 224,038,986
Net income per average common share $ 0.80 $ 0.70 $ 2.31 $ 2.04
Dividends declared per common share 0.23 0.20 0.68 0.60
(1) Includes dividends on common stock of
The Coca-Cola Company 6,757 6,033 20,272 18,100
<FN>
<F1>See notes to consolidated financial statements
</TABLE>
Page 3
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30 December 31 September 30
(Dollars in thousands)<F1> 1997 1996 1996
<S> <C> <C> <C>
Assets
Cash and due from banks $ 2,638,422 $ 3,037,309 $ 2,460,275
Interest-bearing deposits in other banks 9,969 13,461 12,700
Trading account 213,774 80,377 164,363
Investment securities (1) 11,346,407 10,551,166 10,759,252
Funds sold 847,025 1,721,845 768,427
Loans 38,475,470 35,404,171 33,824,308
Reserve for loan losses (747,077) (725,849) (724,677)
Net loans 37,728,393 34,678,322 33,099,631
Premises and equipment 953,567 768,266 753,664
Intangible assets 285,765 277,736 280,264
Customers' acceptance liability 501,325 507,554 441,584
Other assets 929,544 832,213 892,532
Total assets $ 55,454,191 $ 52,468,249 $ 49,632,692
Liabilities
Noninterest-bearing deposits $ 7,840,994 $ 8,900,260 $ 7,940,714
Interest-bearing deposits 28,376,060 27,990,129 27,033,446
Total deposits 36,217,054 36,890,389 34,974,160
Funds purchased 6,595,386 6,047,692 5,346,619
Other short-term borrowings 1,839,091 867,961 878,118
Long-term debt 3,026,245 1,565,341 1,563,906
Acceptances outstanding 501,325 507,554 441,584
Other liabilities 2,286,034 1,709,332 1,649,592
Total liabilities 50,465,135 47,588,269 44,853,979
Shareholders' Equity
Preferred stock, no par value; 50,000,000 shares
authorized; none issued
Common stock, $1.00 par value; 350,000,000
shares authorized (2) 216,608 225,608 225,608
Additional paid in capital 299,519 310,612 313,584
Retained earnings 2,911,637 2,972,900 2,864,131
Treasury stock and other (3) (316,591) (230,918) (131,799)
Realized shareholders' equity 3,111,173 3,278,202 3,271,524
Unrealized gains (losses) on investment
securities, net of taxes 1,877,883 1,601,778 1,507,189
Total shareholders' equity 4,989,056 4,879,980 4,778,713
Total liabilities and shareholders' equity $ 55,454,191 $ 52,468,249 $ 49,632,692
(1) Includes unrealized gains (losses) on
investment securities $ 3,035,624 $ 2,588,907 $ 2,435,138
(2) Common shares outstanding 211,105,817 220,469,001 222,967,776
(3) Treasury shares of common stock 5,502,240 5,139,056 2,640,281
<FN>
<F1>See notes to consolidated financial statements.
</TABLE>
Page 4
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
Nine Months
Ended September 30
(In thousands)<F1> 1997 1996
<S> <C> <C>
Cash flow from operating activities:
Net income $ 495,070 $ 458,104
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 112,421 95,741
Provision for loan losses 84,439 81,155
Provision for losses on other real estate 1,964 2,974
Amortization of compensation element of
restricted stock 7,099 7,372
Securities (gains) and losses, net (1,090) (14,593)
(Gains) and losses on sale of equipment, other
real estate and repossessed assets, net (18,676) (6,372)
Recognition of unearned loan income (180,385) (151,780)
Change in period-end balances of:
Trading account (133,397) (67,750)
Interest receivable (41,419) (9,939)
Prepaid expenses (45,840) (35,531)
Other assets (24,918) 32,152
Taxes payable 56,965 (10,019)
Interest payable 21,373 (31,886)
Other accrued expenses 336,686 82,290
Net cash provided by operating activities 670,292 431,918
Cash flow from investing activities:
Proceeds from maturities of investment securities 943,999 1,363,706
Proceeds from sales of investment securities 526,802 714,355
Purchase of investment securities (1,816,914) (2,573,527)
Net (increase) decrease in loans (2,935,826) (2,349,224)
Capital expenditures (269,979) (93,233)
Proceeds from sale of equipment, other real estate
and repossessed assets 11,680 4,495
Net inflow (outflow) from bank acquisitions 122,603 (1,207)
Other (22,575) (24,276)
Net cash provided(used) by investing activities (3,440,210) (2,958,911)
Cash flow from financing activities:
Net increase (decrease) in deposits (808,920) 1,712,587
Net increase (decrease) in funds purchased and
other short-term borrowings 1,518,824 (156,391)
Proceeds from the issuance of long-term debt 1,647,819 661,888
Repayment of long-term debt (186,915) (100,327)
Proceeds from the exercise of stock options 5,036 4,409
Payments to acquire treasury stock (539,634) (189,168)
Dividends paid (143,491) (134,162)
Net cash provided by financing activities 1,492,719 1,798,836
Net decrease in cash and cash equivalents (1,277,199) (728,157)
Cash and cash equivalents at beginning of period 4,772,615 3,969,559
Cash and cash equivalents at end of period $ 3,495,416 $ 3,241,402
Supplemental Disclosure
Interest paid $ 1,308,801 $ 1,109,437
Taxes paid 208,252 220,130
<FN>
<F1>See notes to consolidated financial statements.
