FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1999
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, 1999, 321,563,833 shares of the Registrant's Common Stock, $1.00
par value were outstanding.
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
Notes to Consolidated Financial Statements 7-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-26
PART II OTHER INFORMATION
Item 1. Legal Proceedings 27
Item 2. Changes in Securities 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Submission of Matters to a Vote of Security Holders 27
Item 5. Other Information 27
Item 6. Exhibits and Reports on Form 8-K 27
SIGNATURES 28
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, 1999 are not
necessarily indicative of the results that may be expected for the full year
1999.
2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Three Months
Ended March 31
----------------------------
(Dollars in thousands except per
share data)(Unaudited) 1999 1998
------------- -------------
INTEREST INCOME
Interest and fees on loans $ 1,201,553 $ 1,151,147
Interest and dividends on
securities available for sale
Taxable interest 197,584 186,304
Tax-exempt interest 7,936 9,272
Dividends (1) 15,636 14,033
Interest on funds sold 15,475 22,968
Interest on deposits in other banks 1,708 1,833
Other interest 2,078 2,266
------------- -------------
Total interest income 1,441,970 1,387,823
------------- -------------
INTEREST EXPENSE
Interest on deposits 394,139 410,122
Interest on funds purchased 169,297 146,086
Interest on other short-term borrowings 20,288 33,313
Interest on long-term debt 88,428 78,516
------------- -------------
Total interest expense 672,152 668,037
------------- -------------
NET INTEREST INCOME 769,818 719,786
Provision for loan losses 41,995 51,722
------------- -------------
Net interest income after provision
for loan losses 727,823 668,064
------------- -------------
NONINTEREST INCOME
Trust income 126,320 113,200
Service charges on deposit accounts 106,114 95,235
Other charges and fees 93,119 84,043
Credit card fees 23,127 20,830
Retail investment services 23,515 14,843
Corporate and institutional investment services 18,680 9,538
Trading account profits and commissions 10,589 12,241
Securities (losses) gains (732) 3,524
Other noninterest income 44,195 45,205
------------- -------------
Total noninterest income 444,927 398,659
------------- -------------
NONINTEREST EXPENSE
Salaries and other compensation 382,929 329,183
Employee benefits 54,389 50,768
Net occupancy expense 47,669 46,325
Equipment expense 45,289 44,169
Outside processing and software 34,774 33,160
Amortization of intangible assets 25,682 21,763
Marketing and customer development 21,790 24,076
Merger-related expenses 13,844 -
Other noninterest expense 114,532 110,942
------------- -------------
Total noninterest expense 740,898 660,386
------------- -------------
Income before provision for income taxes 431,852 406,337
Provision for income taxes 150,115 141,403
============= =============
NET INCOME $ 281,737 $ 264,934
============= =============
Average common shares - diluted 322,363,870 320,386,492
Average common shares - basic 318,090,071 315,677,691
Net income per average common share - diluted $ 0.87 $ 0.83
Net income per average common share - basic 0.89 0.84
Dividends declared per common share 0.345 0.250
(1) INCLUDES DIVIDENDS ON COMMON STOCK OF
THE COCA-COLA COMPANY 7,723 7,240
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 December 31 March 31
(Dollars in thousands) (Unaudited) 1999 1998 1998
------------- ------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 3,529,131 $ 4,289,889 $ 3,547,141
Trading account 222,246 239,665 133,518
Securities available for sale (1) 17,870,140 17,559,043 17,103,263
Funds sold 1,021,335 1,786,945 2,070,671
Loans 64,274,066 65,089,201 58,875,457
Allowance for loan losses (952,589) (944,557) (939,766)
------------- ------------- ------------
Net loans 63,321,477 64,144,644 57,935,691
Premises and equipment 1,587,601 1,519,711 1,457,437
Intangible assets 816,621 797,045 700,875
Customers' acceptance liability 339,395 628,235 364,689
Other assets 2,414,546 2,204,755 2,597,203
============= ============= ============
Total assets $ 91,122,492 $ 93,169,932 $ 85,910,488
============= ============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $ 13,093,641 $ 14,065,720 $ 12,130,911
Interest-bearing deposits 44,834,459 44,967,563 41,649,641
------------- ------------- ------------
Total deposits 57,928,100 59,033,283 53,780,552
Funds purchased 13,435,207 13,295,833 12,108,193
Other short-term borrowings 1,714,672 2,636,986 2,662,807
Long-term debt 4,721,025 4,757,869 4,706,490
Guaranteed preferred beneficial interests in debentures 1,050,000 1,050,000 450,000
Acceptances outstanding 339,395 628,235 364,689
Other liabilities 3,795,352 3,589,082 3,902,211
------------- ------------- ------------
Total liabilities 82,983,751 84,991,288 77,974,942
------------- ------------- ------------
Preferred stock, no par value; 50,000,000 shares
authorized; none issued - - -
Common stock, $1.00 par value 322,846 322,485 320,569
Additional paid in capital 1,299,681 1,293,011 1,211,796
Retained earnings 4,747,118 4,575,382 4,142,522
Treasury stock and other (96,740) (100,441) (107,619)
------------- ------------- ------------
Realized shareholders' equity 6,272,905 6,090,437 5,567,268
Accumulated other comprehensive income 1,865,836 2,088,207 2,368,278
------------- ------------- ------------
Total shareholders' equity 8,138,741 8,178,644 7,935,546
============= ============= ============
Total liabilities and shareholders' equity $ 91,122,492 $ 93,169,932 $ 85,910,488
============= ============= ============
COMMON SHARES OUTSTANDING 321,474,627 321,124,134 318,981,974
COMMON SHARES AUTHORIZED 500,000,000 500,000,000 500,000,000
TREASURY SHARES OF COMMON STOCK 1,370,938 1,360,928 1,586,617
(1) INCLUDES NET UNREALIZED GAINS ON
SECURITIES AVAILABLE FOR SALE $ 3,027,235 $ 3,379,725 $ 3,837,981
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months
Ended March 31
--------------------------------
(Dollars in thousands) (Unaudited) 1999 1998
--------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $281,737 $264,934
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, amortization and accretion 68,185 64,925
Provisions for loan losses and foreclosed property 42,127 51,108
Amortization of compensation element of restricted stock 3,701 2,354
Securities losses (gains) 732 (3,524)
Net loss on sales of non-interest earning assets 299 2,204
Net decrease (increase) in loans held for sale 779,558 (770,165)
Net increase in accrued interest receivable,
prepaid expenses and other assets (296,681) (1,256,227)
Net increase in accrued interest payable, accrued
expenses and other liabilities 336,391 522,152
--------------- -------------
Net cash provided by (used in) operating activities 1,216,049 (1,122,239)
--------------- -------------
Cash flows from investing activities:
Proceeds from maturities of securities available for sale 1,725,620 960,632
Proceeds from sales of securities available for sale 1,431,520 1,850,761
Purchases of securities available for sale (3,819,860) (3,196,001)
Net decrease (increase) in loans 28,431 (1,380,022)
Capital expenditures (107,587) (46,016)
Proceeds from the sale of assets 9,208 173,416
Net funds received in acquisitions 13,420
Loan recoveries 18,188 20,261
--------------- -------------
Net cash used in investing activities (714,480) (1,603,549)
--------------- -------------
Cash flows from financing activities:
Net decrease in deposits (1,105,183) (800,232)
Net (decrease) increase in funds purchased
and other short-term borrowings (782,940) 1,509,486
Proceeds from the issuance of long-term debt 1,424,003
Repayment of long-term debt (36,844) (277,871)
Proceeds from stock issuance 7,031 33,669
Payments to acquire treasury stock (71,197)
Dividends paid (110,001) (84,455)
--------------- -------------
Net cash (used in) provided by financing activities (2,027,937) 1,733,403
--------------- -------------
Net decrease in cash and cash equivalents (1,526,368) (992,385)
Cash and cash equivalents at beginning of period 6,076,834 6,610,197
--------------- -------------
Cash and cash equivalents at end of period $4,550,466 $5,617,812
=============== =============
Supplemental Disclosure
Interest paid $695,032 $654,633
Income taxes paid 482,621 455,019
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Additional Treasury Other
Common Paid in Retained Stock and Comprehensive
(Dollars in thousands) (Unaudited) Stock Capital Earnings Other* Income Total
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998 $ 318,571 $ 1,087,511 $ 3,967,359 $ (109,503) $ 2,048,153 $ 7,312,091
Net income - - 264,934 - - 264,934
Other comprehensive income:
Change in unrealized gains (losses) on
securities, net of taxes - - - - 320,125 320,125
------------
Total comprehensive income - - - - - 585,059
Cash dividends declared, $0.250 per share - - (84,455) - - (84,455)
Exercise of stock options 243 (4,187) - 10,823 - 6,879
Acquisition and retirement of stock (96) - (5,316) (65,785) - (71,197)
Amortization of compensation element
of restricted stock - - - 2,354 - 2,354
Stock issued for acquisitions 1,500 109,268 - 47,257 - 158,025
Issuance of stock for employee benefit plans 351 19,204 - 7,235 - 26,790
=================================================================================
BALANCE, MARCH 31, 1998 $ 320,569 $ 1,211,796 $ 4,142,522 $ (107,619) $ 2,368,278 $ 7,935,546
=================================================================================
BALANCE, JANUARY 1, 1999 $ 322,485 $ 1,293,011 $ 4,575,382 $ (100,441) $ 2,088,207 $ 8,178,644
Net income - - 281,737 - - 281,737
Other comprehensive income:
Change in unrealized gains (losses) on
securities, net of taxes - - - - (222,371) (222,371)
-----------
Total comprehensive income - - - - - 59,366
Cash dividends declared, $0.345 per share - - (110,001) - - (110,001)
Exercise of stock options 334 4,904 - - - 5,238
Amortization of compensation element
of restricted stock - - - 3,701 - 3,701
Issuance of stock for employee benefit plans 27 1,766 - - - 1,793
=================================================================================
BALANCE, MARCH 31, 1999 $ 322,846 $ 1,299,681 $ 4,747,118 $ (96,740) $ 1,865,836 $ 8,138,741
=================================================================================
</TABLE>
* Balance at March 31, 1998 includes $42,785 for Treasury Stock and $64,834 for
Deferred Compensation.
