<PAGE>
Form 10-K/A
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, 1997
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, 1998, SunTrust had 211,408,881 shares of common stock
outstanding. The aggregate market value of SunTrust common stock held by
non-affiliates on January 31, 1998 was approximately $13.0 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 was filed with the Commission on
February 20, 1998. Certain Part I and Part II information required by
Form 10-K is incorporated by reference from the SunTrust Revised Annual
Report to Shareholders as indicated below, which is included as an exhibit
hereto.
FORM 10-K TABLE OF CONTENTS/CROSS-REFERENCE INDEX
<TABLE>
<CAPTION>
Page
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FORM Annual Proxy
10-K Report Statement
---- ------ ---------
<C> <C> <C>
PART I
Item 1. Business -- -- --
Item 2. Properties -- --
Item 3. Legal Proceedings -- --
Item 4. Not Applicable
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters -- -- --
Item 6. Selected Financial Data -- -- --
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- -- --
Item 7A. Derivatives -- -- --
Item 8. Financial Statements and Supplementary Data -- -- --
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 1997.
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 10,
1998, incorporated by reference to Exhibit 3 to Registration
Statement No. 333-46093.
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 SunTrust Banks, Inc. Performance Unit Plan Deferred Compensation Fund,
amended and restated as of February 19, 1996, incorporated by
reference to Exhibit 5 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 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 Amendment to SunTrust Banks, Inc. Executive Stock Plan, effective
February 10, 1998.
10.9 SunTrust Banks, Inc. Performance Stock Agreement, effective February
11, 1992, and First Amendment to Performance Stock Agreement effective
February 10, 1998.
10.10 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.
10.11 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 1997 Annual Report to Shareholders.
21 SunTrust Subsidiaries.
22 SunTrust's Proxy Statement relating to the 1998 Annual Meeting of
Shareholders incorporated by reference to Registrants' Proxy
Statement dated February 20, 1998 filed on Form DEF-14A.
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 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.
SunTrust Banks, Inc.
Date: November 12, 1998 By: /s/ William P. O'Halloran
Senior Vice President and Controller
(signing in the capacity of a duly
authorized officer of the registrant)
<PAGE>
AMENDMENT TO 1986 EXECUTIVE STOCK PLAN
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
SUNTRUST BANKS, INC.
February 10, 1998
The SunTrust Banks, Inc. 1986 Executive Stock Plan (the "Plan"), is hereby
amended, effective as of February 10, 1998, as set forth below.
Any term which is not defined below shall have the meaning
set forth in the Plan.
1. Section 8.1 of the Plan is hereby amended by adding a paragraph at the end
thereof as follows:
The Committee shall also have the right to insert provisions in any Restricted
or Performance Stock Agreement, either at the time such Restricted or
Performance Stock Agreement is entered into or subsequent to such time, whereby
the Restricted or Performance Stock (or a portion thereof) granted under such
Restricted or Performance Stock Agreement may be converted into units, each of
which will have a value equal at all times to a share of Stock (each such unit,
a "Phantom Stock Unit"). Phantom Stock Units shall be subject to such terms
and conditions (including, but not limited to the payment of dividends or the
crediting of dividend equivalents in respect of such Phantom Stock Units) not
inconsistent with this Plan as the Committee may, in its sole discretion,
determine.
IN WITNESS WHEREOF, SunTrust Banks, Inc. has caused this Amendment to be
executed by a duly authorized officer as of the day and year first above
written.
SUNTRUST BANKS, INC.
By: _______________________________
_______________________________
<PAGE>
PERFORMANCE STOCK AGREEMENT
SunTrust Banks, Inc. ("SunTrust"), a Georgia corporation, pursuant to action of
the Compensation Committee ("Committee") of its Board of Directors and in
accordance with the SunTrust Banks, Inc. Executive Stock Plan ("Plan") has made
the following 5 Performance Stock grants ("Grants") to _______________
("Grantee") as an incentive for Grantee to promote the interest of SunTrust and
its Subsidiaries:
Grant 1 ________________ Shares
Grant 2 ________________ Shares
Grant 3 ________________ Shares
Grant 4 ________________ Shares
Grant 5 ________________ Shares
TOTAL ________________ Shares
This Performance Stock Agreement evidences these Grants, and these Grants have
been made subject to all the terms and conditions set forth on the reverse side
of this Performance Stock Agreement and in the Plan. These Grants have been
made as of February 11, 1992 ("Grant Date").
SUNTRUST BANKS, INC.
_______________________________
Authorized Officer
ACKNOWLEDGMENT
Grantee hereby acknowledges the receipt of this Performance Stock Agreement.
_______________________________________________
Grantee Date
TERMS AND CONDITIONS OF PERFORMANCE STOCK GRANTED ON FEBRUARY 11, 1992
1. Grants. All of the Grants have been made subject to all the terms and
conditions set forth in the Plan and in this Performance Stock Agreement.
2. Average Stock Price Conditions. A grant shall be awarded under this
Performance Stock Agreement on the first date (which comes before the earlier
of the fifth anniversary of the Grant Date or the date the Grantee's employment
terminates for any reason whatsoever) that the average closing price for a share
of Stock (as accurately reported in The Wall Street Journal or any successor
selected by the Committee) over 20 consecutive trading days (on the New York
Stock Exchange or any successor exchange on which Stock is traded) equals or
exceeds the average stock price condition for such grant as follows:
Grants Average Stock Price Condition
Grant 1 $ 45.60
Grant 2 53.20
Grant 3 60.80
Grant 4 68.40
Grant 5 76.00
However, if a grant fails to satisfy the related average stock price condition
before the earlier of the fifth anniversary of the Grant Date or the date the
Grantee's employment terminates for any reason whatsoever, such grant
automatically shall be forfeited as of the earlier of such fifth anniversary of
the Grant Date or the date his employment terminates. If a grant is awarded to
Grantee under this 2, he thereafter shall be eligible to receive the dividends,
if any, paid with respect to the Stock subject to such grant and to vote such
Stock (to the same extent he would have been entitled to receive such dividends
and to vote such Stock if he had purchased such Stock on the date the
underlying grant is awarded to him) in accordance with the terms and conditions
set forth in the Plan (including any dividend deferral election available under
the Plan) respecting dividends and voting until the date he either forfeits his
interest in such grant under this Performance Stock Agreement or such shares of
Stock are transferred to him under 3 or 4.
3. Service Conditions.
(a) All of the Grants have been made subject to a service condition, and Grantee
shall satisfy such condition with respect to each grant if he remains in the
continuous employ of SunTrust and its Subsidiaries from the Grant Date through
the earlier of the date he reaches age 64 or the 15th anniversary of the date
such grant is awarded to him under 2 and, if he fails to satisfy such service
condition with respect to any such grant, he shall forfeit his interest in such
grant unless (1) the Committee waives this service condition at the time his
employment actually terminates or (2) the Grantee as employment with SunTrust
and its Subsidiaries terminates by reason of his death or his disability (as
determined by the Committee using a standard which is no less rigorous than the
standard for disability described in Section 22(e)(3) of the Code).
(b) Any interest in a grant of Performance Stock which the Grantee does not
forfeit under 2 or 3(a) shall be transferred to the Grantee free of any
forfeiture conditions under the Plan as soon as practicable after the service
condition under 3(a) no longer applies; provided, however, if the Committee at
any time before such transfer reasonably determines that the Grantee might have
violated any applicable civil or criminal law or did violate the written Code of
Conduct or Code of Ethics for officers and employees of SunTrust and its
Subsidiaries, the Committee shall have the right to completely forfeit Grantee's
interest in the Stock underlying all his Grants of Performance Stock without
regard to whether (i) the Grantee has satisfied the service condition set forth
in 3(a) before the date the Committee makes such determination or (ii) the
Grantee's employment is (or might have been) terminated as a result of such
conduct.
4. Change in Control.
(a) If the service condition set forth in 3 has not been satisfied by the
Grantee on the date there is a change in control (as defined in 4(b)) of
SunTrust, 3(a) shall cease to apply to the Grants on the date of such "change
in control", and any interest in a grant of Performance Stock which had been
awarded to the Grantee under 2 on or before the date of such "change in
control" shall be transferred to him as soon as practicable after such date and
any interest in a grant of Performance Stock which thereafter is awarded to the
Grantee under 2 shall be transferred to him as soon as practicable after the
date such grant is awarded to him under 2.
(b) The term "change in control" for purposes of this 4 shall mean a change in
control of SunTrust of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 (34 Act) as in effect on February 11, 1992,
provided that such a change in control shall be deemed to have occurred at such
time as (i) any "person" (as that term is used in Sections 12(d) and 14(d)(2) of
the 34 Act), is or becomes the beneficial owner (as defined in Rule 13d-3 under
the 34 Act) directly or indirectly, of securities representing 20% or more of
the combined voting power for election of directors of the then outstanding
securities of SunTrust or any successor of SunTrust; (ii) during any period of
two consecutive years or less, individuals who at the beginning of such period
constituted the Board cease, for any reason, to constitute at least a majority
of the Board, unless the election or nomination for election of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period; (iii) the
shareholders of SunTrust approve any merger, consolidation or share exchange as
a result of which stock shall be changed, converted or exchanged (other than a
merger with a wholly-owned subsidiary of SunTrust) or any liquidation of
SunTrust or any sale or other disposition of 50% or more of the assets or
business of SunTrust; or (iv) the shareholders of SunTrust approve any
merger or consolidation to which SunTrust is a party or a share exchange in
which SunTrust shall exchange its shares for shares of another corporation as a
result of which the persons who were shareholders of SunTrust immediately prior
to the effective date of the merger, consolidation or share exchange shall have
beneficial ownership of less than 50% of the combined voting power for election
of directors of the surviving corporation following the effective date of such
merger, consolidation or share exchange; provided, however, and notwithstanding
the occurrence of any of the events described above, that no "change in control"
shall be deemed to have occurred under this 4 if, prior to such time as a
"change in control" would otherwise be deemed to have occurred, the Board
determines otherwise.
5. Withholding. The Committee shall have the right to reduce the number of
shares of Stock actually transferred to the Grantee to satisfy the minimum
applicable tax withholding requirements, and the Grantee shall have the right
(absent any such action by the Committee and subject to satisfying the
requirements, if any, under Rule 16b-3) to elect that the minimum applicable tax
withholding requirements be satisfied through a reduction in the number of
shares of Stock transferred to him.
6. Nontransferable. No rights granted under the Plan or this Performance
Stock Agreement shall be transferable by the Grantee other than by will or by
the laws of descent and distribution, and the person or persons to whom such
rights are so transferred shall be treated as the Grantee under this
Performance Stock Agreement.
7. Employment and Termination. Nothing in the Plan or this Performance Stock
Agreement or any related material shall give the Grantee the right to continue
in employment by SunTrust or by a Subsidiary or adversely affect the right of
SunTrust or a Subsidiary to terminate the Grantee as employment with or without
cause at any time.
8. Other Laws. SunTrust shall have the right to refuse to issue or transfer
any Stock under this Performance Stock Agreement if SunTrust acting in its
absolute discretion determines that the issuance or transfer of such Stock
might violate any applicable law or regulation.
9. Securities Registration. The Grantee may be requested by SunTrust to hold
any shares of Stock transferred to him under this Performance Stock Agreement
for personal investment and not for purposes of resale or distribution to the
public; and the Grantee shall, if so requested by SunTrust, deliver a certified
statement to that effect to SunTrust as a condition to the transfer of such
Stock to the Grantee.
10. Miscellaneous.
(a) A mere transfer of employment between SunTrust and a Subsidiary shall not
be deemed a termination of employment under the Plan or this Performance Stock
Agreement.
(b) This Performance Stock Agreement shall be subject to all of the provisions,
definitions, terms and conditions set forth in the Plan, all of which are
incorporated by this reference in this Performance Stock Agreement except that
under this agreement the term Performance Stock Agreement under the Plan shall
mean Restricted Stock Agreement under the Plan and Performance Stock shall mean
Restricted Stock.
(c) The Plan and this Performance Stock Agreement shall be governed by the laws
of the State of Georgia.
(d) The Grantee as entire interest in the Performance Stock underlying the
Grants shall (without regard to 2, 3 or 4) be available to satisfy the claims of
SunTrust as creditors if SunTrust (on any date before such interests are
actually transferred under 3(b) to the Grantee) is generally not paying its
debts as such debts become due (other than debts that are the subject of a bona
fide dispute) or if an order for relief is entered against SunTrust in a
bankruptcy case commenced by or against it under the United States Bankruptcy
Code, or if SunTrust is the debtor in any proceeding commenced under any other
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,
liquidation or similar debtor relief law in which SunTrust is alleged to be
insolvent or otherwise unable to pay its debts as such debts become due, and
the Grantee shall forfeit his interest in such Stock and such Grants as of such
date.
PERFORMANCE STOCK AGREEMENT
FIRST AMENDMENT
EFFECTIVE FEBRUARY 10, 1998
The terms and conditions set forth in the SunTrust Banks, Inc. Performance
Stock Agreement(s) (the "Agreement(s)") entered into with _____________________
under the Executive Stock Plan (the "Plan"), are hereby amended, effective as of
February 10, 1998, as set forth below.
Performance Stock Granted in 1990
Grant #1 Award _____________ Shares
Grant #2 Award _____________ Shares
Grant #3 Award _____________ Shares
Grant #4 Award _____________ Shares
Grant #5 Award _____________ Shares
Performance Stock Granted in 1992
Grant #1 Award _____________ Shares
Any term which is not defined below shall have the meaning set forth in the
Agreement(s).
1. The Agreement(s) is hereby amended by adding a Section 3.A thereto as
follows:
3.A Phantom Stock Units.
(a) As of February 10, 2000 (the Conversion Date), an aggregate of ________
shares of Performance Stock previously awarded to the Grantee and with respect
to which the relevant stock price condition set forth in 2 has been satisfied
(such number of shares being set forth above and hereinafter referred to as the
"Converted Shares") shall be converted into "Phantom Stock Units" (as described
below) at the rate of one Phantom Stock Unit per Converted Share; provided,
however, that no such conversion shall occur if, prior to the Conversion Date,
(1) the Grantee's employment with SunTrust and its Subsidiaries shall have
terminated for any reason or (2) a "Change in Control" (as defined in 4) shall
have occurred.
(b) The value of each Phantom Stock Unit shall at all times be equal to the
value of a share of Stock. As of the Conversion Date, such Phantom Stock Units
shall be fully vested and no longer subject to the conditions of 3 hereof.
Payment in respect of such Phantom Stock Units shall be made to the Grantee in
shares of Stock upon the earlier to occur of (1) the date on which the Grantee
would otherwise have satisfied the conditions of 3(a) hereof with respect to
the Converted Shares and (2) the date of occurrence of a "Change in Control."
(c) Upon the payment of dividends with respect to shares of Stock, the
Grantee will be entitled to receive, with respect to each Phantom Stock Unit
held by such Grantee, a cash payment equal to the dividend the Grantee would
have received had such Phantom Stock Unit been a share of Stock.
SUNTRUST BANKS, INC.
By: _______________________________
Authorized Officer
ACKNOWLEDGMENT
I hereby approve the First Amendment to the Performance Stock Agreement(s) set
forth under the Executive Stock Plan.
__________________________________________________ _______________
Grantee Date
<PAGE>
EXHIBIT 11.1
Statement re: Computation of Per Share Earnings
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Basic
Net income $667,253 $641,015 $586,826 $537,994 $473,729 $404,397
Average basic common shares 210,243 220,364 226,665 229,317 235,189 239,196
Earnings per common share - basic $ 3.17 $ 2.91 $ 2.59 $ 2.35 $ 2.01 $ 1.69
Diluted
Net income $667,253 $641,015 $586,826 $537,994 $473,729 $404,397
Average common shares outstanding 210,243 220,364 226,665 229,317 235,189 239,196
Incremental shares outstanding <F1> 3,237 3,122 2,879 2,761 2,616 2,445
Average diluted common shares 213,480 223,486 229,544 232,078 237,805 241,641
Earnings per common share - diluted $ 3.13 $ 2.87 $ 2.56 $ 2.32 $ 1.99 $ 1.67
<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
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Ratio 1 - including deposit interest
Earnings:
Income before income taxes $1,025,966 $943,200 $860,925 $806,965 $700,662 $575,768
Fixed charges 1,771,603 1,476,392 1,363,702 946,283 804,281 988,111
Total 2,797,569 2,419,592 2,224,627 1,753,248 1,504,943 1,563,879
Fixed charges:
Interest on deposits 1,151,157 1,083,035 988,725 704,803 632,307 832,372
Interest on funds purchased 345,116 245,502 239,080 122,055 87,900 87,038
Interest on other short-term borrowings 91,592 48,264 54,843 42,519 21,623 7,027
Interest on long-term debt 168,508 85,031 68,114 63,119 48,839 48,560
Portion of rents representative of the
interest factor (1/3) of rental expense 15,230 14,560 12,940 13,787 13,612 13,114
Total $1,771,603 $1,476,392 $1,363,702 $946,283 $804,281 $988,111
Earnings to fixed charges 1.58 x 1.64 x 1.63 x 1.85 x 1.87 x 1.58 x
Ratio 2 - excluding deposit interest
Earnings:
Income before income taxes $1,025,966 $943,200 $860,925 $806,965 $700,662 $575,768
Fixed charges 620,446 393,357 374,977 241,480 171,974 155,739
Total $1,646,412 $1,336,557 $1,235,902 $1,048,445 $872,636 $731,507
Fixed charges:
Interest on funds purchased 345,116 245,502 239,080 $122,055 $87,900 $87,038
Interest on other short-term borrowings 91,592 48,264 54,843 42,519 21,623 7,027
Interest on long-term debt 168,508 85,031 68,114 63,119 48,839 48,560
Portion of rents representative of the
interest factor (1/3) of rental expense 15,230 14,560 12,940 13,787 13,612 13,114
Total $620,446 $393,357 $374,977 $241,480 $171,974 $155,739
Earnings to fixed charges 2.65 x 3.40 x 3.30 x 4.34 x 5.07 x 4.70 x
</TABLE>
<PAGE>
CORPORATE PROFILE
SunTrust Banks, Inc., is a premier financial services company based in the
Southeastern United States. The Company provides a wide range of services
to meet the financial needs of its growing customer base through approximately
700 full-service banking offices in Florida, Georgia, Tennessee and Alabama.