</TABLE>
Page 5
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION> Unrealized
Additional Treasury Gains (Losses)
Common Paid in Retained Stock and on Securities
(In thousands)<F1> Stock Capital Earnings Other<F2> Net of Taxes Total
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $ 130,461 $ 434,724 $ 3,417,801 $ (871,953) $ 1,158,548 $ 4,269,581
Stock dividend 113,183 (113,183) - - - -
Balance, January 1, 1996, restated 243,644 321,541 3,417,801 (871,953) 1,158,548 4,269,581
Net income - - 458,104 - - 458,104
Cash dividends declared on common
stock, $0.60 per share - - (134,150) - - (134,150)
Proceeds from exercise of stock options - (10,536) - 14,945 - 4,409
Acquisition of treasury stock - - - (189,168) - (189,168)
Retirement of treasury stock (18,036) - (877,624) 895,660 - -
Issuance of treasury stock for 401(k) - 1,605 - 6,683 - 8,288
Issuance, net of forfeitures, of treasury
stock as restricted stock - 974 - 18,523 - 19,497
Issuance of treasury stock for acquisition - - - 5,636 - 5,636
Compensation element of restricted stock - - - (19,497) - (19,497)
Amortization of compensation element
of restricted stock - - - 7,372 - 7,372
Change in unrealized gains (losses)
on securities, net of taxes - - - - 348,641 348,641
Balance, September 30, 1996 $ 225,608 $ 313,584 $ 2,864,131 $ (131,799) $ 1,507,189 $ 4,778,713
Balance, January 1, 1997 $ 225,608 $ 310,612 $ 2,972,900 $ (230,918) $ 1,601,778 $ 4,879,980
Net income - - 495,070 - - 495,070
Cash dividends declared on common
stock, $0.68 per share - - (143,491) - - (143,491)
Proceeds from exercise of stock options - (15,815) - 20,851 - 5,036
Acquisition of treasury stock - - - (539,634) - (539,634)
Retirement of treasury stock (9,000) - (412,842) 421,842 - -
Issuance of treasury stock for 401(k) - 1,378 - 7,513 - 8,890
Issuance, net of forfeitures, of treasury
stock as restricted stock - 3,344 - 14,428 - 17,772
Compensation element of restricted stock - - - (17,772) - (17,772)
Amortization of compensation element
of restricted stock - - - 7,099 - 7,099
Change in unrealized gains (losses)
on securities, net of taxes - - - - 276,105 276,105
Balance, September 30, 1997 $ 216,608 $ 299,519 $ 2,911,637 $ (316,591) $ 1,877,883 $ 4,989,056
<FN>
<F1>See notes to consolidated financial statements.
<F2>* Balance at September 30, 1997 includes $256,454 for Treasury Stock and $60,137 for Deferred Compensation.
</TABLE>
Page 6
<PAGE>
Notes to Consolidated Financial Statements
Note 1 - Accounting Policies
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated. These financial statements should be read in conjunction
with the Company's annual financial statements and related notes for the year
ended December 31, 1996.
Note 2 - Stock Dividend
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 restated for the effect of this stock dividend.
Note 3 - Recent Accounting Developments
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS No. 128), Earnings Per Share.
SFAS No. 128 establishes standards for computing and presenting earnings per
share (EPS) and applies to entities with publicly held common stock. SFAS No.
128 simplifies the standards for computing earnings per share previously
found in APB Opinion No. 15 and makes them comparable to international EPS
standards. It replaces the presentation of primary EPS with a presentation of
basic EPS. It also requires dual presentation of basic and diluted EPS on the
face of the statement of earnings for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation. SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997, earlier application is not permitted.
The pro forma basic and diluted EPS calculated under SFAS No. 128 were not
materially different from the primary and fully-diluted earnings per share
presented for the periods ended September 30, 1997 and 1996.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income, which
is effective for annual and interim periods beginning after December 15,
1997. This statement requires that all items that are required to be
recognized under accounting standards as comprehensive income be reported in
a financial statement that is displayed with the same prominence as other
financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.131, Disclosures about Segments of an
Enterprise and Related Information, which is effective for annual and interim
periods beginning after December 15, 1997. This statement establishes
standards for the method that public entities use to report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographical areas and major
customers.
Page 7
<PAGE>
Notes to Consolidated Financial Statements - continued
Note 4 - Derivative Financial Instruments
Derivatives are used to hedge interest rate exposures by modifying the
interest rate characteristics of related balance sheet instruments. The
specific criteria required for derivatives used for such purposes are
described below. Derivatives that do not meet these criteria are carried at
market value with changes in value recognized currently in earnings.
Currently, it is not the Company's policy to hold derivatives that do not
qualify as hedges.
Derivatives used as hedges must be effective at reducing the risk associated
with the exposure being hedged and must be designated as a hedge at the
inception of the derivative contract. Derivatives used for hedging purposes
include swaps, forwards, futures, and purchased options. The fair value of
derivative contracts are carried off-balance sheet and the unrealized gains
and losses on derivative contracts are generally deferred. The interest
component associated with derivatives used as hedges or to modify the
interest rate characteristics of assets and liabilities is recognized over
the life of the contract in net interest income. Upon contract settlement or
termination, the cumulative change in the market value of such derivatives is
recorded as an adjustment to the carrying value of the underlying asset or
liability and recognized in net interest income over the expected remaining
life of the related asset or liability. In instances where the underlying
instrument is sold, the cumulative change in the value of the associated
derivative is recognized immediately in the component of earnings relating to
the underlying instrument.
Note 5 - Acquisitions
On September 26, 1997, the Company signed a definitive agreement to acquire
Equitable Securities Corporation, a Nashville, Tennessee-based investment
banking, securities brokerage and investment advisory firm. The merger,
which is subject to regulatory approval and other customary conditions, is
expected to be completed during the first quarter of 1998.