Balance at March 31, 1999 includes $29,143 for Treasury Stock and $67,597 for
Deferred Compensation.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
Notes to Consolidated Financial Statements (Unaudited)
Note 1 - Accounting Policies
The consolidated interim financial statements of SunTrust Banks, Inc.
("SunTrust") are unaudited. All significant intercompany accounts and
transactions have been eliminated. All historical information for SunTrust has
been restated to include Crestar historical information for all periods
presented. These financial statements should be read in conjunction with the
Annual Report on Form 10-K for the year ended December 31, 1998.
Note 2 - Acquisitions
On December 31, 1998, the SunTrust merged with Crestar Financial Corporation
(Crestar). Each outstanding share of Crestar common stock was exchanged for 0.96
shares of SunTrust common stock, resulting in the issuance of approximately
108,696,877 shares of SunTrust common stock. The business combination was
accounted for using the pooling-of-interests method of accounting. Accordingly,
all historical financial information of SunTrust for all periods presented has
been restated to include Crestar's financial information. Certain conforming
adjustments and reclassifications have been made to Crestar's historical
information to conform to SunTrust's accounting and financial reporting
policies. These adjustments, which relate primarily to the accounting policies
with respect to loan origination costs, did not have a material impact on the
combined financial statements. During 1998, SunTrust recorded $161.9 million in
pre-tax Crestar merger-related charges. The following table shows the
merger-related charges and the remaining liability at March 31, 1999.
<TABLE>
<CAPTION>
Merger-Related Charges Utilized Balance Utilized Balance
(In thousands) Pretax In 1998 December 31, 1998 In 1999 March 31, 1999
--------- --------- ------------------- --------- -----------------
<S> <C> <C> <C> <C> <C>
Transaction costs $40,300 $6,858 $33,442 $33,442 -
Severance and termination accruals 38,900 - 38,900 20,675 $18,225
Adjustment to deferred compensation
liabilities 11,319 11,319 - - -
Litigation loss reserve 7,500 7,500 - - -
Write-off of unrealizable assets 17,400 17,400 - - -
Miscellaneous integration costs 4,000 1,296 2,704 601 2,103
--------- --------- ------------------- --------- -----------------
Merger-related expenses 119,419 44,373 75,046 54,718 20,328
--------- --------- ------------------- --------- -----------------
--------- --------- ------------------- --------- -----------------
Provision for loan losses 20,000 20,000 - - -
Provision for taxes 22,500 22,500 - - -
--------- --------- ------------------- --------- -----------------
Total merger-related charges $161,919 $86,873 $75,046 $54,718 $20,328
========= ========= =================== ========= =================
</TABLE>
At December 31, 1998, SunTrust expected to record approximately $88 million in
additional merger-related charges primarily related to systems conversions and
business line integration over the next 18 months. In the first quarter of 1999,
$13.8 million ($10.4 million after-tax) of these additional merger-related
charges were recorded. These charges included $6.5 million in accelerated
depreciation and amortization based upon estimates of systems integration time
tables, $4.1 million in severance and $3.2 million in miscellaneous integration
costs. SunTrust expects to record additional merger-related charges of $74.2
million through June 2000.
7
<PAGE>
Notes to Consolidated Financial Statements (Unaudited) - continued
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 as hedges are described below. Derivatives that do
not meet these criteria are carried at market value with changes in value
recognized currently in earnings.
Derivatives used as hedges must be effective at reducing the risk associated
with the exposure being hedged and must be designated as a hedge at the
inception of the derivative contract. Derivatives used for hedging purposes may
include swaps, forwards, futures and options. The interest component associated
with derivatives used as hedges or to modify the interest rate characteristics
of assets and liabilities is recognized over the life of the contract in net
interest income. If a contract is cancelled prior to its termination date, the
cumulative change in the market value of the derivatives is recorded as an
adjustment to the carrying value of the underlying asset or liability and
recognized in net interest income over the expected remaining life of the
related asset or liability. In instances where the underlying instrument is
sold, the fair value of the associated derivative is recognized immediately in
the component of earnings relating to the underlying instrument.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including derivative instruments
embedded in other contracts and for hedging activities. It requires that an
entity recognizes all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. This statement could increase
volatility in earnings and other comprehensive income. This statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
SunTrust will adopt SFAS No. 133 effective January 1, 2000 and although SunTrust
has begun an in-depth analysis to determine the effects of the implementation,
currently it is not expected to have a material impact on SunTrust's financial
position or results of operations.
Note 4 - Guaranteed Preferred Beneficial Interests in Debentures
SunTrust has established special purpose trusts, which collectively issued
$1,050 million in trust preferred securities. The proceeds from these issuances,
together with the proceeds of the related issuances of common securities of the
trusts, were invested in junior subordinated deferrable interest debentures of
SunTrust. The sole assets of these special purpose trusts are the debentures.
These debentures rank junior to the senior and subordinated debt issued by
SunTrust. SunTrust owns all of the common securities of the special purpose
trusts. The preferred securities issued by the trusts rank senior to the trusts'
common securities. The obligations of SunTrust under the debentures, the
indentures, the relevant trust agreements and the guarantees, in the aggregate,
constitute a full and unconditional guarantee by SunTrust of the obligations of
the trusts under the trust preferred securities and rank subordinate and junior
in right of payment to all liabilities of SunTrust. The trust preferred
securities may be called prior to maturity at the option of SunTrust.
8
<PAGE>
Notes to Consolidated Financial Statements (Unaudited) - continued
Note 5 - Comprehensive Income
Under Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", some transactions and other economic events that bypass
the income statement must be displayed as other comprehensive income. SunTrust'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 1999 and 1998 is calculated as
follows:
(In thousands)
<TABLE>
<CAPTION>
Before Income Income Net of Income
Tax (Benefit) Tax (Benefit) Tax (Benefit)
<S> <C> <C> <C>
Unrealized gains and losses (net) recognized in
other comprehensive income:
Quarter ended March 31, 1999 $ (352,490) $ (130,119) $ (222,371)
Quarter ended March 31, 1998 $ 517,038 $ 196,913 $ 320,125
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Amounts reported in net income:
(Loss) gain on sale of securities $ (732) $ 3,524
Amortization and accretion, net 1,865 1,205
--------------- -------------
Reclassification adjustment 1,133 4,729
Income tax expense (418) (1,801)
--------------- -------------
Reclassification adjustment, net of tax 715 2,928
Amounts reported in other comprehensive income:
Unrealized (losses) gains arising during period,
net of tax (221,656) 323,053
Reclassification adjustment, net of tax (715) (2,928)
--------------- -------------
Net unrealized (losses) gains recognized in
other comprehensive income (222,371) 320,125
Net income 281,737 264,934
--------------- -------------
Total comprehensive income $ 59,366 $ 585,059
=============== =============
</TABLE>
9
<PAGE>
Notes to Consolidated Financial Statements (Unaudited) - continued
Note 6 - Earnings Per Share Reconciliation
Net income is the same in the calculation of basic and diluted EPS. A
reconciliation of the difference between average basic common shares outstanding
and average diluted common shares outstanding for the quarters ended March 31,
1999 and March 31, 1998 is included in the following table.