SunTrust's primary businesses include traditional deposit and credit services
as well as trust and investment services. Through various subsidiaries the
Company provides credit cards, mortgage banking, credit-related insurance,
data processing and information services, discount brokerage and investment
banking services. As of December 31, 1997, SunTrust had total assets of $58.1
billion, discretionary trust assets of $67.4 billion and a mortgage servicing
portfolio of $16.9 billion.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Year Ended December 31
(Dollars in millions except per share data) 1997 1996 1995
<S> <C> <C> <C>
For the Year
Net income $ 667.3 $ 641.0 $ 586.8
Common dividends paid 195.7 183.9 168.7
Per Common Share
Net income - diluted 3.13 2.87 2.56
Net income - basic 3.17 2.91 2.59
Dividends paid 0.925 0.825 0.740
Market price:
High 75.25 52.50 35.44
Low 44.13 32.00 23.63
Close 71.38 49.25 34.25
Book value 25.06 22.41 19.08
Financial Ratios
Return on average assets (ROA) 1.30 % 1.41 % 1.41 %
Return on average realized
shareholders' equity (ROE) 20.73 19.39 19.10
Net interest margin
(taxable-equivalent) 4.11 4.36 4.49
Efficiency ratio 58.8 59.9 59.5
Tier 1 capital ratio 7.19 7.59 7.86
Total capital ratio 12.33 10.99 9.79
Tier 1 leverage ratio 6.59 6.51 6.78
Selected Average Balances
Total assets $54,372.0 $47,788.9 $43,106.4
Earning assets 46,996.3 41,831.0 38,401.4
Loans 37,516.2 32,792.5 29,709.3
Deposits 35,915.3 34,241.3 31,808.7
Realized shareholders' equity 3,219.4 3,306.6 3,072.9
Total shareholders' equity 5,079.0 4,664.2 3,925.9
Common shares- diluted (thousands) 213,480 223,486 229,544
Common shares- basic (thousands) 210,243 220,364 226,665
At December 31
Total assets $58,082.7 $52,568.2 $46,531.5
Earning assets 49,743.3 45,182.1 40,530.0
Loans 40,135.5 35,404.2 31,301.4
Allowance for loan losses 651.8 625.8 638.9
Deposits 38,197.5 36,890.4 33,183.2
Realized shareholders' equity 3,211.5 3,339.2 3,147.6
Total shareholders' equity 5,260.4 4,941.0 4,306.2
Common shares outstanding (thousands) 209,909 220,469 225,726
Market value of common stock of
The Coca-Cola Company (48,266,496 shares) $ 3,219 $ 2,540 $ 1,792
</TABLE>
In this report, for 1993 - 1997, securities available for sale, 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.
<PAGE>
TO FELLOW SHAREHOLDERS
The Company and its shareholders, had a great year. For the third consecutive
year, the total return on our investment was 47%, including reinvested
dividends. While the stock market has rewarded almost everyone during the
last ten years, SunTrust has experienced an average annual total return of
26% during that time, more than eight percentage points a year higher than
the S&P 500. The stock market has valued our consistently strong earnings
record and rich balance sheet.
During 1997, banking continued its dramatic consolidation and diversification.
Believing that the prices of bank acquisitions were too high, SunTrust spent
the year buying back its own stock and growing its business by improving sales
efforts and service levels. To achieve this growth, we hired new and
experienced personnel, increased training, improved existing products and
introduced new ones. Banking has become an industry of constant change.
Although SunTrust has not made a major acquisition since 1986, we are
comfortable our performance record speaks well for the path we have chosen.
Our building for the future has not hampered current performance. Net income
in 1997 totaled $667.3 million, or $3.13 per share, a 9.1% increase in
earnings per share. Since SunTrust was formed in 1985, earnings per share
have improved every year and we have not taken a major hit to earnings in any
year. Excellent credit quality and good growth in both loans and noninterest
income distinguished the past year. Our performance ratios reflected the
solid earnings for 1997. The return on average assets (ROA) was 1.30% and the
return on average realized shareholders' equity (ROE) was 20.73%, a record
high.
Significant improvement in our already outstanding loan portfolio also
marked 1997. Loan growth continued to be strong while charge-offs remained
low and nonperforming loans fell to their lowest level since 1987. As loan
pricing remains very competitive and spreads stay very narrow, minimizing the
charge-off level is even more important to providing good returns for our
shareholders. Over the last four years our charge-off ratio has been
exceptional, less than 0.30% each year. In addition, SunTrust has been one of
the few banks which has consistently had a loan loss provision significantly
higher than its charge-offs. At year-end our allowance for possible loan losses
was nearly six times nonperforming loans, a comforting thought as the U.S.
moves through its seventh year of economic expansion.
We have been talking about our growth initiatives for several years. The
continued strong revenue growth, chronicled in the financial sections of this
report, is a clear indication that we are realizing the benefits of these
initiatives throughout the Company. We are particularly proud of the growth
in noninterest income that has increased by more than 14% per year for the
last two years.
Consistency is a word often associated with SunTrust. To have a consistent
record of strong earnings per share growth, a company needs well-planned
capital management and the absence of special charges in addition to strong
revenue growth and good expense control. SunTrust has consistently
repurchased its own shares, buying back more than eleven million shares in
1997, and increased its cash dividend in line with EPS growth. During this
decade, SunTrust has not had any major special charges to distort performance
trends.
As you are probably aware, Roberto Goizueta, our longtime Director and
confidant, died in October. Mr. Goizueta was widely recognized as one of the
world's truly great business leaders. His incomparable wisdom, vision and
compassion greatly benefited SunTrust.
This spring SunTrust will undergo a leadership change. I have been privileged
to serve as CEO since April 1990. On March 21, 1998, my sixty-fifth birthday,
I will be turning over the reins to L. Phillip Humann, the current President
of SunTrust. I will continue to serve on the Board and as Chairman of the
Executive Committee. Phil is no stranger to many of you, having spent
twenty-eight years in our organization, serving in many capacities, including
CEO of our Atlanta companies. As the architect of our growth initiatives, he
is ideally suited to lead this Company
We appreciate the dedicated and knowledgeable men and women who comprise
SunTrust. These employees, aided by competitive products and up-to-date
technology, are focused on generating growth internally. Whether serving
existing or new customers, SunTrust is prepared to meet the challenges of
providing superior products and services. As a team we pledge our best
efforts to our customers and our shareholders.
Sincerely,
James B. Williams L. Phillip Humann
Chairman of the Board and President
Chief Exutive Officer
February 10, 1998
A SOLID FOUNDATION
Like a building standing the test of time or a bridge spanning a wide river,
a business depends upon its solid foundation to support and sustain it. At
SunTrust we have built such a foundation - one that runs deep and wide
throughout all the communities we serve, helping to promote and encourage the
growth of SunTrust, our clients and our shareholders.
Amidst the undercurrents sweeping throughout today's banking industry, this
foundation and an adherence to our long-term strategy of serving our client's
needs and increasing the value of our shareholders' investments strengthen
and enhance our position as one of the premier financial institutions serving
the Southeast.
The Company's foundation is comprised of several critical elements - people,
products and technology. The art of managing these elements to achieve
consistent, solid, dependable results and outstanding service to our customers
is an ongoing challenge. Our performance figures demonstrate our ability to
continue to meet that challenge year after year.
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
Year Ended December 31
(Dollars in millions except per share data) 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Interest and dividend income $ 3,650.8 $ 3,246.0 $ 3,027.2 $ 2,552.3 $ 2,362.3 $ 2,537.6
Interest expense 1,756.4 1,461.8 1,350.8 932.5 790.7 975.0
Net interest income 1,894.4 1,784.2 1,676.4 1,619.8 1,571.6 1,562.6
Provision for loan losses 117.0 75.9 77.1 112.8 189.1 234.2
Net interest income after provision for loan losses 1,777.4 1,708.3 1,599.3 1,507.0 1,382.5 1,328.4
Noninterest income 934.2 818.0 713.1 699.9 726.5 672.7
Noninterest expense 1,685.6 1,583.1 1,451.5 1,400.0 1,408.4 1,425.3
Income before provision for income taxes 1,026.0 943.2 860.9 806.9 700.6 575.8
Provision for income taxes 358.7 302.2 274.1 269.0 226.9 171.4
Net income $ 667.3 $ 641.0 $ 586.8 $ 537.9 $ 473.7 $ 404.4
Net interest income (taxable-equivalent) $ 1,931.0 $ 1,824.3 $ 1,726.0 $ 1,675.6 $ 1,634.4 $ 1,632.9
Per common share
Earnings - diluted $ 3.13 $ 2.87 $ 2.56 $ 2.32 $ 1.99 $ 1.67
Earnings - basic 3.17 2.91 2.59 2.35 2.01 1.69
Dividends paid 0.925 0.825 0.740 0.660 0.580 0.520
Market price:
High 75.25 52.50 35.44 25.69 24.81 22.81
Low 44.13 32.00 23.63 21.75 20.69 16.75
Close 71.38 49.25 34.25 23.88 22.50 21.88
Selected Average Balances
Total assets $54,372.0 $47,788.9 $43,106.4 $40,495.6 $37,524.9 $35,356.5
Earning assets 46,996.3 41,831.0 38,401.4 36,111.0 34,047.3 32,008.6
Loans 37,516.2 32,792.5 29,709.3 26,412.6 24,162.8 22,489.1
Deposits 35,915.3 34,241.3 31,808.7 30,877.8 29,683.3 28,609.6
Realized shareholders' equity 3,219.4 3,306.6 3,072.9 2,964.0 2,875.1 2,697.9
Total shareholders' equity 5,079.0 4,664.2 3,925.9 3,575.4 2,877.2 2,697.9
At December 31
Total assets $58,082.7 $52,568.2 $46,531.5 $42,734.1 $40,728.4 $37,789.3
Earning assets 49,743.3 45,182.1 40,530.0 38,045.6 35,904.5 34,167.7
Loans 40,135.5 35,404.2 31,301.4 28,548.9 25,292.1 23,493.5
Allowance for loan losses 651.8 625.8 638.9 622.0 561.2 474.2
Deposits 38,197.5 36,890.4 33,183.2 32,218.4 30,485.8 29,883.0
Long-term debt 3,171.8 1,565.3 1,002.4 930.4 630.4 554.0
Realized shareholders' equity 3,211.5 3,339.2 3,147.6 2,898.5 2,845.8 2,769.7
Total shareholders' equity 5,260.4 4,941.0 4,306.2 3,468.6 3,609.6 2,769.7
Ratios and Other Data
ROA 1.30 % 1.41 % 1.41 % 1.36 % 1.26 % 1.14
ROE 20.73 19.39 19.10 18.15 16.48 14.99
Net interest margin 4.11 4.36 4.49 4.64 4.80 5.10
Efficiency ratio 58.8 59.9 59.5 58.9 59.7 61.8
Tier 1 capital ratio 7.19 7.59 7.86 7.99 8.88 9.37
Total capital ratio 12.33 10.99 9.79 10.09 10.55 11.35
Tier 1 leverage ratio 6.59 6.51 6.78 6.71 6.82 7.27
Total shareholders' equity to assets 9.06 9.40 9.25 8.12 8.86 7.33
Nonperforming assets to total loans plus
other real estate owned 0.37 0.72 0.80 0.96 1.61 2.30
Common dividend payout ratio 29.3 29.8 29.8 30.1 30.6 32.7
Full-service banking offices 699 689 652 658 656 654
ATMs 1,078 917 778 739 738 683
Full-time equivalent employees 21,227 20,863 19,415 19,408 19,532 19,539
Average common shares - diluted (thousands) 213,480 223,486 229,544 232,078 237,805 241,641
Average common shares - basic (thousands) 210,243 220,364 226,665 229,317 235,189 239,196
</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. Suntrust Banks, Inc. has made, and may
continue to make, various forward-looking statements with respect to
financial and business matters. The Company cautions that these forward-
looking statements are subject to numerous assumptions, risks and
uncertainties, all of which may change over time. Actual results could
differ significantly from forward-looking statements. 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 diluted earnings per common share rose 9.1% in 1997 to $3.13, up
from $2.87 per common share in 1996. Basic earnings per share in 1997 were
$3.17 compared with $2.91 for the previous year. Net income of the Company
amounted to $667.3 million, an increase of 4.1% over $641.0 million in 1996.
Operating results in 1997 reflected strong loan demand and continued
excellent credit quality. Net interest income was $1,931.0 million in 1997,
up $106.7 million from 1996. The net interest margin was 25 basis points
lower than last year, but the impact of the decline was more than offset by a
12.4% increase in average earning assets. Average loans increased 14.4% and
average deposits increased 4.9%. The 1997 loan loss provision of $117.0
million was $26.0 million above 1997 net charge-offs. Noninterest income
increased 14.2% with trust fees up 14.5%. Noninterest expense was $1,685.6
million for 1997, 6.5% more than in 1996. Total personnel expense, the single
largest component of noninterest expense, was up $81.5 million, or 9.3%,
from the 1996 level. Per share earnings were aided by the repurchase during
1997 of approximately 11.3 million shares of the Company's common stock.
<TABLE>
TABLE 1 - CONTRIBUTIONS TO NET INCOME
<CAPTION>
Year Ended December 31
1997 1996
(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. $371.5 55.7 % $341.2 53.2 %
SunTrust Banks of Georgia, Inc. 281.5 42.2 253.8 39.6
SunTrust Banks of Tennessee, Inc. 110.1 16.5 100.1 15.6
Total prinicpal banking subsidiaries' net income 763.1 114.4 695.1 108.4
Other banks and nonbanking net income (expense):
Other banks and nonbank subsidiaries (15.0) (2.3) (10.5) (1.6)
Parent Company (80.8) (12.1) (43.6) (6.8)
Total other banks and nonbanking net income (expens (95.8) (14.4) (54.1) (8.4)
Net income $667.3 100.0 % $641.0 100.0 %
<FN>
<F1> Additional information on the performance of banking subsidiaries can be
found on pages 32 and 33.
</TABLE>
Net Interest Income/Margin
Net interest income for 1997 was $1,931.0 million or 5.9% higher than the
prior year. Average earning assets were up 12.4% and the net interest margin
was 4.11% in 1997 compared to 4.36% in 1996. The average rate on earning
assets decreased 1 basis point to 7.85% while the average rate on interest-
bearing liabilities increased 20 basis points to 4.50%.
Interest income that the Company was unable to recognize on
nonperforming loans in 1997 had a negative impact of 1 basis point on the net
interest margin as compared to 2 basic points in 1996. Table 5 contains more
detailed information concerning average balances, yields earned and rates
paid.
<TABLE>
TABLE 2 - ANALYSIS OF CHANGES IN NET INTEREST INCOME
<CAPTION>
1997 Compared to 1996 1996 Compared to 1995
Increase (Decrease) Due to Increase (Decrease) Due to
(In millions on a taxable-equivalent basis)<F1> Volume Rate Net Volume Rate Net
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Loans:
Taxable $ 379.4 $ (22.8) $ 356.6 $ 257.7 $ (77.0) $ 180.7
Tax-exempt <F2> 3.1 (2.6) 0.5 (1.9) (5.7) (7.6)
Securities available for sale:
Taxable 5.5 20.4 25.9 16.2 28.0 44.2
Tax-exempt <F2> (6.3) (2.3) (8.6) (9.5) (5.3) (14.8)
Funds sold 15.8 4.2 20.0 9.7 (3.7) 6.0
Other short-term investments <F2> 7.8 (0.9) 6.9 0.8 0.0 0.8
Total interest income 405.3 (4.0) 401.3 273.0 (63.7) 209.3
Interest Expense
NOW/Money market accounts 5.7 (5.2) 0.5 24.0 4.7 28.7
Savings deposits (3.6) (3.6) (7.2) 56.1 45.3 101.4
Consumer time deposits (14.5) 0.8 (13.7) (30.8) (8.5) (39.3)
Other time deposits 84.4 4.2 88.6 5.9 (2.4) 3.5
Funds purchased 88.6 11.0 99.6 31.5 (25.1) 6.4
Other short-term borrowings 46.5 (3.2) 43.3 (3.4) (3.2) (6.6)
Long-term debt 80.9 2.6 83.5 20.8 (3.9) 16.9
Total interest expense 288.0 6.6 294.6 104.1 6.9 111.0
Net change in net interest income $ 117.3 $ (10.6) $ 106.7 $ 168.9 $ (70.6) $ 98.3
<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 provision for credit losses charged to expense is based upon credit loss
experience and an evaluation of losses inherent in the current loan portfolio,
including the evaluation of impaired loans as prescribed by under SFAS Nos.
114 and 118, which were adopted by the Company in 1995. The Company increased
its provision for loan losses to $117.0 million, which exceeded net charge-offs
by $26.0 million.
Noninterest Income
Noninterest income increased $116.2 million, or 14.2%, with trust income, our
largest source of noninterest income, up $40.3 million or 14.5%. Also other
charges and fees were up $36.2 million or 26.8%. Service charges on deposit
accounts rose $15.4 million or 6.6%. Mortgage fees were up $9.9 million or
27.3%. These increases reflect the Company's ongoing growth initiatives.
<TABLE>
TABLE 3 - NONINTEREST INCOME
<CAPTION>
Year Ended December 31
(In millions) 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Trust income $318.6 $278.3 $259.7 $250.3 $247.0 $226.1
Service charges on deposit accounts 247.8 232.4 212.6 218.4 225.9 215.6
Other charges and fees 171.5 135.3 106.8 95.2 112.8 98.9
Credit card fees 73.6 66.3 62.6 57.2 57.8 58.8
Mortgage fees 45.9 36.0 25.0 25.9 29.3 22.7
Securities gains (losses) 1.5 14.2 (6.6) (2.7) 2.0 5.1
Trading account profits and commissions 18.0 13.3 10.3 8.0 11.3 8.2
Other income 57.3 42.2 42.7 47.6 40.4 37.3
Total noninterest income $934.2 $818.0 $713.1 $699.9 $726.5 $672.7
</TABLE>
Noninterest Expense
Noninterest expense increased 6.5% in 1997; however, strong revenue growth
kept the efficiency ratio below 60%. Total personnel expense increased 9.3%
or $81.5 million due to increased employment and higher incentive pay.
