<PAGE>
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1998
Commission File Number 1-8918
SUNTRUST BANKS, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-1575035
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
303 Peachtree Street, N.E., Atlanta, Georgia 30308
(Address of principal executive offices) (Zip Code)
(404) 588-7711
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X__ No _____
At April 30, 1998, 211,107,402 shares of the Registrant's Common Stock,
$1.00 par value were outstanding.
Page 1
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Shareholders' Equity 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-21
PART II OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 22
PART I - FINANCIAL INFORMATION
The following unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and
accordingly do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
However, in the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months ended
March 31, 1998 are not necessarily indicative of the results that may
be expected for the full year 1998.
Page 2
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months
Ended March 31
(Dollars in thousands except per share data)(Unaudited)<F1> 1998 1997
<S> <C> <C>
Interest Income
Interest and fees on loans $ 804,347 $ 716,152
Interest and dividends on investment securities
Taxable interest 117,528 110,690
Tax-exempt interest 8,644 10,650
Dividends (1) 10,845 9,205
Interest on funds sold 15,609 14,048
Interest on deposits in other banks 163 274
Other interest 2,260 2,064
Total interest income 959,396 863,083
Interest Expense
Interest on deposits 284,512 276,964
Interest on funds purchased 100,555 77,707
Interest on other short-term borrowings 23,517 18,438
Interest on long-term debt 61,392 27,498
Total interest expense 469,976 400,607
Net Interest Income 489,420 462,476
Provision for loan losses 28,626 26,190
Net interest income after provision for loan losses 460,794 436,286
Noninterest Income
Trust income 93,099 78,370
Service charges on deposit accounts 62,140 59,742
Other charges and fees 71,359 51,139
Credit card fees 20,461 18,805
Securities gains (losses) 910 1,391
Other noninterest income 38,348 16,355
Total noninterest income 286,317 225,802
Noninterest Expense
Salaries and other compensation 235,058 202,408
Employee benefits 34,375 32,382
Net occupancy expense 33,072 32,530
Equipment expense 32,007 30,147
Operating supplies 8,967 9,601
Marketing and customer development 17,259 16,802
Postage and delivery 10,795 11,338
Outside processing and software 21,957 14,888
Other noninterest expense 77,574 63,908
Total noninterest expense 471,064 414,004
Income before income taxes 276,047 248,084
Provision for income taxes 95,173 87,028
Net Income $ 180,874 $ 161,056
Average common shares - diluted 211,693,568 218,226,968
Average common shares - basic 208,441,847 214,939,509
Net income per average common share - diluted $ 0.85 $ 0.74
Net income per average common share - basic 0.87 0.75
Dividends declared per common share 0.250 0.225
(1) Includes dividends on common stock of
The Coca-Cola Company 7,240 6,757
<FN>
<F1>See notes to consolidated financial statements
</TABLE>
Page 3
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31 December 31 March 31
(Dollars in thousands)(Unaudited)<F1> 1998 1997 1997
<S> <C> <C> <C>
Assets
Cash and due from banks $ 2,550,594 $ 2,991,263 $ 2,755,113
Interest-bearing deposits in other banks 11,053 15,417 58,522
Trading account 127,734 178,434 346,819
Investment securities (1) 12,003,611 11,729,298 10,747,319
Funds sold 1,017,059 996,583 1,310,143
Loans 41,264,007 40,135,505 36,428,048
Allowance for loan losses (658,488) (651,830) (634,501)
Net loans 40,605,519 39,483,675 35,793,547
Premises and equipment 969,490 964,169 944,314
Intangible assets 429,727 292,370 277,216
Customers' acceptance liability 358,938 488,632 488,917
Other assets 1,916,507 942,895 1,111,369
Total assets $ 59,990,232 $ 58,082,736 $ 53,833,279
Liabilities & Shareholders' Equity
Noninterest-bearing deposits $ 8,524,404 $ 8,927,796 $ 8,176,616
Interest-bearing deposits 28,220,179 29,269,732 28,484,693
Total deposits 36,744,583 38,197,528 36,661,309
Funds purchased 7,757,380 6,483,055 6,285,390
Other short-term borrowings 1,573,718 1,989,415 1,765,397
Long-term debt 4,189,360 3,171,832 1,721,319
Acceptances outstanding 358,938 488,632 488,917
Other liabilities 3,552,023 2,491,892 2,034,097
Total liabilities 54,176,002 52,822,354 48,956,429
Preferred stock, no par value; 50,000,000 shares
authorized; none issued - - -
Common stock, $1.00 par value; 350,000,000
shares authorized 213,108 211,608 225,608
Additional paid in capital 396,726 296,751 302,749
Retained earnings 2,940,944 2,812,645 3,146,532
Treasury stock and other (107,619) (109,503) (465,914)
Realized shareholders' equity 3,443,159 3,211,501 3,208,975
Accumulated other comprehensive income 2,371,071 2,048,881 1,667,875
Total shareholders' equity 5,814,230 5,260,382 4,876,850
Total liabilities and shareholders' equity $ 59,990,232 $ 58,082,736 $ 53,833,279
Common shares outstanding 211,521,440 209,909,204 215,889,057
Treasury shares of common stock 1,586,617 1,698,853 9,719,000
(1) Includes unrealized gains (losses) on
investment securities $ 3,832,666 $ 3,311,979 $ 2,695,129
<FN>
<F1>See notes to consolidated financial statements.
</TABLE>
Page 4
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months
Ended March 31
(Dollars in thousands)(Unaudited)<F1> 1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 180,874 $ 161,056
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 41,683 36,878
Provision for loan losses 28,626 26,190
Provision for losses on other real estate 478 536
Amortization of compensation element of
restricted stock 2,354 2,330
Securities (gains) and losses, net (910) (1,391)
(Gains) and losses on sale of equipment, other
real estate and repossessed assets, net (22,543) (5,856)
Recognition of unearned loan income (21,272) (58,310)
Originations of loans for sale (776,188) (675,643)
Proceeds from sale of loans 777,183 661,772
Change in period-end balances of:
Trading account 50,700 (266,442)
Interest receivable (18,296) (3,743)
Prepaid expenses (41,578) (22,647)
Other assets (891,608) (254,489)
Taxes payable 87,005 79,310
Interest payable 1,057 (9,377)
Other liabilities 775,991 182,456
Net cash provided by (used in) operating activities 173,556 (147,370)
Cash flows from investing activities:
Proceeds from maturities of investment securities 758,082 326,174
Proceeds from sales of investment securities 147,780 320,484
Purchases of investment securities (644,154) (734,382)
Net decrease (increase) in loans (1,121,844) (965,931)
Capital expenditures (35,819) (204,434)
Proceeds from sale of equipment, other real estate
and repossessed assets 10,562 2,369
Net funds received in acquisitions 13,420 -
Other (20,638) (7,503)
Net cash used in investing activities (892,611) (1,263,223)
Cash flows from financing activities:
Net decrease in deposits (1,452,945) (229,080)
Net increase in funds purchased and
other short-term borrowings 847,025 1,135,134
Proceeds from the issuance of long-term debt 1,274,131 240,798
Repayment of long-term debt (256,603) (84,820)
Proceeds from the exercise of stock options 1,029 2,722
Payments to acquire treasury stock (65,564) (254,574)
Dividends paid (52,575) (48,424)
Net cash provided by financing activities 294,498 761,756
Net decrease in cash and cash equivalents (424,557) (648,837)
Cash and cash equivalents at beginning of period 4,003,263 4,772,615
Cash and cash equivalents at end of period $ 3,578,706 $ 4,123,778
Supplemental Disclosure
Interest paid $ 471,033 $ 391,230
Taxes paid 9,142 7,286
<FN>
<F1>See notes to consolidated financial statements
</TABLE>
Page 5
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION> Accumulated
Additional Treasury Other
Common Paid in Retained Stock and Comprehensive
(Dollars in thousands)(Unaudited)<F1> Stock Capital Earnings Other<F2> Income Total
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $ 225,608 $ 310,612 $3,033,900 $(230,918) $1,601,778 $4,940,980
Net income - - 161,056 - - 161,056
Cash dividends declared on common
stock, $0.225 per share - - (48,424) - - (48,424)
Proceeds from exercise of stock options - (8,973) - 11,695 - 2,722
Acquisition of treasury stock - - - (254,574) - (254,574)
Issuance of treasury stock for 401(k) - 1,110 - 5,553 - 6,663
Issuance, net of forfeitures, of treasury
stock as restricted stock - - - (1,017) - (1,017)
Compensation element of restricted stock - - - 1,017 - 1,017
Amortization of compensation element
of restricted stock - - - 2,330 - 2,330
Change in unrealized gains (losses)
on securities, net of taxes - - - - 66,097 66,097
Balance, March 31, 1997 $ 225,608 $ 302,749 $3,146,532 $(465,914) $1,667,875 $4,876,850
Comprehensive Income - March 31, 1997 $ 227,153
Balance, January 1, 1998 $ 211,608 $ 296,751 $2,812,645 $(109,503) $2,048,881 $5,260,382
Net income - - 180,874 - - 180,874
Cash dividends declared on common
stock, $0.25 per share - - (52,575) - - (52,575)
Proceeds from exercise of stock options - (9,794) - 10,823 - 1,029
Issuance of common stock for acquisitions 1,500 - - - - 1,500
Issuance of treasury stock for acquisition - 109,268 - 47,257 - 156,525
Acquisition of treasury stock - - - (65,564) - (65,564)
Issuance of treasury stock for 401(k) - 280 - 7,235 - 7,515
Issuance, net of forfeitures, of treasury
stock as restricted stock - 221 - 8,927 - 9,148
Compensation element of restricted stock - - - (9,148) - (9,148)
Amortization of compensation element
of restricted stock - - - 2,354 - 2,354
Change in unrealized gains (losses)
on securities, net of taxes - - - - 322,190 322,190
Balance, March 31, 1998 $ 213,108 $ 396,726 $2,940,944 $(107,619) $2,371,071 $5,814,230
Comprehensive Income - March 31, 1998 $ 503,064
<FN>
<F1>See notes to consolidated financial statements.