Computation of Per Share Earnings
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months
Ended March 31
-----------------------------
1999 1998
-------------- -------------
<S> <C> <C>
BASIC
Net income $ 281,737 $ 264,934
-------------- -------------
Average common shares 318,090 315,678
-------------- -------------
Earnings per common share - basic $ 0.89 $ 0.84
============== =============
DILUTED
Net income $ 281,737 $ 264,934
-------------- -------------
Average common shares outstanding 318,090 315,678
Effect of dilutive securities:
Stock options 2,643 3,092
Performance restricted stock 1,631 1,617
-------------- -------------
Average diluted common shares 322,364 320,387
-------------- -------------
Earnings per common share - diluted $ 0.87 $ 0.83
============== =============
</TABLE>
10
<PAGE>
Notes to Consolidated Financial Statements (Unaudited) - continued
Note 7 - Segment Reporting
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", requires disclosure of information related to SunTrust's
reportable operating segments. The reportable segments were determined based on
management's internal reporting approach, which is aligned along geographic
regions. The reportable segments are comprised of each of the state bank holding
companies of Florida, Georgia, Tennessee, and Crestar (which includes Virginia,
Maryland and the District of Columbia). Each bank holding company provides a
wide array of banking services to consumer and commercial customers and earns
interest income from loans made to customers and investments in securities
available for sale. Each bank holding company also recognizes fees related to
trust, deposit, lending and other services provided to customers. The "all
other" segment consists primarily of SunTrust's non-bank subsidiaries, including
SunTrust's credit card bank. Most of the revenue earned by the non-bank
subsidiaries is classified in noninterest income and consists primarily of
mortgage banking fees and retail, corporate, and institutional investment
income. No transactions with a single customer contributed 10% or more to
SunTrust's total revenue. The accounting policies for each segment are the same
as those used by SunTrust. The segment results include overhead allocations and
intercompany transactions that were recorded at estimated market prices. All
intercompany transactions have been eliminated to determine the consolidated
balances. The results for the four reportable segments and all other segments of
SunTrust are included in the following table.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
---------------------------------------------------------------------------------------------------------
(In thousands) FLORIDA GEORGIA TENNESSEE CRESTAR ALL OTHER ELIMINATIONS CONSOLIDATED
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $ 477,909 $ 354,852 $ 143,362 $ 446,417 $ 114,493 $ (95,063) $ 1,441,970
Total interest expense 210,146 167,837 68,714 203,185 117,333 (95,063) 672,152
---------------------------------------------------------------------------------------------------------
Net interest income 267,763 187,015 74,648 243,232 (2,840) - 769,818
Provision for loan losses 7,800 5,145 1,800 12,360 14,890 - 41,995
---------------------------------------------------------------------------------------------------------
Net interest income after
provision 259,963 181,870 72,848 230,872 (17,730) - 727,823
---------------------------------------------------------------------------------------------------------
Total noninterest income 138,280 101,562 37,654 135,030 269,759 (237,358) 444,927
Total noninterest expense 229,972 153,787 64,293 223,330 306,874 (237,358) 740,898
---------------------------------------------------------------------------------------------------------
Income before taxes 168,271 129,645 46,209 142,572 (54,845) - 431,852
Provision for income taxes 60,722 44,335 16,906 46,570 (18,418) - 150,115
---------------------------------------------------------------------------------------------------------
Net income $ 107,549 $ 85,310 $ 29,303 $ 96,002 $ (36,427) $ - $ 281,737
=========================================================================================================
Other Significant Items
Total assets $ 29,492,493 $25,744,968 $8,746,809 $ 26,256,394 $18,549,393 $ (17,667,565) $91,122,492
Investment in subsidiaries 2,545,252 3,720,371 710,071 2,363,227 385,354 (9,724,275) -
Depreciation, amortization,
and accretion (net) 15,703 8,097 4,135 24,967 15,283 - 68,185
Total expenditures for
long-lived assets 45,962 2,114 1,825 9,834 47,852 - 107,587
Revenues from external
customers
Total interest income $ 453,208 $ 337,773 $ 140,218 $ 446,417 $ 64,354 $ - $ 1,441,970
Total noninterest income 115,234 82,580 29,557 135,030 82,526 - 444,927
---------------------------------------------------------------------------------------------------------
Total income $ 568,442 $ 420,353 $ 169,775 $ 581,447 $ 146,880 $ - $ 1,886,897
=========================================================================================================
Revenues from affiliates
Total interest income $ 24,701 $ 17,079 $ 3,144 $ - $ 50,139 $ (95,063)
Total noninterest income 23,046 18,982 8,097 - 187,233 (237,358)
---------------------------------------------------------------------------------------------------------
Total income $ 47,747 $ 36,061 $ 11,241 $ - $ 237,372 $ (332,421)
=========================================================================================================
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
------------------------------------------------------------------------------------------------------
(In thousands) Florida Georgia Tennessee Crestar All Other Eliminations Consolidated
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $ 477,997 325,070 $ 142,103 $ 428,428 $ 106,417 $ (92,192) 1,387,823
Total interest expense 225,080 156,539 69,950 198,062 110,598 (92,192) 668,037
------------------------------------------------------------------------------------------------------
Net interest income 252,917 168,531 72,153 230,366 (4,181) - 719,786
Provision for loan losses 8,106 5,510 1,734 23,096 13,276 - 51,722
------------------------------------------------------------------------------------------------------
Net interest income after
provision 244,811 163,021 70,419 207,270 (17,457) - 668,064
------------------------------------------------------------------------------------------------------
Total noninterest income 123,921 88,135 33,876 121,284 237,774 (206,331) 398,659
Total noninterest expense 212,746 142,370 61,879 198,264 251,458 (206,331) 660,386
------------------------------------------------------------------------------------------------------
Income before taxes 155,986 108,786 42,416 130,290 (31,141) - 406,337
Provision for income taxes 56,888 36,480 15,195 46,230 (13,390) - 141,403
------------------------------------------------------------------------------------------------------
Net income $ 99,098 72,306 $ 27,221 $ 84,060 $ (17,751) $ - 264,934
======================================================================================================
OTHER SIGNIFICANT ITEMS
Total assets $ 27,825,399 22,886,313 8,059,157 25,920,255 $15,478,999 (14,259,635) $ 85,910,488
Investment in subsidiaries 2,266,261 3,993,720 655,929 2,121,315 391,170 (9,428,395) -
Depreciation, amortization,
and accretion (net) 17,515 8,757 4,347 22,834 11,472 - 64,925
Total expenditures for
long-lived assets 8,280 7,367 2,943 13,262 14,164 - 46,016
Revenues from external
customers
Total interest income $ 447,058 $ 308,905 $ 138,671 $ 428,428 $ 64,761 - $ 1,387,823
Total noninterest income 104,844 73,109 27,490 121,284 71,932 - 398,659
------------------------------------------------------------------------------------------------------
Total income $ 551,902 $ 382,014 $ 166,161 $ 549,712 $ 136,693 $ - $ 1,786,482
======================================================================================================
Revenues from affiliates
Total interest income $ 30,939 $ 16,165 $ 3,432 $ - $ 41,656 $ (92,192)
Total noninterest income 19,077 15,026 6,386 - 165,842 (206,331)
------------------------------------------------------------------------------------------------------
Total income $ 50,016 $ 31,191 $ 9,818 $ - $ 207,498 $(298,523)
======================================================================================================
</TABLE>
12
<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. SunTrust's principal banking subsidiaries are SunTrust
Banks of Florida, Inc., SunTrust Banks of Georgia, Inc., SunTrust Banks of
Tennessee, Inc. and Crestar Financial Corporation, all of which are bank holding
companies.
SunTrust provides a full line of consumer and commercial banking services in
Alabama, Florida, Georgia, Maryland, Tennessee, Virginia and the District of
Columbia. Our primary businesses include traditional deposit and credit services
as well as trust and investment services. Through various subsidiaries, we
provide credit cards, mortgage banking, credit-related insurance, leasing
services, data processing and information services, securities brokerage,
investment advisory services and investment banking services. Other nonbank
subsidiaries primarily support SunTrust's banking operations, providing data
processing and other services.
The following analysis of the financial performance of SunTrust for the first
quarter of 1999 should be read in conjunction with the financial statements,
notes and other information contained in this document. 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 results of operations for the three months ended March 31, 1999 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 operating net income of $292.2 million or $.91 per
share for the first quarter of 1999, an increase of 10.3% compared with $264.9
million in the first quarter of 1998 (excluding charges related to the Crestar
merger of $10.4 million after-tax). Diluted earnings per share, adjusted for
merger charges, grew 9.6% to $0.91 from $0.83 in the first quarter of 1998. The
growth in net income resulted from increases in noninterest income and continued
strong loan demand.