Page 8
<PAGE>
<TABLE>
TABLE 1 - SELECTED QUARTERLY FINANCIAL DATA
(Dollars in millions except per share data)
<CAPTION>
Quarters
1997 1996
3 2 1 4 3
<S> <C> <C> <C> <C> <C>
Summary of Operations
Interest and dividend income $ 934.9 $ 898.4 $ 863.1 $ 846.5 $ 820.4
Interest expense 458.1 428.7 400.6 384.2 366.0
Net interest income 476.8 469.7 462.5 462.3 454.4
Provision for loan losses 29.0 29.2 26.2 34.7 30.0
Net interest income after provision for loan losses 447.8 440.5 436.3 427.6 424.4
Noninterest income 232.9 228.1 225.8 207.0 197.2
Noninterest expense 424.4 413.3 414.0 399.1 389.6
Income before provision for income taxes 256.3 255.3 248.1 235.5 232.0
Provision for income taxes 87.7 89.9 87.0 77.0 76.4
Net income $ 168.6 $ 165.4 $ 161.1 $ 158.5 $ 155.6
Per common share
Net income $ 0.80 $ 0.77 $ 0.74 $ 0.72 $ 0.70
Dividends declared 0.23 0.23 0.23 0.23 0.20
Book value 23.63 24.21 22.31 22.13 21.43
Common stock market price
High 70.44 59.00 54.75 52.50 41.50
Low 54.75 44.13 46.13 40.88 34.88
Close 67.94 55.06 46.38 49.25 41.00
Selected Average Balances
Total assets $55,060.2 $53,498.3 $51,906.5 $50,061.1 $48,122.6
Earning assets 47,672.1 46,238.1 45,054.0 43,763.9 42,179.2
Loans 37,898.9 37,000.9 35,894.2 34,416.9 33,029.6
Total deposits 36,115.7 36,078.8 35,519.5 34,840.7 34,652.8
Realized shareholders' equity 3,127.6 3,128.2 3,229.2 3,334.0 3,281.7
Total shareholders' equity 5,090.4 5,007.8 4,966.6 4,841.3 4,713.7
Common equivalent shares (thousands) 211,671 213,572 218,227 221,840 222,683
Financial Ratios and Other
ROA<F1> 1.29 % 1.31 % 1.33 % 1.32 % 1.35 %
ROE<F1> 21.38 21.21 20.23 18.91 18.86
Net interest margin<F1> 4.04 4.16 4.25 4.29 4.38
Net interest income - taxable-equivalent $ 485.7 $ 479.2 $ 472.0 $ 472.2 $ 464.2
<FN>
<F1>ROA, ROE and net interest margin are calculated excluding unrealized gains
on investment securities because the unrealized gains are not included in
income.
</TABLE>
Page 9
<PAGE>
The following is an analysis of the financial performance of SunTrust Banks,
Inc. (SunTrust or Company) for the third quarter of 1997 and provides
comments on earlier periods. In this discussion net interest income and net
interest margin are presented on a taxable-equivalent basis. Also all ratios
are presented on an annualized basis.
<TABLE>
TABLE 2A - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE AND AVERAGE
YIELDS EARNED AND RATES PAID
(Dollars in millions; yields on a taxable-equivalent basis)
<CAPTION>
Quarter Ended
September 30, 1997 June 30, 1997 September 30, 1996
Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Loans<F1>
Taxable $37,205.4 $766.1 8.17 % $36,296.5 $738.0 8.16 % $32,389.3 $666.9 8.19 %
Tax-exempt<F2> 693.5 13.5 7.75 704.4 14.0 7.95 640.3 13.4 8.28
Total loans 37,898.9 779.6 8.16 37,000.9 752.0 8.15 33,029.6 680.3 8.19
Investment securities:
Taxable 7,679.8 128.8 6.66 7,412.5 123.7 6.69 7,648.4 123.1 6.41
Tax-exempt<F2> 689.3 14.7 8.46 708.5 15.1 8.57 747.2 16.5 8.76
Total investment securities 8,369.1 143.5 6.80 8,121.0 138.8 6.85 8,395.6 139.6 6.62
Funds sold 1,139.9 16.6 5.75 845.5 13.3 6.27 670.3 9.1 5.42
Other short-term investments<F2> 264.2 4.1 6.18 270.7 3.8 5.69 83.7 1.2 5.80
Total earning assets 47,672.1 943.8 7.85 46,238.1 907.9 7.88 42,179.2 830.2 7.83
Reserve for loan losses (741.6) (733.5) (723.1)
Cash and due from banks 2,238.7 2,197.8 2,167.9
Premises and equipment 949.4 945.0 750.6
Other assets 1,766.9 1,813.8 1,435.6
Unrealized gains(losses) on
investment securities 3,174.7 3,037.1 2,312.4
Total assets $55,060.2 $53,498.3 $48,122.6
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts $10,424.8 $ 71.6 2.73 % $10,494.5 $ 71.2 2.72 % $10,270.4 $ 69.8 2.70 %
Savings 5,202.2 47.1 3.59 5,297.6 47.4 3.59 5,580.5 49.9 3.56
Consumer time 6,946.6 91.2 5.21 7,016.1 90.6 5.18 7,120.1 91.9 5.13
Other time<F3> 6,084.9 86.0 5.61 5,808.1 80.7 5.58 4,579.7 62.3 5.40
Total interest-bearing deposits 28,658.5 295.9 4.10 28,616.3 289.9 4.06 27,550.7 273.9 3.95
Funds purchased 6,440.0 86.9 5.36 5,827.0 77.8 5.35 4,782.0 60.8 5.06
Other short-term borrowings 1,906.4 27.7 5.75 1,762.1 24.9 5.66 658.7 9.3 5.63
Long-term debt 2,826.0 47.6 6.68 2,191.7 36.1 6.61 1,333.0 22.0 6.59
Total interest-bearing liabiliti 39,830.9 458.1 4.56 38,397.1 428.7 4.48 34,324.4 366.0 4.24
Noninterest-bearing deposits 7,457.2 7,462.5 7,102.1
Other liabilities 2,681.7 2,630.9 1,982.4
Realized shareholders' equity 3,127.6 3,128.2 3,281.7
Net unrealized gains(losses)
on investment securities 1,962.8 1,879.6 1,432.0
Total liabilities and
shareholders' equity $55,060.2 $53,498.3 $48,122.6
Interest rate spread 3.29 % 3.40 % 3.59 %
Net Interest Income $485.7 $479.2 $464.2
Net Interest Margin 4.04 % 4.16 % 4.38 %
<FN>
<F1> Interest income includes loan fees of $26.5, $24.1, and $24.1 in the
quarters ended September 30, and June 30, 1997 and September 30, 1996 and
$73.8 and $70.6 in the nine months ended September 30, 1997 and 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%, 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 $8.9, $9.5 and $9.8 in the quarters ended September 30 and June
30, 1997 and September 30, 1996 and $27.9 and $30.2 in the nine months
ended September 30, 1997 and 1996.