<F2>Balance at March 31, 1997 includes $419,796 for Treasury Stock and $46,118 for Deferred Compensation.
Balance at March 31, 1998 includes $42,785 for Treasury Stock and $64,834 for Deferred Compensation.
</TABLE>
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<PAGE>
Notes to Consolidated Financial Statements (Unaudited)
Note 1 - Accounting Policies
The consolidated interim financial statements of SunTrust Banks, Inc.
("SunTrust" or "The Company") are unaudited. All significant intercompany
accounts and transactions have been eliminated. These financial statements
should be read in conjunction with the Annual Report on Form 10-K/A for the
year ended December 31, 1997.
Note 2 - Recent Accounting Developments
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information, which is effective for annual and interim
periods beginning after December 15, 1997. However, this statement is not
required in interim financial statements in the initial year of its
application. This statement establishes standards for the method that public
entities use to report information about operating segments in annual
financial statements and requires those enterprises to report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographical areas and major customers. The
anticipated disclosure, when fully implemented, will provide required
information by reportable operating segment using the current internal
management reporting system which is prepared on a geographic basis.
During the first quarter of 1998, the American Institute to Certified Public
Accountants issued Statement of Position (SOP) 98-1, "Accounting for Costs of
Computer Software Developed or Obtained for Internal Use". SOP 98-1 requires
capitalization of computer software costs that meet certain criteria. The
statement is effective for fiscal years beginning after December 15, 1998.
Adoption of SOP 98-1 is not expected to have a material effect on the
Company's financial position or results of operations.
Note 3 - Derivative Financial Instruments
Derivatives are used to hedge interest rate exposures by modifying the
interest rate characteristics of related balance sheet instruments. The
specific criteria required for derivatives used for such purposes are
described below. Derivatives that do not meet these criteria are carried at
market value with changes in value recognized currently in earnings in the
current period. It is not the Company's policy to hold derivatives that do
not qualify as hedges. There has not been a material change in derivative
related market risk this quarter.
Derivatives used as hedges must be effective at reducing the risk associated
with the exposure being hedged and must be designated as a hedge at the
inception of the derivative contract. Derivatives used for hedging purposes
include swaps, forwards, futures, and purchased options. The fair values of
derivative contracts are carried off-balance sheet and the unrealized gains
and losses on these contracts are generally deferred. The interest component
is recognized over the life of the contract in net interest income for
derivatives used as hedges or those used to modify the interest rate
characteristics of assets and liabilities. 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. If the underlying instrument is sold,
the cumulative change in the value of the associated derivative is recognized
immediately in the earnings of the underlying instrument.
Page 7
<PAGE>
Notes to Consolidated Financial Statements (Unaudited) - continued
Note 4 - Acquisitions
On September 26, 1997, the Company signed a definitive agreement to acquire
Equitable Securities Corporation, a Nashville, Tennessee-based investment
banking, securities brokerage and investment advisory firm. The merger,
which was accounted for as a purchase, was completed on January 2, 1998, and
the new subsidiary was renamed SunTrust Equitable Securities Corporation
(SESC). Consideration tendered, including contingently returnable shares,
aggregated 2.3 million shares of the Company's common stock.
Note 5 - Comprehensive Income
Under Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", certain transactions and other economic events that
bypass the income statement must be displayed as other comprehensive
income. The Company's comprehensive income consists of net income and
unrealized gains and losses on securities available-for-sale, net of income
taxes.
Comprehensive income for the first quarter of 1998 and 1997 is calculated
as follows:
<TABLE>
COMPREHENSIVE INCOME
<CAPTION>
Before Income Net of
(Dollars in thousands) Tax Tax Tax
<S> <C> <C> <C>
Unrealized gains (net) recognized in other
comprehensive income:
Quarter ended March 31, 1998 $527,316 $205,126 $322,190
Quarter ended March 31, 1997 $108,178 $ 42,081 $ 66,097
</TABLE>
<TABLE>
(Dollars in thousands) 1998 1997
<S> <C> <C>
Amounts reported in net income:
Gain on sale of securities $ 910 $ 1,391
Net amortization (accretion) (280) (400)
Reclassification adjustment 630 991
Income tax expense (245) (385)
Reclassification adjustment, net of tax 385 606
Amounts reported in other comprehensive income:
Unrealized gain arising during period, net of tax 322,575 66,703
Reclassification adjustment, net of tax (385) (606)
Unrealized gains (net) recognized in
other comprehensive income 322,190 66,097
Net income 180,874 161,056
Total comprehensive income $503,064 $227,153
</TABLE>
Page 8
<PAGE>
Notes to Consolidated Financial Statements (Unaudited) - continued
Note 6 - Earnings Per Share Reconciliation
In the calculation for basic and diluted EPS, net income is identical.
Below is a reconciliation for the quarters ended March 31, 1998 and
March 31, 1997 of the difference between average basic common shares
outstanding and average diluted common shares outstanding.
Note 7 - Restatement of certian 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 there on, SunTrust has lowered its
provision for loan lossses 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 shareholders'
equity has been increased by a total of $61 million.
<TABLE>
Statement re: Computation of Per Share Earnings
(In thousands, except per share data)
<CAPTION>
Three Months
Ended March 31
1998 1997
<S> <C> <C>
Basic
Net income $180,874 $161,056
Average common shares 208,442 214,940
Earnings per common share - basic $ 0.87 $ 0.75
Diluted
Net income $180,874 $161,056
Average common shares outstanding 208,442 214,940
Incremental shares outstanding <F1>: 3,252 3,287
Average diluted common shares 211,694 218,227
Earnings per common share - diluted $ 0.85 $ 0.74
<FN>
<F1>Includes the incremental effect of stock options and restricted
stock outstanding computed under the treasury stock method.
</TABLE>
<TABLE>
Three Months
Ended March 31
(In thousands) 1998 1997
<S> <C> <C>
Average common shares - basic 208,442 214,940
Effect of dilutive securities:
Stock options 1,635 1,510
Performance restricted stock 1,617 1,777
Average common shares - diluted 211,694 218,227
</TABLE>
Page 9
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
SunTrust Banks, Inc. is a multi-state bank holding company with its
headquarters in Atlanta, Georgia. The Company's principal banking
subsidiaries are SunTrust Banks of Florida, Inc., SunTrust Banks,
of Georgia, Inc. and SunTrust Banks of Tennessee, Inc., all of which are bank
holding companies in their respective states. Credit card services are
provided through SunTrust BankCard, N.A. of Orlando, Florida.
SunTrust has several wholly owned nonbanking subsidiaries that are engaged in
various businesses. They include SunTrust Mortgage, Inc., which originates
and services mortgage loans on both residential and income property,
principally throughout Florida, Georgia and Tennessee. SunTrust Insurance
Company operates as a reinsurer for credit life, accident and health insurance
sold to loan customers of SunTrust. SunTrust Securities, Inc. engages in
securities brokerage services and conducts incidental activities such as
offering custodial and cash management services. SunTrust Equitable Securities
Corporation, which conducts various business activities including investment
banking, securities brokerage, investment advisory services, raising equity
capital, underwriting of debt issues and selling investment securities to
corporations, institutions and government entities. SunTrust Personal Loans,
Inc. operates as a consumer finance company. STI Credit Corporation operates
as a leasing subsidiary, primarily for commercial customers. Other nonbank
subsidiaries primarily support the Company's banking operations, providing data
processing and other services.
SunTrust continues to believe that its plans for dealing with the Year 2000
issue will result in timely and adequate modifications of its systems and
technology. There have not been any material changes since the annual report
was filed.
SunTrust has made, and may continue to make, various forward-looking statements
with respect to financial and business matters. These forward-looking
statements are subject to numerous assumptions, risks and uncertainties, all of
which may change over time. The actual results that are achieved could differ
significantly from the forward-looking statements contained in this document.
The following analysis of the financial performance of SunTrust for the first
quarter of 1998 should be read in conjunction with the financial statements,
notes and other information contained in this document. The results of
operations for the three months ended March 31, 1998 are not indicative of the
results that may be attained for any other period. In this discussion, net
interest income and the net interest margin are presented on a taxable-
equivalent basis and the ratios are presented on an annualized basis.
EARNINGS ANALYSIS
SunTrust reported record net income of $180.9 million for the first quarter of
1998, an increase of 12.3% compared with $161.1 million in the first quarter of
1997. Diluted earnings per share grew 14.9% to $0.85 from $0.74 in the same
periods. The growth in net income resulted from increases in noninterest
income and continued strong loan demand.