SELECTED QUARTERLY FINANCIAL DATA TABLE 1
(Dollars in millions except per share data)
<TABLE>
<CAPTION>
Quarters
-----------------------------------------------------------------
1999 1998
------------ ---------------------------------------------------
1 4 3 2 1
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest and dividend income $ 1,442.0 $ 1,443.0 $ 1,419.5 $ 1,425.7 $ 1,387.7
Interest expense 672.2 689.5 698.2 691.1 668.0
------------ ----------- ----------- ----------- -----------
Net interest income 769.8 753.5 721.3 734.6 719.7
Provision for loan losses 42.0 67.1 40.5 55.3 51.7
------------ ----------- ----------- ----------- -----------
Net interest income after
provision for loan losses 727.8 686.4 680.8 679.3 668.0
Noninterest income 444.9 436.1 460.1 421.3 398.7
Noninterest expense 740.9 851.0 732.9 688.1 660.4
------------ ----------- ----------- ----------- -----------
Income before provision
for income taxes 431.8 271.5 408.0 412.5 406.3
Provision for income taxes 150.1 113.6 131.3 141.0 141.4
------------ ----------- ----------- ----------- -----------
Net income $ 281.7 $ 157.9 $ 276.7 $ 271.5 $ 264.9
============ =========== =========== =========== ===========
Net interest income
(taxable-equivalent) $ 780.7 $ 764.6 $ 732.4 $ 745.6 $ 730.9
PER COMMON SHARE
Net income - diluted $ 0.87 $ 0.49 $ 0.87 $ 0.85 $ 0.83
Net income - basic 0.89 0.50 0.88 0.86 0.84
Dividends declared 0.345 0.250 0.250 0.250 0.250
Book value 25.32 25.47 23.92 25.81 24.88
Market price
High 79.44 80.63 87.75 83.44 77.44
Low 60.44 55.06 54.00 73.38 65.25
Close 69.10 76.50 62.00 81.31 75.38
SELECTED AVERAGE BALANCES
Total assets $ 91,696.6 $ 89,283.1 $ 85,372.1 $ 85,087.5 $ 82,330.5
Earning assets 80,684.8 78,224.4 74,731.7 74,372.8 72,129.4
Loans 64,854.0 63,134.0 60,039.5 59,441.9 57,341.4
Total deposits 56,895.4 54,828.4 53,658.3 53,607.5 52,785.4
Realized shareholders' equity 6,120.2 5,898.6 5,618.9 5,568.9 5,474.8
Total shareholders' equity 8,146.9 7,947.6 7,990.8 7,937.1 7,532.6
Common shares - diluted (thousands) 322,364 320,224 317,920 319,689 320,387
Common shares - basic (thousands) 318,090 315,403 313,572 314,999 315,678
FINANCIAL RATIOS
ROA* 1.29 % 0.73 % 1.35 % 1.34 % 1.36 %
ROE* 18.67 10.62 19.54 19.55 19.63
Net interest margin* 3.92 3.88 3.89 4.02 4.11
</TABLE>
* ROA, ROE and net interest margin are calculated excluding net unrealized gains
on securities available for sale because the net unrealized gains are not
included in income.
14
<PAGE>
CONSOLIDATED DAILY AVERAGE BALANCES, INCOME/EXPENSE
AND AVERAGE YIELDS EARNED AND RATES PAID
(Dollars in millions; yields on taxable-equivalent basis)
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------------------
March 31, 1999 December 31, 1998
----------------------------------- ---------------------------------
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates
------------ ----------- -------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans:(1)
Taxable $ 63,668.8 $ 1,187.2 7.56 % $ 62,011.6 $1,193.8 7.64 %
Tax-exempt(2) 1,185.2 21.2 7.25 1,122.4 21.2 7.50
----------------------------------- ---------------------------------
Total loans 64,854.0 1,208.4 7.56 63,134.0 1,215.0 7.63
Securities available for sale:
Taxable 13,672.0 213.6 6.34 12,868.0 206.2 6.36
Tax-exempt(2) 573.6 11.5 8.15 610.2 12.2 7.95
----------------------------------- ---------------------------------
Total securities available for sale 14,245.6 225.1 6.41 13,478.2 218.4 6.43
Funds sold 1,244.2 15.5 5.04 1,293.5 16.9 5.20
Other short-term investments(2) 341.0 3.8 4.53 318.7 3.8 4.79
----------------------------------- ---------------------------------
Total earning assets 80,684.8 1,452.8 7.30 78,224.4 1,454.1 7.37
Allowance for loan losses (950.0) (955.0)
Cash and due from banks 3,588.8 3,600.3
Premises and equipment 1,529.5 1,524.9
Other assets 3,568.0 3,576.6
Unrealized gains on securities
available for sale 3,275.5 3,311.9
----------------------------------- ---------------------------------
Total assets $ 91,696.6 $ 89,283.1
=================================== =================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW/Money market accounts $ 19,572.1 $ 127.2 2.64 % $ 19,003.7 $ 131.5 2.74 %
Savings 6,959.7 50.6 2.95 6,714.3 52.2 3.09
Consumer time 10,016.0 121.3 4.91 10,135.0 129.8 5.08
Other time 7,880.0 95.0 4.89 6,710.4 87.0 5.14
----------------------------------- ---------------------------------
Total interest-bearing deposits 44,427.8 394.1 3.60 42,563.4 400.5 3.73
Funds purchased 14,785.4 169.3 4.64 14,166.8 172.3 4.82
Other short-term borrowings 1,777.1 20.3 4.63 2,031.6 25.5 4.98
Long-term debt 5,787.1 88.4 6.20 5,844.9 91.2 6.19
----------------------------------- ---------------------------------
Total interest-bearing liabilities 66,777.4 672.1 4.08 64,606.7 689.5 4.23
Noninterest-bearing deposits 12,467.6 12,265.0
Other liabilities 4,304.7 4,463.8
Realized shareholders' equity 6,120.2 5,898.6
Accumulated other comprehensive income 2,026.7 2,049.0
----------------------------------- ---------------------------------
Total liabilities and shareholders' equity $ 91,696.6 $ 89,283.1
=================================== =================================
Interest rate spread 3.22 % 3.14 %
----------------------------------- ---------------------------------
NET INTEREST INCOME $ 780.7 $ 764.6
----------------------------------- ---------------------------------
NET INTEREST MARGIN(3) 3.92 % 3.88 %
----------------------------------- ---------------------------------
</TABLE>
(1) Interest income includes loan fees of $32.6, $30.4, $28.9, $30.2, and
$28.6 in the quarters ended March 31, 1999, and December 31, September
30, June 30 and March 31, 1998. Nonaccrual loans are included in average
balances and income on such loans, if recognized, is recorded on a cash
basis.
