SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 12, 1999
SunTrust Banks, Inc.
(Exact name of registrant as specified in its charter)
Georgia 001-08918 58-1575035
- ---------------------------- ------------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
303 Peachtree St., N.E., Atlanta, Georgia 30308
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 588-7711
<PAGE>
Item 5. Other Events
On January 12, 1999, SunTrust Banks, Inc. issued a press release reporting 1998
Operating Earnings were $1.1 billion, an increase of 11.5%. A copy of the press
release is filed as Exhibit 99 to this Current Report on Form 8-K.
<PAGE>
SIGNATURE
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.
SUNTRUST BANKS, INC.
(Registrant)
Date: January 15, 1999 By: /s/ William P. O'Halloran
--------------------------------------
William P. O'Halloran
Senior Vice President and Controller
News
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SUNTRUST [LOGO]
For Immediate Release Contact: James C. Armstrong (404) 588-7425
January 12, 1999
SunTrust Reports 1998 Operating Earnings of $1.1 Billion, Up 11.5%
ATLANTA, GA -- SunTrust Banks, Inc. (NYSE: STI) today reported 1998 operating
earnings (net income excluding charges related to the recent merger with Crestar
Financial) of $1,088 million compared with $976 million in 1997. Diluted
operating earnings per share for the year were $3.41, an increase of 12.2% from
$3.04 in 1997. After-tax merger-related charges totaled $117 million or $0.37
per share.
"This past year marked an important point in the history of SunTrust," commented
L. Phillip Humann, chairman and chief executive officer of SunTrust Banks, Inc.
"The Company not only continued its tradition of strong earnings, but it also
completed the largest merger in SunTrust history; consolidated its corporate
banking function; significantly expanded its investment banking activities
through SunTrust Equitable Securities; and combined and enhanced its telephone
banking capabilities."
Financial highlights for 1998 were as follows (data shown are after restatement
from the pooling-of-interest accounting for the Crestar merger and exclude
merger-related charges of $162 million pretax or $117 million after-tax):
o Return on average assets (ROA) and return on average realized equity
(ROE) were 1.33% and 19.29% compared with 1.34% and 19.07% for 1997.
o Noninterest income increased 26.6% to $1,716 million. Its largest
component, trust fees, grew 17.1%. Both retail and corporate investment-
related income and mortgage fees grew rapidly.
o Credit quality remained strong as evidenced by very low charge-off rates
in all areas except credit cards. Nonperforming assets at the end of 1998
totaled $242 million or 0.37% of loans and other real estate.
o Loan growth was exceptional with average loans increasing 14.0% for 1998.
Growth was particularly strong in the corporate area.
The Company's initial estimate of $250 million for pretax merger-related charges
still appears to be appropriate, but accounting rules do not permit the entire
charge to be taken in the fourth quarter. The remaining $88 million will be
taken over the next five to six quarters as systems and operations are merged.
<PAGE>
News
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SUNTRUST [LOGO]
Fourth quarter operating earnings were $275 million in 1998 compared with $255
million in the 1997 fourth quarter. Diluted operating earnings per share for the
fourth quarter were $0.86 in 1998 compared with $0.80 in 1997, an increase of
7.5%. The net interest margin declined slightly to 3.88% from its third quarter
1998 level of 3.89%. Fourth quarter noninterest income was $436 million, a 20.6%
increase from the previous year. Noninterest expense excluding merger-related
charges increased 16.4% from a year ago.
In November 1998 at the request of the SEC, SunTrust lowered its loan loss
reserve by $100 million and increased its 1994, 1995 and 1996 earnings. The
individual bank reserves were adjusted in the fourth quarter to distribute the
effect of the change made at the SunTrust level. While there was no effect on
the 1998 consolidated SunTrust results, the adjustments increased net income for
SunTrust Banks of Florida, SunTrust Banks of Georgia and SunTrust Banks of
Tennessee. Excluding these reserve adjustments at SunTrust banks and
merger-related charges taken at Crestar, the 1998 operating earnings for the
subsidiary bank holding companies were:
o SunTrust Banks of Florida - $408 million, up 9.7%
o SunTrust Banks of Georgia - $315 million, up 12.1%
o SunTrust Banks of Tennessee - $113 million, up 2.4%
o Crestar Financial - $339 million, up 9.7%
As of December 31, 1998, SunTrust had total assets of $93.2 billion, a 12.5%
increase from a year ago. In other year-end comparisons, loans grew 14.7% to
$65.1 billion; total deposits were $59.0 billion, up 8.2%; and total
shareholders' equity increased 11.9% to $8.2 billion.