Page 10
<PAGE>
<TABLE>
TABLE 1 - SELECTED QUARTERLY FINANCIAL DATA
(Dollars in millions except per share data)
<CAPTION>
Quarters
1998 1997
1 4 3 2 1
<S> <C> <C> <C> <C> <C>
Summary of Operations
Interest and dividend income $ 959.5 $ 954.4 $ 934.9 $ 898.4 $ 863.1
Interest expense 470.0 469.0 458.1 428.7 400.6
Net interest income 489.5 485.4 476.8 469.7 462.5
Provision for loan losses 28.6 32.6 29.0 29.2 26.2
Net interest income after provision for loan losses 460.9 452.8 447.8 440.5 436.3
Noninterest income 286.3 247.4 232.9 228.1 225.8
Noninterest expense 471.1 433.9 424.4 413.3 414.0
Income before provision for income taxes 276.1 266.3 256.3 255.3 248.1
Provision for income taxes 95.2 94.1 87.7 89.9 87.0
Net income $ 180.9 $ 172.2 $ 168.6 $ 165.4 $ 161.1
Net interest income (taxable equivalent) $ 497.5 $ 494.1 $ 485.7 $ 479.2 $ 472.0
Per common share
Net income - diluted $ 0.85 $ 0.82 $ 0.80 $ 0.77 $ 0.74
Net income - basic 0.87 0.83 0.81 0.78 0.75
Dividends declared 0.250 0.250 0.225 0.225 0.225
Book value 27.49 25.06 23.92 24.50 22.59
Common stock market price
High 77.44 75.25 70.44 59.00 54.75
Low 65.25 61.13 54.75 44.13 46.13
Close 75.38 71.38 67.94 55.06 46.38
Selected Average Balances
Total assets $58,468.4 $56,663.4 $55,160.2 $53,598.3 $52,006.5
Earning assets 50,089.7 48,970.5 47,672.1 46,238.1 45,054.0
Loans 40,526.4 39,230.1 37,898.9 37,000.9 35,894.2
Total deposits 36,316.3 35,940.2 36,115.7 36,078.8 35,519.5
Realized shareholders' equity 3,417.6 3,211.0 3,188.6 3,189.2 3,290.2
Total shareholders' equity 5,471.8 5,067.0 5,151.4 5,068.8 5,027.6
Common shares - diluted (thousands) 211,694 210,554 211,671 213,572 218,227
Common shares - basic (thousands) 208,442 207,138 208,391 210,608 214,940
Financial Ratios
ROA<F1> 1.33 % 1.27 % 1.29 % 1.31 % 1.33 %
ROE<F1> 21.46 21.27 20.98 20.81 19.85
Net interest margin<F1> 4.03 4.00 4.04 4.16 4.25
<FN>
<F1>ROA, ROE and net interest margin are calculated excluding unrealized gains
on investment securities because the unrealized gains are not included in
income.
</TABLE>
Page 11
<PAGE>
<TABLE>
TABLE 2A - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE AND AVERAGE
YIELDS EARNED AND RATES PAID
(Dollars in millions; yields on a taxable-equivalent basis)
<CAPTION>
Quarter Ended
March 31, 1998 December 31, 1997 September 30, 1997
Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Loans<F1>
Taxable $39,835.4 $795.0 8.09 % $38,531.7 $787.5 8.11 % $37,205.4 $766.1 8.17 %
Tax-exempt<F2> 691.0 13.4 7.85 698.4 13.8 7.83 693.5 13.5 7.75
Total loans 40,526.4 808.4 8.09 39,230.1 801.3 8.10 37,898.9 779.6 8.16
Investment securities:
Taxable 7,643.8 128.4 6.81 7,681.3 129.6 6.69 7,679.8 128.8 6.66
Tax-exempt<F2> 607.4 12.6 8.46 653.1 13.8 8.37 689.3 14.7 8.46
Total investment securities 8,251.2 141.0 6.93 8,334.4 143.4 6.82 8,369.1 143.5 6.80
Funds sold 1,106.4 15.6 5.72 1,166.1 17.0 5.82 1,139.9 16.6 5.75
Other short-term investments<F2> 205.7 2.5 4.90 239.9 1.4 2.33 264.2 4.1 6.18
Total earning assets 50,089.7 967.5 7.83 48,970.5 963.1 7.80 47,672.1 943.8 7.85
Allowance for loan losses (650.9) (645.1) (641.6)
Cash and due from banks 2,356.1 2,395.4 2,238.7
Premises and equipment 965.5 958.0 949.4
Other assets 2,385.4 1,985.6 1,766.9
Unrealized gains(losses) on
investment securities 3,322.6 2,999.0 3,174.7
Total assets $58,468.4 $56,663.4 $55,160.2
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts $10,908.5 $ 74.0 2.75 % $10,603.1 $ 72.9 2.73 % $10,424.8 $ 71.6 2.73 %
Savings 5,239.9 46.8 3.62 5,184.4 47.2 3.61 5,202.2 47.1 3.59
Consumer time 6,877.9 88.9 5.24 6,976.0 92.1 5.24 6,946.6 91.2 5.21
Other time<F3> 5,388.3 74.8 5.63 5,374.8 76.2 5.62 6,084.9 86.0 5.61
Total interest-bearing deposits 28,414.6 284.5 4.06 28,138.3 288.4 4.07 28,658.5 295.9 4.10
Funds purchased 7,655.0 100.6 5.33 7,593.4 102.7 5.36 6,440.0 86.9 5.36
Other short-term borrowings 1,671.2 23.5 5.71 1,935.4 20.6 4.23 1,906.4 27.7 5.75
Long-term debt 3,898.8 61.4 6.39 3,073.2 57.3 7.40 2,826.0 47.6 6.68
Total interest-bearing liabilities 41,639.6 470.0 4.58 40,740.3 469.0 4.57 39,830.9 458.1 4.56
Noninterest-bearing deposits 7,901.7 7,801.9 7,457.2
Other liabilities 3,455.3 3,054.2 2,720.7
Realized shareholders' equity 3,417.6 3,211.0 3,188.6
Accumulated other
comprehensive income 2,054.2 1,856.0 1,962.8
Total liabilities and
shareholders' equity $58,468.4 $56,663.4 $55,160.2
Interest rate spread 3.25 % 3.23 % 3.29 %
Net Interest Income $497.5 $494.1 $485.7
Net Interest Margin 4.03 % 4.00 % 4.04 %
<FN>
<F1>Interest income includes loan fees of $25.8, $26.2, $26.5, $24.1 and $23.2
in the quarters ended March 31, 1998, and December 31, September 30, June
30, and March 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%, 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 $8.0, $8.7, $8.9, $9.5 and $9.5 in the quarters ended March 31,
1998, and December 31, September 30, June 30, and March 31, 1997.
<F3>Interest rate swap transactions used to help balance the Company's
interest-sensitivity position increased interest expense by $0.8 in the
quarter ended March 31, 1998, and $1.3, $1.2, $0.8 and $0.4 in the quarters
ended December 31, September 30, June 30, and March 31, 1997. Without
these swaps, the rate on other time deposits and the net interest margin
would have been 5.57% and 4.03%, 5.52% and 4.01%, 5.53% and 4.05%, 5.52%
and 4.16%, and 5.38% and 4.25%, respectively.
</TABLE>
Page 12
<PAGE>
<TABLE>
TABLE 2b - CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE AND AVERAGE
YIELDS EARNED AND RATES PAID
(Dollars in millions; yields on a taxable-equivalent basis)
<CAPTION>
June 30, 1997 March 31, 1997
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans<F1>
Taxable $36,296.5 $738.0 8.16 % $35,193.9 $707.2 8.15 %
Tax-exempt<F2> 704.4 14.0 7.95 700.3 13.4 7.77
Total loans 37,000.9 752.0 8.15 35,894.2 720.6 8.14
Investment securities:
Taxable 7,412.5 123.7 6.69 7,275.6 119.9 6.68
Tax-exempt<F2> 708.5 15.1 8.57 731.1 15.7 8.70
Total investment securities 8,121.0 138.8 6.85 8,006.7 135.6 6.87
Funds sold 845.5 13.3 6.27 969.4 14.0 5.88
Other short-term investments<F2> 270.7 3.8 5.69 183.7 2.4 5.24
Total earning assets 46,238.1 907.9 7.88 45,054.0 872.6 7.85
Allowance for loan losses (633.5) (628.1)
Cash and due from banks 2,197.8 2,259.8
Premises and equipment 945.0 885.4
Other assets 1,813.8 1,629.2
Unrealized gains(losses) on
investment securities 3,037.1 2,806.2
Total assets $53,598.3 $52,006.5
Liabilities and Shareholders' Equity
Interest-bearing deposits:
NOW/Money market accounts $10,494.5 $ 71.2 2.72 % $10,489.4 $ 71.0 2.75 %
Savings 5,297.6 47.4 3.59 5,403.2 47.8 3.59
Consumer time 7,016.1 90.6 5.18 7,050.2 89.5 5.15
Other time<F3> 5,808.1 80.7 5.58 5,142.7 68.7 5.41
Total interest-bearing deposits 28,616.3 289.9 4.06 28,085.5 277.0 4.00
Funds purchased 5,827.0 77.8 5.35 6,108.1 77.7 5.16
Other short-term borrowings 1,762.1 24.9 5.66 1,358.9 18.4 5.50
Long-term debt 2,191.7 36.1 6.61 1,659.0 27.5 6.72
Total interest-bearing liabilities 38,397.1 428.7 4.48 37,211.5 400.6 4.37
Noninterest-bearing deposits 7,462.5 7,434.0
Other liabilities 2,669.9 2,333.4
Realized shareholders' equity 3,189.2 3,290.2
Accumulated other
comprehensive income 1,879.6 1,737.4
Total liabilities and
shareholders' equity $53,598.3 $52,006.5
Interest rate spread 3.40 % 3.48 %
Net Interest Income $479.2 $472.0
Net Interest Margin 4.16 % 4.25 %
<FN>
<F1>See note <F1> on table 2A.
<F2>See note <F2> on table 2A.
<F3>See note <F3> on table 2A.
</TABLE>
Page 13
<PAGE>
Net Interest Income/Margins. The Company's net interest margin of 4.03% for
the first quarter of 1998 was 22 basis points lower than the first quarter of
last year. The rate on earning assets was 7.83% in the first quarter of
1998 and 7.85% in the first quarter of 1997. At the same time, the rate on
interest bearing liabilities increased 21 basis points due to the increased
use of purchased funds.
