<PAGE>
1999 Form 10-K
Securities and Exchange Commission
Washington, DC 20549
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Fiscal Year Ended December 31, 1999
Commission file number 1-8918
SunTrust Banks, Inc.
Incorporated in the State of Georgia
IRS Employer Identification Number 58-1575035
Address: 303 Peachtree Street, NE, Atlanta, GA 30308
Telephone: (404) 588-7711
Securities Registered Pursuant to Section 12(b) of the Act: Common Stock-
$1.00 value, which is registered on the New York Stock Exchange.
As of January 31, 2000, SunTrust had 307,754,139 shares of common stock
outstanding. The aggregate market value of SunTrust common stock held by
nonaffiliates on January 31, 2000 was approximately $18.0 billion.
SunTrust (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Documents Incorporated By Reference
Part III information is incorporated herein by reference, pursuant to
Instruction G of Form 10-K, from SunTrust's Proxy Statement for its 2000
Annual Shareholders' Meeting, which will be filed with the Commission by
March 3, 2000. Certain Part I and Part II information required by Form 10-K
is incorporated by reference from the SunTrust Annual Report to Shareholders
as indicated below. Except for parts of the SunTrust Annual Report to
Shareholders expressly incorporated herein by reference, this Annual Report
is not to be deemed filed with the Securities and Exchange Commission.
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Part I Page Part III Page
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Item 1 Business 2-33 Item 9 Not Applicable
Item 2 Properties 33 Item 10 Directors and Executive
Item 3 Legal Proceedings 33 Officers of the Registrant Proxy Statement
Item 4 Not Applicable Item 11 Executive Compensation Proxy Statement
Item 12 Security Ownership of
Part II Certain Beneficial Owners
Item 5 Market for the Registrant's and Management Proxy Statement
Common Equity and Related Item 13 Certain Relationships and
Stockholder Matters Inside front Related Transactions Proxy Statement
cover
8, 27,
inside back cover Part IV
Item 14 Exhibits, Financial
Statement
Item 6 Selected Financial Data 8 Schedules and Reports
Item 7 Management's Discussion and on Form 8-K 67
Analysis of Financial
Condition
and Results of Operation 2-33
Item 7a Quantitative and Qualitative
Disclosures about Market Risk 24-25
Item 8 Financial Statements and
Supplementary Data 27-30, 35-65 Certain statistical data required by the Securities and
Exchange Commission are included on pages 8-30
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EXHIBIT INDEX
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Sequential
Page
Exhibit Description Number
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3.1 Amended and Restated Articles of Incorporation of SunTrust Banks, Inc.
("SunTrust") effective as of November 14, 1989, and amendment effective as
of April 24, 1998, incorporated by reference to Exhibit 3.1 to Registrant's
1998 Annual Report on Form 10-K. *
3.2 Bylaws of SunTrust, amended effective as of February 9, 1999, incorporated
by reference to Exhibit 3.2 to Registrant's 1998 Annual Report on Form
10-K. *
4.1 Indenture Agreement between SunTrust and Morgan Guaranty Trust Company of
New York, as Trustee, incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-00084. *
4.2 Indenture between SunTrust and PNC, N.A., as Trustee, incorporated by
reference to Exhibit 4(a) to Registration Statement No. 33-62162. *
4.3 Indenture between SunTrust and The First National Bank of Chicago, as
Trustee, incorporated by reference to Exhibit 4(b) to Registration
Statement No. 33-62162. *
4.4 Form of Indenture to be used in connection with the issuance of
Subordinated Debt Securities, incorporated by reference to Exhibit 4.4 to
Registration Statement No. 333-25381. *
4.5 Form of Supplemental Indenture to be used in connection with the issuance
of Subordinated Debt Securities, incorporated by reference to Exhibit 4.5
to Registration Statement No. 333-25381. *
4.6 Form of Subordinated Debt Security, incorporated by reference to Exhibit
4.7 to Registration Statement No. 333-25381. *
4.7 Form of Preferred Securities Guarantee, incorporated by reference to
Exhibit 4.8 to Registration Statement No. 333-25381. *
4.8 Form of Common Securities Guarantee, incorporated by reference to Exhibit
4.7 to Registration Statement No. 333-25381. *
4.9 Form of Indenture to be used in connection with the issuance of
Subordinated Debt Securities, incorporated by reference to Exhibit 4.4 to
Registration Statement No. 333-46123. *
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4.10 Form of Floating Rate Subordinated Debt Security, incorporated by
reference to Exhibit 4.6.1 to Registration Statement No. 333-46123. *
4.11 Form of Fixed Rate Subordinated Debt Security, incorporated by reference
to Exhibit 4.6.2 to Registration Statement No. 333-46123. *
4.12 Form of Common Securities Guarantee, incorporated by reference to Exhibit
4.7 to Registration Statement No. 333-46123. *
4.13 Form of Preferred Securities Guarantee, incorporated by reference to
Exhibit 4.8 to Registration Statement No. 333-46123. *
4.14 Form of Supplemental Indenture to be used in connection with the issuance
by SunTrust of Floating Rate Subordinated Debt Securities, incorporated by
reference to Exhibit 4.9.1 to Registration Statement No. 333-46123. *
4.15 Form of Supplemental Indenture to be used in connection with the issuance
by SunTrust of Fixed Rate Subordinated Debt Securities, incorporated by
reference to Exhibit 4.9.2 to Registration Statement No. 333-46123. *
Material Contracts and Executive Compensation Plans and Arrangements
10.1 Certificate of Trust of SunTrust Capital I, incorporated by reference to
Exhibit 4.1 to Registration Statement No. 333-25381. *
10.2 Declaration of Trust of SunTrust Capital I, incorporated by reference to
Exhibit 4.2 to Registration Statement No. 333-25381. *
10.3 Form of Amended and Restated Declaration of Trust to be used in connection
with the issuance of Preferred Securities, incorporated by reference to
Exhibit 4.3 to Registration Statement No. 333-25381. *
10.4 Certificate of Trust of SunTrust Capital III, incorporated by reference to
Exhibit 4.1 to Registration Statement No. 333-46123. *
10.5 Declaration of Trust of SunTrust Capital III, incorporated by reference to
Exhibit 4.2 to Registration Statement No. 333-46123. *
10.6 Form of Amended and Restated Declaration of Trust to be used in connection
with the issuance of Floating Rate Preferred Securities, incorporated by
reference to Exhibit 4.3.1 to Registration Statement No. 333-46123. *
10.7 Form of Amended and Restated Declaration of Trust to be used in connection
with the issuance of Fixed Rate Preferred Securities, incorporated by
reference to Exhibit 4.3.2 to Registration Statement No. 333-46123. *
10.8 SunTrust Banks, Inc. Supplemental Executive Retirement Plan effective as
of August 13, 1996, and amendment effective as of November 10, 1998,
incorporated by reference to Exhibit 10.9 to Registrant's 1998 Annual
Report on Form 10-K. *
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10.9 SunTrust Banks, Inc. ERISA Excess Retirement Plan, effective as of August
13, 1996, and amendment effective as of November 10, 1998, incorporated by
reference to Exhibit 10.10 to Registrant's 1998 Annual Report on Form 10-K. *
10.10 SunTrust Banks, Inc. Performance Unit Plan, amended and restated as of
August 11, 1998, incorporated by reference to Exhibit 10.11 to
Registrant's 1998 Annual Report on Form 10-K. *
10.11 SunTrust Banks, Inc. Management Incentive Plan, amended and restated as of
February 8, 2000 (filed herewith). _____
10.12 SunTrust Banks, Inc. 401(k) Excess Plan Amended and Restated as of July 1,
1999 (filed herewith). _____
10.13 SunTrust Banks, Inc. Executive Stock Plan, incorporated by reference to
Exhibit 10.16 to Registrant's 1998 Annual Report on Form 10-K. *
10.14 Amendment to SunTrust Banks, Inc. Executive Stock Plan, effective February
10, 1998, incorporated by reference to Exhibit 10.8 to Registrant's 1997
Annual Report on Form 10-K. *
10.15 SunTrust Banks, Inc. Performance Stock Agreement, effective February 11,
1992, and First Amendment to Performance Stock Agreement effective
February 10, 1998, incorporated by reference to Exhibit 10.9 to
Registrant's 1997 Annual Report on Form 10-K. *
10.16 SunTrust Banks, Inc. 1995 Executive Stock Plan (filed herewith). _____
10.17 Amendment to the SunTrust Banks, Inc. 1995 Executive Stock Plan, effective
as of August 11, 1998, incorporated by reference to Exhibit 10.20 to
Registrant's 1998 Annual Report on Form 10-K. *
10.18 SunTrust Banks, Inc. 2000 Stock Plan, effective February 8, 2000,
incorporated by reference to Exhibit A to Registrant's 2000 Proxy
Statement on Form 14A. *
10.19 SunTrust Banks, Inc. Deferred Compensation Plan, effective October 1, 1999
and Amendment Number One, effective October 31, 1999 (filed herewith). _____
10.20 SunTrust Banks, Inc. Directors Deferred Compensation Plan effective as of
January 1, 1994, incorporated by reference to Exhibit 10.21 to
Registrant's 1998 Annual Report on Form 10-K. *
10.21 Crestar Financial Corporation Executive Life Insurance Plan, as amended
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and restated effective January 1, 1991, and amendments effective December
18, 1992, March 30, 1998, and December 30, 1998, incorporated by reference
to Exhibit 10.23 to Registrant's 1998 Annual Report on Form 10-K. *
10.22 1981 Stock Option Plan of Crestar Financial Corporation and Affiliated
Corporations, as amended through January 24, 1997, incorporated by
reference to Exhibit 10.24 to Registrant's 1998 Annual Report on Form 10-K. *
10.23 Employment Agreement between Registrant and Richard G. Tilghman, effective
as of December 31, 1998, incorporated by reference to Exhibit 10.26 to
Registrant's 1998 Annual Report on Form 10-K. *
10.24 Employment Agreement between Registrant and James M. Wells III, effective
as of December 31, 1998 (filed herewith). _____
10.25 Crestar Financial Corporation Excess Benefit Plan, amended and restated
effective December 26, 1990 and amendments thereto (effective December 18,
1992, March 30, 1998 and December 30, 1998), incorporated by reference to
Exhibit 10.29 to Registrant's 1998 Annual Report on Form 10-K. *
10.26 United Virginia Bankshares Incorporated Deferred Compensation Program
under Incentive Compensation Plan of United Virginia Bankshares
Incorporated and Affiliated Corporation, amended and restated through
December 7, 1983, incorporated by reference to Exhibit 10.30 to
Registrant's 1998 Annual Report on Form 10-K. *
10.27 Amendment (effective January 1, 1987) to United Virginia Bankshares
Incorporated Deferred Compensation Program Under Incentive Compensation
Plan of United Virginia Bankshares Incorporated and Affiliated
Corporation, Incorporated by reference to Exhibit 10(p) to Crestar
Financial Corporation's 1995 Annual Report on Form 10-K. *
10.28 Amendments (effective January 1, 1987 and January 1, 1988) to United
Virginia Bankshares Incorporated Deferred Compensation Program Under
Incentive Compensation Plan of United Virginia Bankshares Incorporated and
Affiliated Corporation, incorporated by reference to Exhibit 10(q) to
Crestar Financial Corporation's 1995 Annual Report on Form 10-K. *
10.29 Amendment (effective January 1, 1994) to Crestar Financial Corporation
Deferred Compensation Program Under Incentive Compensation Plan of Crestar
Financial Corporation and Affiliated Corporations, incorporated by
reference to Exhibit 10(r) to Crestar Financial Corporation's 1995 Annual
Report on Form 10-K. *
10.30 Amendment (effective September 21, 1995) to Crestar Financial Corporation
Deferred Compensation Program Under Incentive Compensation Plan of Crestar
Financial Corporation and Affiliated Corporations, incorporated by
reference to Exhibit 10.34 to Registrant's 1998 Annual Report on Form 10-K. *
10.31 Crestar Financial Corporation Deferred Compensation Plan for Outside
Directors of Crestar Financial Corporation and Crestar Bank, amended and
restated through December 13, 1983 and amendments thereto (effective
</TABLE>
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January 1, 1985, April 24, 1991, December 31, 1993 and October 23, 1998),
incorporated by reference to Exhibit 10.35 to Registrant's 1998 Annual
Report on Form 10-K. *
10.32 Amendment (effective January 1, 1999) to Crestar Financial Corporation
Deferred Compensation Plan for Outside Directors of Crestar Financial
Corporation (filed herewith). _____
10.33 Crestar Financial Corporation Additional Nonqualified Executive Plan,
amended and restated effective December 26, 1990 and amendments thereto
(effective December 18, 1992, March 30, 1998 and December 30, 1998),
incorporated by reference to Exhibit 10.36 to Registrant's 1998 Annual
Report on Form 10-K. *
10.34 Crestar Financial Corporation 1993 Stock Incentive Plan, as amended and
restated effective February 28, 1997, incorporated by reference to Exhibit
10(af) to Crestar Financial Corporation's 1997 Annual Report on Form 10-K. *
10.35 Amendments (effective December 19, 1997) to Crestar Financial Corporation
1993 Stock Incentive Plan, incorporated by reference to Exhibit 10.38 to
Registrant's 1998 Annual Report on Form 10-K. *
10.36 Crestar Financial Corporation Supplemental Executive Retirement Plan,
effective January 1, 1995, incorporated by reference to Exhibit 10(al) to