(Continued)
<PAGE>
SUNTRUST BANKS, INC. January 12, 1999
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31 December 31
------------------- ---------------------
1998 1997 1998 1997
------- ------ -------- --------
<S> <C> <C> <C> <C>
For the Period ($ Mils)
- ----------------------
Operating earnings (excluding merger-related charges) $ 1,088.1 $ 975.9 $ 275.0 $ 254.6
Net income 971.0 975.9 157.9 254.6
Dividends paid 352.5 326.3 89.3 88.8
Per common share ($)
Net income - diluted 3.04 3.04 0.49 0.80
Net income - basic 3.08 3.08 0.50 0.81
Dividends 1.000 0.925 0.250 0.250
Book value 25.47 23.08 25.47 23.08
Ratios (%)
Return on average assets(1) 1.18% 1.34% 0.73% 1.33%
Return on average realized equity(1) 17.21 19.07 10.62 19.46
Net interest margin (taxable-equivalent)(2) 3.97 4.23 3.88 4.11
Efficiency ratio(3) 59.98 57.68 60.93 57.54
Equity to assets 8.78 8.83 8.78 8.83
Income Statement ($ Mils)
- -------------------------
Interest income (taxable-equivalent)(2) $ 5,720.3 $ 5,286.1 $ 1,454.1 $ 1,378.6
Interest expense 2,746.8 2,453.5 689.5 656.7
--------- --------- --------- ---------
Net interest income (taxable-equivalent) 2,973.5 2,832.6 764.6 721.9
--------- --------- --------- ---------
Provision for loan losses 214.6 225.1 67.1 55.9
Noninterest income
Trust income 460.1 393.0 117.7 102.3
Service charges on deposit accounts 401.1 374.1 105.7 97.2
Miscellaneous charges and fees 226.3 176.2 61.4 45.7
Mortgage fees 138.6 87.6 39.2 25.0
Credit card fees 87.3 81.1 23.5 24.3
Retail investment income 64.6 51.5 15.2 12.5
Corporate & institutional investment income 55.8 16.8 20.2 4.4
Trading account profits and commissions 44.6 22.7 11.7 6.6
Securities gains (losses) 8.2 6.9 1.0 1.7
Other noninterest income 229.6 145.8 40.5 42.0
--------- --------- --------- ---------
Total noninterest income 1,716.2 1,355.7 436.1 361.7
--------- --------- --------- ---------
Noninterest expense
Personnel expense 1,615.5 1,372.9 415.3 351.2
Net occupancy expense 192.2 187.2 49.8 46.3
Equipment expense 178.8 167.7 45.2 41.7
Merger-related expenses 119.4 - 119.4 -
Marketing and customer development 107.1 95.4 34.7 26.2
Other real estate expense (9.8) (8.6) (1.0) (5.0)
Other noninterest expense 729.2 601.1 187.6 163.0
--------- --------- --------- ---------
Total noninterest expense 2,932.4 2,415.7 851.0 623.4
--------- --------- --------- ---------
Taxable-equivalent adjustments 44.4 47.9 11.1 11.7
Provision for income taxes 527.3 523.7 113.6 138.0
--------- --------- --------- ---------
Net income $ 971.0 $ 975.9 $ 157.9 $ 254.6
========= ========= ========= =========
Merger Charges ($ Mils)
- ----------------------
Provision for loan losses $ 20.0
Provision for state income taxes 22.5
Merger-related expenses 119.4
---------
Total merger charges 161.9
=========
</TABLE>
(1) ROA and ROE are calculated excluding unrealized gains on securities
available for sale because these gains are not included in net income.
(2) Net interest income and net interest margin include the effects of taxable-
equivalent adjustments using a federal tax rate of 35% and state income
taxes where applicable to increase tax-exempt interest income to a taxable-
equivalent basis.
(3) Efficiency ratio excludes the effect of the one time merger-related
expenses of $119.4 million.