Interest income which the Company was unable to recognize on
nonperforming loans in the first three months of 1998 had a negative
impact of 1 basis point on the net interest margin as compared to 3 basis
points in the first three months 1997. Table 2 contains more detailed
information concerning average balances and interest yields earned and
rates paid.
Noninterest Income. Noninterest income in the first three months of 1998,
adjusted to exclude the effect of securities gains (losses), increased $61.0
million, or 27.2%, from the comparable period a year ago. SunTrust Equitable
Securities Corporation (SESC), which was acquired on January 2, 1998, accounted
for $16.1 million of the increase. Trust income, the Company's largest source
of noninterest income, increased $14.7 million, or 18.8%, over the same period.
Mortgage fees increased $8.3 million, or 89.8% over the same period due to
higher volume in our mortgage banking business. The increase in loan volume is
due to the increase in new home sales and refinancing activity as long term
interest rates have declined in the past year.
<TABLE>
TABLE 3 - NONINTEREST INCOME
(In millions)
<CAPTION>
Quarters
1998 1997
1 4 3 2 1
<S> <C> <C> <C> <C> <C>
Trust income $ 93.1 $ 82.5 $ 79.0 $ 78.7 $ 78.4
Service charges on deposit accounts 62.1 63.8 62.4 61.9 59.7
Corporate and institutional investment income 10.9 6.4 8.6 4.6 5.0
Retail investment income 10.4 8.4 8.3 8.5 8.0
Credit card fees 20.5 18.9 17.5 18.4 18.8
Mortgage fees 17.5 13.6 12.2 10.9 9.2
Other charges and fees 32.6 28.0 27.2 29.5 29.0
Securities gains (losses) 0.9 0.4 0.1 (0.4) 1.4
Trading account profits and commissions 11.0 5.2 4.0 4.8 4.0
Other income 27.3 20.2 13.6 11.2 12.3
Total noninterest income $286.3 $247.4 $232.9 $228.1 $225.8
</TABLE>
Page 14
<PAGE>
Noninterest Expense. Noninterest expense increased $57.1 million, or 13.8% in
the first quarter of 1998 compared to the same period last year. Personnel
expense, consisting of salaries, other compensation and employee benefits,
increased $34.6 million, or 14.8% over the earlier period. The SESC
acquisition accounted for $13.6 million, or 23.8% of the total increase in
noninterest expense. The increase in other noninterest expense of $9.3
million, or 23.1% is due to expenditures made in connection with various
projects to stimulate business growth and development. The efficiency ratio
increased from 59.3% in the first quarter of 1997 to 60.1% in the first
quarter of 1998. Various growth projects accounted for the increase with most
of the change due to the acquisition of SESC. After adjusting for the purchase
of SESC, the efficiency ratio for the first quarter would have been 59.6%.
<TABLE>
TABLE 4 - NONINTEREST EXPENSE
(In millions)
<CAPTION>
Quarters
1998 1997
1 4 3 2 1
<S> <C> <C> <C> <C> <C>
Salaries $183.8 $178.7 $175.2 $169.8 $167.0
Other compensation 51.2 42.9 39.2 36.0 35.4
Employee benefits 34.4 22.0 27.5 29.5 32.4
Net occupancy expense 33.1 30.9 30.9 32.5 32.5
Equipment expense 32.0 29.6 30.7 30.3 30.1
FDIC premiums 1.3 1.3 1.3 1.4 1.8
Marketing and customer development 17.3 19.2 15.9 16.9 16.8
Postage and delivery 10.8 10.7 10.1 10.5 11.3
Operating supplies 9.0 9.8 8.7 9.1 9.6
Other real estate expense (2.4) (5.8) (3.1) (1.3) (1.2)
Communications 9.9 8.7 8.9 8.6 9.1
Consulting and legal 7.3 9.3 8.1 5.4 5.7
Amortization of intangible assets 11.2 10.0 8.3 8.0 7.7
Outside processing and software 22.0 19.4 18.0 16.1 14.9
Other expense 50.2 47.2 44.7 40.5 40.9
Total noninterest expense $471.1 $433.9 $424.4 $413.3 $414.0
Efficiency ratio 60.1 % 58.5 % 59.1 % 58.4 % 59.3 %
</TABLE>
Provision for Loan Losses. The Company increased the provision for loan losses
in the first quarter of 1998 to $28.6 million from $26.2 million in the same
period last year, the provision exceeded net charge-offs by $6.7 million. Net
loan charge-offs were $21.9 million in the first three months of this year,
representing 0.22% of average loans. The comparable net charge-off amount in
1997 was $17.5 million or 0.20% of average loans. The Company's allowance for
loan losses totaled $658.5 million at March 31, 1998, which was 1.60% of
quarter-end loans and 504% of total nonperforming loans. These ratios at
December 31, 1997 were 1.62% and 509% and at March 31, 1997 were 1.74%
and 332%.
Page 15
<PAGE>
<TABLE>
TABLE 5 - SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in millions)
<CAPTION>
Quarters
1998 1997
1 4 3 2 1
<S> <C> <C> <C> <C> <C>
Allowance for Loan Losses
Balances - beginning of quarter $ 651.8 $ 647.1 $ 639.8 $ 634.5 $ 625.8
Provision for loan losses 28.6 32.6 29.0 29.2 26.2
Charge-offs:
Commercial (4.8) (7.2) (6.8) (4.7) (4.8)
Real estate:
Construction (0.1) (0.4) (1.3) (0.5) (0.1)
Residential mortgages (1.6) (2.6) (2.0) (1.5) (1.1)
Other (0.9) (2.5) (1.3) (1.8) (1.4)
Lease financing (1.1) (0.6) (0.4) (0.3) (0.3)
Credit card (15.1) (13.4) (13.2) (12.5) (11.6)
Other consumer loans (12.3) (14.8) (12.4) (14.0) (12.7)
Total charge-offs (35.9) (41.5) (37.4) (35.3) (32.0)
Recoveries:
Commercial 3.9 4.9 4.3 2.5 4.6
Real estate:
Construction 0.1 0.7 1.0 - 0.1
Residential mortgages 0.3 0.4 0.2 0.4 0.6
Other 2.2 1.0 2.6 1.1 1.3
Lease financing 0.2 0.1 0.2 0.1 0.1
Credit card 1.8 1.6 2.0 1.8 2.4
Other consumer loans 5.5 4.9 5.4 5.5 5.4
Total recoveries 14.0 13.6 15.7 11.4 14.5
Net charge-offs (21.9) (27.9) (21.7) (23.9) (17.5)
Balance - end of quarter $ 658.5 $ 651.8 $ 647.1 $ 639.8 $ 634.5
Quarter-end loans outstanding:
Domestic $41,001.9 $39,875.7 $38,185.3 $37,382.9 $36,148.1
International 262.1 259.8 290.2 301.4 279.9
Total $41,264.0 $40,135.5 $38,475.5 $37,684.3 $36,428.0
Ratio of allowance to quarter-end loans 1.60 % 1.62 % 1.68 % 1.70 % 1.74 %
Average loans $40,526.4 $39,230.1 $37,898.9 $37,000.9 $35,894.2
Ratio of net charge-offs (annualized)
to average loans 0.22 % 0.28 % 0.23 % 0.26 % 0.20 %
</TABLE>
Page 16
<PAGE>
<TABLE>
TABLE 6 - NONPERFORMING ASSETS
(Dollars in millions)
<CAPTION>
1998 1997
March 31 December 31 September 30 June 30 March 31
<S> <C> <C> <C> <C> <C>
Nonperforming Assets
Nonaccrual loans:
Commercial $ 20.6 $ 20.9 $ 35.2 $ 29.1 $ 36.5
Real Estate:
Construction 2.9 1.8 2.8 12.6 13.6
Residential mortgages 52.0 49.7 57.8 54.8 59.5
Other 42.6 41.2 47.1 55.0 59.9
Lease financing 2.3 3.0 0.7 1.0 1.3
Consumer loans 7.6 8.8 8.7 8.5 10.2
Total nonaccrual loans 128.0 125.4 152.3 161.0 181.0
Restructured loans 2.7 2.7 2.7 11.0 9.9
Total nonperforming loans 130.7 128.1 155.0 172.0 190.9
Other real estate owned 31.4 22.5 35.7 41.9 43.9
Total Nonperforming Assets $162.1 $150.6 $190.7 $213.9 $234.8
Ratios:
Nonperforming loans to total loans 0.32 % 0.32 % 0.40 % 0.46 % 0.52 %
Nonperforming assets to total loans
plus other real estate owned 0.39 0.37 0.50 0.57 0.64
Allowance to nonperforming loans 503.9 508.9 417.5 372.0 332.3
Accruing Loans Past Due 90 Days or More $ 43.3 $ 40.8 $ 41.4 $ 25.9 $ 33.9
</TABLE>
Nonperforming Assets. Nonperforming assets consist of nonaccrual loans,
restructured loans and other real estate owned. Nonperforming assets have
increased 7.6%, or $11.5 million since December 31, 1997 and decreased 31.0%,
or $72.7 million since March 31, 1997. Included in nonperforming loans at
March 31, 1998 are loans aggregating $14.2 million which are current as to the
payment of principal and interest but have been placed in nonperforming status
because of uncertainty over the borrowers' ability to make future payments. In
management's opinion, all known material potential problem loans are included
in Table 6.
Interest income on nonaccrual loans, if recognized, is recorded on a
cash basis. During the first three months of 1998, the gross amount of
interest income that would have been recorded on nonaccrual loans and
restructured loans at March 31, 1998, if all such loans had been accruing
interest at the original contractual rate, was $3.1 million. Interest income
recognized in the three months ended March 31, 1998 on all such nonperforming
loans at March 31, 1998, was $1.8 million.