Outside processing and software increased 20.3% or $11.5 million.
<TABLE>
TABLE 4 - NONINTEREST EXPENSE
<CAPTION>
Year Ended December 31
(In millions) 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 690.7 $ 635.0 $ 578.1 $ 550.4 $ 529.1 $ 511.7
Other compensation 153.5 128.5 95.3 96.1 107.4 107.9
Employee benefits 111.4 110.6 105.6 100.7 98.5 92.8
Total personnel expense 955.6 874.1 779.0 747.2 735.0 712.4
Net occupancy expense 126.8 138.2 130.1 126.9 128.4 134.8
Equipment expense 120.7 115.4 105.1 103.3 103.1 102.9
FDIC premiums 5.8 18.1 36.4 66.6 66.2 64.5
Marketing and customer development 68.8 76.4 50.0 57.2 48.0 51.9
Postage and delivery 42.6 40.5 36.4 34.1 32.4 32.5
Operating supplies 37.2 38.0 32.2 29.4 30.5 30.6
Communications 35.3 32.4 27.7 26.1 26.3 25.8
Consulting and legal 28.5 25.5 20.8 22.6 20.2 27.7
Other real estate expense (11.4) (0.4) (9.0) (2.2) 16.7 36.0
Amortization of intangible assets 34.0 26.7 21.4 20.6 19.7 17.0
Outside processing and software 68.4 56.9 42.7 41.8 41.8 41.2
Other expense 173.3 141.3 178.7 126.4 140.1 148.0
Total noninterest expense $1,685.6 $1,583.1 $1,451.5 $1,400.0 $1,408.4 $1,425.3
Efficiency ratio 58.8 % 59.9 % 59.5 % 58.9 % 59.7 % 61.8 %
</TABLE>
Provision for Income Taxes
The provision for income taxes covers federal and state income taxes. For
1997, the provision was $358.7 million, an increase of $56.5 million or 18.7%
from 1996. 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>
1997 1996 1995
(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 $36,817.1 $2,998.8 8.15 % $32,132.5 $2,642.2 8.22 % $29,028.1 $2,461.5 8.48 %
Tax-exempt <F2> 699.1 54.7 7.83 660.0 54.2 8.22 681.2 61.8 9.05
Total loans 37,516.2 3,053.5 8.14 32,792.5 2,696.4 8.22 29,709.3 2,523.3 8.49
Securities available for sale:
Taxable 7,513.9 502.0 6.68 7,429.0 476.1 6.41 7,167.8 431.9 6.03
Tax-exempt <F2> 695.2 59.3 8.53 768.7 67.9 8.83 873.7 82.7 9.47
Total securities available for sale 8,209.1 561.3 6.84 8,197.7 544.0 6.64 8,041.5 514.6 6.40
Funds sold 1,031.1 60.9 5.90 759.0 40.9 5.39 582.4 34.9 5.98
Other short-term investments <F2><F3> 239.9 11.7 4.89 81.8 4.8 5.84 68.2 4.0 5.80
Total earning assets 46,996.3 3,687.4 7.85 41,831.0 3,286.1 7.86 38,401.4 3,076.8 8.01
Allowance for loan losses (637.2) (647.1) (642.0)
Cash and due from banks 2,273.2 2,240.1 2,114.4
Premises and equipment 934.7 746.3 721.5
Other assets 1,799.7 1,425.2 1,132.1
Unrealized gains on
securities available for sale 3,005.3 2,193.4 1,379.0
Total assets $54,372.0 $47,788.9 $43,106.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW/Money market accounts $10,503.0 $ 286.7 2.73 % $10,296.2 $ 286.2 2.78 % $ 9,425.2 $ 257.5 2.73 %
Savings 5,271.1 189.5 3.59 5,374.0 196.7 3.66 3,619.4 95.3 2.63
Consumer time 6,996.9 363.4 5.19 7,282.3 377.1 5.18 7,875.0 416.4 5.29
Other time <F4> 5,604.6 311.6 5.56 4,084.9 223.0 5.46 3,978.0 219.5 5.52
Total interest-bearing deposits 28,375.6 1,151.2 4.06 27,037.4 1,083.0 4.01 24,897.6 988.7 3.97
Funds purchased 6,496.1 345.1 5.31 4,821.1 245.5 5.09 4,228.8 239.1 5.65
Other short-term borrowings 1,742.7 91.6 5.26 860.6 48.3 5.61 918.1 54.9 5.97
Long-term debt 2,442.4 168.5 6.90 1,268.7 85.0 6.70 960.3 68.1 7.09
Total interest-bearing liabilities 39,056.8 1,756.4 4.50 33,987.8 1,461.8 4.30 31,004.8 1,350.8 4.36
Noninterest-bearing deposits 7,539.7 7,203.9 6,911.1
Other liabilities 2,696.5 1,933.0 1,264.7
Realized shareholders' equity 3,219.4 3,306.6 3,072.9
Net unrealized gains on
securities available for sale 1,859.6 1,357.6 852.9
Total liabilities and
shareholders' equity $54,372.0 $47,788.9 $43,106.4
Interest rate spread 3.35 % 3.56 % 3.65 %
NET INTEREST INCOME $1,931.0 $1,824.3 $1,726.0
NET INTEREST MARGIN <F4> 4.11 % 4.36 % 4.49 %
<FN>
<F1>Interest income includes loan fees of $100.0, $95.3, $86.5, $93.5, $88.6
and $80.8 in the six years ended December 31, 1997. 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 1997, 1996, 1995, 1994 and 1993 and 34%
in 1992 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 $36.6, $40.1, 49.6,
$55.8, $62.8, $70.3 in the six years ended December 31, 1997.
<F3>Stated rate is calculated after reducing interest income by $18.0 in
1992 representing earnings from investment in an employee benefit trust.
<F4>Interest rate swap transactions used to help balance the Company's
interest-sensitivity position increased interest expense by $3.7 and $1.0
in 1997 and 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 5.49% and 4.12%
in 1997, 5.43% 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>
1994 1993 1992
(Dollars in millions; yields on Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
taxable-equivalent basis) Balances Expense Rates Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:<F1>
Taxable $25,678.3 $1,979.6 7.71 % $23,362.8 $1,765.1 7.56 % $21,628.4 $1,821.5 8.42 %
Tax-exempt <F2> 734.3 60.1 8.18 800.0 62.0 7.75 860.7 69.7 8.10
Total loans 26,412.6 2,039.7 7.72 24,162.8 1,827.1 7.56 22,489.1 1,891.2 8.41
Securities available for sale:
Taxable 7,968.4 437.8 5.50 7,844.6 451.2 5.75 7,079.2 515.3 7.28
Tax-exempt <F2> 1,035.5 100.7 9.72 1,128.7 115.8 10.26 1,271.3 134.5 10.58
Total securities available for sale 9,003.9 538.5 5.98 8,973.3 567.0 6.32 8,350.5 649.8 7.78
Funds sold 380.9 17.1 4.49 334.4 10.6 3.17 439.9 16.8 3.83
Other short-term investments <F2><F3> 313.6 12.8 4.07 576.8 20.4 3.53 729.1 50.1 4.40
Total earning assets 36,111.0 2,608.1 7.22 34,047.3 2,425.1 7.12 32,008.6 2,607.9 8.15
Allowance for loan losses (601.6) (521.9) (421.6)
Cash and due from banks 2,228.8 2,200.0 2,007.0
Premises and equipment 713.7 710.1 693.0
Other assets 1,060.1 1,086.0 1,069.5
Unrealized gains on
securities available for sale 983.6 3.4
Total assets $40,495.6 $37,524.9 $35,356.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW/Money market accounts $ 9,798.9 $ 223.7 2.28 % $ 9,655.0 $ 211.8 2.19 % $ 8,900.8 $ 246.2 2.77 %
Savings 4,364.5 104.6 2.40 4,515.0 108.8 2.41 4,316.1 130.4 3.02
Consumer time 6,626.2 271.8 4.10 6,799.4 276.8 4.07 7,350.0 382.8 5.21
Other time <F4> 3,054.1 104.7 3.43 1,940.6 34.9 1.80 2,132.8 73.0 3.42
Total interest-bearing deposits 23,843.7 704.8 2.96 22,910.0 632.3 2.76 22,699.7 832.4 3.67
Funds purchased 3,050.0 122.1 4.00 3,102.7 87.9 2.83 2,664.5 87.0 3.27
Other short-term borrowings 1,083.2 42.5 3.93 632.0 21.7 3.42 192.6 7.0 3.65
Long-term debt 908.4 63.1 6.95 611.4 48.8 7.99 534.5 48.6 9.09
Total interest-bearing liabilities 28,885.3 932.5 3.23 27,256.1 790.7 2.90 26,091.3 975.0 3.74
Noninterest-bearing deposits 7,034.1 6,773.3 5,909.9
Other liabilities 1,000.8 618.3 657.4
Realized shareholders' equity 2,964.0 2,875.1 2,697.9
Net unrealized gains on
securities available for sale 611.4 2.1 -
Total liabilities and
shareholders' equity $40,495.6 $37,524.9 $35,356.5
Interest rate spread 3.99 % 4.22 % 4.41 %
NET INTEREST INCOME $1,675.6 $1,634.4 $1,632.9
NET INTEREST MARGIN <F4> 4.64 % 4.80 % 5.10 %
<FN>
<F1>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
Five Year
One Year Annualized
(Dollars in millions; yields on 1997- 1997-
taxable-equivalent basis) 1996 1992
<S> <C> <C>
Assets
Loans
Taxable 14.6 % 11.2 %
Tax-exempt 5.9 (4.1)
Total loans 14.4 10.8
Securities available for sale:
Taxable 1.1 1.2
Tax-exempt (9.6) (11.4)
Total securities available for sale 0.1 (0.3)
Funds sold 35.9 18.6
Other short-term investments 193.2 (19.9)
Total earning assets 12.3 8.0
Allowance for loan losses (1.5) 8.6
Cash and due from banks 1.5 2.5
Premises and equipment 25.2 6.2
Other assets 26.3 11.0
Unrealized gains on
securities available for sale - -
Total assets 13.8 % 9.0 %
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts 2.0 % 3.4 %
Savings (1.9) 4.1
Consumer time (3.9) (1.0)
Other time 37.2 21.3
Total interest-bearing deposits 4.9 4.6
Funds purchased 34.7 19.5
Other short-term borrowings 102.5 55.3
Long-term debt 92.5 35.5
Total interest-bearing liabilities 14.9 8.4
Noninterest-bearing deposits 4.7 5.0
Other liabilities 39.5 32.6
Realized shareholders' equity (2.6) 3.6
Net unrealized gains on
securities available for sale - -
Total liabilities and
shareholders' equity 13.8 % 9.0 %
</TABLE>
Loans and Allowance for Loan Losses
Loan demand was strong in 1997 as average loans increased 14.4% over the
prior year. An increased emphasis by our banks produced strong growth in both
commercial loans and adjustable-rate residential mortgage loans. The Company's
only significant concentration of credit at December 31, 1997 occurred in loans
secured by real estate which totaled $19.2 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 1997, residential
mortgages were $8.1 billion in STI of Florida; $2.9 billion in STI of
Georgia; and $1.8 billion in STI of Tennessee. Of the $13.0 billion in
residential mortgages, $802.2 million were home equity loans. The average
loan-to-deposit ratio increased to 104.5% in 1997 compared with 95.8% in
1996.
The Company's allowance for loan losses increased to $651.8 million at
December 31, 1997, which was 1.62% of year-end loans and 509% of total
nonperforming loans. The comparable ratios at December 31, 1996 were 1.77%
and 295%, respectively.
The Company maintains a allowance for loan losses to absorb inherent losses
in the loan portfolio. SunTrust is committed to the early recognition of
possible problems and to a strong, conservative allowance. The allowance
consists of three elements; (i) allowances established on specific loans,
(ii) allowances based on historical loan loss experience, and
(iii) allowances based on general economic conditions and other factors in
the Company's individual markets. The specific allowance 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 predetermined
classification. The historical loan loss element is determined
statistically using a loss migration analysis that examines loss experience
and the related internal gradings of loans charged-off. The loss migration
analysis is performed quarterly and evaluated relative to the Company's
general allowance factors which are updated annually.
The general economic conditions elements 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. It
inherently involves a higher degree of uncertainty and considers factors
unique to the markets in which the Company operates. Generally these other
risk factors have not manifested themselves in the Company's historical losses/
experience to the extent they might currently. Consideration of these factors
is a component of the allowance for loan losses and has been reflected as
unallocated allowance in Table 7.
Other risk factors take into consideration such factors as recent loss
experience in specific portfolio segments, loan quality trends and loans
volumes including concentration, economic, foreign and administrative risk.
These other risk factors are reviewed and revised by the bank and holding
company management where conditions indicate that the estimates initially
applied are different from actual results.
The SunTrust charge-off policy is generally consistent with regulatory
standards, however, a somewhat more conservative set of policies govern the
credit card and unsecured consumer loan portfolios. SunTrust typically
places a commercial or real estate loan on nonaccrual when principal or
interest is due and has remained unpaid for 90 days or more, unless the loan
is secured by collateral having realizable value sufficient to discharge the
debt in full, or if the loan is in the legal process of collection. Once a
loan has been classified as nonaccrual, it also meets the criteria for an
impaired loan. Accordingly, the loans are charged down to the estimated
value of the collateral and previously accrued unpaid interest is reversed.
Subsequent charge-offs may be required as a result of changes in collateral,
market values or repayment prospects. Consistent throughout the industry,
confirmation of credit card losses is based on a pre-determined number of
days that the credit card loan is past due. SunTrust policy for credit
cards requires accounts typically to be charged off approximately 30 to 60
days earlier than regulatory guidelines provide. An account deemed
uncollectable and past due 91 to 150 days is prepared for charge-off. The
charge-off may occur as early as the 121st day, but at least prior to 181
days past due.
With regard to consumer loans, losses on unsecured loans are deemed to be
confirmed at 90 days past due, compared to the regulatory loss criteria of 120
days. Secured installment loans are typically charged off at 90 days past due
if all sources of repayment have been eliminated, or at the occurence of a loss
confirming event (i.e., bankruptcy, repossession).
Net loan charge-offs were $91.0 million in 1997, representing 0.24% of
average loans. The comparable net charge-off amount for 1996 was $90.2
million or 0.27% 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.
Recoveries increased to 37.8% of total charge-offs in 1997 compared with
36.5% in 1996.
At December 31, 1997, international outstandings, which include loans,
acceptances, deposits in other banks, foreign guarantees and accrued
interest, totaled $286.4 million, an increase of 4.7% from $273.5 million at
December 31, 1996. 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>
(In millions) At December 31 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Commercial:
Domestic $14,139.9 $11,725.5 $10,222.5 $ 9,279.2 $ 8,190.3 $ 7,933.4
International 247.4 240.6 337.5 273.2 197.8 167.3
Real estate:
Construction 1,442.6 1,384.8 1,216.6 1,151.1 1,083.2 1,034.7
Residential mortgages 12,992.9 11,508.2 9,732.8 8,380.5 7,013.8 5,911.6
Other 4,778.7 4,585.8 4,477.7 4,516.3 4,456.8 4,495.5
Lease financing 725.7 607.5 561.2 411.0 328.1 355.4
Credit card 1,041.3 946.8 774.0 690.5 698.2 725.7
Other consumer loans 4,767.0 4,405.0 3,979.1 3,847.1 3,323.9 2,869.9
Total Loans $40,135.5 $35,404.2 $31,301.4 $28,548.9 $25,292.1 $23,493.5
</TABLE>
<TABLE>
TABLE 7 - ALLOWANCE FOR LOAN LOSSES
<CAPTION>
At December 31
(Dollars in millions) 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Allocation by Loan Type
by Loan Type
Commercial $142.6 $143.8 $137.7 $138.7 $139.4 $155.2
Real estate 122.7 145.1 167.0 200.6 189.6 164.0
Lease financing 7.5 4.8 5.4 2.8 2.8 2.6
Consumer loans 136.4 107.8 86.2 74.6 88.7 82.5
Unallocated 242.6 224.3 242.6 205.3 140.7 69.9
Total $651.8 $625.8 $638.9 $622.0 $561.2 $474.2
Allocation as a Percent of Total Allowance
Commercial 21.9 % 23.0 % 21.6 % 22.3 % 24.8 % 32.7 %
Real estate 18.8 23.2 26.1 32.3 33.8 34.7
Lease financing 1.2 0.8 0.8 0.5 0.5 0.5
Consumer loans 20.9 17.2 13.5 12.0 15.8 17.4
Unallocated 37.2 35.8 38.0 32.9 25.1 14.7
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Year-end Loan Types as a Percent of
Total Loans
Commercial 35.8 % 33.8 % 33.7 % 33.5 % 33.1 % 34.3 %
Real estate 47.9 49.4 49.3 49.2 49.6 48.5
Lease financing 1.8 1.7 1.8 1.4 1.5 1.5
Consumer loans 14.5 15.1 15.2 15.9 15.8 15.7
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) 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Allowance for Loan Losses
Balance - beginning of year $ 625.8 $ 638.9 $ 622.0 $ 561.2 $ 474.2 $ 381.0
Allowance of purchased banks - 1.2 6.3 8.3 8.0 6.4
Provision for loan losses 117.0 75.9 77.1 112.8 189.1 234.2
Charge-offs:
Domestic:
Commercial (23.5) (36.2) (29.7) (28.1) (47.8) (61.3)
Real estate:
Construction (2.3) (1.4) (0.4) (0.7) (7.6) (7.3)
Residential mortgages (7.2) (6.3) (7.1) (7.3) (10.9) (10.3)
Other (7.0) (8.2) (16.3) (20.5) (35.1) (44.5)
Lease financing (1.6) (1.2) (0.9) (0.7) (1.0) (3.0)
Credit card (50.7) (40.8) (27.7) (26.3) (28.9) (33.6)
Other consumer loans (53.9) (47.9) (38.7) (30.1) (31.9) (42.0)
International
Total charge-offs (146.2) (142.0) (120.8) (113.7) (163.2) (202.0)
Recoveries:
Domestic:
Commercial 16.2 15.6 20.0 18.6 20.9 22.1
Real estate:
Construction 1.8 0.4 0.8 0.7 0.5 0.7
Residential mortgages 1.6 1.5 1.5 1.5 1.3 1.1
Other 6.0 7.5 5.5 6.3 5.2 3.0
Lease financing 0.5 0.5 0.5 0.6 1.0 1.1
Credit card 7.8 6.9 7.3 7.3 5.7 6.8
Other consumer loans 21.2 19.4 18.1 18.3 18.4 19.5
International 0.1 - 0.6 0.1 0.1 0.3
Total recoveries 55.2 51.8 54.3 53.4 53.1 54.6
Net charge-offs (91.0) (90.2) (66.5) (60.3) (110.1) (147.4)
Balance - end of year $ 651.8 $ 625.8 $ 638.9 $ 622.0 $ 561.2 $ 474.2
Year-end loans outstanding:
Domestic $39,875.7 $35,154.8 $30,948.4 $28,260.3 $25,078.0 $23,326.2
International 259.8 249.4 353.0 288.6 214.1 167.3
Total $40,135.5 $35,404.2 $31,301.4 $28,548.9 $25,292.1 $23,493.5
Average loans $37,516.2 $32,792.5 $29,709.3 $26,412.6 $24,162.8 $22,489.1
Ratios
Allowance to year-end loans 1.62 % 1.77 % 2.04 % 2.18 % 2.22 % 2.02 %
Net charge-offs to average loans 0.24 0.27 0.22 0.23 0.46 0.66
Provision to average loans 0.31 0.23 0.26 0.43 0.78 1.04
Recoveries to total charge-offs 37.8 36.5 44.9 47.0 32.5 27.0
</TABLE>
Nonperforming Assets
Nonperforming assets were only $150.6 million at year-end 1997, decreasing
41.1% from year-end 1996. At December 31, 1997, 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 $16.2 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.