(2) 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 $10.9, $11.1, $11.1, $11.0, and $11.2, in the
quarters ended March 31, 1999, and December 31, September 30, June 30
and March 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
TABLE 2
Quarter Ended
----------------------------------------------------------------------------------------------------
September 30, 1998 June 30, 1998 March 31, 1998
----------------------------------- --------------------------------- ---------------------------
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:(1)
Taxable $ 58,997.5 $1,173.8 7.89 % $ 58,416.1 $1,175.3 8.07 % $ 56,319.2 $1,137.1 8.19 %
Tax-exempt(2) 1,042.0 20.4 7.79 1,025.8 19.9 7.75 1,022.2 20.4 8.11
----------------------------------- --------------------------------- ---------------------------
Total loans 60,039.5 1,194.2 7.89 59,441.9 1,195.2 8.06 57,341.4 1,157.5 8.19
Securities available for sale:
Taxable 12,652.8 205.4 6.44 12,767.9 207.5 6.52 12,178.6 200.6 6.68
Tax-exempt(2) 627.9 13.0 8.22 643.8 13.4 8.31 654.0 13.6 8.45
----------------------------------- --------------------------------- ---------------------------
Total securities available
for sale 13,280.7 218.4 6.52 13,411.7 220.9 6.60 12,832.6 214.2 6.77
Funds sold 1,084.3 14.5 5.30 1,222.3 17.2 5.65 1,630.9 23.0 5.71
Other short-term investments(2) 327.2 3.5 4.25 296.9 3.4 4.58 324.5 4.2 5.20
----------------------------------- --------------------------------- ---------------------------
Total earning assets 74,731.7 1,430.6 7.60 74,372.8 1,436.7 7.75 72,129.4 1,398.9 7.87
Allowance for loan losses (931.1) (943.6) (932.0)
Cash and due from banks 3,194.6 3,170.0 3,260.3
Premises and equipment 1,487.3 1,473.6 1,460.0
Other assets 3,045.8 3,175.5 3,074.9
Unrealized gains on securities
available for sale 3,843.8 3,839.2 3,337.9
----------------------------------- --------------------------------- ---------------------------
Total assets $ 85,372.1 $ 85,087.5 $ 82,330.5
=================================== ================================= ===========================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits:
NOW/Money market accounts $ 18,408.9 $ 136.2 2.94 % $ 18,243.9 $ 133.0 2.92 % $ 17,338.0 $ 123.8 2.90 %
Savings 6,613.5 55.4 3.32 6,582.5 54.4 3.31 6,673.2 54.9 3.34
Consumer time 10,294.4 133.9 5.16 10,438.8 134.5 5.17 10,700.7 136.2 5.16
Other time 6,665.0 91.7 5.46 6,663.8 94.5 5.69 6,859.6 95.2 5.63
----------------------------------- --------------------------------- ---------------------------
Total interest-bearing
deposits 41,981.8 417.2 3.94 41,929.0 416.4 3.98 41,571.5 410.1 4.00
Funds purchased 11,875.2 160.6 5.36 11,589.2 155.1 5.37 10,996.6 146.1 5.39
Other short-term borrowings 2,307.3 31.7 5.44 2,732.2 37.3 5.48 2,502.2 33.3 5.40
Long-term debt 5,565.7 88.7 6.32 5,217.2 82.3 6.32 4,830.9 78.5 6.59
----------------------------------- --------------------------------- -----------------------------
Total interest-bearing
liabilities 61,730.0 698.2 4.49 61,467.6 691.1 4.51 59,901.2 668.0 4.52
Noninterest-bearing deposits 11,676.5 11,678.5 11,213.9
Other liabilities 3,974.8 4,004.3 3,682.8
Realized shareholders'
equity 5,618.9 5,568.9 5,474.8
Accumulated other
comprehensive income 2,371.9 2,368.2 2,057.8
----------------------------------- --------------------------------- ----------------------------
Total liabilities and
shareholders' equity $ 85,372.1 $ 85,087.5 $ 82,330.5
Interest rate spread =================================== ================================= ============================
NET INTEREST INCOME 3.11 % 3.24 % 3.35 %
----------------------------------- --------------------------------- ----------------------------
NET INTEREST MARGIN(3) $ 732.4 $ 745.6 $ 730.9
----------------------------------- --------------------------------- ----------------------------
3.89 % 4.02 % 4.11 %
----------------------------------- --------------------------------- ----------------------------
</TABLE>
(3) Derivative instruments used to help balance SunTrust's interest-sensitivity
position decreased net interest income by $1.8 in the quarter ended March
31, 1999, had no impact on net interest income in the quarter ended December
31, 1998, decreased net interest income by $1.9 and $0.5 in the quarters
ended September 30, 1998 and June 30, 1998 and increased net interest income
by $1.6 in the quarter ended March 31, 1998. Without these swaps, net
interest margin would have been 3.92%, 3.88%, 3.88%, 4.02% and 4.12%, in the
quarters ended March 31, 1999, December 31, September 30, June 30, and March
31, 1998, respectively.
Net Interest Income/Margin. SunTrust's net interest margin of 3.92% for the
first quarter of 1999 was 19 basis points lower than the first quarter of last
year. The rate on earning assets was 7.30% in the first quarter of 1999 and
7.87% in the first quarter of 1998. At the same time, the rate on interest
bearing liabilities decreased 44 basis points due to the decrease in rates on
other short-term borrowings and time deposits.
Interest income, which SunTrust was unable to recognize on nonperforming loans,
had a negative impact of 2 basis point on the net interest margin in the first
three months of both 1999 and 1998. Table 2 contains more detailed information
concerning average balances and interest yields earned and rates paid.
16
<PAGE>
SunTrust periodically evaluates the interest rate risk assumptions contained in
the annual report. Management continues to believe that our sensitivity to
interest rates is relatively neutral.
Noninterest Income. Noninterest income in the first three months of 1999,
adjusted to exclude the effect of securities gains and losses, increased $50.4
million, or 12.8%, from the first quarter of 1998. Trust income, SunTrust's
largest source of noninterest income, increased $13.1 million, or 11.6% over the
same period. The increase in loan volume is due to the increase in new home
sales and refinancing activity as long term interest rates have continued to
decline in the past year. Mortgage fees, the largest component of miscellaneous
charges and fees, increased $15.2 million, or 48.6% to $46.6 million in the
first quarter of 1999 due to higher volume in our mortgage banking business.
Other income in the third quarter of 1998 includes a $54.0 million pre-tax gain
on the sale of credit card loans.
NONINTEREST INCOME TABLE 3
(In millions)
<TABLE>
<CAPTION>
Quarters
---------------------------------------------------------
1999 1998
---------- --------------------------------------------
1 4 3 2 1
---------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Trust income $ 126.3 $ 117.7 $ 112.9 $ 116.3 $ 113.2
Service charges on deposit accounts 106.1 105.7 102.6 97.6 95.2
Miscellaneous charges and fees 93.1 100.5 90.8 89.5 84.0
Mortgage servicing rights income 41.4 32.5 34.6 34.9 20.8
Retail investment services 23.5 15.2 16.1 18.5 14.8
Credit card fees 23.1 23.5 20.1 22.9 20.8
Corporate and institutional investment services 18.7 20.2 13.8 12.3 9.5
Trading account profits and commissions 10.6 11.7 8.3 12.4 12.2
Securities gains (losses) (0.7) 1.0 (0.8) 4.5 3.5
Other income 2.8 8.1 61.7 12.4 24.7
========== ========= ======== ========= =========
Total noninterest income $ 444.9 $ 436.1 $ 460.1 $ 421.3 $ 398.7
========== ========= ======== ========= =========
</TABLE>
Noninterest Expense. Noninterest expense increased $80.5 million, or 12.2% in
the first quarter of 1999 compared to the same period last year. Personnel
expenses, consisting of salaries, other compensation and employee benefits,
increased $57.3 million, or 15.1% over the earlier period. Most of the remaining
increase in noninterest expense was due to $13.8 million in Crestar
merger-related expenses in the first quarter of 1999. The efficiency ratio in
the first quarter of 1999 was 59.3% (excluding the Crestar merger-related
charges), a slight increase from 58.5% in the first quarter of 1998. The fourth
quarter of 1998 noninterest expense includes $119.4 million in Crestar
merger-related expenses.
17
<PAGE>
NONINTEREST EXPENSE TABLE 4
(In millions)
<TABLE>
<CAPTION>
Quarters
---------------------------------------------------------
1999 1998
---------- --------------------------------------------
1 4 3 2 1
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Salaries $ 298.5 $ 289.9 $ 278.1 $ 269.2 $ 258.3
Other compensation 84.4 86.2 100.8 80.3 70.9
Employee benefits 54.4 39.2 45.7 46.1 50.8
Net occupancy expense 47.7 49.8 49.1 47.0 46.3
Equipment expense 45.3 45.2 45.5 43.9 44.2
Outside processing and software 34.8 37.7 32.9 34.6 33.2
Amortization of intangible assets 25.7 28.9 28.0 26.7 21.8
Marketing and customer development 21.8 34.7 22.7 25.6 24.1
Postage and delivery 17.1 16.1 15.9 16.0 16.4
Credit and collection services 16.6 18.9 17.8 17.5 16.2
Communications 16.1 15.8 15.8 15.6 14.9
Consulting and legal 15.4 19.6 19.6 15.1 13.2
Merger-related expenses 13.8 119.4 - - -
Operating supplies 13.3 14.3 13.2 13.3 13.2
FDIC premiums 2.0 2.3 2.3 2.1 1.7
Other real estate expense (1.1) (1.0) (4.0) (1.8) (3.0)
Other expense 35.1 34.0 49.5 36.9 38.2
========== ========= ========= ========= =========
Total noninterest expense $ 740.9 $ 851.0 $ 732.9 $ 688.1 $ 660.4
========== ========= ========= ========= =========
Efficiency ratio (1) 59.3 % 60.9 % 61.5 % 59.0 % 58.5 %
</TABLE>
(1) Excludes merger-related expenses in the fourth quarter of 1998 and the first
quarter of 1999.
Provision for Loan Losses. The SunTrust Allowance for Loan and Lease Losses
Review Committee meets on a quarterly basis in order to assess the adequacy of
the allowance, analyze provision and charge-off trends and to affirm allowance
methodology. As a result of this review process, the Committee deemed the
allowance at the end of the first quarter of 1999 to be adequate in order to
cover losses inherent in the loan portfolio. The adequacy of the allowance is
assessed based on historical loss rates, specifically analyzed loans and other
risk factors. In the first quarter of 1999, SunTrust has confirmed further
deterioration in the loan portfolio related to the healthcare industry. Other
risk factors, including continuing high consumer bankruptcy rates and high
consumer debt levels, as well as, global economic risk factors such as the Asian
economic crisis, continue to influence the assessment of the adequacy of the
allowance. The Committee also agreed to adjust the general reserve factors
pertaining to the credit card and commercial real estate portfolios based on a
review of the annual loan loss migration analysis. Reserve factors relating to
the credit card portfolio were generally increased while a nominal decrease was
agreed upon in relation to the commercial real estate portfolio.