Crestar Financial Corporation's 1995 Annual Report on Form 10-K. *
10.37 Amendments (effective December 20, 1996) to the Crestar Financial
Corporation Supplemental Executive Retirement Plan, incorporated by
reference to Exhibit 10(aj) to Crestar Financial Corporation's 1997 Annual
Report on Form 10-K. *
10.38 Amendments (effective December 17, 1997) to Crestar Financial Corporation
Supplemental Executive Retirement Plan, incorporated by reference to
Exhibit 10(al) to Crestar Financial Corporation's 1997 Annual Report on
Form 10-K. *
10.39 Amendments (effective December 19, 1997 and December 29, 1998) to the
Crestar Financial Corporation Supplemental Executive Retirement Plan,
incorporated by reference to Exhibit 10.42 to Registrant's 1998 Annual
Report on Form 10-K. *
10.40 Crestar Financial Corporation Directors' Equity Program, effective January
1, 1996, incorporated by reference to Exhibit 10(ao) to Crestar Financial
Corporation's 1996 Annual Report on Form 10-K. *
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10.41 Amendment (effective December 20, 1996) to Crestar Financial Corporation
Directors' Equity Program, incorporated by reference to Exhibit 10(ap) to
Crestar Financial Corporation's 1996 Annual Report on Form 10-K. *
10.42 Amendment (effective September 26, 1997) to Crestar Financial Corporation
Directors' Equity Program, incorporated by reference to Exhibit 10(ao) to
Crestar Financial Corporation's 1997 Annual Report on Form 10-K. *
10.43 Amendments (effective October 23, 1998) to Crestar Financial Corporation
Directors' Equity Program, incorporated by reference to Exhibit 10.47 to
Registrant's 1998 Annual Report on Form 10-K. *
10.44 Amendment (effective October 23, 1998) to Crestar Financial Corporation
Directors' Equity Program (filed herewith). _____
11.1 Statement re computation of per share earnings (filed herewith). _____
12.1 Ratio of Earnings to Fixed Changes (filed herewith). _____
13.1 SunTrust's 1999 Annual Report to Shareholders (filed herewith). _____
21.1 SunTrust Subsidiaries (filed herewith). _____
22.1 SunTrust's Proxy Statement relating to the 2000 Annual Meeting of
Shareholders, dated March 1, 2000, filed on February 28, 2000. *
23.1 Consent of Independent Public Accountants (filed herewith). _____
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Certain instruments defining rights of holders of long-term debt of
SunTrust and its subsidiaries are not filed herewith pursuant to Item
601(b)(4)(iii) of Regulation S-K. At the Commission's request, SunTrust agrees
to give the Commission a copy of any instrument with respect to long-term debt
of SunTrust and its consolidated subsidiaries and any of its unconsolidated
subsidiaries for which financial statements are required to be filed under which
the total amount of debt securities authorized does not exceed ten percent of
the total assets of SunTrust and its subsidiaries on a consolidated basis.
* Incorporated by reference.
Certain statistical data required by the Securities and Exchange Commission are
included on pages AR 9 thru AR 30.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf on February 8, 2000 by the undersigned, thereunto duly authorized.
SunTrust Banks, Inc.
(Registrant)
By: /s/ L. Phillip Humann
-------------------------------------
L. Phillip Humann
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on February 8, 2000 by the following persons on behalf of
the Registrant and in the capacities indicated.
By: /s/ L. Phillip Humann
-------------------------------------
L. Phillip Humann
Chairman of the Board, President
and Chief Executive Officer
By: /s/ John W. Spiegel
-------------------------------------
John W. Spiegel
Executive Vice President and
Chief Financial Officer
By: /s/ William P. O'Halloran
-------------------------------------
William P. O'Halloran
Senior Vice President and
Controller (Chief Accounting
Officer)
<PAGE>
/s/ J. Hyatt Brown Director
- -----------------------------------------
J. Hyatt Brown
/s/ Alston D. Correll Director
- -----------------------------------------
Alston D. Correll
/s/ A. W. Dahlberg Director
- -----------------------------------------
A. W. Dahlberg
/s/ David H. Hughes Director
- -----------------------------------------
David H. Hughes
/s/ M. Douglas Ivester Director
- -----------------------------------------
M. Douglas Ivester
/s/ Summerfield K. Johnston, Jr. Director
- -----------------------------------------
Summerfield K. Johnston, Jr.
/s/ Joseph L. Lanier, Jr. Director
- -----------------------------------------
Joseph L. Lanier, Jr.
/s/ Frank E. McCarthy Director
- -----------------------------------------
Frank E. McCarthy
/s/ G. Gilmer Minor, III Director
- -----------------------------------------
G. Gilmer Minor, III
/s/ Larry L. Prince Director
- -----------------------------------------
Larry L. Prince
/s/ Scott L. Probasco, Jr. Director
- -----------------------------------------
Scott L. Probasco, Jr.
/s/ R. Randall Rollins Director
- -----------------------------------------
R. Randall Rollins
/s/ Frank S. Royal, M.D. Director
- ------------------------------------------
Frank S. Royal, M.D.
/s/ Richard G. Tilghman Director
- ------------------------------------------
Richard G. Tilghman
/s/ James B. Williams Director
- -----------------------------------------
James B. Williams
<PAGE>
Exhibit 10.11
SUNTRUST BANKS, INC. MANAGEMENT INCENTIVE PLAN
Amended and Restated as of February 8, 2000
Section 1. Name and Purpose
- ----------------------------
The name of this Plan is the SunTrust Banks, Inc. Management Incentive
Plan. The purpose of the Plan is to promote the interests of the Corporation and
its stockholders through the granting of Awards to select employees of the
Corporation and its Subsidiaries in order to motivate and retain superior
employees who contribute in a significant manner to the actual financial
performance of the Corporation as measured against pre-established goals for the
Corporation's profits.
Section 2. Effective Date, Term and Amendments
- -----------------------------------------------
The effective date of the amended and restated Plan shall be February 8,
2000, and the amended and restated Plan shall apply to all Awards granted on or
after such date. The Plan shall continue for an indefinite term until terminated
by the Board; provided, however, that the Corporation and the Committee after
such termination shall continue to have full administrative power to take any
and all action contemplated by the Plan which is necessary or desirable and to
make payment of any Awards earned by Participants during any then unexpired Plan
Year. The Board or the Committee may amend the Plan in any respect from time to
time. Awards granted before February 8, 2000 shall continue to be governed by
the Plan as in effect on the date of grant.
Section 3. Definitions and Construction
- ----------------------------------------
A. As used in this Plan, the following terms shall have the meanings
indicated, unless the context clearly requires another meaning:
1. "Award" means the right to receive a cash payment which represents a
percentage of a Participant's Base Wages determined by the Committee in
accordance with Section 5 hereof in the event the Corporation, Subsidiary,
Business Unit or individual achieves the Financial Goals or other goals
established pursuant to Section 5.
2. "Base Wages" means the base salary paid to a Participant by the
Corporation or a Subsidiary during a Plan Year, excluding bonuses, overtime,
commissions and other extra compensation, reimbursed expenses and contributions
made by the Corporation or a Subsidiary to this or any other employee benefit
plan maintained by the Corporation or a Subsidiary.
3. "Business Unit" means a division or other business unit of the
Corporation or a Subsidiary designated as a distinct entity for the purpose of
setting goals and measuring performance.
4. "Calendar Year Report" means the report prepared for such calendar
year by the Controller's office of the Corporation entitled "SunTrust Banks,
Inc. Contribution to
<PAGE>
Consolidated Net Income for the Calendar Year", which is prepared in accordance
with generally accepted accounting principles, or any successor to such report.
5. "Code" means the Internal Revenue Code of 1986, as amended.
6. "Committee" means the Compensation Committee of the Board or any
other Committee of the Board to which the responsibility to administer this Plan
is delegated by the Board; such Committee shall consist of at least two members
of the Board, who shall not be eligible to receive an Award under the Plan and
each of whom shall be a "disinterested" person within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934 and shall be or be treated as an
"outside director" for purposes of Section 162(m) of the Code.
7. "Corporation" means SunTrust Banks, Inc. and any successor thereto.
8. "Covered Employee" means for each calendar year the Chief Executive
Officer of the Corporation and the four other executive officers whose
compensation would be reportable on the "summary compensation table" under the
Securities and Exchange Commission's executive compensation disclosure rules, as
set forth in Item 402 of Regulation S-K, 17 C.F.R. 229.402, under the Securities
Exchange Act of 1934, if the report was prepared as of the last day of such
calendar year.
9. "Change in Control" means a change in control of the Corporation of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 ("34 Act") as in effect on the effective date of this Plan, provided that
such a change in control shall be deemed to have occurred at such time as (i)
any "person" (as that term is used in Section 13(d) and 14(d)(2) of the 34 Act),
is or becomes the beneficial owner (as defined in Rule 13d-3 under the 34 Act)
directly or indirectly, of securities representing 20% or more of the combined
voting power for election of directors of the then outstanding securities of the
Corporation or any successor of the Corporation; (ii) during any period of two
consecutive years or less, individuals who at the beginning of such period
constitute the Board cease, for any reason, to constitute at least a majority of
the Board, unless the election or nomination for election of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period; (iii) the shareholders
of the Corporation approve any merger, consolidation or share exchange as a
result of which the common stock of the Corporation shall be changed, converted
or exchanged (other than a merger with a wholly-owned subsidiary of the
Corporation) or any dissolution or liquidation of the Corporation or any sale or
the disposition of 50% or more of the assets or business of the Corporation; or
(iv) the shareholders of the Corporation approve any merger or consolidation to
which the Corporation is a party or a share exchange in which the Corporation
shall exchange its shares for shares of another corporation as a result of which
the persons who were shareholders of the Corporation immediately prior to the
effective date of the merger, consolidation or share exchange shall have
beneficial ownership of less than 50% of the combined voting power for election
of directors of the surviving corporation following the effective date of such
merger, consolidation or share exchange; provided, however, and notwithstanding
the occurrence of any of the events previously described in this definition,
that no "change in control" shall be deemed to have occurred under this
definition if, prior to such
2
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time as a "change in control" would otherwise be deemed to have occurred under
this definition, the Board determines otherwise.
10. "Employment" means continuous employment with the Corporation or a
Subsidiary from the beginning to the end of each Plan Year, which continuous
employment shall not be considered to be interrupted by transfers between the
Corporation and a Subsidiary or between Subsidiaries.
11. "Final Value" means the value of an Award determined in accordance
with Sections 5 and 6 as the basis for payments to Participants at the end of a
Plan Year.
12. "Financial Goals" means the financial objectives of the Corporation
and its designated Subsidiaries or Business Units which are established pursuant
to Section 5 for each Plan Year. The Financial Goals must be established no
later than the end of the first quarter of each Plan Year (or such time as may
be permitted for Awards paid for such year to be treated as performance-based
compensation under Section 162(m)) as the basis for determining the Final Value
of the Award.
13. "Net Income" means for each calendar year the Corporation's
consolidated net income with respect to the Corporation (as set forth in the
Calendar Year Report for such year) and, with respect to each designated
Subsidiary or Business Unit, either its net income or certain components of its
net income, as specified by the Committee (which net income or components
thereof are as set forth in the Calendar Year Report for such year), adjusted to
exclude items which should be excluded as being extraordinary in nature as
determined by the Committee; provided, however, no such adjustment shall be made
with respect to a Covered Employee if the Committee determines that such
adjustment shall cause an Award to such Covered Employee to fail to qualify as
"performance-based compensation" under Section 162(m) of the Code.