Page 17
<PAGE>
<TABLE>
Table 7 - Loan Portfolio by Types of Loans (in millions)
<CAPTION>
1998 1997
March 31 December 31 September 30 June 30 March 31
<S> <C> <C> <C> <C> <C>
Commercial:
Domestic $15,165.7 $14,139.9 $12,968.2 $12,668.3 $12,267.0
International 249.6 247.4 278.0 289.9 268.4
Real estate:
Construction 1,451.8 1,442.6 1,400.7 1,411.2 1,416.5
Residential mortgages 13,195.2 12,992.9 12,726.3 12,326.0 11,839.2
Other 4,820.5 4,778.7 4,766.4 4,751.7 4,656.1
Lease financing 783.1 725.7 663.6 632.3 607.9
Credit card 982.7 1,041.3 1,022.5 993.9 904.9
Other consumer loans 4,615.4 4,767.0 4,649.8 4,611.0 4,468.0
Loans $41,264.0 $40,135.5 $38,475.5 $37,684.3 $36,428.0
</TABLE>
Loans. During the first three months of 1998, average loans increased 12.9%
over the same period a year ago. Since the first quarter of 1997, the two loan
categories experiencing significant growth were 1-4 family residential mortgage
loans (most of which are variable rate loans) and domestic commercial loans.
The average loan to deposit ratio was 111.6% in the first quarter of 1998
compared with 101.1% in the same period of 1997.
At March 31, 1998, international outstandings, which include loans,
acceptances, deposits in other banks, foreign guarantees and accrued interest,
net of write-downs totaled $272.4 million, a decrease of 4.9% from $286.4
million at December 31, 1997.
Income Taxes. The provision for income taxes was $95.2 million in the first
quarter of 1998 compared to $87.0 million in the same period last year. This
represented a 34% effective tax rate in the first quarter of 1998 and an
effective tax rate of 35% in the same quarter last year.
Investment Securities. The investment portfolio continues to be managed to
maximize yield over an entire interest rate cycle while providing liquidity and
minimizing risk. The portfolio yield increased from an average of 6.87% in the
first quarter of 1997 to 6.93% in the first quarter of this year. The portfolio
size (measured at amortized cost) decreased by $270 million during the first
quarter to $7.9 billion at quarter end. The average life of the portfolio was
approximately 1.7 years at March 31, 1998. At March 31, 1998, approximately 22%
of the portfolio consisted of U.S. Treasury securities, 8% U.S. government
agency securities, 53% mortgage-backed securities, 9% trust preferred
securities and 8% municipal securities (calculated as a percent of total par
value). All of the Company's holdings in mortgage-backed securities are backed
by U.S. government or federal agency guarantees limiting the credit risk
associated with the mortgage loans. At March 31, 1998, the carrying value of
the securities portfolio was $3.8 billion over its amortized cost, consisting
mostly of a $3.7 billion unrealized gain on the Company's investment in common
stock of The Coca-Cola Company.
Page 18
<PAGE>
Liquidity Management. 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 subsidiary banks who are FHLB members.
Average total deposits for the first three months of 1998 increased
$.8 billion, or 2.2%, over the same period a year ago. Interest-bearing
deposits represented 78.2% of average deposits for the first three months of
1998, compared to 79.1% for the same period in 1997. In the first quarter of
1998, average net purchased funds (average funds purchased less average funds
sold) increased $1.4 billion over the same period in 1997. Net purchased funds
were 13.1% of average earning assets for the first three months of 1998 as
compared to 11.4% in the same period a year ago.
Derivatives. The Company enters into various derivatives contracts in a dealer
capacity for customers and in managing its own interest rate risk. Where
contracts have been created for customers, the Company enters into offsetting
positions to eliminate the Company's exposure to interest rate risk. The
principal derivative contract used by the Company is the interest rate swap.
Interest rate swaps are contracts in which a series of interest rate flows,
based on a specific notional amount and a fixed and floating interest rate, are
exchanged over a prescribed period. The Company also monitors its sensitivity
to changes in interest rates and uses interest rate swap contracts to limit the
volatility of net interest income. Table 8 details interest rate swaps as of
March 31, 1998 used for managing interest rate sensitivity.
<TABLE>
TABLE 8 - INTEREST RATE SWAPS
<CAPTION>
Average Average Average
(Dollars in millions) Notional Fair Maturity Rate Rate
At March 31, 1998 Value Value In Months Paid Received
<S> <C> <C> <C> <C> <C>
Gain position:
Receive fixed $ 717.1 $38.4 84.2 5.75 % 6.87 %
Pay fixed 99.8 1.3 14.1 5.45 5.43
Basis swaps 250.0 0.6 13.8 5.41 5.68
Total gain position 1,066.9 40.3
Loss position:
Receive fixed 1,173.0 (2.0) 3.4 5.69 5.37
Pay fixed 768.0 (8.7) 43.3 6.32 5.69
Basis swaps 750.0 (3.3) 28.0 5.37 5.62
Total loss position 2,691.0 (14.0)
Total $3,757.9 $26.3
</TABLE>
The swaps are designated as hedges on investments, deposits and other interest-
bearing liabilities. During the three months ended March 31, 1998, hedge swaps
decreased net interest income by $0.8 million, compared with a $0.4 million
decrease in the corresponding 1997 period.
Page 19
<PAGE>
<TABLE>
TABLE 9 - CAPITAL RATIOS
(Dollars in millions)
<CAPTION>
1998 1997
March 31 December 31 September 30 June 30 March 31
<S> <C> <C> <C> <C> <C>
Tier 1 capital:
Realized shareholders' equity $ 3,443.2 $ 3,211.5 $ 3,172.2 $ 3,137.6 $ 3,209.0
Trust preferred securities 850.0 600.0 600.0 600.0 -
Intangible assets other than servicing rights (357.9) (292.6) (286.2) (276.1) (278.3)
Total Tier 1 capital 3,935.3 3,518.9 3,486.0 3,461.5 2,930.7
Tier 2 capital:
Allowable allowance for loan losses 633.9 600.1 566.0 561.0 526.3
Allowable long-term debt 950.0 950.0 1,055.1 958.2 858.2
Regulatory adjustment 1,119.4 965.6 - - -
Total Tier 2 capital 2,703.3 2,515.7 1,621.1 1,519.2 1,384.5
Total capital $ 6,638.6 $ 6,034.6 $ 5,107.1 $ 4,980.7 $ 4,315.2
Risk-weighted assets $51,805.4 $48,922.3 $45,201.7 $44,803.9 $42,000.0
Risk-based ratios:
Tier 1 capital 7.59 % 7.19 % 7.71 % 7.72 % 6.98 %
Total capital 12.81 12.33 11.29 11.12 10.27
Tier 1 leverage ratio 7.16 6.59 6.74 6.88 6.00
Total shareholders' equity to assets 9.69 9.06 9.09 9.36 9.06
</TABLE>
Capital Resources. Consistent with the objective of operating a sound
financial organization, SunTrust maintains capital ratios well above regulatory
requirements. The rate of internal capital generation has been more than
adequate to support asset growth. Table 9 presents capital ratios for the five
most recent quarters.
Regulatory agencies measure capital adequacy with a framework that
makes capital requirements sensitive to the risk profiles of individual banking
companies. The guidelines define capital as either Tier 1 (primarily
shareholders' equity) 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%.
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) requires the establishment of a capital-based supervisory system of
prompt corrective action for all depository institutions. The Regulator's
implementation of FDICIA defines "well capitalized" institutions as those whose
capital ratios equal or exceed the following minimum ratios: Tier 1 capital
ratio of 6%, total risk-based capital ratio of 10%, and a Tier 1 leverage ratio
of 5%. Under regulations proposed in 1997, a portion of the unrealized gains
on equity securities are included in the Tier 2 capital calculation. At March
31, 1998, the Company's Tier 1 capital, total risk-based capital and Tier 1
leverage ratios were 7.59%, 12.81% and 7.16%, respectively. 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 March 31, 1998,
the Company had 12,154,894 shares remaining to be repurchased under this
authorization.
Page 20
<PAGE>
<TABLE>
TABLE 10 - FINANCIAL HIGHLIGHTS - BANKING SUBSIDIARIES
(Dollars in Millions)
<CAPTION>
SunTrust Banks SunTrust Banks SunTrust Banks
of Florida, Inc. of Georgia, Inc. of Tennessee, Inc.