A loan classified as nonaccrual, except for smaller balance, homogenous loans,
also meets the criteria for an impaired loan. The Company considers nonaccrual
status to be required with the occurrence of one of the following events:
(i) interest or principal has been in default 90 days or more, unless the loan
is well secured and in the process of collection;(ii) collection of recorded
interest or principal is not anticipated; or (iii) the loan is operating on a
cash basis due to the deterioration in the financial condition of the debtor.
Consumer real estate loans are generally not subject to the above referenced
guidelines and are normally placed on nonaccrual when payments have been in
default for 90 days or more.
SunTrust measures the impairment of a loan based on the present value of
expected future cash flows discounted at the loan's effective interest rate.
The exception to this policy is real estate loans, whose impairment is based
on the estimated fair value of the collateral. If the present value of expected
future cash flows (or the fair value of the collateral) is less than the
recorded investments in the loans (i.e., principal; accrued interest; net
deferred loan fees or costs; unamortized premium or discount), SunTrust will
include this deficiency in evaluating the overall adequacy of the allowance for
loan losses.
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 allowance 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 1997 the gross amount of interest income that would have
been recorded on nonaccrual loans and restructured loans at December 31,
1997, if all such loans had been accruing interest at the original
contractual rate, was $12.3 million. Interest payments recorded in 1997 as
interest income (excluding reversals of previously accrued interest) for all
such nonperforming loans at December 31, 1997, were $9.1 million.
<TABLE>
TABLE 9 - NONPERFORMING ASSETS AND ACCRUING LOANS
PAST DUE 90 DAYS OR MORE
<CAPTION>
At December 31
(Dollars in millions) 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Nonperforming Assets
Nonaccrual loans:
Commercial $ 20.9 $ 45.6 $ 28.3 $ 27.9 $ 41.3 $ 49.6
Real Estate:
Construction 1.8 13.3 4.9 16.0 29.9 45.4
Residential mortgages 49.7 49.6 45.7 45.3 53.1 45.5
Other 41.2 81.0 99.3 82.0 116.8 160.2
Lease financing 3.0 2.3 0.1 0.2 0.1 0.9
Consumer loans 8.8 10.5 11.0 11.6 9.3 18.1
Total nonaccrual loans 125.4 202.3 189.3 183.0 250.5 319.7
Restructured loans 2.7 9.9 2.9 4.6 11.3 4.6
Total nonperforming loans 128.1 212.2 192.2 187.6 261.8 324.3
Other real estate owned 22.5 43.6 58.8 87.7 148.9 220.3
Total nonperforming assets $ 150.6 $ 255.8 $ 251.0 $ 275.3 $ 410.7 $ 544.6
Ratios
Nonperforming loans to total loans 0.32 % 0.60 % 0.61 % 0.66 % 1.03 % 1.38 %
Nonperforming assets to total loans
plus other real estate owned 0.37 0.72 0.80 0.96 1.61 2.30
Allowance to nonperforming loans 508.9 294.9 332.4 331.6 214.4 146.2
Accruing Loans Past Due 90 Days or More $ 40.8 $ 34.2 $ 24.3 $ 19.2 $ 24.4 $ 27.6
</TABLE>
Securities available for sale
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 6.64% in 1996 to 6.84% in 1997.
On an amortized cost basis, the portfolio increased by $455.0 million from
December 31, 1996 to December 31, 1997. Portfolio turnover from sales totaled
$637.8 million in 1997, representing approximately 7.8% of the average
portfolio size. The average life of the portfolio increased to approximately
4.6 years at year-end 1997. 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 1.8 years.
The Company classifies its securities portfolio as "securities
available-for-sale" which is consistent with the Company's investment
philosophy of maintaining flexibility to manage the securities portfolio. The
carrying value of securities available for sale at December 31, 1997,
reflected $3.3 billion in unrealized gains, including a $3.2 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 $678.7 million during 1997, which was not reflected in net income
of SunTrust.
<TABLE>
TABLE 10 - SECURITIES AVAILABLE FOR SALE
<CAPTION>
Amortized Fair Unrealized Unrealized
(In millions) At December 31 Cost Value Gains Losses
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. government
agencies and corporations:
1997 $2,875.0 $ 2,896.3 $ 24.7 $ 3.4
1996 3,277.8 3,290.9 24.3 11.2
1995 3,286.7 3,308.4 32.5 10.8
States and political subsidivions:
1997 622.3 642.1 20.0 0.2
1996 749.1 773.2 25.2 1.1
1995 831.2 865.8 36.1 1.5
Mortgage-backed securities:
1997 4,031.5 4,049.9 34.2 15.8
1996 3,750.5 3,748.6 27.0 28.9
1995 3,508.4 3,516.2 26.4 18.6
Trust preferred securities:
1997 663.0 674.4 17.4 6.0
1996 - - - -
1995 - - - -
Other securities:<F1>
1997 225.5 3,466.6 3,241.4 0.3
1996 184.9 2,738.5 2,555.0 1.4
1995 177.5 1,986.5 1,810.1 1.1
Total securities available for sale
1997 $8,417.3 $11,729.3 $3,337.7 $25.7
1996 7,962.3 10,551.2 2,631.5 42.6
1995 7,803.8 9,676.9 1,905.1 32.0
<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 5.0% in 1997 and comprised 79.0%,
79.0% and 78.3% of average total deposits in 1997, 1996 and 1995. Other time
deposits had the largest increase at 37.2%. Consumer time deposits decreased
3.9%.
<TABLE>
TABLE 11 - COMPOSITION OF AVERAGE DEPOSITS
<CAPTION>
Year Ended December 31 Percent of Total
(Dollars in millions) 1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing $ 7,539.7 $ 7,203.9 $ 6,911.1 21.0 % 21.0 % 21.7 %
NOW/Money market accounts 10,503.0 10,296.2 9,425.2 29.2 30.1 29.6
Savings 5,271.1 5,374.0 3,619.4 14.7 15.7 11.4
Consumer time 6,996.9 7,282.3 7,875.0 19.5 21.3 24.8
Other time 5,604.6 4,084.9 3,978.0 15.6 11.9 12.5
Total $ 35,915.3 $ 34,241.3 $ 31,808.7 100.0 % 100.0 % 100.0 %
</TABLE>
Funds Purchased
Average funds purchased increased $1,675.0 million or 34.7% in 1997. Also,
average net purchased funds (average funds purchased less average funds sold)
increased $1,402.9 million in 1997. Average net purchased funds were 11.6% of
earning assets for 1997 compared to 9.7% in 1996.
<TABLE>
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>
1997 $6,483.1 5.76 % $6,496.1 5.31 % $7,842.1
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
<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 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 allowance 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 capital ratio, and the Tier 1 leverage ratio must equal or
exceed 6%, 10% and 5%, respectively. Under regulations proposed in 1997, a
portion of the unrealized gains on equity securities are included in the Tier
2 capital calculation. SunTrust is committed to maintaining well capitalized
banks.
In April 1997, the Board of Directors authorized the Company to
repurchase up to 15,000,000 shares of SunTrust common stock. At December 31,
1997, the Company had 13,068,994 shares remaining to be repurchased under
this authorization.
<TABLE>
TABLE 13 - CAPITAL RATIOS
<CAPTION>
At December 31
(Dollars in millions) 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital:
Realized shareholders' equity $ 3,211.5 $ 3,339.2 $ 3,147.6 $ 2,898.5 $ 2,845.8 $ 2,769.7
Trust preferred securities 600.0
Intangible assets other than
servicing rights (292.4) (244.1) (252.3) (222.2) (194.0) (174.6)
Tier 1 capital 3,519.1 3,095.1 2,895.3 2,676.4 2,651.8 2,595.1
Tier 2 capital:
Allowable allowance for loan losses 600.1 510.8 462.2 420.9 378.1 349.8
Allowable long-term debt 950.0 877.1 246.8 281.4 120.4 200.0
Regulatory adjustment 965.6
Tier 2 capital 2,515.7 1,387.9 709.0 702.3 498.5 549.8
Total capital $ 6,034.8 $ 4,483.0 $ 3,604.3 $ 3,378.7 $ 3,150.3 $ 3,144.9
Risk-weighted assets $48,922.3 $40,751.0 $36,797.4 $33,469.3 $29,871.4 $27,684.4
Risk-based ratios:
Tier 1 capital 7.19 % 7.59 % 7.86 % 7.99 % 8.88 % 9.37 %
Total capital 12.33 10.99 9.79 10.09 10.55 11.35
Tier 1 leverage ratio 6.59 6.51 6.78 6.71 6.82 7.27
Total shareholders' equity to assets 9.06 9.40 9.25 8.12 8.86 7.33
</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. 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 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>
(In millions) Remaining Maturities of Selected Loans
Within 1-5 After
At December 31, 1997 Total 1 Year Years 5 Years
<S> <C> <C> <C> <C>
Loan Maturity
Commercial $ 14,387.3 $ 6,955.8 $ 5,721.8 $ 1,709.7
Real estate - construction 1,442.6 998.1 444.5
Total $ 15,829.9 $ 7,953.9 $ 6,166.3 $ 1,709.7
Interest Rate Sensitivity
Selected loans with:
Predetermined interest rates $ 1,261.8 $ 277.9
Floating or adjustable interest rates 4,904.5 1,431.8
Total $ 6,166.3 $ 1,709.7
</TABLE>
<TABLE>
TABLE 15 - MATURITY DISTRIBUTION OF SECURITIES AVAILABLE FOR SALE
<CAPTION>
At December 31, 1997
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 $ 1,131.1 $ 1,739.3 $ 4.6 $ - $ 2,875.0 1.5
States and political subdivisions 138.4 357.9 117.2 8.8 622.3 2.8
Mortgage-backed securities <F1> 567.8 2,593.0 824.1 46.6 4,031.5 3.1
Trust preferred securities - - 30.3 632.7 663.0 29.1
Total debt securities $ 1,837.3 $ 4,690.2 $ 976.2 $ 688.1 $ 8,191.8 4.6
Fair Value
U.S. Treasury and other U.S. government
agencies and corporations $ 1,130.8 $ 1,760.6 $ 4.9 $ - $ 2,896.3
States and political subdivisions 140.7 366.7 125.3 9.4 642.1
Mortgage-backed securities <F1> 561.8 2,610.4 830.7 47.0 4,049.9
Trust preferred securities - - 30.1 644.3 674.4
Total debt securities $ 1,833.3 $ 4,737.7 $ 991.0 $ 700.7 $ 8,262.7
Weighted average yield(FTE):
U.S. Treasury and other U.S. government
agencies and corporations 5.67 % 6.27 % 7.14 % - % 6.04 %
States and political subdivisions 8.84 8.04 8.99 7.83 8.40
Mortgage-backed securities <F1> 5.85 6.67 6.28 5.73 6.46
Trust preferred securities - - 6.68 7.17 7.15
Total debt securities 5.97 6.63 6.62 7.08 6.52
<FN>
<F1> Distribution of maturities is based on expected cash flows which may be
different from the contractual terms.
</TABLE>
<TABLE>
TABLE 16 - MATURITY OF CONSUMER TIME AND OTHER
TIME DEPOSITS IN AMOUNTS OF $100,000 OR MORE
<CAPTION>
(In millions) At December 31, 1997
Other
Consumer Time
Time Deposits Total
<S> <C> <C> <C>
Months to maturity:
3 or less $1,572.8 $3,041.3 $4,614.1
Over 3 through 6 586.8 586.8
Over 6 through 12 630.1 630.1
Over 12 469.2 469.2
Total $3,258.9 $3,041.3 $6,300.2
</TABLE>
Interest Rate and Market Risk
The normal course of business activity exposes SunTrust to interest rate
risk. Fluctuations in interest rates may result in changes in the fair
market value of the Company's financial instruments, cashflows and net
interest income. SunTrust's asset / liablilty management process manages the
Company's interest rate risk position. The objective of this process is the
optimization of the Company's financial position, liquidity and net interest
income, while maintaining a relatively neutral interest rate sensitive
position. The gap analysis in Table 17 represents a snapshot of the
Company's balance sheet structure as of year-end. It does not reflect the
complexities of the Company's interest rate sensitivity.
SunTrust uses a simulation modeling process to measure interest rate risk and
evaluate potential strategies. These simulations incorporate assumptions
regarding balance sheet growth and mix, pricing, and the repricing and
maturity characteristics of the existing and projected balance sheet. Other
interest-rate-related risks such as prepayment, basis and option risk are
also considered. Simulation results quantify interest rate risk under
various interest rate scenarios. Management then develops and implements
appropriate strategies. Senior management regularly reviews the overall
interest rate risk position and asset / liability management strategies.
The Company's relative interest rate risk neutrality as of December 31, 1997
is evidence of the management's ability to reach their interest rate risk
objectives. Management estimates the Company's annual net interest income
would decline less than $5 million, or 0.2%, under an instantaneous increase,
or decrease, in interest rates of 100 basis points, versus the projection
under stable rates. A fair market value analysis of the Company's balance
sheet calculated under an instantaneous 100 basis point increase in rates
over December 31, 1997 estimates a $225 million decrease in market value.
SunTrust estimates a like decrease in rates would increase market value $183
million. These changes in market value represent less than 0.4% of total
carrying value of total assets as of year-end. These simulated computations
should not be relied upon as indicative of actual future results. Further,
the computations do not contemplate certain actions that management may
undertake in response to future changes in interest rates.
The Company is also subject to risk from changes in equity prices. SunTrust
owns 48,266,496 shares of commom stock of The Coca-Cola Company which had a
carrying value of $3.2 billion at December 31, 1997. An instantaneous 10%
decrease in share price of The Coca-Cola Company would result in a decrease
of approximately $205 million in shareholders' equity.
The Company's trading portfolio at December 31, 1997 is not significant
compared to the remainder of the balance sheet. The increase or decrease in
portfolio equity from trading assets caused by hypothetical 10% increase or
decrease in interest rates or equity prices would not be material.
Nevertheless, the Company closely monitors market risk .
<TABLE>
TABLE 17 - INTEREST RATE SENSITIVITY ANALYSIS
<CAPTION> At December 31, 1997
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> $ 13,494.2 $ 5,749.9 $ 2,339.5 $ 3,743.0 $ 14,390.3 $ 39,716.9
Debt securities <F3> 1,022.7 845.5 577.0 1,354.8 4,570.2 8,370.2
Interest-bearing deposits 13.4 0.7 - - 1.3 15.4
Funds sold 1,063.6 - - - - 1,063.6
Total earning assets 15,593.9 6,596.1 2,916.5 5,097.8 18,961.8 49,166.1
INTEREST-BEARING LIABILITIES
Interest-bearing deposits <F4> 20,936.6 1,584.2 2,193.9 2,281.3 2,273.7 29,269.7
Funds purchased 8,101.0 - - - - 8,101.0
Other short-term borrowings 1,307.4 197.0 35.0 450.0 - 1,989.4
Long-term debt 137.6 97.1 4.5 18.8 2,913.8 3,171.8
Total interest-bearing liabilities 30,482.6 1,878.3 2,233.4 2,750.1 5,187.5 42,531.9
Off-balance sheet financial instruments (236.1) 276.8 (341.0) (535.4) 835.7 -
Interest-sensitivity gap $(15,124.8) $ 4,994.6 $ 342.1 $ 1,812.3 $ 14,610.0 $ 6,634.2
Cumulative gap $(15,124.8) $(10,130.2) $ (9,788.1) $ (7,975.8) $ 6,634.2
Ratio of cumulative gap to total earning assets 30.8 % 20.6 % 19.9 % 16.2 % 13.5 %
Ratio of interest-sensitive assets to
interest-sensitive liabilities 51.2 351.2 130.6 185.4 365.5
Cumulative gap at December 31, 1996 $(12,256.7) $ (9,157.7) $ (8,764.8) $ (5,809.2) $ 7,544.2
Cumulative gap at December 31, 1995 (8,215.5) (7,687.5) (7,233.8) (4,597.4) 6,972.4
<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.