14. "Participant" means a select employee of the Corporation and/or its
Subsidiaries who is selected by the Committee or the Committee's delegate to
participate in the Plan based upon the employee's substantial contributions to
the future growth and future profitability of the Corporation and/or its
Subsidiaries.
15. "Plan" means the SunTrust Banks, Inc. Management Incentive Plan as
amended and restated in this document and all amendments thereto.
16. "Plan Year" means a single calendar year period as set by the
Committee which commences on the first day of such period.
17. "Proportionate Final Value" means the product of a fraction, the
numerator of which is the actual number of full months in a Plan Year that an
employee was a Participant in the Plan and the denominator of which is the total
number of months in that Plan Year, multiplied by the Final Value of an Award.
18. "Subsidiary" means any bank, corporation or entity which the
Corporation controls either directly or indirectly through ownership of fifty
percent (50%) or more of the total
3
<PAGE>
combined voting power of all classes of stock of such bank, corporation or
entity, except for such direct or indirect ownership by the Corporation while
the Corporation or a Subsidiary is acting in a fiduciary capacity with respect
to any trust, probate estate, conservatorship, guardianship or agency.
19. "Termination Value" means the value of an Award as determined by the
Committee, in its absolute discretion, upon the early termination of a Plan Year
or upon a Participant's termination of Employment before the end of such Plan
Year, which value shall be the basis for the payment of an Award to a
Participant, in accordance with Sections 7(B), 7(C), 7(D), 8(A) or 8(B) of the
Plan based on the Participant's Employment prior to his termination of
Employment or the early termination of such Plan Year.
B. In the construction of the Plan, the masculine shall include the
feminine and the singular shall include the plural in all instances in which
such meanings are appropriate. The Plan and all agreements executed pursuant to
the Plan shall be governed by the laws of Georgia.
Section 4. Committee Responsibilities
- --------------------------------------
A. The Committee may, from time to time, adopt rules and regulations and
prescribe forms and procedures for carrying out the purposes and provisions of
the Plan. The Committee shall have the sole and final authority to designate
Participants, determine Awards, designate the Plan Year, determine Financial
Goals and other goals, determine Final Value of Awards, and answer all questions
arising under the Plan, including questions on the proper construction and
interpretation of the Plan. Any interpretation, decision or determination made
by the Committee shall be final, binding and conclusive upon all interested
parties, including the Corporation and its Subsidiaries, Participants and other
employees of the Corporation or any Subsidiary, and the successors, heirs and
representatives of all such persons. The Committee shall use its best efforts to
ensure that Awards to Covered Employees under the Plan qualify as "performance-
based compensation" for purposes of Section 162(m) of the Code.
B. Subject to the express provisions of the Plan and no later than the
end of the first quarter of a calendar year (or such time as may be permitted
for Awards paid for such year to be treated as performance-based compensation
under Section 162(m)), the Committee shall:
1. Designate the Plan Year which shall begin on the first day of such
year.
2. Designate the Participants for each such Plan Year.
3. Establish the Financial Goals and other goals for the Corporation,
designated Subsidiaries and Business Units and individuals for each such Plan
Year.
4. Establish the method of calculating the Final Value of each Award.
5. Authorize management (a) to notify each Participant that he has been
selected as a Participant, inform him of the Financial Goal or other goals that
have been established for such
4
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Plan Year and (b) to obtain from him such agreements and powers and designations
of beneficiaries as it shall reasonably deem necessary for the administration of
the Plan.
C. During any Plan Year, the Committee may, if it determines that it will
promote the purpose of the Plan, designate as additional Participants any
employees of the Corporation and its Subsidiaries who have been hired,
transferred or promoted into a position eligible for participation in the Plan.
The individual's designation as a Participant shall be subject to the same
restrictions, limitations, Financial Goals or other goals and other conditions
as those held by other Participants for the same Plan Year and their
participation may be made retroactive to the first day of such Plan Year;
provided, however, no Participant who is added will be paid an Award for any
calendar year to the extent such payment, when added to all his other
compensation for such year, would be nondeductible under Section 162(m) of the
Code.
D. During any Plan Year, the Committee may, if it determines it will
promote the purpose of the Plan, revoke the Committee's prior designation of an
employee as a Participant under the Plan for a Plan Year.
E. The Committee may revise the Financial Goals or other goals for any
Plan Year to the extent the Committee, in the exercise of its absolute
discretion, believes necessary to achieve the purpose of the Plan in light of
any unexpected or unusual circumstances or events, including, but not limited
to, changes in accounting rules, accounting practices, tax laws and regulations,
or in the event of mergers, acquisitions, divestitures, unanticipated increases
in Federal Deposit Insurance premiums, and extraordinary or unanticipated
economic circumstances; provided, however, no change will be effective for any
participant who at the time of payment of the Award is a Covered Employee, to
the extent the Committee determines that such change might make the amount of
the Award to such Participant nondeductible under Section 162(m).
F. The Committee may delegate any of its responsibilities under this Plan
to such members of management of the Company as the Committee shall select,
provided that no such delegation shall be made that has the effect of causing an
award to a Covered Employee to fail to qualify as "performance-based
compensation" for purposes of Section 162(m).
Section 5. Goals
- -----------------
A. Financial Goals for Covered Employees
-------------------------------------
For each Plan Year, the Committee shall establish separate Financial Goals
for the Corporation and designated Subsidiaries and Business Units based on each
such entity's or unit's Net Income which shall then determine the Final Value of
each Award as a specified percent of the Participant's Base Wages based on the
attainment by the Participant's employer or Business Unit, as applicable, of
such goals for the Plan Year. With respect to the Corporation and each
Subsidiary, the Committee shall fix a minimum Net Income objective for the Plan
Year, and the Final Value of such Awards shall be equal to zero if actual Net
Income falls below the minimum Net Income objective of the Corporation or, where
appropriate, such Subsidiary or Business Unit. The Committee shall also fix a
maximum Net Income objective and such other Net
5
<PAGE>
Income objectives which fall between the maximum and minimum Net Income
objectives as the Committee shall deem appropriate, with corresponding Final
Values for such Awards with respect to the Corporation and each Subsidiary or
Business Unit. Awards will be determined based upon achieving or exceeding the
Financial Goals set by the Committee. Straight line interpolation will be used
to calculate Awards when Net Income falls between any two specified Net Income
objectives. No Participant may receive an Award in excess of $2 million for any
given Plan Year.
B. Goals for Other Participants
----------------------------
For each Plan Year, goals will be established for each Participant other
than Covered Employees. Goals will be established based on a combination of
financial measurements and non-financial measurements that are deemed to further
corporate objectives. Straight line interpolation will be used to calculate
Awards when results fall between any two specified Financial Goals. No
Participant may receive an Award in excess of $2 million for any given Plan
Year.
Goals may include such measurements as: business unit net income, revenue
growth, budget management, achievement of talent management objectives,
achievement of corporate objectives, individual objectives, service quality, or
other such measurements, or a combination of the above.
Section 6. Payment of Awards
- -----------------------------
A. Promptly after the date on which the necessary information for a
particular Plan Year becomes available, the Committee, or such persons as the
Committee shall designate, shall determine in accordance with Section 5 the
extent to which the Financial Goals or other goals have been achieved for such
Plan Year and authorize the cash payment of the Final Value of an Award, if any,
to each Participant. The Committee shall review and ratify the Award
determinations and shall certify such Award determinations in writing. Payment
of Awards shall be made as soon as practical after the certification of Awards
by the Committee. Each Award shall be paid in cash after deducting the amount of
applicable Federal, State, or Local withholding taxes of any kind required by
law to be withheld by the Corporation. All Awards, whether paid currently or
paid under any plan which defers payment, shall be payable out of the
Corporation's general assets. Each Participant's claim, if any, for the payment
of an Award, whether made currently or made under any plan which defers payment,
shall not be superior to that of any general and unsecured creditor of the
Corporation. If an error or omission is discovered in any of the determinations,
the Committee shall cause an appropriate equitable adjustment to be made in
order to remedy such error or omission.
B. Notwithstanding the terms of any Award, the Committee in its sole and
absolute discretion, may reduce the amount of the Award payable to any
Participant for any reason, including the Committee's judgment that the
Financial Goals or other goals have become an inappropriate measure of
achievement, a change in the employment status, position or duties of the
Participant, unsatisfactory performance of the Participant, or the Participant's
service for less than the entire Plan Year.
6
<PAGE>
C. In accordance with the procedures set forth in the SunTrust Banks,
Inc. Deferred Compensation Plan, a Participant may elect to defer receipt of one
hundred (100%) percent of the Final Value of his Award, if any, for each Plan
Year or fifty (50%) percent of said amount, and the amount so deferred shall be
credited by the Corporation to the Participant's deferral accounts established
under such Plan.
Section 7. Participation for Less Than a Full Plan Year
- --------------------------------------------------------
A. Except as otherwise provided in this Section 7, an Award to a
Participant shall be forfeited if the Participant's Employment terminates during
any Plan Year and no payment shall be due the Participant for any forfeited
Award.
B. If a Participant's Employment terminates prior to the end of any Plan
Year on account of his death, the Committee shall waive the Employment condition
and shall authorize the payment of an Award to such Participant at the end of
such Plan Year based on the Proportionate Final Value, if any, of his Award,
unless the Committee in its discretion feels the Award should be forfeited.
C. If a Participant's Employment terminates prior to the end of any Plan
Year on account of disability under a long-term disability plan maintained by
the Corporation or a Subsidiary, the Committee shall waive the Employment
condition and shall authorize, as of commencement of disability benefits to such
Participant, the payment of an Award to such Participant at the end of such Plan
Year based on the Proportionate Final Value, if any, of his Award, unless the
Committee in its discretion feels the Award should be forfeited.
D. If a Participant's Employment terminates prior to the end of any Plan
Year on account of his early or normal retirement under any pension plan
maintained by the Corporation or any Subsidiary, the Committee shall waive the
Employment condition and shall authorize the payment of an Award to such
Participant at the end of such Plan Year based on the Proportionate Final Value,
if any, of his Award, unless the Committee in its discretion feels the Award
should be forfeited.
Section 8. Premature Satisfaction of Plan Conditions
- -----------------------------------------------------
A. In the event of a Change in Control of the Corporation prior to the
end of any Plan Year, the Committee shall waive any and all Plan conditions and
shall authorize the payment of an Award immediately to each Participant based on
the Termination Value, if any, of his Award.
B. If a tender or exchange offer is made other than by the Corporation
for shares of the Corporation's stock prior to the end of any Plan Year, the
Committee may waive any and all Plan conditions and authorize, at any time after
the commencement of the tender or exchange offer and within thirty (30) days
following completion of such tender or exchange offer, the payment of an Award
immediately to each Participant based on the Termination Value, if any, of his
Award.
7
<PAGE>
C. A Plan Year shall terminate upon the Committee's authorization of the
payment of an Award during such Year pursuant to this Section 8 and no further
payments shall be made for such Year.
Section 9. Non-Transferability of Rights and Interests
- -------------------------------------------------------
A. A Participant may not alienate, assign, transfer or otherwise encumber
his rights and interests under this Plan and any attempt to do so shall be null
and void.
B. In the event of a Participant's death and subject to the terms of
Section 7(B), the Committee shall authorize payment of any Award due a
Participant to the Participant's designated beneficiary as specified or, in the
absence of such written designation or its effectiveness, then to his estate.
Any such designation may be revoked and a new beneficiary designated by the
Participant by written instrument delivered to the Committee.
Section 10. Limitation of Rights
- ---------------------------------
Nothing in this Plan shall be construed to give any employee of the
Corporation or a Subsidiary any right to be selected as a Participant or to
receive an Award or to be granted an Award other than as is provided herein.
Nothing in this Plan or any agreement executed pursuant hereto shall be
construed to limit in any way the right of the Corporation or a Subsidiary to
terminate a Participant's employment at any time, without regard to the effect
of such termination on any rights such Participant would otherwise have under
this Plan, or give any right to a Participant to remain employed by the
Corporation or a Subsidiary in any particular position or at any particular rate
of remuneration.
Section 11. Shareholder Approval
- ---------------------------------
Notwithstanding anything in this Plan to the contrary, no Awards shall be
paid to Covered Employees until such shareholder approval as is required under
Section 162(m) of the Code, if any, is obtained.