SunTrust decreased the provision for loan losses in the first quarter of 1999 to
$42.0 million from $51.7 million in the same period last year. Total provision
exceeded net charge-offs by $8.0 million. This variance reflects lower than
anticipated net charge-offs for the first quarter of 1999 totaling $34.0
million, representing 0.21% of average loans. While it is anticipated that
second quarter charge-offs will reflect a moderately higher rate as originally
forecast, the first quarter results did compare favorably to net charge-offs of
$46.9 million or 0.33% of average loans in the first quarter of 1998.
SunTrust's allowance for loan losses totaled $952.6 million at March 31, 1999,
which was 1.48% of quarter-end loans and 481.5% of total nonperforming loans. As
of March 31, 1998 the allowance for loan losses was $939.8 million, or 1.60% of
quarter-end loans and 478.5% of total nonperforming loans.
18
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE TABLE 5
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters
--------------------------------------------------------------------
1999 1998
------------ ------------------------------------------------------
1 4 3 2 1
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for Loan Losses
Balances - beginning of quarter $ 944.6 $ 928.5 $ 908.9 $ 939.8 $ 933.5
Allowance from acquisitions and
other activity - net - 1.5 21.9 (34.9) 1.5
Provision for loan losses 42.0 67.1 40.5 55.3 51.7
Charge-offs:
Commercial (12.2) (19.2) (11.9) (11.4) (6.5)
Real estate:
Construction (0.7) (1.7) (1.0) - (0.5)
Residential mortgages (3.1) (2.9) (3.6) (4.3) (3.0)
Other (0.6) (1.6) (1.6) (0.9) (1.1)
Credit card (22.7) (26.1) (27.1) (38.6) (37.7)
Other consumer loans (12.9) (16.3) (14.3) (14.6) (18.4)
------------ ------------ ----------- ----------- -----------
Total charge-offs (52.2) (67.8) (59.5) (69.8) (67.2)
------------ ------------ ----------- ----------- -----------
Recoveries:
Commercial 4.0 2.6 3.8 3.8 4.6
Real estate:
Construction 0.2 - - 0.1 0.2
Residential mortgages 0.8 0.9 0.3 1.0 0.5
Other 2.6 2.2 1.4 2.0 2.8
Credit card 3.2 2.7 3.5 4.5 4.2
Other consumer loans 7.4 6.9 7.7 7.1 8.0
------------ ------------ ----------- ----------- -----------
Total recoveries 18.2 15.3 16.7 18.5 20.3
------------ ------------ ----------- ----------- -----------
Net charge-offs (34.0) (52.5) (42.8) (51.3) (46.9)
------------ ------------ ----------- ----------- -----------
Balance - end of quarter $ 952.6 $ 944.6 $ 928.5 $ 908.9 $ 939.8
============ ============ =========== =========== ===========
Quarter-end loans outstanding $ 64,274.1 $ 65,089.2 $ 61,325.1 $ 59,778.7 $ 58,875.5
Average loans $ 64,854.0 $ 63,134.0 $ 60,039.5 $ 59,441.9 $ 57,341.4
Allowance to quarter-end loans 1.48 % 1.45 % 1.51 % 1.52 % 1.60 %
Allowance to nonperforming loans 481.5 456.0 468.3 462.6 478.5
Net charge-offs to average loans
(annualized) 0.21 % 0.33 % 0.28 % 0.35 % 0.33 %
</TABLE>
19
<PAGE>
NONPERFORMING ASSETS TABLE 6
(Dollars in millions)
<TABLE>
<CAPTION>
1999 1998
----------- ---------------------------------------------------
MARCH 31 December 31 September 30 June 30 March 31
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Nonperforming Assets
Nonaccrual loans:
Commercial $ 47.7 $ 50.1 $ 48.3 $ 50.1 $ 32.4
Real Estate:
Construction 14.8 13.5 14.8 16.5 16.8
Residential mortgages 80.7 83.9 77.7 69.2 79.0
Other 41.6 46.6 43.5 48.6 49.8
Consumer loans 13.0 12.5 13.4 12.1 15.7
----------- ----------- ----------- ----------- -----------
Total nonaccrual loans 197.8 206.6 197.7 196.5 193.7
Restructured loans 0.1 0.6 0.5 - 2.7
----------- ----------- ----------- ----------- -----------
Total nonperforming loans 197.9 207.2 198.2 196.5 196.4
Other real estate owned 36.1 34.9 33.1 43.4 52.0
----------- ----------- ----------- ----------- -----------
Total nonperforming assets $ 234.0 $ 242.1 $ 231.3 $ 239.9 $ 248.4
=========== =========== =========== =========== ===========
Ratios:
Nonperforming loans to total loans 0.31 % 0.32 % 0.32 % 0.33 % 0.33 %
Nonperforming assets to total loans
plus other real estate owned 0.36 0.37 0.38 0.40 0.42
Accruing Loans Past Due
90 Days or More $ 103.8 $ 108.2 $ 89.8 $ 101.5 $ 110.3
</TABLE>
Nonperforming Assets. Nonperforming assets consist of nonaccrual loans,
restructured loans and other real estate owned. Nonperforming assets have
decreased 3.3%, or $8.1 million since December 31, 1998 and decreased 5.8%, or
$14.4 million since March 31, 1998. Included in nonperforming loans at March 31,
1999 are loans aggregating $19.2 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.
Interest income on nonaccrual loans, if recognized, is recorded on a cash basis.
During the first three months of 1999, $5.3 million of interest income would
have been recorded if all nonaccrual and restructured loans had been accruing
interest at their original contractual rates. Interest income recognized on a
cash basis in the first quarter of 1999 on nonperforming loans was $1.9 million.
20
<PAGE>
LOAN PORTFOLIO BY TYPES OF LOANS TABLE 7
(In millions)
<TABLE>
<CAPTION>
1999 1998
------------ ---------------------------------------------------------
MARCH 31 December 31 September 30 June 30 March 31
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Commercial $ 24,058.1 $ 24,589.6 $ 21,652.7 $ 20,571.1 $ 19,695.2
Real estate:
Construction 2,180.2 2,085.0 1,995.5 1,931.0 1,834.7
Residential mortgages 20,563.7 20,429.5 21,056.5 20,336.0 20,316.3
Other 7,403.5 8,254.3 7,045.8 6,999.9 7,030.0
Credit card 1,522.3 1,563.5 1,526.2 2,094.1 2,163.0
Other consumer loans 8,546.3 8,167.3 8,048.4 7,846.6 7,836.3
------------ ------------ ------------ ------------ ------------
Total loans $ 64,274.1 $ 65,089.2 $ 61,325.1 $ 59,778.7 $ 58,875.5
============ ============ ============ ============ ============
</TABLE>
Loans. Total loans at March 31, 1999 were $64.3 billion, an increase of $5.4
billion or 9.3% from March 31, 1998. The average loan to deposit ratio was
114.0% in the first three months of 1999 compared with 108.6% in the first
quarter of 1998. Loans held for sale at March 31, 1999 were $2.8 billion, a
decrease of $.7 billion from December 31, 1998.
Income Taxes. The provision for income taxes was $150.1 million in the first
quarter of 1999 compared to $141.4 million in the same period last year. This
represents a 35% effective tax rate in each period.
Securities available for sale. Securities in the investment portfolio are
classified as available-for-sale and are carried at market value with unrealized
gains and losses, net of any tax effect, added to or deducted from realized
shareholders' equity to determine total shareholder's equity. The investment
portfolio continues to be managed to optimize yield over an entire interest rate
cycle while providing liquidity and managing market risk. The portfolio yield
decreased from an average of 6.77% in the first quarter of 1998 to 6.41% in the
first quarter of this year. The portfolio size (measured at amortized cost)
increased by $1.6 billion during the first quarter to $14.8 billion as of March
31, 1999. At March 31, 1999, approximately 7% of the portfolio consisted of U.S.
Treasury securities, 10% U.S. government agency securities, 65% mortgage-backed
securities, 7% asset-backed securities, 7% trust preferred securities and 4%
municipal securities (calculated as a percent of total par value). Most of
SunTrust'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, 1999 the carrying value of the securities portfolio
was $3.0 billion over amortized cost, consisting mostly of a $3.0 billion
unrealized gain on SunTrust's investment in common stock of The Coca-Cola
Company.