<F4> Savings, NOW and money market accounts can be repriced at any time,
therefore all such balances have been 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
may use interest rate swap contracts to limit the volatility of net interest
income. Interest rate swaps increased interest expense by $3.7 million in
1997 and $1.0 in 1996 and decreased interest expense by $10.1 million for
1995. Included in those amounts are $(1.4), $2.3 and $0.5 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, 1997.
<TABLE>
TABLE 18 - INTEREST RATE SWAPS
<CAPTION>
Average Average Average
(Dollars in millions) Notional Fair Maturity Rate Rate
At December 31, 1997 Value Value In Months Paid Received
<S> <C> <C> <C> <C> <C>
Gain position:
Receive fixed $ 718.8 $ 36.0 87.1 5.90 % 6.87 %
Pay fixed 112.8 2.8 23.5 5.65 5.90
Basis swaps 250.0 0.4 14.8 5.47 5.73
Total gain position 1,081.6 39.2
Loss position:
Receive fixed 1,038.0 (3.5) 4.6 5.82 5.32
Pay fixed 589.6 (7.0) 46.2 6.52 5.84
Basis swaps 750.0 (4.3) 33.9 5.47 5.71
Total loss position 2,377.6 (14.8)
Total $3,459.2 $ 24.4
</TABLE>
Earnings and Balance Sheet Analysis 1996 vs. 1995
Net income was $641.0 million in 1996 compared with $586.8 million in 1995.
This increase amounted to $54.2 million or 9.2%. Diluted earnings per common
share in 1996 were $2.87, an 12.1% increase over the preceding year. Basic
earnings per common share in 1996 were $2.91 compared to $2.59 the previous
year.
Net interest income, at $1,824.3 million for 1996, was $98.3 million
higher than in 1995 primarily because of a 10.8% growth in average assets.
The Company's net interest margin declined from 4.49% in 1995 to 4.36% in
1996.
The provision for loan losses decreased $1.2 million from $77.1 million
to $75.9 million while the allowance for loan losses as a percentage of loans
decreased from 2.04% to 1.77%. Net charge-offs were 0.27% of loans in 1996
versus 0.22% in 1995. Nonperforming assets increased $4.8 million from $251.0
million at December 31, 1995 to $255.8 million at December 31, 1996.
Noninterest income increased $104.9 million from $713.1 million in 1995
to $818.0 million in 1996. Other charges and fees were up as a result of
increased investment banking activity. Noninterest expense was up $131.6
million or 9.1%.
Loans at December 31, 1996, were $35.4 billion or 13.1% greater than at
year-end 1995. At December 31, 1996, deposits were $36.9 billion, an increase
of $3.7 billion, or 11.2%, from 1995 year-end.
Fourth Quarter Results
Diluted net income per common share for the fourth quarter of 1997 was $0.82,
unchanged from the fourth quarter of 1996. Basic net income per common share
decreased 1.2% to $0.83 in 1997 from $0.84 in 1996. Net income decreased
from $182.9 million in the 1996 fourth quarter to $172.2 million in the 1997
fourth quarter.
The 1997 provision for loan losses of $32.6 million was $37.8 million greater
than the ($5.3) million in 1996 (see Note 18). Net loan charge-offs for the
current period were lower at $27.9 million, $5.7 million lower than in the
1996 fourth quarter.
Average earning assets were $49.0 billion in the 1997 fourth quarter, an
increase of 11.9% over 1996. This gain, offset somewhat by a 29 basis point
decline in the net interest margin, produced an increase of $21.9 million in
net interest income on a taxable-equivalent basis.
Noninterest income increased by $40.4 million in the 1997 fourth quarter
compared to the fourth quarter of 1996. Trust income was up $13.5 million
or 19.6%. Service charges on deposit accounts were up $3.1 million or 5.3%
over the 1996 fourth quarter.
Noninterest expense increased 8.7% from year-ago levels. Personnel expense
was up $15.0 million or 6.6%.
<TABLE>
TABLE 19 - QUARTERLY FINANCIAL DATA
<CAPTION>
(Dollars in millions) except 1997 1996
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 $ 954.4 $ 934.9 $ 898.4 $ 863.1 $ 846.5 $ 820.4 $ 798.6 $ 780.5
Interest expense 469.0 458.1 428.7 400.6 384.2 366.0 354.3 357.3
Net interest income 485.4 476.8 469.7 462.5 462.3 454.4 444.3 423.2
Provision for loan losses 32.6 29.0 29.2 26.2 (5.3) 30.0 26.2 25.0
Net interest income after
provision for loan losses 452.8 447.8 440.5 436.3 467.6 424.4 418.1 398.2
Noninterest income 247.4 232.9 228.1 225.8 207.0 197.2 200.1 213.7
Noninterest expense 433.9 424.4 413.3 414.0 399.1 389.6 393.4 401.0
Income before provision
for income taxes 266.3 256.3 255.3 248.1 275.5 232.0 224.8 210.9
Provision for income taxes 94.1 87.7 89.9 87.0 92.6 76.4 72.7 60.5
Net income $ 172.2 $ 168.6 $ 165.4 $ 161.1 $ 182.9 $ 155.6 $ 152.1 $ 150.4
Net interest income,
(taxable-equivalent) $ 494.1 $ 485.7 $ 479.2 $ 472.0 $ 472.2 $ 464.2 $ 454.2 $ 433.7
PER COMMON SHARE
Net income - diluted $ 0.82 $ 0.80 $ 0.77 $ 0.74 $ 0.82 $ 0.70 $ 0.68 $ 0.66
Net income - basic 0.83 0.81 0.78 0.75 0.84 0.71 0.68 0.68
Dividends declared 0.250 0.225 0.225 0.225 0.225 0.200 0.200 0.200
Book value 25.06 23.92 24.50 22.59 22.41 21.60 20.89 19.76
Market Price:
High 75.25 70.44 59.00 54.75 52.50 41.50 38.00 38.38
Low 61.13 54.75 44.13 46.13 40.88 34.88 33.25 32.00
Close 71.38 67.94 55.06 46.38 49.25 41.00 37.00 35.00
SELECTED AVERAGE BALANCES
Total assets $56,663.4 $55,160.2 $53,598.3 $52,006.5 $50,161.1 $48,182.6 $47,079.5 $45,701.9
Earning assets 48,970.5 47,672.1 46,238.1 45,054.0 43,763.9 42,179.2 41,241.8 40,114.0
Loans 39,230.1 37,898.9 37,000.9 35,894.2 34,416.9 33,029.6 32,265.2 31,437.9
Total deposits 35,940.2 36,115.7 36,078.8 35,519.5 34,840.7 34,652.8 34,378.8 33,081.9
Realized shareholders' equity 3,211.0 3,188.6 3,189.1 3,290.2 3,395.0 3,318.3 3,268.6 3,243.4
Total shareholders' equity 5,067.0 5,151.4 5,068.8 5,027.6 4,902.3 4,750.3 4,558.8 4,441.9
Common shares - diluted (thousands) 210,554 211,671 213,572 218,227 221,840 222,683 224,061 225,388
Common shares - basic (thousands) 207,138 208,391 210,608 214,940 218,353 219,610 221,142 222,381
Ratios (Annualized)
ROA 1.27 % 1.29 % 1.31 % 1.33 % 1.52 % 1.35 % 1.36 % 1.38 %
ROE 21.69 21.27 20.81 19.85 21.43 18.86 18.93 18.87
Net interest margin 4.00 4.04 4.16 4.25 4.29 4.38 4.43 4.35
</TABLE>
<TABLE>
TABLE 20 - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE
AND AVERAGE YIELDS EARNED AND RATES PAID
<CAPTION>
Quarter Ended
December 31, 1997 December 31, 1996
(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 $38,531.7 $787.5 8.11 % $33,669.4 $688.4 8.13 %
Tax-exempt <F2> 698.4 13.8 7.83 747.5 14.5 7.75
Total loans 39,230.1 801.3 8.10 34,416.9 702.9 8.13
Securities available for sale:
Taxable 7,681.3 129.6 6.69 7,330.4 120.1 6.52
Tax-exempt <F2> 653.1 13.8 8.37 733.8 16.0 8.69
Total securities available for sale 8,334.4 143.4 6.82 8,064.2 136.1 6.71
Funds sold 1,166.1 17.0 5.82 1,177.5 15.9 5.36
Other short-term investments <F2> 239.9 1.4 2.33 105.3 1.5 5.57
Total earning assets 48,970.5 963.1 7.80 43,763.9 856.4 7.78
Allowance for loan losses (645.1) (624.8)
Cash and due from banks 2,395.4 2,320.1
Premises and equipment 958.0 759.4
Other assets 1,985.6 1,506.4
Unrealized gains(losses) on
securities available for sale 2,999.0 2,436.1
Total assets $56,663.4 $50,161.1
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts $10,603.1 $ 72.9 2.73 % $10,369.1 $ 70.4 2.70 %
Savings 5,184.4 47.2 3.61 5,437.8 48.9 3.57
Consumer time 6,976.0 92.1 5.24 7,062.1 91.3 5.15
Other time <F3> 5,374.8 76.2 5.62 4,487.4 60.7 5.39
Total interest-bearing deposits 28,138.3 288.4 4.07 27,356.4 271.3 3.95
Funds purchased 7,593.4 102.7 5.36 5,788.3 74.3 5.11
Other short-term borrowings 1,935.4 20.6 4.23 874.8 12.3 5.58
Long-term debt 3,073.2 57.3 7.40 1,568.4 26.3 6.67
Total interest-bearing liabilities 40,740.3 469.0 4.57 35,587.9 384.2 4.30
Noninterest-bearing deposits 7,801.9 7,484.3
Other liabilities 3,054.5 2,186.0
Realized shareholders' equity 3,211.0 3,395.0
Net unrealized gains(losses) on
securities available for sale 1,856.0 1,507.3
Total liabilities and shareholders' equity $56,663.4 $50,161.1
Interest rate spread 3.23 % 3.48 %
Net Interest Income $494.1 $472.2
Net Interest Margin <F3> 4.00 % 4.29 %
<FN>
<F1> Interest income includes loan fees of $26.2 and $24.7 in the quarters ended
December 31, 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
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 $8.7 and $9.9 in the quarters ended December 31, 1997 and 1996.
<F3> Interest rate swap transactions used to help balance the Company's
interest-sensitivity position increased interest expense by $1.3 in the
fourth quarter of 1997 and reduced interest expense by $0.1 in the fourth
quarter of 1996. Without these swaps, the rate on Other time deposits and
the net interest margin would have been 5.52% and 4.01% in 1997 and 5.40%
and 4.29% in 1996.
</TABLE>
<TABLE>
TABLE 21 - QUARTERLY NONINTEREST INCOME AND EXPENSE
<CAPTION>
Quarters
1997 1996
(In millions) 4 3 2 1 4 3 2 1
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest Income
Trust income $ 82.5 $ 79.0 $ 78.7 $ 78.4 $ 69.0 $ 68.1 $ 70.5 $ 70.7
Service charges on deposit accounts 63.8 62.4 61.9 59.7 60.7 57.9 58.1 55.7
Corporate and institutional
investment income 6.4 8.6 4.6 5.0 4.8 3.4 3.3 2.8
Retail investment income 8.4 8.3 8.5 8.0 5.1 6.3 6.2 4.6
Credit card fees 18.9 17.5 18.4 18.8 17.0 15.7 16.6 17.0
Mortgage fees 13.6 12.2 10.9 9.2 8.8 8.7 9.8 8.7
Other charges and fees 28.0 27.2 29.5 29.0 25.9 23.8 25.6 23.5
Securities gains (losses) 0.4 0.1 (0.4) 1.4 (0.4) (0.5) (2.2) 17.3
Trading account profits and commissions 5.2 4.0 4.8 4.0 4.1 3.5 3.1 2.6
Other income 20.2 13.6 11.2 12.3 12.0 10.3 9.1 10.8
Total noninterest income $ 247.4 $ 232.9 $ 228.1 $ 225.8 $ 207.0 $ 197.2 $ 200.1 $ 213.7
Noninterest Expense
Salaries $ 178.7 $ 175.2 $ 169.8 $ 167.0 $ 165.6 $ 161.7 $ 156.0 $ 151.7
Other compensation 42.9 39.2 36.0 35.4 34.2 32.9 32.3 29.1
Employee benefits 22.0 27.5 29.5 32.4 28.8 26.0 26.4 29.4
Total personnel expense 243.6 241.9 235.3 234.8 228.6 220.6 214.7 210.2
Net occupancy expense 30.9 30.9 32.5 32.5 35.2 34.9 34.4 33.7
Equipment expense 29.6 30.7 30.3 30.1 30.4 29.5 28.0 27.5
FDIC premiums 1.3 1.3 1.4 1.8 1.4 14.1 1.4 1.2
Marketing and customer development 19.2 15.9 16.9 16.8 23.3 19.2 18.7 15.2
Postage and delivery 10.7 10.1 10.5 11.3 10.3 10.5 9.7 10.0
Operating supplies 9.8 8.7 9.1 9.6 9.5 8.9 9.9 9.7
Other real estate expense (5.8) (3.1) (1.3) (1.2) (1.1) 0.4 (0.5) 0.8
Communications 8.7 8.9 8.6 9.1 8.6 8.3 7.8 7.7
Consulting and legal 9.3 8.1 5.4 5.7 8.5 5.8 6.1 5.1
Amortization of intangible assets 10.0 8.3 8.0 7.7 7.3 6.8 6.5 6.1
Outside processing and software 19.4 18.0 16.1 14.9 18.2 14.2 12.8 11.7
Other expense 47.2 44.7 40.5 40.9 18.9 16.4 43.9 62.1
Total noninterest expense $ 433.9 $ 424.4 $ 413.3 $ 414.0 $ 399.1 $ 389.6 $ 393.4 $ 401.0
</TABLE>
<TABLE>
TABLE 22 - SUMMARY OF LOAN LOSS EXPERIENCE, NONPERFORMING ASSETS AND
ACCRUING LOANS PAST DUE 90 DAYS OR MORE (DOLLARS IN MILLIONS)
<CAPTION>
Quarters
1997 1996
4 3 2 1 4 3 2 1
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES
Balance - Beginning of quarter $ 647.1 $ 639.8 $ 634.5 $ 625.8 $ 664.7 $ 662.6 $ 652.4 $ 638.9
Allowance of purchased bank - - - - - - - 1.2
Provision for loan losses 32.6 29.0 29.2 26.2 (5.3) 30.0 26.2 25.0
Charge-offs (41.5) (37.4) (35.3) (32.0) (45.9) (40.9) (28.6) (26.6)
Recoveries 13.6 15.7 11.4 14.5 12.3 13.0 12.6 13.9
Balance - End of quarter $ 651.8 $ 647.1 $ 639.8 $ 634.5 $ 625.8 $ 664.7 $ 662.6 $ 652.4
RATIOS
Allowance to loans outstanding -
Quarter-end 1.62 % 1.68 % 1.70 % 1.74 % 1.77 % 1.97 % 2.04 % 2.05 %
Net loan charge-offs (annualized)
to average loans 0.28 0.23 0.26 0.20 0.39 0.34 0.20 0.16
Provison to average loans (annualized) 0.33 0.30 0.32 0.30 (0.06) 0.36 0.33 0.32
NONPERFORMING ASSETS
Nonaccrual loans $ 125.4 $ 152.3 $ 161.0 $ 181.0 $ 202.3 $ 184.9 $ 192.0 $ 187.7
Restructured loans 2.7 2.7 11.0 9.9 9.9 2.7 2.8 2.9
Total nonperforming loans 128.1 155.0 172.0 190.9 212.2 187.6 194.8 190.6
Other real estate owned 22.5 35.7 41.9 43.9 43.6 51.9 53.5 58.8
Total nonperforming assets $ 150.6 $ 190.7 $ 213.9 $ 234.8 $ 255.8 $ 239.5 $ 248.3 $ 249.4
RATIOS
Nonperforming loans to total loans 0.32 % 0.40 % 0.46 % 0.52 % 0.60 % 0.55 % 0.60 % 0.60 %
Nonperforming assets to total loans
plus other real estate owned 0.37 0.50 0.57 0.64 0.72 0.71 0.77 0.78
Allowance to nonperforming loans 508.9 417.5 372.0 332.4 294.9 354.3 340.1 342.0
Accruing Loans Past Due 90 Days or More $ 40.8 $ 41.4 $ 25.9 $ 33.9 $ 34.2 $ 28.0 $ 29.9 $ 26.0
</TABLE>
Banking Income
<TABLE>
TABLE 23 - SELECTED FINANCIAL DATA OF PRINCIPAL BANKING SUBSIDIARIES
(Dollars in Millions)
<CAPTION>
SunTrust Banks of SunTrust Banks of SunTrust Banks of
Florida, Inc. Georgia, Inc. Tennessee, Inc.
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net interest income (FTE) $1,007.1 $ 947.4 $ 662.8 $ 603.2 $ 293.6 $ 276.5
Provision for loan losses 32.4 30.3 20.3 26.7 6.1 8.9
Trust income 156.3 142.0 114.5 100.5 38.6 35.5
Other noninterest income 314.0 271.2 206.1 176.0 89.2 77.6
Personnel expense 347.1 324.0 230.9 204.2 111.9 103.8
Other noninterest expense 492.7 449.3 298.2 255.6 125.2 114.4
Net income $ 371.5 $ 341.2 $ 281.5 $ 253.8 $ 110.1 $ 100.1
Selected Average Balances
Total assets 25,609 23,058 21,275 17,673 7,577 6,877
Earning assets 24,110 21,583 16,708 14,065 7,284 6,599
Loans 18,194 16,363 13,402 11,218 5,673 4,973
Total deposits 18,409 18,275 11,751 10,485 5,820 5,528
Realized shareholder's equity 2,090 1,978 1,530 1,351 606 565
At December 31
Total assets 27,387 24,783 22,718 20,068 8,142 7,489
Earning assets 25,435 22,885 17,582 15,698 7,783 7,094
Loans 19,549 17,267 14,299 12,287 5,906 5,370
Allowance for loan losses 379 369 201 196 110 114
Total deposits 19,715 19,316 12,251 11,703 6,382 5,837
Realized shareholder's equity 2,172 2,048 1,685 1,404 635 585
Total shareholder's equity 2,190 2,058 3,687 2,982 641 590
Credit Quality
Net loan charge-offs<F1> 22.3 23.5 15.0 23.0 10.4 9.7
Nonperforming loans<F2> 79.3 117.4 36.4 73.6 12.0 20.7
Other real estate owned<F2> 10.9 24.4 2.8 5.3 8.6 13.9
Ratios and Other Data
ROA 1.45 % 1.48 % 1.54 % 1.64 % 1.45 % 1.46 %
ROE 17.77 17.25 18.39 18.79 18.17 17.71
Net interest margin 4.18 4.40 3.97 4.29 4.03 4.20
Efficiency ratio 56.8 56.8 53.8 52.3 56.3 56.0
Total shareholder's equity/assets 8.00 8.30 16.23 14.86 7.88 7.88
Net loan charge-offs to average loans 0.13 0.15 0.11 0.21 0.19 0.20
Nonperforming loans to total loans 0.42 0.70 0.26 0.61 0.21 0.39
Nonperforming assets to total loans plus
other real estate owned 0.47 0.84 0.28 0.65 0.36 0.66
Allowance to loans 1.99 2.19 1.43 1.62 1.90 2.17
Allowance to nonperforming loans 478.4 314.5 552.2 266.1 909.6 550.5
Full-service banking offices 368 372 213 201 118 116
ATMs 550 496 359 292 169 129
<FN>
<F1> Charge-offs on credit cards are recorded in SunTrust BankCard, N.A.
and are not included in the principal banking subsidiaries.