Executed this 8/th/ day of February, 2000.
(CORPORATE SEAL) SUNTRUST BANKS, INC.
Attest: /s/ Margaret U. Hodgson By: /s/ Mary T. Steele
---------------------------- ------------------------------
Title: Assistant Corporate Secretary Title: Feb. 8, 2000
------------------------------ --------------------------
8
<PAGE>
Exhibit 10.12
SunTrust Banks, Inc. 401(k) Excess Plan
Amended and Restated as of July 1, 1999
WHEREAS, SunTrust Banks, Inc. (the "Corporation") has adopted and currently
sponsors the SunTrust Banks, Inc. 401(k) Plan, as amended and restated effective
January 1, 1997 and subsequently amended; and
WHEREAS, in accordance with the provisions of Sections 401(a)(17), 402(g)
and 415(c) of the Internal Revenue Code of 1986, as amended, the SunTrust Banks,
Inc. 401(k) Plan is limited in its capacity to allow elective contributions and
to provide matching contributions on behalf of certain highly compensated
employees; and
WHEREAS the Corporation has adopted and currently sponsors the SunTrust
Banks, 401(k) Excess Plan, as amended and restated as of January 1, 1993, in
order to provide benefits to certain highly compensated or management employees
not otherwise permitted to be provided under the SunTrust Banks, Inc. 401(k)
Plan due to the limitations of sections 401(a)(17), 402(g) and 415(c) of the
Internal Revenue Code; and
WHEREAS, on December 31, 1998 Crestar Financial Corporation ("Crestar")
became a wholly-owned subsidiary of the Corporation, as a result of the merger
of SMR Corporation (Va), a wholly-owned subsidiary of the Corporation into and
with Crestar, with Crestar as the surviving entity; and
WHEREAS, Crestar sponsors the Crestar Employees' Thrift and Profit Sharing
Plan, as amended and restated through December 31, 1994, which shall merge into
and with the SunTrust Banks, Inc. 401(k) Plan on July 1, 1999; and
WHEREAS, Crestar Bank, a wholly-owned subsidiary of Crestar, sponsors the
Crestar Additional Nonqualified Executive Plan ("ANEX Plan"), as amended and
restated December 30, 1998 in order to provide benefits to a select group of
management or highly compensated employees not otherwise permitted to be
provided under the Crestar Employees' Thrift and Profit Sharing Plan due to
limits and restrictions of the Internal Revenue Code; and
WHEREAS, the Corporation wishes to merge the ANEX Plan into the SunTrust
Banks, Inc. 401(k) Excess Plan and to maintain a single nonqualified and
unfunded defined contribution plan for a select group of management or certain
1
<PAGE>
highly compensated employees whose benefits under the SunTrust Banks, Inc.
401(k) Plan are limited or restricted by the Internal Revenue Code;
NOW THEREFORE, effective July 1, 1999, the SunTrust Banks, Inc. 401(k)
Excess Plan is amended and restated as follows:
1. Definitions
Unless otherwise defined in this Excess Plan or unless the context in the
Excess Plan clearly indicates another meaning, any defined terms in the 401(k)
Plan that are used in the Excess Plan are hereby incorporated by reference in
this Excess Plan.
1.1 Account means the bookkeeping account that is established for each
-------
Participant and used to measure his benefit under this Excess Plan.
Each Participant's Account is comprised of the undistributed amount of
(i) the Participant's Excess Plan Frozen Balance or ANEX Plan Frozen
Balance; (ii) elective contributions, Employer matching contributions
and any other contributions made to this Excess Plan after June 30,
1999, as described in Section 4 herein; and (iii) any earnings, gains
or losses on such frozen balances and contributions. A Participant's
Account shall be utilized solely as a device for the determination and
measurement of the amounts to be paid to the Participant pursuant to
this Excess Plan. A Participant's Account shall not constitute or be
treated as a trust fund of any kind.
1.2 ANEX Plan means the Crestar Additional Nonqualified Executive Plan, as
----
amended and restated effective December 30, 1998.
1.3 ANEX Plan Frozen Balance means with respect to an individual, who was
------------------------
a participant in the ANEX Plan as of June 30, 1999, the balance in his
ANEX Plan Account as of June 30, 1999, as adjusted thereafter for any
additional earnings, gains, losses and distributions.
1.4 Beneficiary means the person or entity entitled to receive any
-----------
benefits payable under this Excess Plan at the Participant's death. A
Participant may name one or more primary Beneficiaries and one or more
secondary Beneficiaries. A Participant may revoke a Beneficiary
designation by filing a new Beneficiary Designation Form or a written
revocation with the Compensation Committee. If the Compensation
Committee is not in receipt of a properly completed Beneficiary
2
<PAGE>
Designation Form at the Participant's death, or if none of the
Beneficiaries named by the Participant survives the Participant or is
in existence at the date of the Participant's death, then the
Participant's Beneficiary shall be the Participant's estate.
1.5 Beneficiary Designation Form means the form that a Participant uses to
-----------------------
name his Beneficiary or Beneficiaries.
1.6 Board means the Board of Directors of the Corporation.
-----
1.7 Code means the Internal Revenue Code of 1986, as amended.
----
1.8 Compensation Committee means the Compensation Committee of the
----------------------
Corporation's Board.
1.9 Deferral Election Form means the form that a Participant uses to elect
----------------------
to defer a percentage of his Eligible Compensation into his Excess
Plan Account.
1.10 Election Date means the date by which an Eligible Employee must submit
-------------
a valid Deferral Election Form for a Plan Year. The Election Date
shall be such date, as determined by the Compensation Committee in its
sole discretion, that is on or before the last business day of the
calendar year immediately prior to the Plan Year for which a Deferral
Election Form becomes effective. If an individual becomes an Eligible
Employee after the Election Date for a Plan Year has passed, the
Compensation Committee has sole discretion to determine whether such
individual may submit a Deferral Election Form for that Plan Year; if
allowed to participate, such individual shall have an Election Date
that is no more than thirty (30) days after a notice of approval from
the Compensation Committee is sent, and such individual's Deferral
Election Form shall apply only to Eligible Compensation that has not
been earned as of the date of deferral.
1.11 Eligible Compensation means, for purposes of the Excess Plan, Eligible
---------------------
Compensation as defined in the 401(k) Plan, determined without regard
to Code Section 401(a)(17) and modified in accordance with the
provisions of paragraphs 2.2 and 2.3 of this Excess Plan.
1.12 Eligible Employee means, for each Plan Year, a management or highly
-----------------
compensated employee whose Elective Contributions and Matching
3
<PAGE>
Contributions under the 401(k) Plan are limited (i) because his
Eligible Compensation under the 401(k) Plan is limited by the
compensation limitations of Code Section 401(a)(17); (ii) due to the
limitations of Code Section 402(g) on Elective Contributions under the
401(k) Plan; or (iii) due to the dollar amount limitation on annual
additions of Code Section 415(c)(1)(A), and who is designated by the
Compensation Committee as an Eligible Employee for that Plan Year
under this Excess Plan. An individual shall cease to be an Eligible
Employee on the first to occur of (i) his termination of employment,
(ii) a determination by the Compensation Committee that he is no
longer a management or highly compensated employee, or (iii) a
determination by the Compensation Committee, in its sole discretion,
that he is no longer eligible to participate in the Excess Plan. The
Compensation Committee shall have sole discretion to resolve any
disputes regarding eligibility under this Excess Plan.
1.13 Excess Plan means the SunTrust Banks, Inc. 401(k) Excess Plan
-----------
described in this document as amended from time to time.
1.14 Excess Plan Frozen Balance means with respect to an individual who is
--------------------------
or was a participant in the SunTrust Banks, Inc. 401(k) Excess Plan as
of June 30, 1999, the balance in his Excess Plan Account as of June
30, 1999, as adjusted thereafter for any additional earnings, gains,
losses and distributions.
1.15 401(k) Plan means the SunTrust Banks, Inc. 401(k) Plan, as amended and
-----------
restated effective January 1, 1997 and subsequently amended.
1.16 Investment Fund means each investment vehicle that, for bookkeeping
---------------
purposes, is used to determine the earnings that are credited and the
losses that are charged to each Participant's Account. Unless the
Compensation Committee announces otherwise, the Excess Plan's
Investment Funds are the same as the investment options that are
available under the 401(k) Plan, excluding Employer Stock.
1.17 Participant means an individual who has an Account in this Excess
-----------
Plan. An individual ceases to be a Participant when his entire benefit
under the Excess Plan has been distributed or forfeited.
4
<PAGE>
1.18 Plan Year means the calendar year.
---------
1.19 Valuation Date means the last business day of each Plan Year and such
--------------
other dates as the Compensation Committee may determine from time to
time.
2. Deferral Election
2.1 Election. An Eligible Employee who wishes to become a Participant in
--------
this Excess Plan must file an initial Deferral Election Form on or
before the Election Date, designating the amount of elective
contribution to be made to his Account for the Plan Year, which shall
be expressed as a whole percentage of his Eligible Compensation
(between two percent (2%) and fifteen percent (15%) unless otherwise
announced by the Compensation Committee). If an Eligible Employee
fails to designate a contribution rate, his contribution rate
hereunder shall be the same rate he has elected under the 401(k) Plan
as of the Election Date.
2.1.1 Irrevocability. A deferral election under paragraph 2.1 shall
--------------
become irrevocable once the deadline for filing such elections
has expired. A Participant's election shall remain in effect
for all subsequent Plan Years in which he continues to be an
Eligible Employee unless modified or revoked by the
Participant for a subsequent Plan Year. A Participant may
modify or revoke his deferral election for a subsequent Plan
Year in writing to the Compensation Committee on or before the
Election Date for the relevant Plan Year.
2.1.2 Prior Elections. Elections made under the Excess Plan and the
---------------
ANEX Plan prior to July 1, 1999 shall remain unchanged for the
remainder of the 1999 Plan Year.
2.2 Compensation Limit. Eligible Compensation taken into account for
------------------
purposes of elective contributions and matching contributions under
this Excess Plan shall be limited to $300,000, or such lesser or
greater amounts as the Compensation Committee may determine in its
sole discretion.
2.3 When Operative. For each Plan Year, a Deferral Election Form shall
--------------
become operative and shall apply to Eligible Compensation payable
after (i) the Eligible Employee's Elective Contributions under the
5
<PAGE>
401(k) Plan equal the Code Section 402(g) limit; or (ii) the Eligible
Employee's Eligible Compensation under the 401(k) Plan exceeds the
Code Section 401(a)(17) limit.
3. Investment Options
3.1 Elective Contributions Made After June 30, 1999. Each Participant must
-----------------------------------------------
make an initial election to allocate that portion of his Account
attributable to elective contributions made under this Excess Plan
after June 30, 1999 among the Investment Funds in increments of one
percent (1%). A Participant's initial election shall be a part of his
Deferral Election Form and shall be filed with the Compensation
Committee on or before the Election Date. Thereafter, a Participant
may elect to reallocate that portion of his Account attributable to
elective contributions made after June 30, 1999 among the Investment
Funds on an annual or other basis, as determined by the Compensation
Committee in its discretion, and pursuant to the administrative
procedures established by the Compensation Committee.
3.2 Default Investment for Elective Contributions Made After June 30,
-----------------------------------------------------------------
1999. If a Participant fails to make an initial election pursuant to
----
paragraph 3.1, his elective contributions made after June 30, 1999 to
this Excess Plan shall be deemed to be invested in an Investment Fund
selected by the Compensation Committee that primarily invests in fixed
income investments with shorter average maturities than other
Investment Funds.
3.3 Excess Plan Frozen Balance. That portion of a Participant's Account
--------------------------
attributable to the Participant's Excess Plan Frozen Balance shall be
deemed at all times to be invested in Employer Stock.
3.4 ANEX Plan Frozen Balance. A Participant's ANEX Plan Frozen Balance
------------------------
shall remain invested in the Investment Funds pursuant to the
Participant's investment election under the ANEX Plan as in effect on
June 30, 1999. For Plan Years beginning after December 31, 1999, a
Participant may reallocate his ANEX Plan Frozen Balance among the
Investment Funds on an annual or other basis pursuant to the
administrative procedures established by the Compensation Committee.
3.5 Matching Contributions made after June 30, 1999. That portion of a
-----------------------------------------------
Participant's Account attributable to Employer matching contributions
6
<PAGE>
made after June 30, 1999 shall be deemed at all times to be invested
in Employer Stock.