</TABLE>
Page 10
<PAGE>
<TABLE>
TABLE 2b - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE AND AVERAGE
YIELDS EARNED AND RATES PAID
(Dollars in millions; yields on a taxable-equivalent basis)
<CAPTION>
Nine Months Ended
September 30, 1997 September 30, 1996
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans<F1>
Taxable $36,239.3 $2,211.3 8.16 % $31,616.5 $1,953.7 8.25 %
Tax-exempt<F2> 699.4 40.9 7.82 630.6 39.8 8.42
Total loans 36,938.7 2,252.2 8.15 32,247.1 1,993.5 8.26
Investment securities:
Taxable 7,457.5 372.4 6.68 7,462.1 356.0 6.37
Tax-exempt<F2> 709.5 45.5 8.58 780.4 51.9 8.88
Total investment securities 8,167.0 417.9 6.84 8,242.5 407.9 6.61
Funds sold 985.5 43.9 5.94 618.5 25.0 5.40
Other short-term investments<F2> 239.8 10.3 5.76 73.9 3.3 5.97
Total earning assets 46,331.0 2,724.3 7.86 41,182.0 2,429.7 7.88
Reserve for loan losses (734.5) (714.6)
Cash and due from banks 2,232.0 2,213.3
Premises and equipment 926.8 741.9
Other assets 1,737.2 1,397.8
Unrealized gains(losses) on
investment securities 3,007.4 2,112.0
Total assets $53,499.9 $46,932.4
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts $10,469.4 $ 213.8 2.73 % $10,271.7 $ 215.8 2.81 %
Savings 5,300.3 142.3 3.59 5,352.6 147.8 3.69
Consumer time 7,003.9 271.3 5.18 7,356.2 285.8 5.19
Other time<F3> 5,682.0 235.4 5.54 3,949.8 162.3 5.49
Total interest-bearing deposits 28,455.6 862.8 4.05 26,930.3 811.7 4.03
Funds purchased 6,126.2 242.4 5.29 4,496.3 171.2 5.09
Other short-term borrowings 1,677.8 71.0 5.66 855.8 36.0 5.62
Long-term debt 2,229.8 111.2 6.67 1,168.1 58.7 6.72
Total interest-bearing liabiliti 38,489.4 1,287.4 4.47 33,450.5 1,077.6 4.30
Noninterest-bearing deposits 7,451.3 7,109.8
Other liabilities 2,537.1 1,824.4
Realized shareholders' equity 3,161.3 3,240.3
Net unrealized gains(losses)
on investment securities 1,860.8 1,307.4
Total liabilities and
shareholders' equity $53,499.9 $46,932.4
Interest rate spread 3.39 % 3.58 %
Net Interest Income $1,436.9 $1,352.1
Net Interest Margin 4.15 % 4.39 %
<FN>
<F3> Interest rate swap transactions used to help balance the Company's
interest-sensitivity position increased interest expense by $1.2, $0.8,
and $0.4 in the quarters ended September 30, 1997, June 30, 1997 and
September 30, 1996 and $2.4 and $1.2 in the nine months ended September
30, 1997 and September 30, 1996. Without these swaps, the rate on other
time deposits and the net interest margin would have been 5.53% and 4.05%,
5.52% and 4.16%, and 5.37% and 4.38% in the quarters ended September 30
and June 30, 1997 and September 30, 1996 and 5.48% and 4.15%, and 5.45%
and 4.39% in the nine months ended September 30, 1997 and 1996.
</TABLE>
Page 11
<PAGE>
Net Interest Income/Margins. The Company's net interest margin of 4.04% for
the third quarter of 1997 was 34 basis points lower than the third quarter of
last year. The rate on earning assets was 7.85% in the third quarter of 1997
and 7.83% in the third quarter of 1996. At the same time, the rate on
interest-bearing liabilities increased 32 basis points. Rapid earning asset
growth funded by growth in higher cost funding sources put downward pressure
on the net interest margin. Funds used for the repurchase of SunTrust common
stock (see the discussion entitled "Capital" on page 18) also had the effect
of lowering the net interest margin by approximately 4 basis points.
Interest rate swaps also contributed to the decrease of this year's net
interest margin (see the discussion entitled "Derivatives" on page 17).
Interest income which the Company was unable to recognize on nonperforming
loans in the first nine months of 1997 had a negative impact of 1 basis point
on the net interest margin as compared to 2 basis points in the first nine
months of 1996. Table 2 contains more detailed information concerning average
balances and interest yields earned and rates paid.
Noninterest Income. Noninterest income in the third quarter and the first
nine months of 1997, adjusted to exclude securities gains (losses), increased
17.7% and 15.0% from the comparable periods a year ago. Trust income, the
Company's largest source of noninterest income, increased 16.0% and 12.8%
over the same periods. Mortgage fees were 39.3% higher in the third quarter
of this year compared to the same period last year due to higher volume in
our mortgage banking business. Credit card fees also increased 11.4% and
11.0%.
<TABLE>
TABLE 3 - NONINTEREST INCOME
(In millions)
<CAPTION>
Quarters
1997 1996
3 2 1 4 3
<S> <C> <C> <C> <C> <C>
Trust income $ 79.0 $ 78.7 $ 78.4 $ 69.0 $ 68.1
Service charges on deposit accounts 62.4 61.9 59.7 60.7 57.9
Corporate and institutional investment serv 8.6 4.6 5.0 4.8 3.4
Retail investment income 8.3 8.5 8.0 5.1 6.3
Credit card fees 17.5 18.4 18.8 17.0 15.7
Mortgage fees 12.2 10.9 9.2 8.8 8.7
Other charges and fees 27.2 29.5 29.0 25.9 23.8
Securities gains (losses) 0.1 (0.4) 1.4 (0.4) (0.5)
Trading account profits and commissions 4.0 4.8 4.0 4.1 3.5
Other income 13.6 11.2 12.3 12.0 10.3
Total noninterest income $232.9 $228.1 $225.8 $207.0 $197.2
</TABLE>
Page 12
<PAGE>
Noninterest Expense. Noninterest expense increased 8.9% and 5.7% in the
third quarter and first nine months of 1997 compared to the same periods last
year. Personnel expense, consisting of salaries, other compensation and
employee benefits, increased 9.7% and 10.3% over the aforementioned periods.
Other noninterest expense increased substantially over last year due to
expenditures made in connection with various projects to stimulate business
growth and development.