1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations<F1>
Net interest income (FTE) $ 256.7 $ 248.3 $ 171.1 $ 157.5 $ 73.9 $ 72.7
Provision for loan losses 8.1 9.6 5.5 4.5 1.7 2.3
Trust income 43.0 38.4 34.6 28.5 11.1 9.7
Other noninterest income 93.1 74.2 54.8 47.0 23.7 19.9
Personnel expense 91.1 85.9 60.1 56.1 28.3 27.5
Other noninterest expense 133.9 123.7 83.5 71.0 34.4 29.9
Net income 99.1 87.1 72.3 65.6 27.3 26.3
Selected Average Balances<F1>
Total assets 27,346 24,755 22,045 20,328 7,941 7,421
Earning assets 25,719 23,254 17,342 15,987 7,612 7,152
Loans 19,629 17,567 14,421 12,607 5,996 5,538
Total deposits 18,831 18,446 11,516 11,376 6,041 5,736
Realized shareholders' equity 2,171 2,044 1,571 1,413 629 584
At March 31
Total assets 27,825 25,319 22,886 20,786 8,059 7,456
Earning assets 25,986 23,403 17,661 16,456 7,711 7,137
Loans 19,819 17,690 14,748 13,007 6,117 5,589
Allowance for loan losses 386 375 202 198 109 114
Total deposits 19,363 18,783 11,365 12,070 6,036 5,879
Realized shareholders' equity 2,217 2,092 1,595 1,473 640 603
Total shareholders' equity 2,238 2,087 3,915 3,136 646 604
Credit Quality
Net loan charge-offs<F1> 2.0 3.7 4.6 2.4 2.0 2.1
Nonperforming loans<F2> 79.2 114.5 39.2 54.3 11.9 21.9
Other real estate owned<F2> 12.2 25.7 2.8 4.9 16.4 13.0
Ratios
ROA<F3> 1.47 % 1.43 % 1.56 % 1.51 % 1.39 % 1.44 %
ROE<F3> 18.51 17.29 18.66 18.82 17.54 18.24
Net interest margin<F3> 4.05 4.33 4.00 4.00 3.93 4.12
Efficiency ratio<F3> 57.26 58.05 55.14 54.56 57.79 56.14
Total shareholders' equity/assets<F2> 8.04 8.24 17.11 15.09 8.02 8.10
Net loan charge-offs to average loans<F3> 0.04 0.09 0.13 0.08 0.14 0.15
Nonperforming loans to total loans<F2> 0.41 0.66 0.27 0.42 0.20 0.40
Nonperforming assets to total loans plus
other real estate owned<F2> 0.47 0.81 0.29 0.46 0.47 0.64
Allowance to loans<F2> 1.99 2.18 1.39 1.54 1.83 2.09
Allowance to nonperforming loans<F2> 486.7 327.7 514.7 364.2 917.7 520.6
<FN>
<F1>For the three month period ended March 31.
<F2>At March 31.
<F3>Annualized for the first three months.
</TABLE>
Page 21
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Registrant was held
on April 21, 1998. At the meeting, the following individuals
were elected directors of the Registrant: Summerfield K.
Johnston, Jr., Larry L. Prince, R. Randall Rollins, James B.
Williams and M. Douglas Ivester. Votes for ranged from
181,064,933 to 181,603,794 and votes withheld ranged from
1,996,464 to 2,535,325. J. Hyatt Brown, Alston D. Correll,
David H. Hughes, Scott L. Probasco, Jr., A.W. Dahlberg, L.
Phillip Humann and Joseph L. Lanier, Jr. will continue as
directors of the Registrant.
The shareholders also approved: (i) the Company's Amendment
to Articles of Incorporation to increase the number of
authorized common shares outstanding from 350 million shares
to 500 million shares. 177,948,161 shares voted for, 4,386,825
voted against and 1,265,272 abstained from approval of the
amendment and (ii) ratification of the selection of Arthur
Andersen LLP as independent auditors to audit the financial
statement of the Company for 1998. 182,292,366 shares voted
for, 583,751 shares voted against and 724,141 abstained from
ratification.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 3.1 Articles of Incorporation as Amended
B. Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized this 12th day of May, 1998.
SunTrust Banks, Inc.
(Registrant)
/s/ W.P. O'Halloran
William P. O'Halloran
Senior Vice President and Controller
(Chief Accounting Officer)
Page 22
<PAGE>
<PAGE>
EXHIBIT 3.1
Articles of Incorporation as Amended
ARTICLES OF AMENDMENT
OF
SUNTRUST BANKS, INC.
1.
The name of the Corporation is SunTrust Banks, Inc.
(the "Corporation").
2.
On February 10, 1998 the Board of Directors of the
Corporation approved an amendment to Article 5(a) of the
Restated Articles of Incorporation of the Corporation as
follows:
"5(a). The aggregate number of
common shares (referred to in
these Articles of Incorporation
as "Common Stock") which the
Corporation shall have the
authority to issue is 500,000,000
shares with a par value of $1.00
per share. Each holder of
Common Stock shall be entitled
to one vote for each share of
such stock held."
3.
The amendment was duly approved by the
shareholders of the Corporation on April 21, 1998 in
accordance with the provisions of O.C.G.A. 14-2-1003.
IN WITNESS WHEREOF, the Corporation has caused
these Articles of Amendment to be executed by its duly
authorized officer and its corporate seal to be affixed hereto, as
of the 21st day of April, 1998.
SUNTRUST BANKS, INC.
By: /c/ Raymond Fortin
Raymond D. Fortin
Title: Senior Vice President
[SEAL]
ARTICLES OF RESTATEMENT OF THE
ARTICLES OF INCORPORATION OF
SUNTRUST BANKS, INC.
Pursuant to the Georgia Business Corporation Code,
SunTrust Banks, Inc., a Georgia corporation (the
"Corporation"), submits these Articles of Restatement and
Restated Articles of Incorporation and shows as follows:
1.
The Corporation hereby certifies that, by resolution
adopted on November 14, 1989, the Board of Directors did
adopt these Articles of Restatement and Restated Articles of
Incorporation of the Corporation, as set forth in paragraph 2
below. Shareholder approval of amendments to the Articles of
Incorporation contained in the Articles of Restatement was not
required.
2.
The Articles of Incorporation of the Corporation shall
be amended by the deletion in their entirety of Articles 10 and
16, by the redesignation of (i) existing Article 18 as Article 10
and (ii) existing Article 17 as Article 16, by the addition of
new Article 5(c), and by restating all other provisions of the
Articles of Incorporation, as heretofore amended, now in effect
and not being amended by foregoing amendments, and
substituting therefor in all respects the Restated Articles of
Incorporation as follows:
RESTATED ARTICLES OF INCORPORATION
1.
The name of the Corporation is SunTrust Banks, Inc.
2.
The Corporation is organized pursuant to the
provisions of the Georgia Business Corporation Code.
3.
The Corporation shall have perpetual duration.
4.
The purpose for which the Corporation is organized is
to conduct any businesses and to engage in any activities not
specifically prohibited to corporations for profit under the laws
of the State of Georgia.
5.
(a). The aggregate number of common shares (referred
to in these Articles of Incorporation as "Common Stock")
which the Corporation shall have the authority to issue is
350,000,000 with a par value of $1.00 per share. Each holder
of Common Stock shall be entitled to one vote for each share
of such stock held.
(b). The aggregate number of preferred shares
(referred to in these Articles of Incorporation as "Preferred
Stock") which the Corporation shall have authority to issue is
50,000,000 with no par value per share. The terms,
preferences, limitations and relative rights of the Preferred
Stock are as follows:
So long as any of the shares of the Preferred Stock are
outstanding, no dividends (other than (i) dividends on
Common Stock payable in Common Stock, (ii) dividends
payable in stock junior to the Preferred Stock both as to
dividends and upon liquidation, and (iii) cash in lieu of
fractional shares in connections with any such dividend) shall
be paid or declared, in cash or otherwise, nor shall any other
distribution be made, on the Common Stock or on any other
stock junior to the Preferred Stock as to dividends, unless (a)
there shall be no arrearages in dividends on the Preferred
Stock for any past dividend period and the full dividends for
the current quarterly dividend period shall be paid or declared
and funds set aside therefor, and (b) the Corporation shall not
be in default on its obligation to redeem any of the shares of
the Preferred Stock called for redemption. Subject to the
foregoing provisions, such dividends as may be determined by
the Board of Directors of the Corporation may be declared and
paid from time to time on any stock or shares of the
Corporation other than the Preferred Stock without any right
of participation therein by the holders of shares of the
Preferred Stock. Dividends on the Preferred Stock shall be
cumulative. No interest shall be payable in respect of any
dividend payment which may be in arrears. If at any time the
Corporation shall fail to pay full cumulative dividends on any
shares of the Preferred Stock, thereafter until such dividends
shall have been paid or declared and set apart for payment, the
Corporation shall not purchase, redeem or otherwise acquire
for consideration any shares of any class of stock then
outstanding and ranking on a parity with or junior to the
Preferred Stock.
If there are any arrearages in dividends for any past
dividend period on any series of the Preferred Stock or any
other class or series of preferred stock ranking on a parity with
the Preferred Stock as to dividends, or if the full dividend for
the current quarterly dividend period shall not have been paid
or declared and funds set aside therefor on all series of the
Preferred Stock and all other classes and series of preferred
stock ranking on a parity with the Preferred Stock as to
dividends (to the extent that dividends on such other class or
series of preferred stock are cumulative), any dividends paid
or declared on the Preferred Stock or on any other class or
series of preferred stock ranking on a parity with the Preferred
Stock as to dividends shall be shared first ratably by the
holders of the Preferred Stock and the holders of all such other
classes and series of preferred stock ranking on a parity with
the Preferred Stock as to dividends in proportion to such
respective arrearages and unpaid and undeclared current
cumulative dividends, and thereafter by the holders of shares
of noncumulative classes and series of preferred stock ranking
on a parity with the Preferred Stock as to dividends.
In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Corporation, after payment or provision for payment of debts
and other liabilities of the Corporation and before any
distribution to the holders of shares of Common Stock or any
stock junior to the Preferred Stock as to the distribution of
assets upon liquidation, the holders of each series of the
Preferred Stock shall be entitled to receive out of the net assets
of the Corporation an amount in cash for each share equal to
the amount fixed and determined by the Board of Directors in
the resolution providing for the issuance of the particular
series of the Preferred Stock, plus an amount equal to all
dividends accrued and unpaid on each such share of the
Preferred Stock up to the date fixed for distribution, and no
more. If the assets of the Corporation are insufficient to
permit the payment of the full preferential amounts payable in
such event to the holders of the Preferred Stock and any class
or series of preferred stock ranking on a parity with the
Preferred Stock as to the distribution of assets upon
liquidation, then the assets available for distribution to holders
of shares of the Preferred Stock and such other classes and
series of preferred stock ranking on a parity with the Preferred
Stock as to the distribution of assets upon liquidation shall be
distributed ratably to the holders of shares of each series of the
Preferred Stock and such classes and series of preferred stock
in proportion to the full preferential amounts payable on their
respective shares upon liquidation. Neither the sale,
conveyance, exchange or transfer of all or substantially all the
property and assets of the Corporation, the consolidation or
merger of the Corporation with or into any other corporation,
nor the merger of consolidation of any other corporation into
or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation.