3.6 Other Contributions after June 30, 1999. In the event the Compensation
---------------------------------------
Committee should determine, in its discretion, to allow any other
contributions to the Excess Plan, the Compensation Committee shall
maintain records of the type and amount of such contributions, the
Participants to whom such contributions are to be allocated, and the
Investment Funds in which such contributions shall be deemed to be
invested.
3.7 No Actual Investment Required. Notwithstanding the preceding
-----------------------------
paragraphs of this Section 3, this Excess Plan shall remain an
unfunded plan and the description of Employer Stock and Investment
Funds in this Section 3, including any election rights of a
Participant, shall not obligate the Corporation to set aside any funds
or to make any actual investments pursuant to this Excess Plan.
3.8 Compliance with Securities Laws. Notwithstanding the foregoing
-------------------------------
provisions of this Section 3, if a Participant is subject to Section
16 of the Securities Exchange Act of 1934 (the "34 Act"), then such
Participant's investment elections shall be subject to such additional
rules as may be established by the Compensation Committee as it deems
necessary to ensure that transactions by such Participant comply with
Rule 16b-3 of the 34 Act (or any successor rules).
4. Allocations to Accounts
A Participant's benefit under this Excess Plan is equal to the vested
balance of his Account. As of each Valuation Date, amounts shall be
allocated to and charged against each Participant's Account in
accordance with this Section 4.
4.1 Distributions and Forfeitures. Each Participant's Account will be
-----------------------------
reduced by any distributions made under Section 6 and by any
forfeitures pursuant to paragraph 5.2.
4.2 Elective Contributions. Subject to the compensation limits set forth
----------------------
in paragraph 2.3, each Participant's Account shall be credited with
elective contributions in accordance with the Participant's Deferral
Election Form. Elective Contributions shall be credited to the
7
<PAGE>
Participant's Account as of the dates that the Eligible Compensation
would otherwise have been paid to the Participant but for the deferral
pursuant to this Excess Plan.
4.3 Matching Contributions. Subject to the compensation limits set forth
----------------------
in paragraph 2.3, each Participant's Account shall be credited with
Employer matching contributions based on the rate of Matching
Contribution in effect under the 401(k) Plan at the relevant time and
the amount of Eligible Compensation that is deferred under this Excess
Plan in accordance with the Participant's Deferral Election Form. Such
amounts shall be credited to the Account as of the dates that matching
contributions are made to the 401(k) Plan or such other times as the
Compensation Committee may determine in its sole discretion.
4.4 Other Contributions. Any other contributions to the Excess Plan
-------------------
pursuant to paragraph 3.6 shall be allocated to the Account of each
Participant who, as determined by the Compensation Committee in its
sole discretion, is eligible to receive an allocation of such
contributions.
4.5 Earnings. Each Participant's Account will be credited with earnings
--------
or charged with losses based on the performance of each Investment
Fund and, if applicable, Employer Stock, as though the Participant's
Account were actually invested in such Investment Fund or Employer
Stock at such times as determined by the Compensation Committee, but
not less frequently than as of the last Valuation Date of the Plan
Year. Earnings and losses will continue to be credited or charged to
the Participant's Account in accordance with the preceding sentence
until the Valuation Date immediately preceding the date of
distribution of Plan benefits or the date of forfeiture pursuant to
paragraph 5.2. The amount of such deemed investment gain or loss shall
be determined by the Compensation Committee and such determinations
shall be final and conclusive upon all concerned.
5. Vesting
5.1 Generally. Except as provided in paragraph 5.2, a Participant's
---------
interest in his benefit under the Excess Plan is one hundred percent
(100%) vested and nonforfeitable at all times.
8
<PAGE>
5.2 Exception. A Participant and his Beneficiary shall completely forfeit
---------
that portion of his benefit under the Excess Plan attributable to
Employer matching contributions (whenever allocated) if the
Participant is discharged or resigns due to action taken by the
Participant which evidences fraud or dishonesty, provided the action
relates to the individual's employment with the Corporation or an
Affiliate, and further provided that the action potentially is so
damaging to the Corporation or an Affiliate that a reasonable person
would not find that the action was inadvertent or without knowledge
that such action would violate the restrictions of this paragraph.
Forfeiture under this paragraph 5.2 shall be in addition to any other
remedies which may be available to the Corporation or an Affiliate at
law or in equity. This paragraph 5.2 shall not apply to any
Participant to whom Section 7 applies or to any ANEX Plan Frozen
Balance.
6. Distributions
6.1 Normal Form of Payment and Commencement. Except as otherwise provided
---------------------------------------
in this Section 6, when a Participant separates from service with the
Corporation and its Affiliates for any reason, he shall be paid his
Excess Plan benefit in a single lump-sum cash payment during the first
quarter of the calendar year immediately following the year of his
separation. The amount payable to the Participant shall be equal to
the balance of the Participant's Account as of the Valuation Date
immediately preceding the date of distribution, less withholding for
applicable federal and state taxes.
6.2 Alternate Form of Payment Election. At any time prior to the January
----------------------------------
1 following a Participant's separation from service, a Participant may
elect, in lieu of the lump-sum payment described in paragraph 6.1, to
receive payment of his total benefit under this Excess Plan in five
(5) substantially equal annual installments, payable in cash. The
initial installment shall be paid during the first quarter of the
calendar year immediately following the year of his separation. Each
subsequent annual installment shall be paid during the first quarter
of each of the subsequent four calendar years. Each installment
payment shall be determined based on the balance of the Participant's
Account as of the Valuation Date immediately preceding the date of
payment and shall be reduced by withholding for applicable federal and
9
<PAGE>
state taxes. A Participant's election to receive installment payments
of his Excess Plan benefit pursuant to this paragraph 6.2 shall be
made in writing on such forms as may be provided by the Compensation
Committee and shall not be effective until received and approved by
the Compensation Committee.
6.3 Special Rule for Certain Participants. Notwithstanding paragraphs 6.1
-------------------------------------
and 6.2, a Participant who separates from service before January 1,
2000 or any other Participant as the Compensation Committee shall
determine in its sole discretion, which shall be set forth in an
Exhibit to this Excess Plan, shall receive payment of his Excess Plan
benefit as soon as administratively feasible following such date of
separation in the form of payment previously elected by the
Participant. If the Participant elected an installment form of
payment, the initial installment payment shall be made as soon as
administratively possible following the date of separation; and each
subsequent annual installment shall be paid during the first quarter
of each of the subsequent four calendar years.
6.4 Death. In the event of a Participant's death, the Compensation
-----
Committee shall authorize payment to the Participant's Beneficiary of
any benefits due hereunder but not paid to the Participant prior to
his death. Payment shall be made at the same time as if the
Participant had retired on the date of his death and in accordance
with the Participant's distribution election in effect at his death.
The Beneficiary (other than a Beneficiary entitled to a payment
pursuant to paragraph 6.3) may request a change in the form of payment
by making a written request to the Compensation Committee prior to
January 1 of the calendar year in which the benefit will be paid. The
Compensation Committee has sole discretion and authority to approve or
deny the Beneficiary's request, taking into account such factors as
the Compensation Committee may deem appropriate.
If a Participant dies after having received one or more installments
but before all installment payments have been made, the remaining
annual installment payments shall be paid to his Beneficiary at the
same time they would otherwise have been paid to the Participant. The
Beneficiary may request an accelerated payment in the form of a lump-
sum cash payment by making a written request to the Compensation
10
<PAGE>
Committee prior to the January 1 of the calendar year in which the
benefit will be paid. The Compensation Committee has sole discretion
and authority to approve or deny the Beneficiary's request.
6.5 Disability. A Participant shall be entitled to payment of his Excess
----------
Plan benefit in the event of his Total Disability only if the
conditions of subparagraphs 6.5.1 and 6.5.2 are met. In such
situation, payment of the Participant's benefit shall commence
pursuant to paragraph 6.1 or 6.2 as if the Participant separated from
service on the date all such conditions are met. A Participant shall
be considered to have a Total Disability only if:
6.5.1 The Participant has incurred a "Total Disability" as such term
is defined in the SunTrust Banks, Inc. Long-Term Disability
Plan (or any successor plan), which entitle the Participant to
disability payments under such Plan; and
6.5.2 The Compensation Committee determines, in its sole discretion,
based upon medical evidence furnished by the Participant, that
the disability is anticipated to be a permanent disability.
6.6 Extreme Financial Hardship. A Participant may request a distribution
--------------------------
of all or part of his vested Excess Plan benefit prior to the date
specified in paragraphs 6.1 through 6.5 due to an extreme financial
hardship, by submitting a written request to the Compensation
Committee with evidence satisfactory to the Compensation Committee to
demonstrate the circumstances constituting the extreme financial
hardship. The Compensation Committee, in its sole discretion, shall
determine whether an extreme financial hardship exists. An extreme
financial hardship means an immediate, catastrophic financial need of
the Participant occasioned by (i) a tragic event, such as the death,
total disability, serious injury or illness of a Participant or the
Participant's spouse, child or dependent; or (ii) an extreme financial
reversal or other impending catastrophic event which has resulted in,
or will result in, harm to the Participant or the Participant's
spouse, child or dependent. A distribution for extreme financial
hardship may not exceed the amount required to meet the hardship and
may be made only if the Compensation Committee finds the extreme
financial hardship may not be alleviated from other resources
reasonably available to the Participant, including without limitation,
liquidation of investment assets or luxury assets, or loans from
11
<PAGE>
financial institutions or other sources. The Compensation Committee
shall have the authority to require the Participant to provide such
evidence as the Committee deems necessary to determine whether
distribution is warranted pursuant to this paragraph 6.6. The
Compensation Committee shall use uniform and nondiscriminatory
standards in reviewing any requests for distributions to meet an
extreme financial hardship.
6.6.1 Form and Commencement. A hardship distribution to a
---------------------
Participant pursuant to this paragraph 6.6 shall be made in a
single lump-sum cash payment (less withholding for applicable
federal and state taxes) as soon as practicable after the
Compensation Committee approves the hardship request. Amounts
distributed for hardship shall be deemed to reduce pro rata
the deemed investment in each Investment Fund, including any
Employer Stock, in the Participant's Account.
6.6.2 Accelerated Installment Payments. A Participant who has
--------------------------------
commenced receiving installment payments pursuant to paragraph
6.2 may request acceleration of such payments in the event of
an extreme financial hardship. The Compensation Committee may
permit accelerated payments to the extent such accelerated
payment does not exceed the amount necessary to meet the
extreme financial hardship.
6.7 Payment to Guardian, Legal Representative or Other. If a benefit
--------------------------------------------------
hereunder is payable to a minor or a person declared incompetent or to
a person incapable of handling the disposition of his property, the
Compensation Committee may direct payment of such Plan benefit to the
guardian, legal representative or person having the care and custody
of such minor, incompetent or person. The Compensation Committee may
require proof of incompetency, minority, incapacity or guardianship as
it may deem appropriate prior to distribution of the benefit. A
payment pursuant to this paragraph 6.7 shall completely discharge the
Compensation Committee and the Corporation from all liability with
respect to such benefit.
7. Change in Control
12
<PAGE>
7.1 Purpose. The purpose of this Section 7 is to provide protection for
-------
the benefits payable under this Excess Plan to a Participant who is
affected by a Change in Control of the Corporation.
7.2 Definitions. The following terms shall have the meanings set forth
-----------
opposite such terms for purposes of this Section 7.
7.2.1 Affiliate means as of any date any organization which is a
---------
member of a controlled group of corporations (within the
meaning of Code section 414(b)) which includes the Corporation
or a controlled group of trades or businesses (within the
meaning of Code section 414(c)) which includes the
Corporation.