<TABLE>
TABLE 4 - NONINTEREST EXPENSE
(In millions)
<CAPTION>
Quarters
1997 1996
3 2 1 4 3
<S> <C> <C> <C> <C> <C>
Salaries $175.2 $169.8 $167.0 $165.6 $161.7
Other compensation 39.2 36.0 35.4 34.2 32.9
Employee benefits 27.5 29.5 32.4 28.8 26.0
Net occupancy expense 30.9 32.5 32.5 35.2 34.9
Equipment expense 30.7 30.3 30.1 30.4 29.5
FDIC premiums 1.3 1.4 1.8 1.4 14.1
Marketing and community relations 15.9 16.9 16.8 23.3 19.2
Postage and delivery 10.1 10.5 11.3 10.3 10.5
Operating supplies 8.7 9.1 9.6 9.4 8.9
Other real estate expense (3.1) (1.3) (1.2) (1.1) 0.4
Communications 8.9 8.6 9.1 8.6 8.3
Consulting and legal 8.1 5.4 5.7 8.5 5.8
Amortization of intangible assets 8.3 8.0 7.7 7.3 6.8
Outside processing and software 18.0 16.1 14.9 18.2 14.2
Other expense 62.7 56.6 55.8 37.2 30.6
Total noninterest expense $442.4 $429.4 $428.9 $417.3 $403.8
</TABLE>
Provision for Loan Losses. The Company decreased its provision for loan
losses in the third quarter of 1997 to $29.0 million from $30.0 million in
the same period last year, yet the provision still exceeded net charge-offs
by $7.3 million. Net loan charge-offs were $63.1 million in the first nine
months of this year, representing 0.23% of average loans. The comparable net
charge-off amount for 1996 was $56.5 million or 0.23% of average loans.
The Company maintains a reserve for loan losses to absorb possible
losses in the loan portfolio. The reserve consists of three elements; (i)
reserves established on specific loans, (ii) reserves based on historical
loan loss experience, and (iii) reserves based on economic conditions in the
Company's individual markets. The specific reserve element is based on a
regular analysis of all loans and commitments over a fixed dollar amount
where the internal credit rating is at or below a pre-determined
classification. The historical loan loss element represents a projection of
future credit problems and is determined statistically using a loss migration
analysis that examines loss experience and the related internal gradings of
loans charged-off. The general economic condition element is determined by
management at the individual subsidiary banks and is based on a subjective
evaluation 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.
The Company's reserve for loan losses totaled $747.1 million at
September 30, 1997, which was 1.94% of quarter-end loans and 482.0% of total
nonperforming loans. These ratios at December 31, 1996 were 2.05% and 342.0%
and at September 30, 1996 were 2.14% and 386.2%.
Page 13
<PAGE>
<TABLE>
TABLE 5 - SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in millions)
<CAPTION>
Quarters
1997 1996
3 2 1 4 3
<S> <C> <C> <C> <C> <C>
Reserve for Loan Losses
Balances - beginning of quarter $ 739.8 $ 734.5 $ 725.8 $ 724.7 $ 722.6
Reserve of purchased banks
Provision for loan losses 29.0 29.2 26.2 34.7 30.0
Charge-offs:
Commercial (6.8) (4.7) (4.8) (14.4) (12.2)
Real estate:
Construction (1.3) (0.5) (0.1) (1.1) (0.2)
Mortgage, 1-4 family (2.0) (1.5) (1.1) (1.5) (2.3)
Other (1.3) (1.8) (1.4) (3.0) (2.8)
Lease financing (0.4) (0.3) (0.3) (0.3) (0.2)
Credit card (13.2) (12.5) (11.6) (11.7) (10.6)
Other consumer loans (12.4) (14.0) (12.7) (13.9) (12.6)
Total charge-offs (37.4) (35.3) (32.0) (45.9) (40.9)
Recoveries:
Commercial 4.3 2.5 4.6 3.7 4.6
Real estate:
Construction 1.0 0.1 0.1 0.1
Mortgage, 1-4 family 0.2 0.4 0.6 0.4 0.3
Other 2.6 1.1 1.3 1.5 1.2
Lease financing 0.2 0.1 0.1 0.1 0.1
Credit card 2.0 1.8 2.4 1.7 1.7
Other consumer loans 5.4 5.5 5.4 4.8 5.0
Total recoveries 15.7 11.4 14.5 12.3 13.0
Net charge-offs (21.7) (23.9) (17.5) (33.6) (27.9)
Balance - end of quarter $ 747.1 $ 739.8 $ 734.5 $ 725.8 $ 724.7
Quarter-end loans outstanding:
Domestic $38,185.3 $37,382.9 $36,148.1 $35,154.8 $33,567.4
International 290.2 301.4 279.9 249.4 256.9
Total $38,475.5 $37,684.3 $36,428.0 $35,404.2 $33,824.3
Ratio of reserve to quarter-end loans 1.94 % 1.96 % 2.02 % 2.05 % 2.14 %
Average loans $37,898.9 $37,000.9 $35,894.2 $34,416.9 $33,029.6
Ratio of net charge-offs (annualized)
to average loans 0.23 % 0.26 % 0.20 % 0.39 % 0.34 %
</TABLE>
Page 14
<PAGE>
<TABLE>
TABLE 6 - NONPERFORMING ASSETS
(Dollars in millions)
<CAPTION>
1997 1996
September 30 June 30 March 31 December 31 September 30
<S> <C> <C> <C> <C> <C>
Nonperforming Assets
Nonaccrual loans:
Domestic:
Commercial $ 35.2 $ 29.1 $ 36.5 $ 45.6 $ 29.1
Real Estate:
Construction 2.8 12.6 13.6 13.3 14.9
Mortgage, 1-4 family 57.8 54.8 59.5 49.6 49.7
Other 47.1 55.0 59.9 81.0 80.1
Lease financing 0.7 1.0 1.3 2.3 0.2
Consumer loans 8.7 8.5 10.2 10.5 10.9
Total nonaccrual loans 152.3 161.0 181.0 202.3 184.9
Restructured loans 2.7 11.0 9.9 9.9 2.7
Total nonperforming loans 155.0 172.0 190.9 212.2 187.6
Other real estate owned 35.7 41.9 43.9 43.6 51.9
Total Nonperforming Assets $190.7 $213.9 $234.8 $255.8 $239.5
Ratios:
Nonperforming loans to total loans 0.40 % 0.46 % 0.52 % 0.60 % 0.55 %
Nonperforming assets to total loans
plus other real estate owned 0.50 0.57 0.64 0.72 0.71
Reserve to nonperforming loans 482.0 430.1 384.7 342.0 386.2
Accruing Loans Past Due 90 Days or More $ 41.4 $ 25.9 $ 33.9 $ 34.2 $ 28.0
</TABLE>
Nonperforming Assets. Nonperforming assets consist of nonaccrual and
restructured loans and other real estate owned. Nonperforming assets have
decreased $65.1 million since December 31, 1996 and $48.8 million since
September 30, 1996. Included in nonperforming loans at September 30, 1997 are
loans aggregating $23.7 million which are current as to the payment of
principal and interest but have been placed in nonperforming status because
of uncertainty over the borrowers' ability to make future payments. In
management's opinion, all known material potential problem loans are included
in Table 6.