<F2> At December 31.
</TABLE>
<TABLE>
TABLE 24 - FINANCIAL HIGHLIGHTS OF PRINCIPAL BANKING SUBSIDIARIES
<CAPTION> Total Assets at
Net Income ROA December 31
(Dollars in millions) 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C>
SunTrust Banks of Florida, Inc.
SunTrust Bank, Central Florida, N.A. $ 96.7 $ 86.6 1.40 % 1.53 % $ 7,803 $ 6,460
SunTrust Bank, East Central Florida 17.8 16.9 1.65 1.58 1,070 1,056
SunTrust Bank, Gulf Coast 22.6 17.9 1.22 0.99 1,907 1,822
SunTrust Bank, Miami, N.A. 43.5 47.4 1.38 1.83 3,523 2,849
SunTrust Bank, Mid-Florida, N.A. 11.6 11.9 1.19 1.21 963 984
SunTrust Bank, Nature Coast 17.9 16.2 1.38 1.31 1,342 1,292
SunTrust Bank, North Central Florida 13.4 12.2 1.54 1.54 907 822
SunTrust Bank, North Florida, N.A. 8.0 9.5 0.76 1.08 1,037 972
SunTrust Bank, South Florida, N.A. 70.6 60.6 1.78 1.57 4,452 4,113
SunTrust Bank, Southwest Florida 18.8 16.6 1.43 1.46 1,359 1,255
SunTrust Bank, Tallahassee, N.A. 5.7 5.0 1.21 1.06 520 445
SunTrust Bank, Tampa Bay 36.3 31.8 1.57 1.57 2,493 2,106
SunTrust Bank, West Florida 9.4 7.9 1.69 1.51 587 565
SunTrust Banks of Georgia, Inc.
SunTrust Bank, Atlanta $ 198.0 $ 179.1 1.38 % 1.52 % $17,050 $14,978
SunTrust Bank, Augusta, N.A. 7.9 7.5 1.52 1.58 536 483
SunTrust Bank, Middle Georgia, N.A. 11.5 9.8 1.98 1.65 565 631
SunTrust Bank, Northeast Georgia, N.A. 12.6 10.5 2.03 1.72 661 612
SunTrust Bank, Northwest Georgia, N.A. 6.4 5.7 1.73 1.68 372 376
SunTrust Bank, Savannah, N.A. 10.9 9.6 1.95 1.89 596 519
SunTrust Bank, South Georgia, N.A. 10.6 9.5 1.66 1.59 670 622
SunTrust Bank, Southeast Georgia, N.A. 7.0 6.3 1.48 1.51 526 452
SunTrust Bank, West Georgia, N.A. 6.2 6.6 1.26 1.49 502 476
SunTrust Banks of Tennessee, Inc.
SunTrust Bank, Chattanooga, N.A. $ 25.3 $ 21.5 1.79 % 1.57 % $ 1,471 $ 1,399
SunTrust Bank, East Tennessee, N.A. 21.2 20.4 1.24 1.34 1,915 1,600
SunTrust Bank, Nashville, N.A. 54.9 49.5 1.42 1.46 4,264 3,899
SunTrust Bank, South Central Tennessee, N.A. 5.1 4.9 1.52 1.49 341 332
SunTrust Bank, Alabama, N.A. 3.6 3.7 1.04 1.12 353 348
</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 allowances 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.
Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994, bank holding companies from any state may now acquire banks
located in any other state, subject to certain conditions, including
concentration limits. A bank may establish branches across state lines by
merging with a bank in another state, beginning June 1, 1997 (unless
applicable state law permitted such interstate mergers at an earlier date or
prohibits such interstate mergers entirely), provided certain conditions are
met. A bank may also establish a de novo branch in a state in which the bank
does not maintain a branch if that state expressly permits such interstate de
novo branching 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 responsibility
for preparing its institution's 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 ("SEC") and is a member of the National
Association of Securities Dealers, Inc. Trusco Capital Management, Inc. is
registered with the SEC and is an investment adviser pursuant to the
Investment Advisers Act of 1940, as amended.
SunTrust Equitable Securities Corporation ("SESC") is a broker-dealer
registered with the SEC and is a member of the New York Stock Exchange, Inc.,
and the National Association of Securities Dealers, Inc. SESC engages in
investment banking activities, including underwriting and dealing in debt and
equity securities, public finance, corporate finance, mergers and
acquisitions and other advisory services to corporations, and the sale of
securities to corporations, institutions and governmental entities, high net
worth individuals and others. SESC also engages in investment advisory
activities and is an investment adviser registered with the SEC pursuant to
the Investment Advisers Act of 1940, as amended. SESC has an indirect
subsidiary, Equitable Asset Management, Inc. which is also an investment
adviser registered with the SEC pursuant to the Investment Advisers Act of
1940, as amended.
Year 2000
SunTrust recognizes the need to ensure that Year 2000 software failures will
not adversely impact its operation. Potential software failures due to
processing errors arising from calculations using the Year 2000 date are a
known risk. A corporate-wide task force, with representation from all major
business units, was established in early 1996 to evaluate and manage the
risks, solutions and cost associated with addressing this issue. Under the
direction of this group, with direct supervision by executive management,
much has already been accomplished.
The costs incurred in addressing the Year 2000 problem are being expensed
as incurred in compliance with generally accepted accounting principles.
None of these costs are expected to impact materially the results of
operations in any one period. Managment estimates the total cost of
achieving Year 2000 compliance to be approximately $45 million (pre-tax). A
significant portion of this cost is not expected to be incremental to
SunTrust but instead will constitute a reassignment of existing internal
systems technology resources. SunTrust believes that its plans for dealing
with the Year 2000 issue will result in timely and adequate modifications of
its systems and technology. Ultimately, the potential impact of the Year
2000 issue will depend not only on the corrective measures SunTrust
undertakes but also on the way in which the Year 2000 issue is addressed by
governmental agencies, businesses and other entities that provide data to, or
receive data from, SunTrust, or whose financial condition or operational
capability is important to SunTrust as borrowers, suppliers or customers.
Community Reinvestment
"Build your community and you build your bank" has always been the operating
philosophy of SunTrust. In our communities, where you find people working
together to build, rebuild or improve their quality of life, SunTrust will be
there.
Each SunTrust bank is an integral part of the community it serves. Our
bankers work side by side with community groups, non-profit organizations,
governmental agencies, and individuals to provide decent, safe, affordable
housing; opportunities for small businesses; and redevelopment of blighted
areas. SunTrust employees can be found hammering nails in Habitat homes,
serving on the boards of Community Development Corporations, teaching small-
business owners the keys to success, walking for charity, and anywhere there
is an activity to improve our communities. Our role as a community leader is
a responsibility that every SunTrust bank takes seriously. Each bank has
designated a senior executive to oversee our community activities and ensure
that we are doing our part.
SunTrust provides financial support to community building afforts
through our extensive corporate contributions, investments, and lending
activities. In 1997, SunTrust approved 4,639 loans for $288 million to
provide housing in low- to moderate income areas. We also approved 9,567
loans totaling $432 million for families classified as low- to moderate-
income to purchase or rehabilitate their homes. Thirty-two thousand thirty
(32,030) small businesses in our communities received $3.1 billion in
SunTrust loans.
SunTrust continues to seek new and innovative ways to build the
communities we serve and to ensure that all qualified applicants receive the
loans they need to improve their quality of life.
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, 1997, bank subsidiaries of the Company owned 469 of their 699 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,
1997, 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, 1997, its
system of internal controls over financial reporting met those criteria.
L. Philip Humann 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
Consolidated Statements of Income
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Year Ended December 31
(Dollars in thousands except per share data)<F1> 1997 1996 1995
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $3,036,100 $2,678,566 $2,501,536
Interest and dividends on
securities available for sale:
Taxable interest 464,210 442,497 403,133
Tax-exempt interest 40,246 46,092 55,611
Dividends(1) 37,778 33,302 28,292
Interest on funds sold 60,861 40,881 34,857
Interest on deposits in other banks 776 1,011 1,053
Other interest 10,768 3,693 2,722
Total interest income 3,650,739 3,246,042 3,027,204
INTEREST EXPENSE
Interest on deposits 1,151,157 1,083,035 988,725
Interest on funds purchased 345,116 245,502 239,080
Interest on other short-term borrowings 91,592 48,264 54,843
Interest on long-term debt 168,508 85,031 68,114
Total interest expense 1,756,373 1,461,832 1,350,762
NET INTEREST INCOME 1,894,366 1,784,210 1,676,442
Provision for loan losses - Note 5 117,043 75,916 77,108
Net interest income after provision for loan losses 1,777,323 1,708,294 1,599,334
NONINTEREST INCOME
Trust income 318,637 278,294 259,742
Service charges on deposit accounts 247,828 232,426 212,582
Other charges and fees 217,377 171,289 131,826
Credit card fees 73,611 66,309 62,572
Securities gains(losses) - Note 3 1,523 14,168 (6,649)
Other noninterest income 75,262 55,503 52,997
Total noninterest income 934,238 817,989 713,070
NONINTEREST EXPENSE
Salaries and other compensation - Note 11 844,156 763,461 673,417
Employee benefits - Note 11 111,447 110,588 105,573
Net occupancy expense 126,802 138,186 130,124
Equipment expense 120,675 115,423 105,122
Marketing and customer development 68,802 76,409 49,966
Postage and delivery 42,621 40,515 36,392
Operating supplies 37,225 37,938 32,157
Other noninterest expense 333,867 300,563 318,728
Total noninterest expense 1,685,595 1,583,083 1,451,479
Income before provision for income taxes 1,025,966 943,200 860,925
Provision for income taxes - Note 10 358,713 302,185 274,099
NET INCOME $ 667,253 $ 641,015 $ 586,826
Net income per average common share - diluted $ 3.13 $ 2.87 $ 2.56
Net income per average common share - basic 3.17 2.91 2.59
Dividends paid per common share 0.925 0.825 0.740
Average common shares - diluted 213,479,820 223,486,311 229,543,890
Average common shares - basic 210,242,895 220,363,781 226,665,006
(1) Includes dividends on 48,266,496 shares
of common stock of The Coca-Cola Company $ 27,029 $ 24,133 $ 21,237
<FN>
<F1> See notes to consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
At December 31
(Dollars in thousands) <F1> 1997 1996
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,991,263 $ 3,037,309
Interest-bearing deposits in other banks 15,417 13,461
Trading account 178,434 80,377
Securities available for sale(1) - Note 3 11,729,298 10,551,166
Funds sold 996,583 1,721,845
Loans - Notes 4,12 and 13 40,135,505 35,404,171
Allowance for loan losses - Note 5 (651,830) (625,849)
Net loans 39,483,675 34,778,322
Premises and equipment - Note 6 964,169 768,266
Intangible assets 292,370 277,736
Customers' acceptance liability 488,632 507,554
Other assets - Note 11 942,895 832,213
Total assets $58,082,736 $52,568,249
LIABILITIES AND SHAREHOLDERS' EQUITY - NOTES 9 AND 11
Noninterest-bearing deposits $ 8,927,796 $8,900,260
Interest-bearing deposits 29,269,732 27,990,129
Total deposits 38,197,528 36,890,389
Funds purchased 6,483,055 6,047,692
Other short-term borrowings - Note 7 1,989,415 867,961
Long-term debt - Note 8 3,171,832 1,565,341
Acceptances outstanding 488,632 507,554
Other liabilities - Notes 10 and 11 2,491,892 1,748,332
Total liabilities 52,822,354 47,627,269
Commitments and contingencies - Notes 6, 8, 11, 12, and 15
Preferred stock, no par value; 50,000,000 shares
authorized; none issued - -
Common stock, $1.00 par value; 350,000,000 shares authorized 211,608 225,608
Additional paid in capital 296,751 310,612
Retained earnings 2,812,645 3,033,900
Treasury stock and other (109,503) (230,918)
Realized shareholders' equity 3,211,501 3,339,202
Unrealized gains on securities available for sale,
net of taxes - Note 3 2,048,881 1,601,778
Total shareholders' equity 5,260,382 4,940,980
Total liabilities and shareholders' equity $58,082,736 $52,568,249
Common shares outstanding 209,909,204 220,469,001
Treasury shares of common stock 1,698,853 5,139,056
(1) Includes unrealized gains on securities
available for sale $ 3,311,979 $ 2,588,907
<FN>
<F1> See notes to consolidated financial statements
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
Unrealized
Additional Treasury Gains on
Common Paid in Retained Stock and Securities,
(In thousands) <F1> Stock Capital Earnings Other(1) Net of Taxes Total
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 $243,644 $325,126 $3,036,235 $(706,499) $ 570,075 $3,468,581
Net income - - 586,826 - - 586,826
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 forfeitures 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 3,454,401 (871,953) 1,158,548 4,306,181
Net income - - 641,015 - - 641,015
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 trasury 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 3,033,900 (230,918) 1,601,778 4,940,980
Net income - - 667,253 - - 667,253
Cash dividends paid on common stock, $0.925 per share - - (195,672) - - (195,672)
Proceeds from exercise of stock options - (18,696) - 25,343 - 6,647
Acquisition of treasury stock - - - (625,143) - (625,143)
Retirement of treasury stock (14,000) - (692,836) 706,836 - -
Issuance of treasury stock for 401(k) - 1,491 - 8,527 - 10,018
Issuance (net of forfeitures) of treasury
stock as restricted stock - 3,344 - 14,428 - 17,772
Compensation element from issuance of
restricted stock - - - (17,772) - (17,772)
Amortization of compensation element
of restricted stock - - - 9,196 - 9,196
Change in unrealized gains(losses) on securities, net of taxes - - - - 447,103 447,103
BALANCE, DECEMBER 31, 1997 $211,608 $296,751 $2,812,645 $(109,503) $2,048,881 $5,260,382
(1)Balance at December 31, 1997 includes $51,463 for treasury stock and
$58,040 for compensation element of restricted stock.
<FN>
<F1>See notes to consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
Year Ended Ended December 31
(In thousands)<F1> 1997 1996 1995
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 667,253 $ 641,015 $ 586,826
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 153,580 130,555 133,771
Provision for loan losses 117,043 75,916 77,108
Provision for losses on other real estate 3,710 3,524 3,870
Deferred income tax benefit 32,531 (5,068) (19,918)
Amortization of compensation element of
restricted stock 9,196 10,985 6,132
Securities (gains) losses, net (1,523) (14,168) 6,649
Gains on sale of loans, equipment, other
real estate and repossessed assets, net (43,321) (14,738) (13,385)
Recognition of unearned loan income (249,792) (217,475) (127,440)
Origination of loans for sale (3,946,854) (2,897,590) (822,054)
Proceeds from sale of loans 2,351,111 2,646,706 667,216
Change in period-end balances of:
Trading account (98,057) 16,236 1,497
Interest receivable (21,725) (4,332) (14,359)
Prepaid expenses (48,333) (35,582) (11,545)
Other assets (106,039) 82,252 (87,556)
Taxes payable 55,324 7,702 19,255
Interest payable 47,323 (11,847) 43,802
Other accrued expenses 376,093 61,918 81,086
Net cash (used in) operating activities (702,480) 476,009 530,955
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from maturities of securities
available for sale 1,361,988 1,945,278 1,482,138
Proceeds from sales of securities available for sale 639,307 758,751 1,206,904
Purchases of securities available for sale (2,453,421) (2,837,598) (1,977,136)
Net increase in loans (2,929,805) (3,635,956) (2,334,133)
Capital expenditures (311,770) (138,061) (133,292)
Proceeds from sale of equipment, other real estate
and repossessed assets 22,531 7,675 103,248
Net funds received (paid) in acquisitions 122,624 (987) (57,939)
Other (39,020) (22,646) (9,480)
Net cash (used in) investing activities (3,587,566) (3,923,544) (1,719,690)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase in deposits 1,171,554 3,628,816 734,135
Net increase (decrease) in funds purchased
and other short-term borrowings 1,556,817 534,525 1,129,112
Proceeds from issuance of long-term debt 1,809,319 671,319 160,936
Repayment of long-term debt (202,828) (108,323) (88,986)
Proceeds from the exercise of stock options 6,647 5,465 4,814
Payments to acquire treasury stock (625,143) (297,319) (204,824)
Dividends paid (195,672) (183,892) (168,660)
Net cash provided by financing activities 3,520,694 4,250,591 1,566,527
Net (decrease) increase in cash and cash equivalents (769,352) 803,056 377,792
Cash and cash equivalents at beginning of year 4,772,615 3,969,559 3,591,767
Cash and cash equivalents at end of year $ 4,003,263 $ 4,772,615 $ 3,969,559
SUPPLEMENTAL DISCLOSURE
Interest paid $ 1,709,050 $ 1,473,679 $ 1,306,960
Income taxes paid 303,519 294,618 261,997
<FN>
<F1> See notes to consolidated financial statements
</TABLE>
Notes to Consolidated Financial Statements
Note 1 - Accounting Policies
General: 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.