21
<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 SunTrust'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 1999 increased $4.1
billion, or 7.8% over the same period a year ago. Interest-bearing deposits
represented 78.1% of average deposits for the first three months of 1999,
compared to 78.8% for the same period in 1998. In the first quarter of 1999,
average net purchased funds (average funds purchased less average funds sold)
increased $4.2 billion over the same period in 1998. Net purchased funds were
16.8% of average earning assets for the first three months of 1999 as compared
to 13.0% in the same period a year ago.
Derivatives. SunTrust enters into various derivative contracts in a dealer
capacity for customers and in managing its own interest rate risk. Where
contracts have been created for customers, SunTrust enters into offsetting
positions to eliminate SunTrust's exposure to interest rate risk. The principal
derivative contracts used by SunTrust are swaps, options and futures. 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. Futures contracts are an agreement between a buyer and
a seller to purchase an asset or currency at a later date at a fixed price. The
contract trades on a futures exchange and is subject to a daily settlement
procedure. Options, which may include caps and floors, are contracts to buy or
sell an asset, currency, or a futures contract for a fixed price at a specific
time. SunTrust also monitors its sensitivity to changes in interest rates and
uses derivatives instruments to limit the volatility of net interest income.
Table 8 details derivative instruments as of March 31, 1999 used for managing
interest rate sensitivity.
DERIVATIVE INSTRUMENTS TABLE 8
(Dollars in millions)
<TABLE>
<CAPTION>
Average Average Rate
Maturity In Paid/Option Average Rate
Notional Value Fair Value Months Strike Received
--------------------- ------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Gain position:
Receive fixed $ 2,923.0 $ 83.2 43 5.00 % 6.30 %
Pay fixed 370.0 6.5 110 5.12 5.33
Basis swaps 275.0 0.8 52 4.75 5.20
------------------ ------------------
Total gain position 3,568.0 90.5
------------------ ------------------
Loss position:
Receive fixed - - - - -
Pay fixed 860.0 (16.2) 73 6.26 4.96
Basis swaps 300.0 (0.3) 26 4.83 5.28
------------------ ------------------
Total loss position 1,160.0 (16.5)
------------------ ------------------
Total interest rate swaps $ 4,728.0 $ 74.0
================== ==================
Options Purchased $ 4,457.0 $ (3.7) 23 6.72 %
Options Sold 1,000.0 0.1 3 4.75
Futures 700.0 0.0 6
22
</TABLE>
Derivatives are designated as hedges on investments, deposits and other
interest-bearing liabilities. During the three months ended March 31, 1999,
hedges decreased net interest income by $1.8 million, compared with a $1.6
million increase in the corresponding 1998 period.
CAPITAL RATIOS TABLE 9
(Dollars in millions)
<TABLE>
<CAPTION>
1999 1998
--------------- --------------------------------------------------------------
MARCH 31 December 31 September 30 June 30 March 31
--------------- ----------- ------------ ---------- ----------------
<S> <C> <C> <C> <C> <C>
Tier 1 capital $ 6,773.7 $ 6,586.5 $ 6,284.9 $ 6,055.0 $ 6,081.7
Total capital 10,341.1 10,307.9 9,784.5 10,147.6 9,454.9
Risk-weighted assets 80,838.6 80,586.4 75,320.5 74,729.5 73,324.4
Risk-based ratios:
Tier 1 capital 8.37 % 8.17 % 8.34 % 8.10 % 8.29 %
Total capital 12.79 12.79 12.99 13.58 12.89
Tier 1 leverage ratio 7.69 7.68 7.72 7.49 7.73
Total shareholders' equity
to assets 8.93 8.78 8.77 9.34 9.24
</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 (debt instruments and a portion of the allowance for loan losses).
SunTrust 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%. Forty-five percent of the unrealized gains on equity securities of The
Coca-Cola Company are included in the calculation of Total capital. At March 31,
1999, SunTrust's Tier 1 capital, total capital and Tier 1 leverage ratios were
8.37%, 12.79% and 7.69%, respectively. SunTrust is committed to maintaining
well-capitalized banks.
Year 2000. The Year 2000 issue is the result of computer programs and components
using a two-digit format, as opposed to four digits, to indicate the year. These
computer systems may be unable to interpret dates beyond the year 1999, which
could cause a system failure or other computer errors, leading to disruptions in
operations. In addition, many software programs and automated systems may fail
to recognize the year 2000 as a leap year. The problem is not limited to
computer systems, or any particular industry or field. Year 2000 issues could
potentially affect any device that has an embedded microchip containing this
flaw.
23
<PAGE>
Prior to their merger, SunTrust and Crestar had each established programs to
deal with the Year 2000 issue and were well along in executing those programs.
Because most SunTrust and Crestar computer systems will not be integrated until
after year-end 1999, SunTrust decided to complete both Year 2000 programs as
separate projects. Both programs are based on very detailed guidance issued by
the Federal Financial Institutions Examination Council (FFIEC), and while the
programs have differences in terminology and structure, the basic processes are
very similar. The following discussion applies to both programs. While separate
Project Offices oversee each program, SunTrust has appointed one group of senior
managers to oversee both programs.
SunTrust's Year 2000 Program has four phases: inventory of areas potentially
impacted, assessment to identify problems, remediation to fix those problems,
and testing of remediated systems. The inventory and assessment phases were
completed in 1997 and early 1998 and covered both internal and vendor
applications, as well as hardware, networks, packaged software and
non-information technology systems that contain microprocessors. Examples of the
latter are elevators, bank alarms and vault locks. The remediation and testing
phases are nearing completion.
Remediation includes both correcting internal systems and managing corrections
to vendor-supplied systems and applications. Testing verifies that the system
performs properly after modification ("Compliance Testing") and also interacts
properly with other systems in an operating environment ("Enterprise Testing").
These latter tests use dedicated equipment that has been "fast-forwarded" to
simulate the date change from 1999 to 2000. All test results are reviewed and
accepted by personnel who regularly use these systems. Substantially all
SunTrust mission-critical applications have completed this process. Crestar
Enterprise Testing was completed in April 1999. The four remaining
mission-critical systems are on schedule to be completed in the second quarter
of 1999. The completion of the Year 2000 process for other non critical systems
are on target for completion throughout 1999. Following Compliance Testing,
remediated systems are put into current production, so remediated systems are
currently operating.
SunTrust's operations are also dependent on outside vendors and service
providers, and SunTrust could be materially impacted should they experience Year
2000 problems. SunTrust maintains a dialogue with mission-critical vendors and
suppliers, virtually all of which reported they were Year 2000 compliant by
December 31, 1998. Those who were not are being monitored closely; contingency
plans, including alternate vendors, have been identified wherever possible.
SunTrust is also supplementing its normal contingency plans to encompass
specific Year 2000 concerns. These contingency plans are designed to provide for
ongoing operations or early business resumption should there be problems such as
a mainframe system or network "crash"; a localized disruption that might occur
due to a hurricane or tornado; or the loss of services from a mission-critical
vendor. In this respect, they will be very applicable to Year 2000 concerns. In
a worst-case scenario for the Year 2000, however, it is possible that the basic
utilities SunTrust depends on (such as electricity, telephone and water) would
not be available for an extended period of time. Should this unlikely event
occur, SunTrust might not be able to provide services until the utilities are
returned.
Management believes that it has taken the reasonable and necessary steps to
minimize the operational, regulatory and legal risks associated with Year 2000.
Despite these efforts, SunTrust could still experience Year 2000 problems, some
of which could have a material impact on SunTrust's results of operations and
financial condition. While this is not anticipated, the following discusses
several major risks and SunTrust's efforts to mitigate them.
It is possible that the public's desire to hold cash going into Year 2000 could
precipitate unusual withdrawals of deposits. SunTrust is planning in conjunction
with the Federal Reserve to have additional supplies of cash available and has
developed plans for alternative funding sources should a panic create a
temporary liquidity shortage for SunTrust. A significant financial impact on
24
<PAGE>
SunTrust could result from customer Year 2000 difficulties resulting in
customers' inabilities to repay their loans. SunTrust has implemented special
Year 2000 risk assessments for all large borrowers and considers Year 2000 risks
when renewing or making loans. Some observers have predicted irrational panic
selling of investment portfolios late in 1999. Should this occur, asset values
would drop dramatically, and SunTrust's fees based on asset values, primarily
asset management, would drop proportionally.
To make resources available for Year 2000 efforts, some discretionary data
processing projects have been deferred. These projects will be implemented as
resources again become available. There have been no material negative financial
impacts from these deferrals.