Interest income on nonaccrual loans, if recognized, is recorded on a cash
basis. During the first nine months of 1997, the gross amount of interest
income that would have been recorded on nonaccrual loans and restructured
loans at September 30, 1997, if all such loans had been accruing interest at
the original contractual rate, was $11.0 million. Interest income recognized
in the nine months ended September 30, 1997 on all such nonperforming loans
at September 30, 1997, was $3.7 million.
Page 15
<PAGE>
<TABLE>
Table 7 - Loan Portfolio by Types of Loans (in millions)
<CAPTION>
1997 1996
September 30 June 30 March 31 December 31 September 30
<S> <C> <C> <C> <C> <C>
Commercial:
Domestic $12,968.2 $12,668.3 $12,267.0 $11,725.5 $10,985.2
International 278.0 289.9 268.4 240.6 247.7
Real estate:
Construction 1,400.7 1,411.2 1,416.5 1,384.8 1,330.2
Mortgage, 1-4 family 12,726.3 12,326.0 11,839.2 11,508.2 11,018.1
Other 4,766.4 4,751.7 4,656.1 4,585.8 4,547.6
Lease financing 663.6 632.3 607.9 607.5 598.3
Credit card 1,022.5 993.9 904.9 946.8 857.2
Other consumer loans 4,649.8 4,611.0 4,468.0 4,405.0 4,240.0
Total loans $38,475.5 $37,684.3 $36,428.0 $35,404.2 $33,824.3
</TABLE>
Loans. During the third quarter and first nine months of 1997, average loans
increased 14.7% and 14.6% over the same periods a year ago. Since December
31, 1996, the two loan categories experiencing significant growth were 1-4
family residential mortgage loans (most of which are variable rate loans) and
domestic commercial loans. The average loan to deposit ratios were 104.9% and
102.9% in the third quarter and first nine months of 1997 compared with 95.3%
and 94.7% in the same periods of 1996.
At September 30, 1997, international outstandings, which include loans,
acceptances, deposits in other banks, foreign guarantees and accrued
interest, totaled $314.1 million, an increase of 14.8% from $273.5 million at
December 31, 1996.
Income Taxes. The provision for income taxes was $87.7 and $264.6 million in
the third quarter and first nine months of 1997 compared to $76.4 and $209.6
million in the same periods last year.
Investment Securities. The investment portfolio continues to be managed to
maximize yield over an entire interest rate cycle while providing liquidity
and minimizing risk. The portfolio yield increased from an average of 6.62%
in the third quarter of 1996 to 6.80% in the third quarter of this year. The
portfolio size (measured at cost) decreased to $8.1 billion, while the growth
in liabilities was used to fund loan growth. The average life of the
portfolio was approximately 3.2 years and its duration, the average time to
the receipt of the present value of the portfolio's expected cash flow, was
2.2 years at September 30, 1997. At September 30, 1997, approximately 29.4%
of the portfolio consisted of U.S. Treasury securities, 6.9% U.S. government
agency securities, 47.9% mortgage-backed securities, 8.4% municipal
securities, and 7.4% in other securities (calculated as a percent of original
cost). All of the Company's holdings in mortgage-backed securities are backed
by U.S. government or federal agency guarantees limiting the credit risk
associated with the mortgage loans. At September 30, 1997, the carrying value
of the securities portfolio was $3.0 billion over its amortized cost; the
gain consisting mostly of a $2.9 billion unrealized gain on the Company's
investment in common stock of The Coca-Cola Company.
Page 16
<PAGE>
Liquidity Management. Liquidity is managed to ensure there is sufficient
cash flow to satisfy demand for credit, deposit withdrawals and other
attractive market opportunities. A large, stable core deposit base, strong
capital position and excellent credit ratings are the solid foundation for
the Company's liquidity position. It is enhanced by an investment portfolio
structured to provide liquidity as needed. Liquidity 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.
Average total deposits for the third quarter and first nine months of
1997 increased 4.2% and 5.5% over the same periods a year ago. Interest-
bearing deposits represented 79.4% and 79.3% of average deposits for the
third quarter and first nine months of 1997, compared to 79.5% and 79.1% for
the same periods in 1996. In the third quarter of 1997, average net
purchased funds (average funds purchased less average funds sold) increased
$1.2 billion over the same period in 1996. Net purchased funds were 11.1% of
average earning assets for the third quarter and first nine months of 1997 as
compared to 9.8% and 9.4% in the same periods a year ago.
Derivatives. The Company enters into various derivatives contracts in a
dealer capacity for customers and in managing its own interest rate risk.
Where contracts have been created for customers, the Company enters into
offsetting positions to eliminate its exposure to market risk. The principal
derivative contract used by the Company is the interest rate swap. 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. The Company also monitors its sensitivity
to changes in interest rates and uses interest rate swap contracts to limit
the volatility of net interest income. Table 8 details interest rate swaps as
of September 30, 1997 used for managing interest rate sensitivity.
<TABLE>
TABLE 8 - INTEREST RATE SWAPS
<CAPTION>
Average Average Average
(Dollars in millions) Notional Fair Maturity Rate Rate
At September 30, 1997 Value Value In Months Paid Received
<S> <C> <C> <C> <C> <C>
Gain position:
Receive fixed $ 654.9 $23.0 93.2 5.77 % 7.03 %
Pay fixed 285.6 2.4 51.4 6.37 5.73
Total gain position 940.5 25.4
Loss position:
Receive fixed 1,367.7 (6.3) 8.7 5.77 5.41
Pay fixed 441.1 (6.4) 32.2 6.31 5.86
Total loss position 1,808.8 (12.7)
Total $2,749.3 $12.7
</TABLE>
The majority of the swaps are designated as hedges on deposits and other
interest-bearing liabilities. During the nine months ended September 30,
1997, hedge swaps decreased net interest income by $2.4, compared with a $1.2
decrease in the corresponding 1996 period.