<PAGE>
SUNTRUST BANKS, INC. January 12, 1999
FINANCIAL HIGHLIGHTS (Cont'd)
<TABLE>
<CAPTION>
Average
------------------------------------------------
As of Year Ended Three Months Ended
December 31 December 31 December 31
-------------------- -------------------- ---------------------
1998 1997 1998 1997 1998 1997
------ ------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet ($ Mils)
- ---------------------
Assets:
Loans $ 65,089 $ 56,765 $ 60,005 $ 52,654 $ 63,134 $ 55,354
Securities available for sale(1) 17,559 16,197 16,837 15,608 16,790 15,366
Funds sold 1,401 2,244 1,306 1,378 1,294 1,639
Interest-bearing deposits in other banks 386 193 100 46 100 76
Trading account 240 181 217 234 219 233
Allowance for loan losses (945) (934) (940) (913) (955) (929)
Cash and due from banks 4,290 4,173 3,307 3,157 3,600 3,300
Intangible assets 797 560 738 511 784 535
Other assets 4,353 3,462 3,967 3,342 4,317 3,602
--------- --------- --------- --------- --------- ---------
Total assets $ 93,170 $ 82,841 $ 85,537 $ 76,017 $ 89,283 $ 79,176
========= ========= ========= ========= ========= =========
Liabilities and shareholders' equity:
Noninterest-bearing deposits $ 14,066 $ 12,482 $ 11,711 $ 10,706 $ 12,265 $ 11,030
Interest-bearing deposits 44,967 42,099 42,014 40,968 42,563 40,983
--------- --------- --------- --------- --------- ---------
Total deposits 59,033 54,581 53,725 51,674 54,828 52,013
Funds purchased 13,296 9,736 12,165 8,642 14,167 10,303
Other short-term borrowings 2,637 3,526 2,392 2,592 2,032 2,664
Long-term debt 5,808 4,010 5,368 3,275 5,845 3,891
Other liabilities 4,217 3,676 4,033 2,881 4,463 3,266
--------- --------- --------- --------- --------- ---------
Total liabilities 84,991 75,529 77,683 69,064 81,335 72,137
Realized shareholders' equity 6,090 5,264 5,641 5,117 5,899 5,190
Accumulated other comprehensive income 2,089 2,048 2,213 1,836 2,049 1,849
--------- --------- --------- --------- --------- ---------
Total shareholders' equity 8,179 7,312 7,854 6,953 7,948 7,039
--------- --------- --------- --------- --------- ---------
Total liabilities and shareholders' equity $ 93,170 $ 82,841 $ 85,537 $ 76,017 $ 89,283 $ 79,176
========= ========= ========= ========= ========= =========
Total earning assets $ 81,295 $ 72,259 $ 74,881 $ 66,944 $ 78,224 $ 69,668
(1) Includes unrealized gains
on investment securities $ 3,380 $ 3,321 $ 3,584 $ 2,976 $ 3,312 $ 2,999
Common shares outstanding (thous.) 321,124 316,873
Diluted shares outstanding (thous.) 319,711 320,932 320,224 318,480
Basic shares outstanding (thous.) 314,908 316,436 315,403 313,617
Year Fourth Quarter
--------------------- ------------------------
Allowance for Loan Losses ($ Mils) 1998 1997 1998 1997
- ---------------------------------- -------- ---------- ----------- ----------
Balance - beginning of period $ 933.5 $ 897.0 $ 928.5 $ 925.7
Provision for loan losses 214.6 225.1 67.1 55.9
Net loan charge-offs (193.5) (190.8) (52.5) (52.2)
Allowance from acquisitions and other activity - net (10.0) 2.2 1.5 4.1
--------- --------- --------- ---------
Balance - end of period $ 944.6 $ 933.5 $ 944.6 $ 933.5
========= ========= ========= =========
Net loan charge-off ratios (annualized) 0.32% 0.36% 0.33% 0.32%
12/31/98 09/30/98 12/31/97
---------- ---------- ----------
Nonperforming Assets ($ Mils)
- -----------------------------
Nonaccrual loans $ 206.6 $ 197.7 $ 186.0
Restructured loans 0.6 0.5 2.7
Other real estate owned 34.9 33.1 48.2
--------- --------- ---------
Total nonperforming assets $ 242.1 $ 231.3 $ 236.9
========= ========= =========
Ratios (%)
- ----------
Allowance for loan losses/total loans 1.45% 1.51% 1.64%
Allowance for loan losses/nonperforming loans 456.0 468.4 495.0
Nonperforming loans/total loans 0.32 0.32 0.33
</TABLE>