The Board of Directors is expressly authorized at any
time and from time to time to provide for the issuance of
shares of the Preferred Stock in one or more series, with such
voting powers, full or limited, but not to exceed one vote per
share, or without voting powers, and with such designations,
preferences and relative, participating, optional or other
special rights, qualifications, limitations or restrictions, as
shall be fixed and determined in the resolution or resolutions
providing for the issuance thereof adopted by the Board of
Directors, and as are not stated and expressed in these Articles
of Incorporation or any amendment hereto, including (but
without limiting the generality of the foregoing) the following:
(i) The distinctive designation of such series
and number of shares which shall constitute such
series, which number may be increased (except where
otherwise provided by the Board of Directors in
creating such series) or decreased (but not below the
number of shares thereof then outstanding) from time
to time by resolution of the Board of Directors.
(ii) The rate of dividends payable on shares of
such series, the times of payment, and the date from
which such dividends shall accumulate;
(iii) Whether shares of such series can be
redeemed, the time or times when, and the price or
prices at which shares of such series shall be
redeemable, the redemption price, terms and conditions
of redemption, and the purchase, retirement or sinking
fund provisions, if any, for the purchase or redemption
of such shares;
(iv) The amount payable on shares of such
series and the rights of holders of such shares in the
event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the
Corporation;
(v) The rights, if any, of the holders of shares
of such series to convert such shares into, or exchange
such shares for, shares of Common Stock or shares of
any other class or series of the Preferred Stock and the
terms and conditions of such conversion or exchange;
and
(vi) The rights, if any, of the holders of shares
of such series to vote.
Except in respect of the relative rights and preferences
that may be provided by the Board of Directors as
hereinbefore provided, all shares of the Preferred Stock shall
be of equal rank and shall be identical, and each share of a
series shall be identical in all respects with the other shares of
the same series, except as to the date, if any, from which
dividends thereon shall accumulate.
(c). The Corporation may acquire its own shares. Any
such shares shall become, upon acquisition, treasury shares to
be classified as issued but not outstanding shares.
6.
Shares of the Corporation may be issued by the
Corporation for such consideration, not less than the par value
thereof (in the case of shares having a par value), as shall be
fixed from time to time by the Board of Directors.
7.
No holder of shares of any class of the capital stock of
the Corporation shall have as a matter of right any pre-emptive
or preferential right to subscribe for, purchase, receive, or
otherwise acquire any part of any new or additional issue of
stock of any class, whether now or hereafter authorized, or of
any bonds, debentures, notes, or other securities of the
Corporation, whether or not convertible into shares of stock of
the Corporation.
8.
Subject to the provisions of the Georgia Business
Corporation Code, the Board of Directors shall have the power
to distribute a portion of the assets of the Corporation, in cash
or in property, to holders of shares of the Corporation out of
the capital surplus of the Corporation.
9.
The Corporation shall have all powers necessary to
conduct the businesses and engage in the activities set forth in
Article 4 hereof, including, but not limited to, the powers
enumerated in the Georgia Business Corporation Code or any
amendment thereto. In addition, the Corporation shall have
the full power to purchase and otherwise acquire, and dispose
of, its own shares and securities granted by the laws of the
State of Georgia and shall have the right to purchase its shares
out of its unreserved and unrestricted capital surplus available
therefor, as well as out of its unreserved and unrestricted
earned surplus available therefor.
10.
The names and addresses of the Incorporators are:
Robert Strickland
One Park Place, N.E.
Atlanta, Georgia 30303
Joel R. Wells, Jr.
200 South Orange Avenue
Orlando, Florida 32801
11.
I. (A) In addition to any affirmative vote required
by law, these Articles of Incorporation or otherwise with
respect to any shares of capital stock of the Corporation, and
except as otherwise expressly provided in paragraph II of this
Article 11:
(i) any merger or consolidation of the
Corporation or any Subsidiary (as hereafter defined)
with (a) any Interested Shareholder (as hereinafter
defined) or (b) any other corporation (whether or not
itself an Interested Shareholder) which is, or after such
merger or consolidation would be, an Affiliate (as
hereinafter defined) of and Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one transaction
or a series of transactions) to or with any Interested
Shareholder or any Affiliate of any Interested
Shareholder of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value (as
hereinafter defined) of $1,000,000 or more; or
(iii) the issuance or transfer by the Corporation
or any Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or
any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange for
cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of
$1,000,000 or more; or
(iv) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation
proposed by or on behalf of an Interested Shareholder
or any Affiliate of any Interested Shareholder; or
(v) any reclassification of securities (including
any reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any
class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least
seventy-five percent (75%) of the then outstanding shares of
Common Stock of the Corporation, including the affirmative
vote of the holders of at least seventy-five percent (75%) of
the then outstanding shares of Common Stock of the
Corporation other than those beneficially owned by the
Interested Shareholder. Such affirmative vote shall be
required notwithstanding the fact that no vote may be required,
or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(B) The term "Business Combination" as used
in this Article 11 shall mean any transaction which is referred
to in any one or more of clauses (i) through (v) of
subparagraph (A) of this paragraph I.
II. The provisions of paragraph I of this Article 11
shall not be applicable to any particular Business
Combination, and such Business Combination shall require
only such affirmative vote as is required by law and any other
provision of these Articles of Incorporation, if all of the
conditions specified in either of the following subparagraphs
(A) or (B) are met:
(A) The Business Combination shall have
been approved by three-fourths of all Directors.
(B) All of the following conditions shall
have been met:
(i) The aggregate amount of (x) cash
and (y) the Fair Market Value (as hereinafter
defined) as of the date of the consummation of
the Business Combination, of consideration
other than cash to be received per share by
holders of Common Stock in such Business
Combination shall be at least equal to the
highest amount determined under subclauses
(a), (b), (c) and (d) below (taking into account
all stock dividends and stock splits):
(a) (if applicable) the highest
per share price (including any brokerage
commissions, transfer taxes and
soliciting dealers' fees) paid by the
Interested Shareholder or any of its
Affiliates or Associates for any share of
Common Stock acquired by the
Interested Shareholder (1) within the
two-year period immediately prior to
the first public announcement of the
proposal of the Business Combination
(the "Announcement Date") or (2) in
the transaction in which it became an
Interested Shareholder, whichever is
higher;
(b) the highest Fair Market
Value per share of Common Stock
during the 30-day period ending on the
Announcement Date or during the 30-day period ending
on the date on which the Interested Shareholder became
an Interested Shareholder (such latter date
is referred to in this Article 11 as the
"Determination Date"), whichever is
higher.
(c) (if applicable) the price per
share equal to the highest Fair Market
Value per share of Common Stock
determined pursuant to subparagraph
B(i)(b) above, multiplied by the ratio of
(1) the highest per share price
(including any brokerage commissions,
transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder
or any of its Affiliates or Associates for
any shares of Common Stock acquired
by the Interested Shareholder within the
two-year period immediately prior to
the Announcement Date to (2) the Fair
Market Value per share of Common
Stock on the date that the Interested
Shareholder became a beneficial owner
of shares of Common Stock during such
two-year period; and
(d) (if applicable) the book
value per share of Common Stock on
the last day in the month preceding the
date of the consummation of the
Business Combination multiplied by the
ratio of (1) the highest price paid by the
Interested Shareholder or any of its
Affiliates or Associates per share of
Common Stock as determined pursuant
to subparagraph B(i)(a) above to (2) the
book value per share of Common Stock
on the last day in the month preceding
the date on which the highest price as
determined pursuant to B(i)(a) above
was paid.
(ii) The aggregate amount of (x) the
cash and (y) the Fair Market Value as of the
date of the consummation of the Business
Combination, of consideration other than cash
to be received per share by holders of shares of
any series of outstanding Preferred Stock shall
be at least equal to the highest of the following
(it being intended that the requirements of this
paragraph B(ii) shall be required to be met with
respect to every series of outstanding Preferred
Stock, whether or not the Interested
Shareholder or any of its Affiliates or
Associates has previously acquired any shares
of any particular series of Preferred Stock):
(a) (if applicable) the highest
per share price (including any brokerage
commissions, transfer taxes and
soliciting dealers' fees) paid by the
Interested Shareholder or any of its
Affiliates or Associates for any share of
such series of Preferred Stock acquired
by the Interested Shareholder (1) within
the two-year period immediately prior
to the Announcement Date or (2) in the
transaction in which it became an
Interested Shareholder, whichever is
higher; and
(b) (if applicable) the highest
preferential amount per share to which
the holders of shares of such series of
Preferred Stock are entitled in the event
of any voluntary or involuntary
liquidation, dissolution or winding up of
the Corporation.
(iii) The consideration to be received
by holders of outstanding Common Stock and
by holders of a particular series of outstanding
Preferred Stock shall be in cash or in the same
form as the Interested Shareholder or any of its
Affiliates or Associates has previously paid for
shares of each such kind of stock. If the
Interested Shareholder or any of its Affiliates or
Associates has paid for shares of Common
Stock or for shares of any series of Preferred
Stock with varying forms of consideration, the
form of consideration for each such kind of
stock shall be either cash or the form used to
acquire the largest number of shares of each
such kind of stock previously acquired by it.