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.
Reclassifications: Certain prior year amounts have been restated to conform
with the current year financial statement presentation.
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: Securities in the investment portfolio are classified as
securities 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.
Included in noninterest income are realized and unrealized gains and
losses resulting from such market value adjustments and from recording
the results of sales of trading account securities.
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. A loan classified as
nonaccrual, except for smaller balance homogenous loans, which include consumer,
residential and credit card loans, meets the criteria to be considered an
impaired loan. The Company considers nonaccrual status to be required with the
occurrence of one of the following events: (i) interest or principal has been
in default 90 days or more, unless the loan is well secured and in the process
of collection; (ii) collection of recorded interest or principal is not
anticipated; or (iii) the loan is operating on a cash basis due to the
deterioration in the financial condition of the debtor. However, consumer
and residential real estate loans are normally placed on nonaccrual when
payments have been in default for 90 days or more.
SunTrust measures the impairment of a loan based on the present value of
expected future cash flows discounted at the loan's effective interest rate.
The exception to this policy is real estate loans, whose impairment is based on
the estimated fair value of the collateral. If the present value of the
expected future cash flows (or the fair value of the collateral) is less than
the recorded investements in the loans (i.e., principal, accrued interest; net
deferred loan fees or costs; unamortized premium or discount), SunTrust will
include this deficiency in evaluating the overall adequacy of the allowance for
loan losses.
A minimum payment delay is generally defined as a scheduled payment not received
and recorded on the specified date, and is considered past due on the next
business day. A payment shortfall is defined as a scheduled payment which is
received and is insufficient to cover required principal amortization plus
accrued interest.
For accruing loans when a scheduled payment is not received and recorded on the
specified date (a minimum payment delay), it is considered past due on the next
business day. If a scheduled payment is received and is insufficient to cover
required principal amortization plus accrued interest it is considered a
payment shortfall. 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.
Allowance for Loan Losses: The Company's allowance is that amount considered
adequate to absorb inherent 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 and prior
loan loss experience as well as the impact of current economic conditions and
other risk factors. 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. Prior loss experience 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.
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: Basic earnings per share are based on the weighted
average number of common shares outstanding during each period, excluding
outstanding shares that are contingently returnable shares. Diluted ernings
per share are based on the weighted average number of common shares
outstanding during each period, plus common shares calculated for stock
options and performance restricted stock outstanding using the treasury stock
method. All share and per share information included in these financial
statements have been restated to give effect to the Company's adoption of
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
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.)
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 as
hedges 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
may 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 2 - Acquisitions
During the three year period ended December 31, 1997, 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
</TABLE>
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 was accounted for as a purchase, was completed on January 2,
1998, and the subsidiary was renamed SunTrust Equitable Securities
Corporation. Consideration tendered, including contingently returnable
shares, aggregated 2.3 million shares of the Company's common stock.
Note 3 - Securities Available for Sale
Securities available for sale at December 31:
<TABLE>
<CAPTION>
1997
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 $2,875,007 $ 2,896,354 $ 24,717 $ 3,370
States and political subdivisions 622,386 642,092 19,955 249
Mortgage-backed securities 4,031,451 4,049,922 34,291 15,820
Trust preferred securities 662,993 674,346 17,397 6,044
Common stock of
The Coca-Cola Company 110 3,218,772 3,218,662 -
Other securities 225,372 247,812 22,702 262
Total investment securities $8,417,319 $11,729,298 $ 3,337,724 $25,745
</TABLE>
<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 -
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>
The amortized cost and fair value of investments in debt securities at
December 31, 1997, 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 $1,269,502 $1,271,523
Due in one year through five years 2,097,194 2,127,316
Due after five years through ten years 152,102 160,265
After ten years 641,588 653,688
Mortgage-backed securities 4,031,451 4,049,922
Total $8,191,837 $8,262,714
</TABLE>
Proceeds from the sale of investments in debt securities were $634.9,
$736.5 and $1,206.9 million in 1997, 1996 and 1995. Gross realized gains were
$0.2, $0.2 and $1.4 million and gross realized losses on such sales were
$2.2, $3.2 and $8.0 million in 1997, 1996 and 1995.
The fair value of securities available for sale pledged to secure
public deposits, trust and other funds were $5.9 and $4.4 billion at December
31, 1997 and 1996.
Note 4 - Loans
The composition of the Company's loan portfolio at December 31:
<TABLE>
(In thousands) 1997 1996
<S> <C> <C>
Commercial, financial and agricultural:
Domestic $14,139,947 $11,725,503
International 247,368 240,595
Real estate:
Construction 1,442,607 1,384,796
Residential mortgages 12,992,901 11,508,154
Other 4,778,707 4,585,803
Lease financing 725,705 607,470
Credit card 1,041,308 946,756
Other consumer loans 4,766,962 4,405,094
Loans $40,135,505 $35,404,171
</TABLE>
The gross amounts of interest income that would have been recorded in
1997, 1996, and 1995 on nonaccrual and restructured loans at December 31 of
each year, if all such loans had been accruing interest at their contractual
rates, were $12.3, $19.3, and $20.1 million, while interest income actually
recognized totaled $9.1, $9.1, and $11.0 million, respectively. Total
nonaccrual and restructured loans at December 31, 1997 and 1996 were $128.1
and $212.2 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
$1,421.3 million at December 31, 1997 and $529.2 million at December 31,
1996. During 1997, $2,878.8 million of such loans were made and repayments
totaled $2,045.9 million. None of these loans have been restructured, nor
were any related party loans charged off during 1997 and 1996.
Note 5 - Allowance for Loan Losses
Activity in the allowance for loan losses:
<TABLE>
<CAPTION>
(In thousands) 1997 1996 1995
<S> <C> <C> <C>
Balance at beginning of year $ 625,849 $ 638,864 $ 622,016
Allowance of purchased banks - 1,243 6,336
Provision charged to operating expense 117,043 75,916 77,108
Loan charge-offs (146,188) (142,016) (120,766)
Loan recoveries 55,126 51,842 54,170
Balance at end of year $ 651,830 $ 625,849 $ 638,864
</TABLE>
It is the opinion of management that the allowance was adequate at
December 31, 1997, based on conditions reasonably known to management;
however, the allowance 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:
<TABLE>
<CAPTION>
(In thousands) Useful Life 1997 1996
<S> <C> <C> <C>
Land $ 241,047 $ 212,211
Buildings and improvements 3-55 years 725,978 584,348
Leasehold improvements 5-30 years 149,015 115,651
Furniture and equipment 3-20 years 671,031 642,531
Construction in progress 45,204 36,282
1,832,275 1,591,023
Less accumulated depreciation
and amortization 868,106 822,757
Total $ 964,169 $ 768,266
</TABLE>
The carrying amounts of premises and equipment subject to mortgage
indebtedness (included in long-term debt) was not significant at December 31,
1997 and 1996.
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, 1997 were as follows:
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
<S> <C> <C>
1998 $ 50,599 $ 4,474
1999 47,187 4,475
2000 37,414 4,220
2001 35,310 4,210
2002 33,074 3,142
Thereafter 115,039 45,747
Total minimum lease payments $318,623 $66,268
Amounts representing interest $39,377
Present value of net minimum lease payments $26,891
</TABLE>
Net premises and equipment include $17.9 and $21.4 million at December
31, 1997 and 1996, 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 $50.1, $44.9 and $40.4 million for 1997, 1996 and
1995.
Note 7 - Other Short-Term Borrowings
Other short-term borrowings at December 31:
<TABLE>
<CAPTION>
1997 1996
(In thousands) Balance Rate Balance Rate
<S> <C> <C> <C> <C>
Commercial paper 765,377 5.57%-5.91% 364,624 5.300% - 6.10%
Bank notes 450,000 5.80%-5.83% - -
Federal funds purchased maturing in over one day 283,000 5.31%-5.81% 125,000 5.125% - 5.75%
Federal reserve borrowings - discount window 160,000 5.00% - -
Short-term borrowing facility 140,400 5.65%-6.00% 216,481 5.340% - 6.89%
Other 190,638 161,856
Total 1,989,415 867,961
</TABLE>
At December 31, 1997, $325.0 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. The average balance of short-term borrowings for the
years ended December 31, 1997, 1996, and 1995, were $1,742.7, $860.6, and
$918.1 million, respectively while the maximum amount outstanding at any
month-end during the years ended December 31, 1997, 1996 and 1995, were
$1,989.4, $1,137.3 and $1,082.4 million, respectively.
Note 8 - Long-Term Debt
Long-term debt at December 31:
<TABLE>
<CAPTION>
(In thousands) 1997 1996
<S> <C> <C>
PARENT COMPANY
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 28,753 34,932
7.375% notes due 2002 200,000 200,000
7.50% debentures due 2002 - 10,573
Floating rate notes due 2002 250,000 -
6.125% notes due 2004 200,000 200,000
7.375% notes due 2006 200,000 200,000
6.0% notes due 2026 200,000 200,000
Floating rate preferred securities due 2027 350,000 -
7.9% trust preferred securities due 2027 250,000 -
Capital lease obligation 5,239 5,789
Total Parent Company (excluding intercompany) 1,978,492 1,153,294
SUBSIDIARIES
7.25% notes due 2006 250,000 250,000
6.90% notes due 2007 100,000 -
Capital lease obligations 21,652 22,574
FHLB advances (1997: 5.62% - 6.61%; 1996: 5.80 - 7.38%) 819,168 136,566
Other 2,520 2,907
Total subsidiaries 1,193,340 412,047
Total long-term debt $3,171,832 $1,565,341
</TABLE>
Principal amounts due for the next five years on long-term debt at
December 31, 1997 are: 1998 - $164.5 million; 1999 - $254.0 million; 2000 -
$69.0 million; 2001 - $18.7 million and 2002 - $1,134.9 million.
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, 1997 the Company was in compliance with all covenants and
provisions of long-term debt agreements.
In the summary table of long-term debt, $600 million in 1997 qualifies
as Tier 1 capital, and $950.0 million in 1997 and $877.1 million in 1996
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, 1997,
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, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) Required Required
For Capital To Be Well
Actual Adequacy Purposes Well Capitalized
Amount Ratio Amount Ratio Amount Ratio
As of December 31, 1997:
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital:
SunTrust Banks, Inc. $ 3,519 7.19 % > $ 1,957 > 4.00 % > $ 2,935 > 6.00 %
SunTrust Banks of Florida, Inc. 2,076 10.37 > 801 > 4.00 > 1,201 > 6.00
SunTrust Banks of Georgia, Inc. 1,666 8.00 > 832 > 4.00 > 1,248 > 6.00
SunTrust Banks of Tennessee, Inc. 624 10.04 > 248 > 4.00 > 373 > 6.00
SunTrust Bank, Atlanta 1,286 7.62 > 675 > 4.00 > 1,012 > 6.00
Total capital:
SunTrust Banks, Inc. 6,035 12.33 > 3,913 > 8.00 > 4,892 > 10.00
SunTrust Banks of Florida, Inc. 2,428 12.13 > 1,601 > 8.00 > 2,001 > 10.00
SunTrust Banks of Georgia, Inc. 3,083 14.81 > 1,664 > 8.00 > 2,080 > 10.00
SunTrust Banks of Tennessee, Inc. 702 11.29 > 497 > 8.00 > 621 > 10.00
SunTrust Bank, Atlanta 2,178 12.91 > 1,350 > 8.00 > 1,687 > 10.00
Tier 1 leverage:
SunTrust Banks, Inc. 6.59 > 3.00 > 5.00
SunTrust Banks of Florida, Inc. 7.83 > 3.00 > 5.00
SunTrust Banks of Georgia, Inc. 8.86 > 3.00 > 5.00
SunTrust Banks of Tennessee, Inc. 8.07 > 3.00 > 5.00
SunTrust Bank, Atlanta 8.75 > 3.00 > 5.00
As of December 31, 1996:
Tier 1 capital:
SunTrust Banks, Inc. $ 3,095 7.59 % > $ 1,630 > 4.00 % > $ 2,445 > 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
Total capital:
SunTrust Banks, Inc. 4,483 10.99 > 3,260 > 8.00 > 4,071 > 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
Tier 1 leverage:
SunTrust Banks, Inc. 6.51 > 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
</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. All references to common share and per
share information and the weighted average number of common shares 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 $540.1 million at December 31, 1997.
In the calculation of basic and diluted EPS, net income is identical.
Below is a reconciliation for the three years ended December 31, 1997, of the
difference between average basic common shares outstanding and average
diluted common shares outstanding.
<TABLE>
<CAPTION>
(In thousands) 1997 1996 1995
<S> <C> <C> <C>
Average common shares - basic 210,243 220,364 226,665
Effect of dilutive securities:
Stock options 1,572 1,415 1,505
Performance restricted stock 1,665 1,707 1,374
Average common shares - diluted 213,480 223,486 229,544
</TABLE>
Note 10 - Income Taxes
The provision for income taxes for the three years ended December 31, 1997
consisted of the following:
<TABLE>
<CAPTION>
(In thousands) 1997 1996 1995
<S> <C> <C> <C>
Provision for federal income taxes:
Current $312,693 $273,642 $268,718
Deferred (prepaid) 4,774 (10,794) (29,607)
Total provision for federal income taxes 317,467 262,848 239,111
Provision for state income taxes:
Current 13,489 18,011 11,649
Deferred 27,757 21,326 23,339
Total provision for state income taxes 41,246 39,337 39,337
Total $358,713 $302,185 $274,099
</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, 1997 differ from the amount 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) 1997 1996 1995
<S> <C> <C> <C>
Tax provision at federal statutory rate $359,088 $330,120 $301,324
Increase (decrease) resulting from:
Tax-exempt interest (25,820) (28,498) (33,017)
Disallowed interest deduction 4,107 3,883 3,857
Income tax credits (2,709) (2,455) (1,533)
State income taxes, net of federal benefit 26,834 26,152 23,249
Dividend exclusion (6,841) (6,430) (5,517)
Favorable tax settlement (2,845) (27,486) (20,177)
Other 6,899 6,899 5,915
Provision for income taxes $358,713 $302,185 $274,099
</TABLE>
Temporary differences create deferred tax assets and liabilities which are
detailed below for December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Deferred Tax
Assets (Liabilities)
(In thousands) 1997 1996
<S> <C> <C>
Loan loss reserve $ 253,026 $ 241,943
Depreciation (3,980) (7,325)
Employee benefits (81,794) (72,111)
Unrealized gains on investment securities (1,263,098) (987,129)
Leasing (98,191) (103,633)
Other real estate 17,534 16,169
Other (10,985) (1,783)
Total deferred tax liability $(1,109,488) $(835,869)
</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 pre-tax contributions, which
are a percentage of compensation, and on the Company's earnings performance.
The Performance Bonus Plan is a nonqualified plan which awards 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 are distributed on the earliest of: (i) fifteen years after the date
shares are awarded to participants; (ii) the participant 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) 1997 1996 1995
<S> <C> <C> <C>
401(k) Plan and Performance Bonus Plan $30,053 $28,737 $30,552
Management Incentive Plan and
Performance Unit Plan 17,871 16,500 15,929
Performance Stock 9,196 10,985 6,132
</TABLE>
The following table presents information on stock options and
Performance Stock:
<TABLE>
<CAPTION>
(Dollars in thousands except per share data)
Stock Options Performance Stock
Weighted
Price Average Deferred
Shares Range Exercise Price Shares Compensation
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 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
Granted 632,000 65.25 65.25 300,000 19,172
Exercised/Vested (614,270) 9.50 - 33.19 15.26 (738,000) -
Cancelled, expired/Forfeited (33,500) 33.19 - 46.63 46.22 (56,000) (1,400)
Amortization of compensation
for Performance Stock (9,196)
Balance, December 31, 1997 3,428,539 $10.50 - 65.25 $ 34.93 3,228,000 $ 58,040
</TABLE>
The Company does not recognize compensation cost in accounting for its
stock option plans. If the Company had elected to recognize compensation cost
for options granted in 1997, 1996 and 1995, based on the fair value of the
options granted at the grant date, net income and earnings per share would
have been reduced to the pro forma amounts indicated below (in millions
except per share amounts):
<TABLE>
1997 1996 1995
<S> <C> <C> <C>
Net income - as reported $667.3 $616.6 $565.5
Net income - pro forma 665.4 616.0 562.7
Diluted earnings per share -
as reported 3.13 2.76 2.47
Diluted earnings per share -
pro forma 3.12 2.76 2.46
Basic earnings per share -
as reported 3.17 2.80 2.49
Basic earnings per share -
pro forma 3.16 2.80 2.48
</TABLE>
The weighted average fair values of options granted during 1997, 1996 and
1995 were $15.00, $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:
<TABLE>
1997 1996 1995
<S> <C> <C> <C>
Expected dividend yield 1.53% 1.93% 2.40%
Expected stock price
volatility 11.5% 11.5% 11.5%
Risk-free interest rate 6.50% 6.54% 6.24%
Expected life of options 5 years 5 years 5 years
</TABLE>
At December 31, 1997, options for 2,245,639 shares were exercisable with
a weighted average exercise price of $23.54. The weighted average remaining
contractual life of all options at December 31, 1997 was 6.9 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) 1997 1996 1995
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 24,461 $ 23,990 $ 21,286
Interest cost on projected
benefit obligations 30,055 27,735 25,364
Actual return on Plan assets (111,870) (54,120) (89,162)
Net amortization and deferral 62,463 10,788 47,556
Net periodic retirement Plan expense $ 5,109 $ 8,393 $ 5,044
Actuarial Assumptions:
Weighted average discount rate 7.25% 7.75% 7.50%
Rate of increase in future compensation levels 4.00% 4.00% 4.00%
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) 1997 1996
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $327,965 in 1997 and $277,255 in 1996 $ (373,633) $ (317,399)
Projected benefit obligation for service
rendered to date $ (436,406) $ (364,945)
Plan assets at fair value 609,502 493,694
Plan assets in excess of projected benefit obligation 173,096 128,749
Unrecognized net loss since transition 34,486 51,220
Unrecognized prior service cost (10,587) (13,887)
Unrecognized net asset at transition being
amortized over 14 years (13,173) (17,381)
Prepaid pension expense included in other assets $ 183,822 $ 148,701
</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, 1997 and 1996, the projected benefit obligation for this plan
was $17.5 and $14.7 million. Included in other liabilities at December 31,
1997 and 1996, is $15.5 and $12.4 million representing accumulated benefit
obligations. The expense of the nonqualified plan was $3.0, $3.1 and $3.5
million in 1997, 1996 and 1995.