SunTrust estimates that the total pre-tax cost of one-time expenses associated
with Year 2000 will approximate $82 million. These expenses are being recognized
as they are incurred. Through the first quarter of 1999, SunTrust recognized
$64.8 million, or 79%, of the total projected expense. Of this amount, $11.2
million was incurred in the first quarter of 1999. Management does not believe
that future Year 2000 expenses will have a material effect on the results of
operations or financial condition of SunTrust.
As mentioned above, the FFIEC has established extensive guidelines on Year 2000
matters that apply to all financial institutions. These guidelines are available
to the public on the Internet at www.FFIEC.gov. In addition, SunTrust is engaged
in a regular dialogue with the regulatory agencies and has received additional
guidance from them.
The previous discussion of Year 2000 issues includes numerous forward-looking
statements reflecting management's current assessment and estimates with respect
to SunTrust's Year 2000 compliance effort and the impact of Year 2000 issues on
SunTrust's business and operations.
These statements are based on information currently available to management.
Various factors could cause actual results to differ materially from those
contemplated by any assessments, estimates and forward-looking statements,
including many factors that are beyond the control of SunTrust. These factors
include, but are not limited to: (a) the success of SunTrust in identifying
systems and programs that are not Year 2000 compliant; (b) the continuing
availability of experienced consultants and information technology personnel;
(c) the nature and amount of programming required to upgrade or replace each of
the affected programs; (d) the ability of third parties to complete their own
Year 2000 remediations on a timely basis; and (e) the ability of SunTrust to
implement contingency plans.
The foregoing statements regarding Year 2000 matters are "Year 2000 readiness
disclosures" under the Year 2000 Information and Readiness Disclosure Act.
25
<PAGE>
FINANCIAL HIGHLIGHTS - BANKING SUBSIDIARIES TABLE 10
(Dollars in millions)
<TABLE>
<CAPTION>
SunTrust Banks SunTrust Banks SunTrust Banks Crestar Financial
of Florida, Inc. of Georgia, Inc. of Tennessee, Inc. Corporation
---------------------- -------------------- -------------------- --------------------
1999 1998 1999 1998 1999 1998 1999 1998
----------- ------- ---------- --------- ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS (1)
Net interest income (FTE) $ 270.9 % $ 256.7 $ 189.3 $ 171.1 $ 76.0 $ 73.9 $ 247.2 $ 233.5
Provision for loan losses 7.8 8.1 5.1 5.5 1.8 1.7 12.4 23.1
Trust income 47.5 43.0 37.8 34.6 11.8 11.1 23.3 20.1
Other noninterest income 90.8 80.9 63.8 53.5 25.9 22.8 111.8 101.2
Personnel expense 97.1 91.1 61.3 60.1 28.5 28.3 122.2 110.5
Other noninterest expense 132.9 121.7 92.5 82.2 35.8 33.6 101.1 87.7
Net income 107.5 99.1 85.3 72.3 29.3 27.3 96.0 84.1
SELECTED AVERAGE BALANCES (1)
Total assets 29,551 27,346 25,470 22,045 8,642 7,941 26,699 23,862
Earning assets 27,698 25,719 20,701 17,342 8,297 7,612 24,553 22,040
Loans 20,965 19,629 16,983 14,421 6,530 5,996 19,670 16,815
Total deposits 20,259 18,831 13,224 11,516 6,209 6,041 17,305 16,469
Realized shareholders' equity 2,461 2,171 1,736 1,571 683 629 2,355 2,057
AT MARCH 31
Total assets 29,492 27,825 25,745 22,886 8,747 8,059 26,256 25,920
Earning assets 27,617 25,986 21,096 17,661 8,485 7,711 24,093 23,754
Loans 20,780 19,819 16,979 14,748 6,503 6,117 19,414 17,611
Allowance for loan losses 310 386 206 202 93 109 284 281
Total deposits 20,320 19,363 13,799 11,365 6,456 6,036 17,509 17,036
Realized shareholders' equity 2,512 2,217 1,784 1,595 698 640 2,357 2,124
Total shareholders' equity 2,517 2,238 3,623 3,915 700 646 2,363 2,121
CREDIT QUALITY
Net loan charge-offs (1) 7.3 2.0 3.2 4.6 0.9 2.0 9.1 25.1
Nonperforming loans (2) 92.5 79.2 39.6 39.2 14.7 11.9 49.8 65.7
Other real estate owned (2) 11.2 12.2 1.8 2.8 4.7 16.4 18.4 20.5
RATIOS
ROA (3) 1.48 % 1.47 % 1.55 % 1.56 % 1.38 % 1.39 % 1.46 % 1.43 %
ROE (3) 17.72 18.51 19.93 18.66 17.39 17.54 16.53 16.57
Net interest margin (3) 3.97 4.05 3.71 4.00 3.72 3.93 4.08 4.30
Efficiency ratio (3) 56.20 55.89 52.88 54.92 56.55 57.44 58.42 55.89
Total shareholder's equity/assets (2) 8.53 8.04 14.07 17.11 8.00 8.02 9.00 8.18
Net loan charge-offs to average loans (3) 0.14 0.04 0.08 0.13 0.05 0.14 0.19 0.60
Nonperforming loans to total loans (2) 0.45 0.41 0.24 0.27 0.23 0.20 0.26 0.37
Nonperforming assets to total loans plus
other real estate owned (2) 0.51 0.47 0.25 0.29 0.31 0.47 0.35 0.49
Allowance to loans (2) 1.52 1.99 1.23 1.39 1.47 1.83 1.46 1.60
Allowance to nonperforming loans (2) 334.9 486.7 519.7 514.7 634.6 917.7 569.9 427.9
</TABLE>
(1) FOR THE THREE MONTH PERIOD ENDED MARCH 31.
(2) AT MARCH 31.
(3) ANNUALIZED FOR THE FIRST THREE MONTHS.
26
<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 20, 1999.
At the meeting, the following individuals were elected directors of the
Registrant: A.W. Dahlberg, L. Phillip Humann, M. Douglas Ivester, Joseph L.
Lanier, Frank E. McCarthy, Frank S. Royal, M.D., Richard G. Tilghman and G.
Gilmer Minor, III. Votes for ranged from 275,187,550 to 275,282,783 and votes
withheld ranged from 2,696,387 to 2,791,620. J. Hyatt Brown, Alston D. Correll,
David H. Hughes, Summerfield K. Johnston, Jr., Scott L. Probasco, Larry L.
Prince, R. Randall Rollins and James B. Williams will continue as directors of
the Registrant.
The shareholders also approved the ratification of Arthur Andersen LLP as
independent auditors to audit the financial statements of SunTrust for 1999.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 99.1 Press Release
B. Reports on Form 8-K
The Registrant filed a Current Report on Form 8-K dated January 12, 1999
reporting that the Registrant completed the acquisition of Crestar Financial
Corporation.
The Registrant filed a Current Report on Form 8-K dated January 15, 1999. The
purpose of this report was to file as an exhibit the press release reporting
1998 operating earnings.
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, 1999.
SunTrust Banks, Inc.
--------------------
(Registrant)
/s/ W.P. O'Halloran
--------------------
William P. O'Halloran
Senior Vice President and Controller
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,529,131
<INT-BEARING-DEPOSITS> 11,181
<FED-FUNDS-SOLD> 1,010,154
<TRADING-ASSETS> 222,246
<INVESTMENTS-HELD-FOR-SALE> 17,870,140
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 64,274,066
<ALLOWANCE> 952,589
<TOTAL-ASSETS> 91,122,492
<DEPOSITS> 57,928,100
<SHORT-TERM> 15,149,879
<LIABILITIES-OTHER> 4,134,747
<LONG-TERM> 5,771,025
322,846
0
<COMMON> 0
<OTHER-SE> 7,815,895
<TOTAL-LIABILITIES-AND-EQUITY> 91,122,492
<INTEREST-LOAN> 1,201,553
<INTEREST-INVEST> 221,156
<INTEREST-OTHER> 19,261
<INTEREST-TOTAL> 1,441,970
<INTEREST-DEPOSIT> 394,139
<INTEREST-EXPENSE> 672,152
<INTEREST-INCOME-NET> 769,818
<LOAN-LOSSES> 41,995
<SECURITIES-GAINS> (732)
<EXPENSE-OTHER> 740,898
<INCOME-PRETAX> 431,852
<INCOME-PRE-EXTRAORDINARY> 281,737
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 281,737
<EPS-PRIMARY> 0.87
<EPS-DILUTED> 0.89
<YIELD-ACTUAL> 3.92
<LOANS-NON> 197,845
<LOANS-PAST> 103,757
<LOANS-TROUBLED> 10
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 944,557
<CHARGE-OFFS> 52,153
<RECOVERIES> 18,190
<ALLOWANCE-CLOSE> 952,589
<ALLOWANCE-DOMESTIC> 952,589
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 952,589
</TABLE>