7.2.2 Change in Control means a "change in control" of the
-----------------
Corporation of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 as
amended and in effect at the time of such "change in control"
(the "34 Act"), provided that such a change in control shall
be deemed to have occurred at such time as (i) any "person"
(as that term is used in Sections 12(d) and 14(d)(2) of the 34
Act), is or becomes the beneficial owner (as defined in Rule
13d-3 under the 34 Act) directly or indirectly, of securities
representing 20% or more of the combined voting power for
election of directors of the then outstanding securities of
the Corporation or any successor of the Corporation; (ii)
during any period of two consecutive years or less,
individuals who at the beginning of such period constitute the
Board cease, for any reason, to constitute a majority of the
Board, unless the election or nomination for election of each
new director was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the
beginning of the period; (iii) the shareholders of the
Corporation approve any merger, consolidation or share
exchange as a result of which the common stock of the
Corporation shall be changed, converted or exchanged (other
than a merger with a wholly-owned subsidiary of the
Corporation) or any liquidation of the Corporation or any sale
or the disposition of 50% or more of the assets or business of
the Corporation; or (iv) the shareholders of the Corporation
approve any merger or consolidation to which the Corporation
13
<PAGE>
is a party or a share exchange in which the Corporation shall
exchange its shares for shares of another corporation as a
result of which the persons who were shareholders of the
Corporation immediately prior to the effective date of the
merger, consolidation or share exchange shall have beneficial
ownership of less than 50% of the combined voting power for
election of directors of the surviving corporation following
the effective date of such merger, consolidation or share
exchange; provided, however, and not withstanding the
occurrence of any of the events previously described in this
definition, that no "change in control" shall be deemed to
have occurred under this definition if prior to such time as a
"change in control" would otherwise be deemed to have occurred
under this definition, the Board determines otherwise.
7.3 Benefit Calculation and Payment. In the event of a Change in Control
-------------------------------
of the Corporation prior to the end of any Plan Year, the Compensation
Committee, in its sole discretion, may waive such Plan conditions as
it may deem appropriate to carry out the purposes of the Excess Plan
and may authorize a contribution to Participants' Accounts for the
Plan Year in accordance with Section 4 based upon (i) each
Participant's Eligible Compensation earned during the Plan Year
through the date of the reorganization or Change in Control, (ii) an
estimate by the Compensation Committee of any contribution on such
compensation that will be made to the Excess Plan for such year and
(iii) other criteria as deemed appropriate by the Compensation
Committee to carry out the purpose of the Plan, as set forth above, in
light of the circumstances.
7.4 Amendment Restrictions. If there is a Change in Control of the
----------------------
Corporation, no amendment shall be made to this Excess Plan thereafter
which would adversely affect in any manner whatsoever the benefit
payable under this Excess Plan to any Participant absent the express
written consent of all Participants who might be adversely affected by
such amendment if this Section 7 were, or could become, applicable to
such Participants, and the Corporation intends that each Participant
rely on the protections which the Corporation intends to provide
through this Section 7. Notwithstanding the foregoing, the
Corporation may amend this Excess Plan without Participant consent to
the extent such an amendment is required by law or is necessary or
14
<PAGE>
desirable to prevent adverse tax consequences to Participants or their
Beneficiaries provided that the Corporation obtains the written
opinion of outside counsel that such an amendment is required by law
or is necessary or desirable to prevent adverse tax consequences to
Participants or their Beneficiaries.
8. Plan Administration
8.1 Responsibility of Compensation Committee. This Excess Plan shall be
----------------------------------------
administered by the Compensation Committee, who shall have sole
discretionary authority for the operation, interpretation and
administration of the Plan. All determinations and actions of the
Compensation Committee within its discretionary authority shall be
final, conclusive and binding on all persons, except that the
Compensation Committee may revoke or modify a determination or action
it determines was previously made in error. The Compensation
Committee shall exercise all powers and authority given to it in a
nondiscriminatory manner, and shall apply uniform administrative rules
of general application to insure that all Participants and
Beneficiaries in similar circumstances are treated similarly. In
addition to the implied powers and duties that may be needed to carry
out the administration of the Excess Plan, the Compensation Committee
shall have the following specific powers and responsibilities:
8.1.1 To establish, interpret, amend, revoke and enforce rules and
regulations as required or desirable for the efficient
administration of the Excess Plan.
8.1.2 To review and interpret Excess Plan provisions and to remedy
provisions that are ambiguous or inconsistent or contain
omissions.
8.1.3 To determine all questions relating to an individual's
eligibility to participate in the Excess Plan and the validity
of an individual's Deferral Election Form.
8.1.4 To determine a Participant's or Beneficiary's eligibility for
benefits from the Excess Plan and to authorize payment of
benefits.
15
<PAGE>
8.1.5 To delegate any of its rights, powers and duties to one or
more members, or to any nonmember delegate(s). Such delegation
may include, without limitation, the power to execute any
document on behalf of the Compensation Committee and to accept
service of legal process for the Committee at the principal
office of the Corporation.
8.1.6 To employ outside professionals and to enter into agreements
on behalf of the Corporation necessary or desirable for
administration of the Excess Plan.
8.2 Compensation Committee Action. The Compensation Committee may take
-----------------------------
action by majority vote of members attending any meeting where a
majority of the members are present. The Compensation Committee may
also take any action without a meeting that is approved by a majority
of the Compensation Committee by a written document signed by a member
of the Compensation Committee.
8.3 Disqualification of Compensation Committee Member. A member of the
-------------------------------------------------
Compensation Committee who is otherwise an Eligible Employee may
participate in this Excess Plan but shall not make any decisions
solely with respect to his own participation and benefits under the
Excess Plan.
8.4 Books, Records and Expenses. The books and records to be maintained
---------------------------
for the purpose of this Excess Plan shall be maintained by the
Compensation Committee and subject to the supervision and control of
the Committee. The Corporation shall pay the general expenses of
administering this Excess Plan.
8.5 Compensation. No member of the Compensation Committee who is an
------------
employee of the Corporation or an Affiliate shall receive any
additional compensation for his services as a Compensation Committee
member.
8.6 Indemnity. The Corporation shall indemnify and hold harmless the
---------
members of the Compensation Committee against any and all claims,
loss, damage, expense or liability arising from any action or failure
to act with respect to this Excess Plan, except in the case of a
member's own gross negligence or willful misconduct.
16
<PAGE>
9. Miscellaneous
9.1 Construction. The headings and subheadings in this Excess Plan have
------------
been set forth for convenience of reference only and have no
substantive effect whatsoever. Whenever any words are used herein in
the masculine, they shall be construed as though they were used in the
feminine in all cases where they would so apply; and whenever any
words are used herein in the singular or in the plural, they shall be
construed as though they were used in the plural or in the singular,
as the case may be, in all cases where they would so apply.
9.2 Validity. In case any provision of this Excess Plan shall be held
--------
illegal or invalid for any reason, such illegality or invalidity
shall not affect the remaining parts hereof, but this Excess Plan
shall be construed and enforced as if such illegal and invalid
provision had never been inserted herein.
9.3 Non-Alienability of Benefits. Except as required by law, neither the
----------------------------
Participant nor any Beneficiary entitled to payments after the death
of the Participant shall have any power to alienate, transfer, assign,
or otherwise encumber in advance any of the payments that may become
due hereunder and any attempt to do so shall be null and void; nor
shall any such payments be subject to attachment, garnishment or
execution, or be transferable by operation of law in the event of the
Participant's or Beneficiary's bankruptcy, insolvency, or otherwise.
9.4 No Participation Rights or Contract of Employment. Nothing in this
-------------------------------------------------
Excess Plan shall be construed to give any employee of the Corporation
or an Affiliate any right to be selected as a Participant for any Plan
Year or to receive any benefit under this Excess Plan other than as is
provided herein. Nothing in the Excess Plan or any deferral election
executed pursuant hereto shall be construed to limit in any way the
right of the Corporation or an Affiliate to terminate a Participant's
employment at any time, without regard to the effect of such
termination on any rights such Participant would otherwise have under
the Plan or any deferral election, or give any right to a Participant
to remain employed by the Corporation or its Affiliates in any
particular position or at any particular rate of remuneration.
17
<PAGE>
9.5 Liability. No member of the Corporation's Board of Directors or the
---------
Compensation Committee and no officer or employee of the Corporation
or an Affiliate shall be liable to any person for any action taken or
omitted in connection with the administration of this Excess Plan
unless attributable to his own fraud and willful misconduct; nor shall
the Corporation or any Affiliate be liable to any person for such
action unless attributable to fraud or willful misconduct on the part
of the director, officer or employee of the Corporation or an
Affiliate.
9.6 Nonqualified Plan. This Excess Plan shall be administered and
-----------------
maintained as a plan of deferred compensation for a select group of
management or highly compensated employees which is not intended to
meet the qualification requirements of Code Section 401.
9.7 Unfunded Plan. This Excess Plan is an unfunded plan maintained
-------------
primarily for a select group of management or highly compensated
employees. The obligation of the Corporation to provide any benefits
under this Excess Plan is a mere contractual liability and the
Corporation is not required to establish or maintain any special or
separate fund or segregate any assets for the payment of benefits
under this Excess Plan. Participants and their Beneficiaries shall not
have any interest in any particular assets of the Corporation by
reason of its obligation under the Excess Plan and they are at all
times unsecured general creditors of the Corporation with respect to
any claim for benefits under the Excess Plan. All amounts of
compensation deferred under this Excess Plan, all property and rights
purchased with such amounts and any income attributable to such
amounts, rights or property shall constitute general funds of the
Corporation.
9.7.1 The Corporation may, but is not required to, establish or
maintain any special or separate fund or segregate any assets
for the payment of benefits under this Excess Plan. In the
event the Corporation should establish a "rabbi" trust to
assist in meeting the Corporation's financial obligations
under the Excess Plan, the assets of such trust shall be
subject to the claims of general creditors of the Corporation
in the event of the Corporation's insolvency. Participants in
this Excess Plan and their Beneficiaries shall have no
preferred claim on, or any legal or equitable rights, claims
or interest in any particular assets of any such trust. To the
18
<PAGE>
extent payments of all or any part of the benefits under this
Excess Plan are actually made from any such trust or from any
other source, the obligation of the Corporation to make such
payment is satisfied, but to the extent not so paid, payment
of benefits under this Excess Plan remains the obligation of,
and shall be paid by, the Corporation.
9.7.2 Notwithstanding the foregoing, the Corporation shall have no
obligation to pay any benefits for ANEX Plan Frozen Balances
to the extent that any assets are held in the Crestar Bank
Selected Executive Plans Trust.
9.8 Right to Amend or Terminate Plan. The Corporation expects to continue
--------------------------------
this Excess Plan indefinitely, but reserves the right to amend or
discontinue the Excess Plan should it deem such an amendment or
discontinuance necessary or desirable, subject to the restrictions on
amendments in Section 7 after a Change in Control. The Corporation
hereby authorizes and empowers the Compensation Committee to amend
this Excess Plan in any manner that is consistent with the purpose of
this Excess Plan as set forth above, without further approval from the
Board except as to any matter that the Compensation Committee
determines may result in a material increased cost to the Corporation.
However, if the Corporation or Compensation Committee should amend or
discontinue this Excess Plan, the Corporation shall be liable for any
contributions and earnings thereon that have accrued and are vested as
of the date of such action.
9.9 Binding Effect. This Excess Plan shall be binding upon and inure to
--------------
the benefit of any successor of the Corporation and any successor
shall be deemed substituted for the Corporation under this Plan and
shall assume the rights, obligations and liabilities of the
Corporation hereunder and be obligated to perform the terms and
conditions of the Excess Plan. As used in this paragraph 9.9, the term
"successor" shall include any person, firm, corporation or other
business entity or related group of such persons, firms, corporations
or business entities which at any time, whether by merger, purchase,
reorganization, liquidation or otherwise, or by means of a series of
such transactions, acquires all or substantially all of the assets or
business of the Corporation.
19
<PAGE>
9.10 Governing Law. The Excess Plan and all actions taken pursuant to the
-------------
Excess Plan shall be governed by the laws of the State of Georgia
except to the extent such laws are superseded by federal law.
20
<PAGE>
Executed as of the 1st day of August, 1999.
--- -------
SunTrust Banks, Inc.
Attest:
By: /s/ Margaret U. Hodgson By: /s/ Mary T. Steele
---------------------------- -------------------------
Title: Assistant Corporate Secretary Title: Senior Vice President
----------------------------- -------------------------
21
<PAGE>
Exhibit 10.16
SUNTRUST BANKS, INC. 1995 EXECUTIVE STOCK PLAN
SECTION 1. BACKGROUND AND PURPOSE
---------- ----------------------
The name of this Plan is the SunTrust Banks, Inc. 1995 Executive Stock
Plan. The purpose of this Plan is to promote the interest of SunTrust and its
Subsidiaries through grants to Key Employees of Options to purchase Stock,
grants of stock appreciation rights and grants of Restricted Stock in order (1)
to attract and retain Key Employees, (2) to provide an additional incentive to
each Key Employee to work to increase the value of Stock and (3) to provide each
Key Employee with a stake in the future of SunTrust which corresponds to the
stake of each of SunTrust's shareholders.