Page 17
<PAGE>
<TABLE>
TABLE 9 - CAPITAL RATIOS
(Dollars in millions)
<CAPTION>
1997 1996
September 30 June 30 March 31 December 31 September 30
<S> <C> <C> <C> <C> <C>
Tier 1 capital:
Realized shareholders' equity $ 3,110.8 $ 3,075.8 $ 3,146.9 $ 3,278.2 $ 3,271.5
Trust preferred securities 600.0 600.0 0.0 0.0 0.0
Intangible assets other than servicing rights (285.8) (275.3) (277.2) (244.1) (249.0)
Total Tier 1 capital 3,425.0 3,400.5 2,869.7 3,034.1 3,022.5
Tier 2 capital:
Allowable reserve for loan losses 567.1 561.0 526.3 510.8 487.8
Allowable long-term debt 1,055.1 958.2 858.2 877.1 877.9
Total Tier 2 capital 1,622.2 1,519.2 1,384.5 1,387.9 1,365.7
Total capital $ 5,047.2 $ 4,919.7 $ 4,254.2 $ 4,422.0 $ 4,388.2
Risk-weighted assets $45,184.8 $44,703.9 $41,900.0 $40,651.0 $38,788.8
Risk-based ratios:
Tier 1 capital 7.58 % 7.60 % 6.84 % 7.46 % 7.78 %
Total capital 11.17 11.00 10.15 10.87 11.30
Tier 1 leverage ratio 6.63 6.77 5.89 6.40 6.63
Total shareholders' equity to assets 9.00 9.27 8.96 9.30 9.63
</TABLE>
Capital Resources. Consistent with the objective of operating a sound
financial organization, SunTrust maintains capital ratios well above
regulatory requirements. The rate of internal capital generation has been
more than adequate to support asset growth. Table 9 presents capital ratios
for the five most recent quarters.
Regulatory agencies measure capital adequacy with a framework that makes
capital requirements sensitive to the risk profiles of individual banking
companies. The guidelines define capital as either Tier 1 (primarily
shareholders' equity excluding unrealized gains and losses on investment
securities) or Tier 2 (certain debt instruments and a portion of the reserve
for loan losses). The Company and its subsidiary banks are subject to a
minimum Tier 1 capital to risk-weighted assets ratio of 4% and total capital
(Tier 1 plus Tier 2) to risk-weighted assets ratio of 8%. The Federal Reserve
Board (Board) has also established an additional capital adequacy guideline
referred to as the Tier 1 leverage ratio which measures the ratio of Tier 1
capital to average quarterly assets.
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) requires the establishment of a capital-based supervisory system of
prompt corrective action for all depository institutions. The Board's
implementation of FDICIA defines "well capitalized" institutions as those
whose capital ratios equal or exceed the following minimum ratios: Tier 1
capital ratio of 6%, total risk-based capital ratio of 10%, and a Tier 1
leverage ratio of 5%. At September 30, 1997, the Company's Tier 1 capital,
total risk-based capital and Tier 1 leverage ratios were 7.58%, 11.17% and
6.63%, respectively. Regulatory authorities have issued a proposal to allow
financial institutions to include in Tier 2 capital 45 percent of the net
unrealized pre-tax gains on available-for-sale equity securities. Had this
proposal been in effect at September 30, 1997, the total capital ratio of
SunTrust would have been approximately 250 basis points higher.
In April 1997, the Board of Directors authorized the Company to
repurchase up to 15,000,000 shares of SunTrust common stock. At September 30,
1997, the Company has a remaining 14,329,694 shares that may be purchased
under this authorization.
Page 18
<PAGE>
Nonbanking Subsidiaries. SunTrust Mortgage, Inc. originates and services
mortgage loans on both residential and income property, principally
throughout Florida, Georgia and Tennessee. SunTrust Mortgage is primarily a
mortgage banker selling to the secondary market and representing
institutional investors. SunTrust Mortgage also assists various SunTrust
banks in their origination of mortgage loans for sale in the secondary market
and for retention in their portfolio. At September 30, 1997, the servicing
portfolio was $15.9 billion, which includes $10.0 billion in loans serviced
for subsidiary banks of SunTrust. SunTrust Insurance Company operates as a
reinsurer for credit life and accident and health insurance sold to loan
customers of SunTrust. SunTrust Insurance Services is engaged in selling
various types of insurance products, such as property and casualty, life and
health insurance. SunTrust Securities engages in securities brokerage
services and conducts incidental activities such as offering custodial and
cash management services. SunTrust Capital Markets, Inc. serves as the
investment banking arm of SunTrust. Its business activities include public
finance, corporate finance and the sale of investment securities to
corporations, institutions and government entities. Personal Express Loans,
Inc. operates as a consumer finance company. STI Credit Corporation operates
as a leasing subsidiary, primarily for commercial customers. Other nonbank
subsidiaries primarily support the Company's banking operations, providing
data processing and other services.
State Summary. SunTrust Banks, Inc. operates through three principal
subsidiaries, SunTrust Banks of Florida, Inc., SunTrust Banks of Georgia,
Inc. and SunTrust Banks of Tennessee, Inc., all well-established bank holding
companies within their respective states. Data in Table 10 does not include
financial results of SunTrust's Parent Company and certain other non-bank
subsidiaries (including SunTrust BankCard N.A., which holds substantially all
the credit card balances of the company). It is also before elimination of
certain intercompany accounts and balances.
Page 19
<PAGE>
<TABLE>
TABLE 10 - FINANCIAL HIGHLIGHTS - BANKING SUBSIDIARIES
(Dollars in Millions)
<CAPTION>
SunTrust Banks SunTrust Banks SunTrust Banks
of Florida, Inc. of Georgia, Inc. of Tennessee, Inc.