(iv) After such Interested Shareholder
has become an Interested Shareholder and prior
to the consummation of such Business
Combination: (a) except as approved by three-fourths
of all Directors, there shall have been no failure to
declare and pay at the regular date therefor dividends
in full (whether or not cumulative) on the outstanding
Preferred Stock; (b) there shall have been (1) no reduction
in the annual rate of dividends paid on the Common
Stock (except as necessary to reflect any
subdivision of the Common Stock), except as
approved by three-fourths of all Directors and
(2) an increase in such annual rate of dividends
as necessary to reflect any reclassification
(including any reverse stock split),
recapitalization, reorganization, or any similar
transaction which has the effect of reducing the
number of outstanding shares of the Common
Stock, unless the failure so to increase such
annual rate is approved by three-fourths of all
Directors; and (c) such Interested Shareholder
shall not have become the beneficial owner of
any additional shares of Common Stock except
as part of the transaction which results in such
Interested Shareholder becoming an Interested
Shareholder.
(v) After such Interested Shareholder
has become an Interested Shareholder, such
Interested Shareholder shall not have received
the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax
advantages provided by the Corporation or any
of its Subsidiaries, whether in anticipation of or
in connection with such Business Combination
or otherwise.
(vi) A proxy or information statement
describing the proposed Business Combination
and complying with the requirements of the
Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules
or regulations) shall be mailed to public
shareholders of the Corporation at least 30 days
prior to the meeting at which the Business
Combination will be voted upon (whether or
not such proxy or information statement is
required to be mailed pursuant to such Act or
subsequent provisions). The proxy or
information statement shall contain on the
cover page thereof a statement as to how
members of the Board of Directors voted on the
proposal in question and any recommendation
as to the advisability or inadvisability of the
Business Combination that any director wishes
to make, and shall also contain the opinion of a
reputable national investment banking firm as
to the fairness of the terms of the Business
Combination, from the point of view of the
remaining public shareholders of the
Corporation (such investment banking firm to
be engaged solely on behalf of the remaining
public shareholders, to be paid a reasonable fee
for its services by the Corporation upon receipt
of such opinion and to be an investment
banking firm which has not previously been
associated with the Interested Shareholder or
any of its Affiliates or Associates).
III. For the purposes of this Article 11:
A. A "person" shall mean any individual,
firm, corporation or other entity.
B. "Interested Shareholder" shall mean any
person (other than the Corporation, any Subsidiary or
either the Corporation or any Subsidiary acting as
Trustee or in a similar fiduciary capacity) who or
which:
(i) is the beneficial owner of more than 10% of
the outstanding Common Stock; or
(ii) is an Affiliate of the Corporation and at any
time within the two-year period immediately
prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of
the then outstanding Common Stock; or
(iii) acquired any shares of Common Stock
which were at any time within the two-year
period immediately prior to the date in question
beneficially owned by any Interested
Shareholder, if such acquisition shall have
occurred in the course of a transaction or series
of transactions not involving a public offering
within the meaning of the Securities Act of
1933.
C. A person shall be a "beneficial owner"
of any Common Stock:
(i) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially
owns, directly or indirectly; or
(ii) which such person or any of its Affiliates
or Associates has, directly or indirectly, (a) the
right to acquire (whether such right is
exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the
exercise of conversion rights, exchange rights,
warrants or options or otherwise, or (b) the
right to vote pursuant to any agreement,
arrangement or understanding; or
(iii) which are beneficially owned, directly or
indirectly, by any other person with which such
person or any of its Affiliates or Associates has
any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or
disposing of any shares of Common Stock.
D. For the purposes of determining
whether a person is an Interested Shareholder pursuant
to paragraph B of this Section III, the number of shares
of Common Stock deemed to be outstanding shall
include shares deemed owned through application of
paragraph C(ii)(a) of this Section III but shall not
include any other shares of Common Stock which may
be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
E. (i) An "Affiliate" of a specified person
is a person that directly, through one or more
intermediaries, controls, or is controlled by, or
is under common control with, the person
specified.
(ii) The term "Associate" used to indicate a
relationship with any person means (1) any
firm, corporation or other entity (other than the
Corporation or any Subsidiary) of which such
person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more
of any class of equity securities, (2) any trust or
other estate in which such person has a
substantial beneficial interest or as to which
such person serves as trustee or in a similar
fiduciary capacity, and (3) any relative or
spouse of such person, or any relative of such
spouse who has the same home as such person.
F. "Subsidiary" means any corporation of
which a majority of any class of equity securities is
owned, directly or indirectly, by the Corporation unless
owned solely as trustee or other similar fiduciary
capacity.
G. "Fair Market Value" means: (i) in the
case of stock, the closing sales price of a share of such
stock on the Composite Tape on the New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted
on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act
of 1934, as amended, on which such stock is listed, or,
if such stock is not listed on any such exchange, the
closing sales price or the sales price or the average of
the bid and asked prices reported with respect to a
share of such stock on the National Association of
Securities Dealers, Inc. Automatic Quotation System
or any system then in use, or if no such quotations are
available, the fair market value on the date in question
of a share of such stock as determined by the Board in
good faith; and (ii) in the case of property other than
cash or stock, the fair market value of such property on
the date in question as determined by the Board in
good faith.
H. In the event of any Business
Combination in which the Corporation survives, the
phrase "consideration other than cash to be received"
as used in paragraphs B(i) and (ii) of Section II of this
Article 11 shall include the shares of Common Stock
and/or the shares of any series of outstanding Preferred
Stock retained by the holders of such shares.
I. The term "acquire" or "acquired" means
the acquisition of beneficial ownership.
IV. The Directors of the Corporation shall have the
power and duty to determine for the purposes of this Article
11, on the basis of information known to them after reasonable
inquiry, (i) whether a person is an Interested Shareholder, (ii)
the number of shares of Common Stock beneficially owned by
any person, (iii) whether a person is an Affiliate or Associate
of another, and (iv) whether the assets which are the subject of
any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination
has, an aggregate Fair Market Value of $1,000,000 or more.
V. Nothing contained in this Article 11 shall be
construed to relieve any Interested Shareholder or any of its
Affiliates or Associates from any fiduciary obligation imposed
by law.
VI. Nothwithstanding any other provisions of these
Articles of Incorporation or the Bylaws of the Corporation
(and notwithstanding the fact that a lesser percentage may be
specified by law, these Articles of Incorporation or the Bylaws
of the Corporation), the affirmative vote of the holders of at
least seventy-five percent (75%) of the shares of the
outstanding Common Stock of the Corporation, including the
affirmative vote of the holders of at least seventy-five percent
(75%) of the outstanding shares of Common Stock of the
Corporation other than those beneficially owned by any
Interested Shareholder, shall be required to amend or repeal, or
adopt any provisions inconsistent with, this Article 11 of these
Articles of Incorporation, in addition to any affirmative vote
required by law or these Articles of Incorporation with respect
to any other shares of capital stock of the Corporation.
12.
The Board of Directors of the Corporation, when
evaluating any offer of a person (as defined in Article 11),
other than the Corporation itself, to (a) make a tender or
exchange offer for any equity security of the Corporation or
any other security of the Corporation convertible into any
equity security, (b) merge or consolidate the Corporation with
another person, or (c) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation
(an "Acquisition Proposal"), shall, in connection with the
exercise of its business judgment in determining what is the
best interests of the Corporation and its shareholders, give due
consideration to all relevant factors, including without
limitation the consideration being offered in the Acquisition
Proposal in relation to the then-current market price, but also
in relation to the then-current value of the Corporation in a
freely negotiated transaction and in relation to the Board of
Directors' then estimate of the future value of the Corporation
as an independent entity, the social and economic effects on
the employees, customers, suppliers and other constituents of
the Corporation and its subsidiaries and on the communities in
which the Corporation and its subsidiaries operate or are
located and the desirability of maintaining independence from
any other entity.
13.
Nothwithstanding anything to the contrary in the
Bylaws of the Corporation and subject to the rights of holders
of any series of Preferred Stock then outstanding, the
shareholders may amend or repeal, or adopt any provision
inconsistent with, Article 11 of the Corporation's Bylaws only
by the same affirmative vote as is required to amend or repeal
or adopt any provision inconsistent with Article 11 of these
Articles of Incorporation as provided for in paragraph VI of
said Article 11, or in the alternative, by the vote of 75% or
more of the Directors, the Board of Directors may amend or
repeal or adopt any provision inconsistent with Article 11 of
the Corporation's Bylaws.
Any amendment or repeal of any part of Article X of
the Corporation's Bylaws effected by the Directors shall
require the affirmative vote of at least 75% of the full Board of
Directors following at least ten days prior written notice to all
Directors of the specific proposal.
14.
In addition to any powers provided by law, in the
Bylaws, or otherwise, the Corporation shall have the power to
indemnify any person who becomes a party or who is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (including any action by or in
the right of the Corporation), by reason of the fact that he is or
was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
15.
(a). No director of the Corporation shall be
personally liable to the Corporation or its shareholders for
monetary damages for breach of his duty of care or other duty
as a director; provided that this provision shall eliminate or
limit the liability of a director only to the maximum extent
permitted from time to time by the Georgia Business
Corporation Code or any successor law or laws.
(b). Any repeal or modification of Article 15(a) by
the shareholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing
at the time of such repeal or modification.
16.
The Corporation shall not commence business until it
shall have received not less than $500 in payment for the
issuance of its shares.
<PAGE>
Said Restated Articles of Incorporation supersede the
original Articles of Incorporation as heretofore amended.
IN WITNESS WHEREOF, SunTrust Banks, Inc. has
caused these Articles of Restatement to be executed, its
corporate seal to be affixed, and its seal and execution hereof
to be attested, all by its duly authorized officers, this 13th day
of November, 1998.
SUNTRUST BANKS, INC.
/s/ W. P. O'Halloran
William P. O'Halloran
Senior Vice President and Controller
(Chief Accounting Officer)
(CORPORATE SEAL)
Attest: /c/ Thomas C. Duer
Thomas C. Duer
Corporate Secretary
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