SECTION 2. DEFINITIONS
---------- -----------
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.
2.1. Board -- means the Board of Directors of SunTrust.
------
2.2. Change in Control -- means a change in control of SunTrust of a
-----------------
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act as in effect
on January 1, 1995, provided that such a change in control shall be deemed to
have occurred at such time as (i) any "person" (as that term is used in Sections
13(d) and 14(d)(2) of the Exchange Act), is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of
securities representing 20% or more of the combined voting power for election of
directors of the then outstanding securities of SunTrust or any successor of
SunTrust; (ii) during any period of two consecutive years or less, individuals
who at the beginning of such period constitute the Board cease, for any reason,
to constitute at least a majority of the Board, unless the election or
nomination for election of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period; (iii) the shareholders of SunTrust approve any merger,
consolidation or share exchange as a result of which the common stock of
SunTrust shall be changed, converted or exchanged (other than a merger with a
wholly-owned subsidiary of SunTrust), or any dissolution or liquidation of
SunTrust or any sale or the disposition of 50% or more of the assets or business
of SunTrust; or (iv) the shareholders of SunTrust approve any merger or
consolidation to which SunTrust is a party or a share exchange in which SunTrust
shall exchange its shares for shares of another corporation as a result of which
the persons who were shareholders of SunTrust immediately prior to the effective
date of the merger, consolidation or share exchange shall have beneficial
ownership of less than 50% of the combined voting power for election of
directors of the surviving corporation following the effective date of such
merger, consolidation or share exchange; provided, however, and notwithstanding
the occurrence of any of the events previously described in this definition,
that no "Change in Control" shall be deemed to have occurred under this
<PAGE>
definition if, prior to such time as a "Change in Control" would otherwise be
deemed to have occurred under this definition, the Board determines otherwise.
2.3. Code -- means the Internal Revenue Code of 1986, as amended.
----
2.4. Committee -- means a Committee of the Board to which the
---------
responsibility to administer this Plan is delegated by the Board and which shall
consist of at least two members of the Board (i) none of whom shall be eligible
to receive grants of Options, SARs or Restricted Stock and (ii) each of whom
shall be a "disinterested" person within the meaning of Rule 16b-3 under the
Exchange Act and each of whom shall be (or be treated as) an "outside director"
for purposes of Section 162(m) of the Code.
2.5. Covered Employee -- means a Key Employee who the Committee on
----------------
the date he or she is granted an Option, a SAR or Restricted Stock deems likely
to be a "covered employee" (within the meaning of Section 162(m) of the Code) as
of any date on or after the date of such grant.
2.6. Exchange Act -- means the Securities Exchange Act of 1934, as
------------
amended.
2.7. Fair Market Value -- means (1) the closing price on any date for
-----------------
a share of Stock as reported by The Wall Street Journal under the New York Stock
------------------------
Exchange Composite Transactions quotation system (or under any successor
quotation system) or, if Stock is no longer traded on the New York Stock
Exchange, under the quotation system under which such closing price is reported
or, if The Wall Street Journal no longer reports such closing price, such
-----------------------
closing price as reported by a newspaper or trade journal selected by the
Committee or, if no such closing price is available on such date, (2) such
closing price as so reported in accordance with Section 2.7(1) for the
immediately preceding business day, or, if no newspaper or trade journal reports
such closing price, (3) the price which the Committee acting in good faith
determines through any reasonable valuation method that a share of Stock might
change hands between a willing buyer and a willing seller, neither being under
any compulsion to buy or to sell and both having reasonable knowledge of the
relevant facts.
2.8. ISO -- means an option granted under this Plan to purchase Stock
---
which is evidenced by an Option Agreement which provides that the option is
intended to satisfy the requirements for an incentive stock option under Section
422 of the Code.
2.9. Key Employee -- means any employee of SunTrust or any Subsidiary
------------
who, in the judgment of the Committee acting in its absolute discretion, is a
key to the success of SunTrust or such Subsidiary and who is not a Ten Percent
Shareholder.
2.10. NQO -- means an option granted under this Plan to purchase
---
Stock which is evidenced by an Option Agreement which provides that the option
shall not be treated as an incentive stock option under Section 422 of the Code.
2.11. Option -- means an ISO or a NQO.
------
<PAGE>
2.12. Option Agreement -- means the written agreement or instrument which
----------------
sets forth the terms of an Option granted to a Key Employee under Section 7 of
this Plan.
2.13. Option Price -- means the price which shall be paid to purchase
------------
one share of Stock upon the exercise of an Option granted under this Plan.
2.14. Parent Corporation -- means any corporation which is a parent
------------------
of SunTrust within the meaning of Section 424(e) of the Code.
2.15. Plan -- means this SunTrust Banks, Inc. 1995 Executive Stock
----
Plan, as amended from time to time.
2.16. Restricted Stock -- means Stock granted to a Key Employee under
----------------
Section 8 of this Plan.
2.17. Restricted Stock Agreement -- means the written agreement or
--------------------------
instrument which sets forth the terms of a Restricted Stock grant to a Key
Employee under Section 8 of this Plan.
2.18. Rule 16b-3 -- means the exemption under Rule 16b-3 to Section
----------
16b of the Exchange Act or any successor to such rule.
2.19. Stock -- means the One Dollar ($1.00) par value common stock of
-----
SunTrust.
2.20. SAR -- means a right which is granted pursuant to the terms of
---
Section 7 of this Plan to the appreciation in the Fair Market Value of a share
of Stock in excess of the SAR Share Value for such a share.
2.21. SAR Agreement -- means the written agreement or instrument which
-------------
sets forth the terms of a SAR granted to a Key Employee under Section 7 of this
Plan.
2.22. SAR Share Value -- means the figure which is set forth in each SAR
---------------
Agreement and which is no less than the Fair Market Value of a share of Stock on
the date the related SAR is granted.
2.23. Subsidiary -- means any corporation which is a subsidiary
----------
corporation (within the meaning of Section 424(f) of the Code) of SunTrust
except a corporation which has subsidiary corporation status under Section
424(f) of the Code exclusively as a result of SunTrust or a SunTrust subsidiary
holding stock in such corporation as a fiduciary with respect to any trust,
estate, conservatorship, guardianship or agency.
2.24. SunTrust -- means SunTrust Banks, Inc., a Georgia corporation, and
--------
any successor to such corporation.
2.25. Ten Percent Shareholder -- means a person who owns (after taking
-----------------------
into account the attribution rules of Section 424(d) of the Code) more than ten
percent of the total combined voting power of all classes of stock of either
SunTrust, a Subsidiary or a Parent Corporation.
<PAGE>
SECTION 3. SHARES RESERVED UNDER PLAN
---------- --------------------------
There shall be 5,000,000 shares of Stock reserved for use under this Plan.
All such shares of Stock shall be reserved to the extent that SunTrust deems
appropriate from authorized but unissued shares of Stock and from shares of
Stock which have been reacquired by SunTrust. Furthermore, any shares of Stock
subject to an Option which remain unissued after the cancellation, expiration or
exchange of such Option and any Restricted Shares which are forfeited thereafter
shall again become available for use under this Plan, but any shares of Stock
used to satisfy a withholding obligation under Section 14.3 shall not again
become available for use under this Plan. The exercise of a SAR or a surrender
right in an Option with respect to any shares of Stock shall be treated for
purposes of this Section 3 the same as the exercise of an Option for the same
number of shares of Stock.
SECTION 4. EFFECTIVE DATE
---------- --------------
This Plan shall be effective on January 1, 1995, provided the shareholders
of SunTrust (acting at a duly called meeting of such shareholders) approve this
Plan within twelve (12) months after such date and such approval satisfies the
requirements for shareholder approval under Rule 16b-3 and Code Section
422(b)(1). Any Restricted Stock, any Option and any SAR granted under this Plan
before such shareholder approval automatically shall be granted subject to such
shareholder approval.
SECTION 5. COMMITTEE
---------- ---------
This Plan shall be administered by the Committee. The Committee acting in its
absolute discretion shall exercise such powers and take such action as expressly
called for under this Plan and, further, the Committee shall have the power to
interpret this Plan and (subject to Section 11, Section 12 and Section 13) to
take such other action in the administration and operation of this Plan as the
Committee deems equitable under the circumstances, which action shall be binding
on SunTrust, on each affected Key Employee and on each other person directly or
indirectly affected by such action. The Committee shall use its best efforts to
grant Options, SARs and Restricted Stock under this Plan to a Covered Employee
which will qualify as "performance-based compensation" for purposes of Section
162(m) of the Code, except where the Committee deems that SunTrust's interests
when viewed broadly will be better served by a grant which is free of the
conditions required to so qualify any such grant for purposes of Section 162(m)
of the Code.
SECTION 6. ELIGIBILITY
---------- -----------
Only Key Employees shall be eligible for the grant of Options, SARs and
Restricted Stock under this Plan.
<PAGE>
SECTION 7. OPTIONS AND SARs
---------- ----------------
7.1. Options. The Committee acting in its absolute discretion shall have
-------
the right to grant Options to Key Employees under this Plan from time to time to
purchase shares of Stock. Each grant of an Option shall be evidenced by an
Option Agreement, and each Option Agreement shall set forth whether the Option
is an ISO or a NQO and shall set forth such other terms and conditions of such
grant as the Committee acting in its absolute discretion deems consistent with
the terms of this Plan.
7.2. $100,000 Limit. The aggregate Fair Market Value of ISOs granted to a
--------------
Key Employee under this Plan and incentive stock options granted to such Key
Employee under any other stock option plan adopted by SunTrust, a Subsidiary or
a Parent Corporation which first become exercisable in any calendar year (which
begins on or after January 1, 1995) shall not exceed $100,000. Such Fair Market
Value figure shall be determined by the Committee on the date the ISO or other
incentive stock option is granted, and the Committee shall interpret and
administer the limitation set forth in this Section 7.2 in accordance with
Section 422(d) of the Code.
7.3. Share Limitation.
----------------
(a) A Key Employee (other than a Key Employee who is SunTrust's chief
executive officer) may be granted in any calendar year one or more Options, or
one or more SARs, or one or more Options and SARs in any combination which,
individually or in the aggregate, relate to no more than 60,000 shares of Stock.
(b) A Key Employee who is SunTrust's chief executive officer may be
granted in any calendar year one or more Options, or one or more SARs, or one or
more Options and SARs in any combination which, individually or in the
aggregate, relate to no more than 100,000 shares of Stock.
7.4. Option Price. The Option Price for each share of Stock subject to an
------------
Option shall be no less than the Fair Market Value of a share of Stock on the
date the Option is granted. The Option Price shall be payable in full upon the
exercise of any Option, and an Option Agreement at the discretion of the
Committee can provide for the payment of the Option Price (a) in cash or by a
check acceptable to the Committee, (b) in Stock which has been held by the Key
Employee for a period acceptable to the Committee and which Stock is otherwise
acceptable to the Committee (c) through a broker facilitated exercise procedure
acceptable to the Committee or (d) in any combination of the three methods
described in this Section 7.4 which is acceptable to the Committee. Any payment
made in Stock shall be treated as equal to the Fair Market Value of such Stock
on the date the properly endorsed stock certificate for such Stock is delivered
to the Committee or, if payment is effected through a certification of ownership
of Stock in lieu of a stock certificate, on the date the option is exercised.
7.5. Exercise Period. Each Option granted under this Plan shall be
---------------
exercisable in whole or in part at such time or times as set forth in the
related Option Agreement, but no Option Agreement shall make an Option
exercisable before the date such Option is granted or after the earlier of:
<PAGE>
(a) the date such Option is exercised in full, or
(b) the date which is the tenth anniversary of the date such
Option is granted.
An Option Agreement may provide for the exercise of an Option after the
employment of a Key Employee has terminated for any reason whatsoever, including
death or disability.
7.6. Nontransferability. Except to the extent the Committee deems
------------------
permissible under Section 422(b) of the Code and Rule 16b-3 and consistent with
the best interests of SunTrust, neither an Option granted under this Plan nor
any related surrender rights nor any SAR shall be transferable by a Key Employee
other than by will or by the laws of descent and distribution, and such Option
and any such surrender rights and any such SAR shall be exercisable during a Key
Employee's lifetime only by the Key Employee. The person or persons to whom an
Option or a SAR is transferred by will or by the laws of descent and
distribution thereafter shall be treated as the Key Employee under this Plan.