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations<F1>
Net interest income (FTE) $751.9 $704.1 $490.8 $445.6 $219.9 $204.7
Provision for loan losses 31.0 32.0 15.6 18.5 6.6 6.7
Trust income 115.6 106.5 85.3 75.9 28.6 26.6
Other noninterest income 228.9 200.8 149.4 129.8 64.9 57.7
Personnel expense 258.1 241.3 170.9 151.2 82.9 76.7
Other noninterest expense 370.3 334.0 219.1 188.4 93.4 85.4
Net income 268.3 247.5 208.2 189.0 80.6 73.8
Selected Average Balances<F2>
Total assets 25,270 22,845 21,122 17,189 7,518 6,809
Earning assets 23,822 21,370 16,542 13,721 7,235 6,528
Loans 17,954 16,159 13,151 10,968 5,624 4,899
Total deposits 18,364 18,280 11,838 10,317 5,766 5,495
Realized shareholders' equity 2,078 1,971 1,493 1,344 600 563
At September 30
Total assets 26,055 23,307 21,440 19,252 7,723 7,133
Earning assets 24,368 21,688 16,887 15,143 7,345 6,793
Loans 18,550 16,737 13,780 11,731 5,763 5,185
Reserve for loan losses 385 380 202 197 113 116
Total deposits 18,372 18,104 11,908 11,420 5,957 5,578
Realized shareholders' equity 2,150 2,037 1,634 1,405 627 585
Total shareholders' equity 2,170 2,024 3,465 2,918 635 582
Credit Quality
Net loan charge-offs<F1> 15.1 14.2 9.0 13.1 7.8 5.2
Nonperforming loans<F2> 90.5 117.5 49.2 48.7 14.9 21.2
Other real estate owned<F2> 21.8 31.2 3.2 5.6 10.4 15.1
Ratios
ROA<F3> 1.42 % 1.45 % 1.53 % 1.67 % 1.43 % 1.45 %
ROE<F3> 17.27 16.77 18.65 18.78 17.95 17.51
Net interest margin<F3> 4.22 4.41 3.97 4.34 4.06 4.20
Efficiency ratio<F3> 57.31 56.88 53.75 52.13 56.23 56.14
Total shareholders' equity/assets<F2> 8.33 8.68 16.16 15.16 8.22 8.17
Net loan charge-offs to average loans<F3> 0.12 0.12 0.09 0.16 0.19 0.15
Nonperforming loans to total loans<F2> 0.50 0.72 0.36 0.42 0.26 0.42
Nonperforming assets to total loans plus
other real estate owned<F2> 0.62 0.91 0.39 0.47 0.45 0.71
Reserve to loans<F2> 2.13 2.33 1.49 1.71 2.00 2.29
Reserve to nonperforming loans<F2> 425.9 323.6 410.8 405.2 757.4 548.5
<FN>
<F1>For the nine month period ended September 30.
<F2>At September 30.
<F3>Annualized for the first nine months.
</TABLE>
Page 20
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index:
Exhibit Exhibit No. Page No.
No.
Statement re: Computation of Per Share Earnings 11 22
(b) SunTrust did not file any reports on Form 8-K during the third quarter of
1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized this 14th day of November, 1997
SunTrust Banks, Inc.
(Registrant)
/s/ W.P. O'Halloran
William P. O'Halloran
Senior Vice President and Controller
(Chief Accounting Officer)
Page 21
<PAGE>
<TABLE>
EXHIBIT 11
Statement re: Computation of Per Share Earnings
(In thousands, except per share data)
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Primary
Net income $168,578 $155,588 $495,070 $458,104
Average common shares outstanding 211,584 223,178 214,517 224,528
Average common share equivalents outstanding <F1> :
Stock options 1,636 1,352 1,524 1,361
Restricted sock (1,549) (1,847) (1,575) (1,850)
Average primary common shares 211,671 222,683 214,466 224,039
Earnings per common share - Primary $ 0.80 $ 0.70 $ 2.31 $ 2.04
Fully Diluted
Net income $168,578 $155,588 $495,070 $458,104
Average common shares outstanding 211,584 223,178 214,517 224,528
Average common share equivalents outstanding <F1> :
Stock options 1,672 1,372 1,555 1,380
Restricted sock (1,549) (1,847) (1,564) (1,847)
Average fully diluted common shares 211,707 222,703 214,508 224,061
Earnings per common share - Fully Diluted $ 0.80 $ 0.70 $ 2.31 $ 2.04
<FN>
<F1>Includes the incremental effect of stock options and restricted
stock outstanding computed under the treasury stock method.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,638,422
<INT-BEARING-DEPOSITS> 9,969
<FED-FUNDS-SOLD> 847,025
<TRADING-ASSETS> 213,774
<INVESTMENTS-HELD-FOR-SALE> 11,346,407
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 38,475,470
<ALLOWANCE> 747,077
<TOTAL-ASSETS> 55,454,191
<DEPOSITS> 36,217,054
<SHORT-TERM> 8,434,477
<LIABILITIES-OTHER> 2,787,359
<LONG-TERM> 3,026,245
<COMMON> 216,608
0
0
<OTHER-SE> 4,772,448
<TOTAL-LIABILITIES-AND-EQUITY> 55,454,191
<INTEREST-LOAN> 2,239,149
<INTEREST-INVEST> 403,297
<INTEREST-OTHER> 53,945
<INTEREST-TOTAL> 2,696,391
<INTEREST-DEPOSIT> 862,791
<INTEREST-EXPENSE> 1,287,428
<INTEREST-INCOME-NET> 1,408,963
<LOAN-LOSSES> 84,439
<SECURITIES-GAINS> 1,090
<EXPENSE-OTHER> 1,251,697
<INCOME-PRETAX> 759,665
<INCOME-PRE-EXTRAORDINARY> 495,070
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 495,070
<EPS-PRIMARY> 2.31
<EPS-DILUTED> 2.31
<YIELD-ACTUAL> 4.15
<LOANS-NON> 152,259
<LOANS-PAST> 41,414
<LOANS-TROUBLED> 2,732
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 724,677
<CHARGE-OFFS> 104,793
<RECOVERIES> 41,582
<ALLOWANCE-CLOSE> 747,077
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 747,077
</TABLE>