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 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, 1997, 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>
(Dollars in thousands) 1997 1996 1996
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 1,584 $ 1,505 $ 1,277
Interest cost on projected benefit obligations 6,352 6,182 5,730
Actual return on plan assets (16,406) (9,192) (16,128)
Deferral of asset gain 9,950 3,008 10,688
Amortization of transition obligation 2,892 2,892 2,892
Net cost $ 4,372 $ 4,395 $ 4,459
Actuarial assumptions:
Weighted average discount rate 7.25% 7.75% 7.50%
Health care cost trend rate:
Pre-medicare (for 1997, equal adjustments until
leveling out at 5.0% in 2004) 10.25 11.25 12.00
Post-medicare (for 1997, equal adjustments until
leveling out at 5.0% in 2006) 9.75 10.50 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) 1997 1996
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Fully eligible active employees $ (9,561) $ (8,818)
Other active employees (14,893) (15,499)
Retirees (63,828) (57,202)
Total APBO (88,282) (81,519)
Plan assets at fair value 111,353 105,171
Plan assets in excess of APBO 23,071 23,652
Unrecognized net loss 11,867 12,766
Unrecognized net transition obligation 43,389 46,281
Prepaid postretirement benefit expense included in other assets 78,327 82,699
Incremental effect of 1% increase in the health care trend rate:
on total APBO $ (2,250) $ (4,364)
</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 in accordance with
generally accepted accounting principles.
Credit risk represents the potential loss that may occur because a party
to a transaction fails to perform according to the terms of the contract.
Market risk is the possibility that a change in interest or currency exchange
rates will cause the value of a financial instrument to decrease or become
more costly to settle. The contract/notional amounts of financial
instruments, which are not included in the consolidated balance sheet, do not
necessarily represent credit or market risk. However, they can be used to
measure the extent of involvement in various types of financial instruments.
The Company controls the credit risk of its off-balance sheet portfolio
by limiting the total amount of arrangements outstanding by individual
counterparty; by monitoring the size and maturity structure of the portfolio;
by obtaining collateral based on management's credit assessment of the
counterparty; and by applying uniform credit standards maintained for all
activities with credit risk. Collateral held varies but may include
marketable securities, 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, 1997 At December 31, 1996
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 $ 3,459 $2,765 $ 78 $ 2,255 $1,174 $ 36
Futures and forwards 4 - 20 -
Options written 855 - 468 -
Options purchased 861 - 471 -
Total interest rate contracts 3,459 4,485 78 2,255 2,133 36
Foreign exchange rate contracts 637 - 7 257 3
Commodity and other contracts 15 - 2 9 -
Total derivatives contracts $ 4,111 $4,485 87 $ 2,521 $2,133 39
Credit-related arrangements:
Commitments to extend credit $23,120 23,120 $19,134 19,134
Standby letters of credit and similar
arrangements 3,842 3,842 3,195 3,195
Total credit-related arrangements 26,962 26,962 22,329 22,329
When-issued securities:
Commitments to sell $ - - $ 297 -
Commitments to purchase - - - -
Total credit risk amount $27,049 $22,368
</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 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, 1997 and 1996, there were no deferred gains or losses
relating to terminated interest rate swap contracts. The Company records
substantially all swap income and expense in the interest expense category.
Interest rate swaps increased interest expense by $3.7 million in 1997 and
$1.0 million in 1996 and decreased interest expense by $10.1 million for
1995. Included in those amounts are ($1.4), $2.3, and $0.5 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 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. 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, 1997 the Company had $13.0 billion
in loans and an additional $2.3 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 region of the
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, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term investments $ 4,003,263 $4,003,263 $ 4,772,615 $ 4,772,615
Trading account 178,434 178,434 80,377 80,377
Investment securities 11,729,298 11,729,298 10,551,166 10,551,166
Loans 39,483,675 40,835,498 34,778,322 35,870,163
Financial liabilities:
Deposits 38,197,528 38,111,528 36,890,389 36,878,671
Short-term borrowings 8,472,470 8,472,470 6,915,653 6,915,653
Long-term debt 3,171,832 3,221,977 1,565,341 1,563,294
Off-balance sheet financial instruments:
Interest rate swaps:
In a net receivable position 39,210 19,658
In a net payable position (14,841) (11,655)
Commitments to extend credit 12,976 9,581
Standby letters of credit 1,885 1,418
Other - 3
</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.
Securities available for sale 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 fair 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
Statements of Income
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Year Ended December 31
(In thousands) 1997 1996 1995
<S> <C> <C> <C>
OPERATING INCOME
From subsidiaries:
Dividends - substantially all from
banking subsidiaries $396,344 $464,813 $417,255
Service fees 80,044 74,812 46,649
Interest on loans 25,007 17,950 13,218
Other income 4 102 128
Other operating income <F1> 36,036 61,945 36,291
Total operating income 537,435 619,622 513,541
OPERATING EXPENSE
Interest on short-term borrowings 42,184 21,827 22,727
Interest on long-term debt (F2> 112,121 69,010 56,866
Salaries and employee benefits 38,951 48,236 39,972
Amortization of intangible assets 7,650 7,660 7,660
Service fees to subsidiaries 35,152 17,804 14,130
Other operating expense <F3> 40,952 102,176 30,758
Total operating expense 277,010 266,713 172,113
Income before income taxes and equity in
undistributed income of subsidiaries 260,425 352,909 341,428
Income tax benefit 48,595 68,349 42,715
Income before equity in undistributed income
of subsidiaries 309,020 421,258 384,143
Equity in undistributed income of subsidiaries 358,233 219,757 202,683
NET INCOME $667,253 $641,015 $586,826
<FN>
<F1> Other operating income for 1997 includes $25.8 million in interest income
on trust preferred securities purchased during 1997. For 1996,
other operating income includes a $16.2 million securities gain on the
sale of a long-held minority position in a Florida bank.
<F2> Interest on long-term debt includes $26.4 million in interest expense
from trust preferred securities which were issued in 1997.
<F3> Other operating expense for 1997 and 1996 contains expenses incurred on
behalf of certain banking subsidiaries in connection with the
Company's growth initiatives.
</TABLE>
Balance Sheets
<TABLE>
BALANCE SHEETS
<CAPTION>
December 31
(Dollars in thousands) 1997 1996
<S> <C> <C>
ASSETS
Cash in subsidiary banks $ 11,739 $ 9,376
Interest-bearing deposits in banks 2,497 1,521
Funds sold 47,415
Investment securities 705,104 23,920
Loans to subsidiaries 617,030 337,503
Investment in capital stock of subsidiaries stated on the basis
of the Company's equity in subsidiaries' capital accounts:
Banking subsidiaries 6,611,981 5,718,219
Nonbanking and holding company subsidiaries 189,513 77,720
Premises and equipment 20,371 22,561
Intangible assets 107,161 114,812
Other assets - Note 11 427,049 550,848
Total Assets $ 8,739,860 $ 6,856,480
LIABILITIES AND SHAREHOLDERS' EQUITY - NOTES 9 AND 11
Short-term borrowings from:
Subsidiaries $ 1,050 $ 83,197
Non-affiliated companies - Note 7 892,527 417,224
Long-term debt - Note 8 2,048,492 1,153,294
Other liabilities - Notes 10 and 11 537,409 261,785
Total Liabilities 3,479,478 1,915,500
Preferred stock, no par value; 50,000,000 shares
authorized; none issued
Common stock, $1.00 par value; 350,000,000 shares authorized 211,608 225,608
Additional paid in capital 296,751 310,612
Retained earnings 2,812,645 3,033,900
Treasury stock and other (109,503) (230,918)
Realized Shareholders' Equity 3,211,501 3,339,202
Unrealized gains on investment securities, net of taxes - Note 3 2,048,881 1,601,778
Total Shareholders' Equity 5,260,382 4,940,980
Total Liabilities and Shareholders' Equity $ 8,739,860 $ 6,856,480
Common shares outstanding 209,909,204 220,469,001
Treasury shares of common stock 1,698,853 5,139,056
</TABLE>
Statements of Cash Flow
<TABLE>
STATEMENTS OF CASH FLOW
<CAPTION>
Year Ended December 31
(In thousands) 1997 1996 1995
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 667,253 $ 641,015 $ 586,826
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed income of subsidiaries (358,233) (219,757) (202,683)
Depreciation and amortization 12,511 11,610 10,658
Securities gains (3,503) (17,145) -
Deferred income tax benefit 33,572 5,068 19,918
Changes in period end balances of:
Prepaid expenses (45,049) (32,211) (31,511)
Other assets 143,219 (222,108) (34,532)
Taxes payable 44,803 (30,774) 26,089
Interest payable 4,828 5,838 (1,079)
Other accrued expenses 228,560 20,094 27,410
Net cash provided by operating activities 727,961 161,630 401,096
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of investment securities 9,305 23,494 6,000
Purchase of investment securities (667,830) (219) (9)
Net change in loans to subsidiaries (279,527) (69,113) (97,255)
Net funds received in acquisitions - 5,636 -
Capital expenditures (1,347) (8,231) (11,229)
Capital contributions to subsidiaries (212,103) (96,822) (90,355)
Other, net 109 4,143 15,264
Net cash (used in) investing activities (1,151,393) (141,112) (177,584)
CASH FLOW FROM FINANCING ACTIVITIES:
Net change in short-term borrowings 393,156 98,211 140,731
Proceeds from issuance of long-term debt 920,000 407,500 42,330
Repayment of long-term debt (24,802) (81,549) (2,723)
Proceeds from the exercise of stock options 6,647 5,465 4,814
Payments to acquire treasury stock (625,143) (297,319) (204,824)
Dividends paid (195,672) (183,892) (168,660)
Net cash provided by (used in) financing activities 474,186 (51,584) (188,332)
Net increase (decrease) in cash and cash equivalents 50,754 (31,066) 35,180
Cash and cash equivalents at beginning of year 10,897 41,963 6,783
Cash and cash equivalents at end of year $ 61,651 $ 10,897 $ 41,963
SUPPLEMENTAL DISCLOSURE
Income taxes received from subsidiaries $ 394,908 $ 336,898 $ 322,440
Income taxes paid by Parent Company (298,520) (290,450) (253,228)
Net income taxes received by Parent Company 96,388 46,448 69,212
Interest paid $ 106,311 $ 84,310 $ 80,077
</TABLE>
Note 17 - Subsequent Event
On July 20, 1998, SunTrust issued a press release announcing that the Company
and Crestar Financial Corporation ("Crestar") had entered into a definitive
Agreement and Plan of Merger providing for the merger of a wholly owned
subsidiary of SunTrust with and into Crestar. Under terms of the agreement,
Crestar shareholders will receive, in a tax-free exchange, 0.96 shares of
SunTrust's common stock for each share of Crestar common stock. It is
intended that the merger will be accounted for as a pooling-of-interests.
The merger is subject to regulatory and shareholder approval of both companies
and is expected to be completed during the fourth quarter of 1998. In
connection with the announcement, the Board of Directors of SunTrust has
rescinded its stock repurchase authorization. For further information, see
the Current Report on Form 8-K filed by SunTrust on July 21, 1998.
Note 18 - Restatement of Certain Prior Years Financial Statements
In connection with the review by the staff of the Securities and Exchange
Commission of documents related to SunTrust's acquisition of Crestar
Financial Corporation and the staff's comments thereon, SunTrust has
lowered its provision for loan losses in 1996, 1995 and 1994 by $40 million,
$35 million, and $25 million respectively. The effect of this action was
to increase net income in these years by $24.4 million, $21.4 million and
$15.3 million respectively. Further, as of December 31, 1997 and 1996, the
Allowance for Loan Losses has been decreased by a total of $100 million and
shareholder's equity has been increased by a total of $61 million.
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, 1997
and 1996 and the related consolidated statements of income, shareholders'
equity and cash flow for each of the three years in the period ended December
31, 1997, as restated - see Note 18. 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 restated 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, 1997 and
1996, and the results of their operations and their cash flow for each
of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 30, 1998 (except with respect to the matters discussed in Notes 17 and
18, as to which the date is November 10, 1998).
<PAGE>
Corporate Headquarters Shareholders of Record
SunTrust Banks, Inc. SunTrust has 30,315 shareholders of
303 Peachtree Street, N.E. record as of December 31, 1997. In
Atlanta, Georgia 30308 addition, approximately 16,700
(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 21, Thomson BankWatch: AA
1998, 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: TBW-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 SunTrust and its subsidiaries are
in additional shares of SunTrust Equal Opportunity Employers.
common stock. For information,
contact: Banks in the SunTrust group are
members of the Federal Deposit
Stock Transfer Department Insurance Corporation.
SunTrust Bank Atlanta
P.O. Box 4625
Atlanta, Georgia 30302-4625
(404) 588-7822
(800) 568-3476
<PAGE>
Subsidiaries of the Registrant as of December 31, 1997.
SunTrust Banks, Inc. (27 banks in total)
100% SunTrust Banks of Florida, Inc.
100% SunTrust Bank, Central Florida, National Association
100% STB Management (Central Florida), Inc.
100% STB Real Estate Parent (Central Florida), Inc.
100% STB Real Estate Holdings (Central Florida), Inc.
100% STB Receivables (Central Florida), Inc.
100% SunTrust Annuities, Inc.
100% SunTrust Insurance Services (Florida), Inc.
100% SunTrust Bank, East Central Florida
100% Service of Volusia County, Inc.
100% STB Receivables (East Central Florida), Inc.
100% SunTrust Bank, Gulf Coast
100% STB Management (Gulf Coast), Inc.
100% STB Real Estate Parent (Gulf Coast), Inc.
100% STB Real Estate Holdings (Gulf Coast), Inc.
100% STB Receivables (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% STB Receivables (Mid-Florida), Inc.
100% SunTrust Bank, Nature Coast
100% STB Real Estate Parent (Nature Coast), Inc.
100% STB Real Estate Holdings (Nature Coast), Inc.
100% STB Receivables (Nature Coast), Inc.
100% SunTrust Bank, North Central Florida
100% STB Receivables (North Central Florida), Inc.
100% SunTrust Bank, North Florida, National Association
100% STB Receivables (North Florida), Inc.
100% SunTrust Bank, South Florida, National Association
100% STB Management (South Florida), Inc.
100% STB Real Estate Parent (South Florida), Inc.
100% STB Real Estate Holdings (South Florida), Inc.
100% STB Receivables (South Florida), Inc.
100% SunTrust Bank, Southwest Florida
100% STB Real Estate Parent (Southwest Florida), Inc.
100% STB Real Estate Holdings (Southwest Florida), Inc.
100% STB Receivables (Southwest Florida), Inc.
100% SunTrust Bank, Tallahassee, National Association
100% STB Receivables (Tallahassee), Inc.
100% SunTrust Bank, Tampa Bay
100% STB Management (Tampa Bay), Inc.
100% STB Receivables (Tampa Bay), Inc.
100% SunTrust Bank, West Florida
100% STB Receivables (West Florida), Inc.
100% SunTrust Banks Trust Company (Cayman) LTD
100% Premium Assignment Corporation
100% SunTrust Banks of Georgia, Inc.
100% SunTrust Bank, Atlanta
100% STB Management (Atlanta), Inc.
100% STB Real Estate Parent (Atlanta), Inc.
100% STB Real Estate Holdings (Atlanta), Inc.
100% STI Credit Corporation
100% SunTrust International Banking Company
100% SunTrust Asia, Limited (inactive)
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% STB Real Estate Parent (Northeast Georgia), Inc.
100% STB Real Estate Holdings (Northeast Georgia), Inc.
100% SunTrust Insurance Services (Georgia), Inc.
100% SunTrust Bank, Northwest Georgia, National Association
100% SunTrust Bank, Savannah, National Association
100% SunTrust Bank, South Georgia, National Association
100% STB Real Estate Parent (South Georgia), Inc.
100% STB Real Estate Holdings (South Georgia), Inc.
100% SunTrust Bank, Southeast Georgia, National Association
100% SunTrust Bank, West Georgia, National Association
100% SunTrust Personal Loans, Inc.
100% Preferred Surety Holdings, Inc.
100% Preferred Surety Corporation
100% Madison Insurance Company (inactive)
100% SunTrust Banks of Tennessee, Inc.
100% SunTrust Bank, Nashville, National Association
100% Cherokee Insurance Company (inactive)
100% STB Management (Nashville), Inc.
100% SunTrust Leasing of Tennessee, Inc.
100% SunTrust Bank, Alabama, National Association
100% SunTrust Annuities (Alabama), Inc.
100% SunTrust Bank, Chattanooga, National Association
100% STB Management (Chattanooga), Inc.
100% SunTrust of Chattanooga Mortgage Corporation
100% SunTrust Insurance Services (Tennessee), Inc.
100% SunTrust Bank, East Tennessee, National Association
100% Acquisition and Equity Corporation
100% SunTrust Bank, South Central Tennessee, National Association
100% Trust Company of Tennessee (inactive)
<PAGE>
100% STI Capital Management, National Association
100% STI Trust & Investment Operations, Inc.
100% SunTrust BankCard, National Association
100% SunTrust Capital I
100% SunTrust Capital II
100% SunTrust Capital Markets, Inc.
100% SunTrust Insurance Company
100% SunTrust International Services, Inc.
100% SunTrust Mortgage, Inc.
100% SunTrust Online, Inc. (inactive)
100% SunTrust Plaza Associates, LLC
100% SunTrust Properties, Inc.
100% SunTrust Securities, Inc.
100% SunTrust Service Corporation*
100% Trusco Capital Management, Inc.
* 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>
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-K/A, into the Registrant's previously
filed Registration Statement Nos. 33-50756, 33-28250 and 33-58723 on
Form S-8 and Registration Statement No. 333-46093 on Form S-3.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
November 12, 1998
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