7.7. SARs and Surrender Rights.
-------------------------
(a) SARs. The Committee acting in its absolute discretion may grant a
----
Key Employee a SAR which will give the Key Employee the right to the
appreciation in one, or more than one, share of Stock, and any such appreciation
shall be measured from the related SAR Share Value. The Committee shall have
the right to make any such grant subject to such additional terms as the
Committee deems appropriate, and such terms shall be set forth in the related
SAR Agreement.
(b) Option Surrender Rights. The Committee acting in its absolute
------------------------
discretion also may incorporate a provision in an Option Agreement to give a Key
Employee the right to surrender his or her Option in whole or in part in lieu of
the exercise (in whole or in part) of that Option to purchase Stock on any date
that
(1) the Fair Market Value of the Stock subject to such Option exceeds
the Option Price for such Stock, and
(2) the Option to purchase such Stock is otherwise exercisable.
(c) Procedure. The exercise of a SAR or a surrender right in an
---------
Option shall be effected by the delivery of the related SAR Agreement or Option
Agreement to the Committee (or to its delegate) together with a statement signed
by the Key Employee which specifies the number of shares of Stock as to which
the Key Employee, as appropriate, exercises his or her SAR or exercises his or
her right to surrender his or her Option and (at the Key Employee's option) how
he or she desires payment to be made with respect to such shares.
<PAGE>
(d) Payment. A Key Employee who exercises his or her SAR or right to
-------
surrender his or her Option shall (to the extent consistent with the exemption
under Rule 16b-3) receive a payment in cash or in Stock, or in a combination of
cash and Stock, equal in amount on the date such exercise is effected to (i) the
number of shares of Stock with respect to which, as applicable, the SAR or the
surrender right is exercised times (ii) the excess of the Fair Market Value of a
share of Stock on such date over, as applicable, the SAR Share Value for a share
of Stock subject to the SAR or the Option Price for a share of stock subject to
an Option. The Committee acting in its absolute discretion shall determine the
form and timing of such payment, and the Committee shall have the right (1) to
take into account whatever factors the Committee deems appropriate under the
circumstances, including any written request made by the Key Employee and
delivered to the Committee (or to its delegate) and (2) to forfeit a Key
Employee's right to payment of cash in lieu of a fractional share of stock if
the Committee deems such forfeiture necessary in order for the surrender of his
or her Option under this Section 7.7 to come within the exemption under Rule
16b-3. Any cash payment under this Section 7.7 shall be made from SunTrust's
general assets, and a Key Employee shall be no more than a general and unsecured
creditor of SunTrust with respect to such payment.
(e) Restrictions. Each SAR Agreement and each Option Agreement which
------------
incorporates a provision to allow a Key Employee to surrender his or her Option
shall incorporate such additional restrictions on the exercise of such SAR or
surrender right as the Committee deems necessary to satisfy the conditions to
the exemption under Rule 16b-3.
SECTION 8. RESTRICTED STOCK
---------- ----------------
8.1. Committee Action. The Committee acting in its absolute discretion
----------------
shall have the right to grant Restricted Stock to Key Employees under this Plan
from time to time. However, no more than 2,500,000 shares of Stock shall be
granted as Restricted Stock from the shares otherwise available for grants under
this Plan. Each Restricted Stock grant shall be evidenced by a Restricted Stock
Agreement, and each Restricted Stock Agreement shall set forth the conditions,
if any, which will need to be timely satisfied before the grant will be
effective and the conditions, if any, under which the Key Employee's interest in
the related Stock will be forfeited.
8.2. Effective Date. A Restricted Stock grant shall be effective (a) as
--------------
of the date set by the Committee when the grant is made or, if the grant is made
subject to one, or more than one, condition, (b) as of the date the Committee
determines that such conditions have been timely satisfied.
8.3. Conditions.
---- ----------
(a) Grant Conditions. The Committee acting in its absolute discretion
----------------
may make the grant of Restricted Stock to a Key Employee subject to the
satisfaction of one, or more than one, objective employment, performance or
other grant condition which the Committee deems appropriate under the
circumstances for Key Employees generally or for a Key Employee in particular,
and the related Restricted Stock Agreement shall set forth each such condition
and the deadline for satisfying each such grant condition. If a Restricted Stock
grant will become effective only upon the satisfaction of one, or more than one,
condition, the related shares of Stock shall be unavailable under Section 3 for
<PAGE>
the period which begins on the date as of which such grant is made and, if a
Restricted Stock grant fails to become effective in whole or in part under
Section 8.2, such period shall end on the date of such failure (i) for the
related shares of Stock subject to such grant (if the entire grant fails to
become effective) or (ii) for the related shares of Stock subject to that part
of the grant which fails to become effective (if only part of the grant fails to
become effective). If such period ends for any such shares of Stock, such shares
shall be treated under Section 3 as forfeited at the end of such period and
shall again become available under Section 3.
(b) Forfeiture Conditions. The Committee may make each Restricted
---------------------
Stock grant (if, when and to the extent that the grant becomes effective)
subject to one, or more than one, objective employment, performance or other
forfeiture condition which the Committee acting in its absolute discretion deems
appropriate under the circumstances for Key Employees generally or for a Key
Employee in particular, and the related Restricted Stock Agreement shall set
forth each such condition and the deadline for satisfying each such forfeiture
condition. A Key Employee's nonforfeitable interest in the shares of Stock
related to a Restricted Stock grant shall depend on the extent to which each
such condition is timely satisfied. Each share of Stock related to a Restricted
Stock grant shall again become available under Section 3 after such grant
becomes effective if such share is forfeited as a result of a failure to timely
satisfy a forfeiture condition, in which event such share of Stock shall again
become available under Section 3 as of the date of such failure. A Stock
certificate shall be issued (subject to the conditions, if any, described in
this Section 8.3(b) and Section 8.4) to, or for the benefit of, the Key Employee
with respect to the number of shares for which a grant has become effective as
soon as practicable after the date the grant becomes effective.
8.4. Dividends and Voting Rights.
---- ---------------------------
(a) Each Restricted Stock Agreement shall state whether the Key
Employee shall have a right to receive any cash dividends which are paid with
respect to his or her Restricted Stock after the date his or her Restricted
Stock grant has become effective and before the first day that the Key
Employee's interest in such stock is forfeited completely or becomes completely
nonforfeitable. If a Restricted Stock Agreement provides that a Key Employee
has no right to receive a cash dividend when paid, such agreement shall set
forth the conditions, if any, under which the Key Employee will be eligible to
receive one, or more than one, payment in the future to compensate the Key
Employee for the fact that he or she had no right to receive any cash dividends
on his or her Restricted Stock when such dividends were paid. If a Restricted
Stock Agreement calls for any such payments to be made, SunTrust shall make such
payments from SunTrust's general assets, and the Key Employee shall be no more
than a general and unsecured creditor of SunTrust with respect to such payments.
(b) If a Stock dividend is declared on such a share of Stock after the
grant is effective but before the Key Employee's interest in such Stock has been
forfeited or has become nonforfeitable, such Stock dividend shall be treated as
part of the grant of the related Restricted Stock, and a Key Employee's interest
in such Stock dividend shall be forfeited or shall become nonforfeitable at the
same time as the Stock with respect to which the Stock dividend was paid is
forfeited or becomes nonforfeitable.
<PAGE>
(c) If a dividend is paid other than in cash or Stock, the disposition
of such dividend shall be made in accordance with such rules as the Committee
shall adopt with respect to each such dividend.
(d) A Key Employee shall have the right to vote the Stock related to
his or her Restricted Stock grant after the grant is effective with respect to
such Stock but before his or her interest in such Stock has been forfeited or
has become nonforfeitable.
8.5. Satisfaction of Forfeiture Conditions. A share of Stock shall cease
-------------------------------------
to be Restricted Stock at such time as a Key Employee's interest in such Stock
becomes nonforfeitable under this Plan, and the certificate representing such
share shall be reissued as soon as practicable thereafter without any further
restrictions related to Section 8.3(b) or Section 8.4 and shall be transferred
to the Key Employee.
SECTION 9. SECURITIES REGISTRATION
---------- -----------------------
Each Option Agreement, SAR Agreement and Restricted Stock Agreement
shall provide that, upon the receipt of shares of Stock as a result of the
exercise of an Option (or any related surrender right) or a SAR or the
satisfaction of the forfeiture conditions under a Restricted Stock Agreement,
the Key Employee shall, if so requested by SunTrust, hold such shares of Stock
for investment and not with a view of resale or distribution to the public and,
if so requested by SunTrust, shall deliver to SunTrust a written statement
satisfactory to SunTrust to that effect. As for Stock issued pursuant to this
Plan, SunTrust at its expense shall take such action as it deems necessary or
appropriate to register the original issuance of such Stock to a Key Employee
under the Securities Act of 1933, as amended, or under any other applicable
securities laws or to qualify such Stock for an exemption under any such laws
prior to the issuance of such Stock to a Key Employee; however, SunTrust shall
have no obligation whatsoever to take any such action in connection with the
transfer, resale or other disposition of such Stock by a Key Employee.
SECTION 10. LIFE OF PLAN
----------- ------------
No Option or SAR or Restricted Stock shall be granted under this Plan after
the earlier of
(a) December 31, 2004, in which event this Plan otherwise thereafter
shall continue in effect until all outstanding Options (and any related
surrender rights) and SARs have been exercised in full or no longer are
exercisable and all Restricted Stock grants under this Plan have been forfeited
or the forfeiture conditions on the related Stock have been satisfied in full,
or
(b) the date on which all of the Stock reserved under Section 3
of this Plan has (as a result of the exercise of all Options (and any related
surrender rights) and all SARs granted under this Plan or the satisfaction of
the forfeiture conditions on Restricted Stock) been issued or no longer is
available for use under this Plan, in which event this Plan also shall terminate
on such date.
<PAGE>
SECTION 11. ADJUSTMENT
----------- ----------
The number of shares of Stock reserved under Section 3 of this Plan, the
number of shares of Stock related to Restricted Stock grants under this Plan and
any related grant conditions and forfeiture conditions, the number of shares of
Stock subject to Options granted under this Plan and the Option Price of such
Options and the SAR Grant Value and the number of shares of Stock related to any
SAR all shall be adjusted by the Board in an equitable manner to reflect any
change in the capitalization of SunTrust, including, but not limited to, such
changes as stock dividends or stock splits. Furthermore, the Board shall have
the right to adjust (in a manner which satisfies the requirements of Section
424(a) of the Code) the number of shares of Stock reserved under Section 3 of
this Plan, the number of shares of Stock related to Restricted Stock grants
under this Plan and any related grant conditions and forfeiture conditions, the
number of shares subject to Options granted under this Plan and the Option Price
of such Options and the SAR Grant Value and the number of shares of Stock
related to any SAR in the event of any corporate transaction described in
Section 424(a) of the Code which provides of the substitution or assumption of
such Options, SARs or Restricted Stock grants. If any adjustment under this
Section 11 would create a fractional share of Stock or a right to acquire a
fractional share of Stock, such fractional share shall be disregarded and the
number of shares of Stock reserved under this Plan and the number subject to any
Options or related to any SARs or Restricted Stock grants under this Plan shall
be the next lower number of shares of Stock, rounding all fractions downward.
An adjustment made under this Section 11 by the Board shall be conclusive and
binding on all affected persons and, further, shall not constitute an increase
in "the number of shares reserved under Section 3" within the meaning of Section
13(1) of this Plan.
SECTION 12. CHANGE IN CONTROL
----------- -----------------
If there is a Change in Control and the Board determines that no adequate
provision has been made as part of such Change in Control for either the
assumption of the Options, SARs and Restricted Stock grants outstanding under
this Plan or for the granting of comparable, substitute stock options, stock
appreciation rights and restricted stock grants, (1) each outstanding Option and
SAR at the direction and discretion of the Board (a) may (subject to such
conditions, if any, as the Board deems appropriate under the circumstances) be
cancelled unilaterally by SunTrust in exchange for the number of whole shares of
Stock (and cash in lieu of a fractional share), if any, which each Key Employee
would have received if on the date set by the Board he or she had exercised his
or her SAR in full or if he or she had exercised a right to surrender his or her
outstanding Option in full under Section 7.7 of this Plan or (b) may be
cancelled unilaterally by SunTrust if the Option Price or SAR Share Value equals
or exceeds the Fair Market Value of a share of Stock on such date and (2) the
grant conditions, if any, and forfeiture conditions on all outstanding
Restricted Stock grants may be deemed completely satisfied on the date set by
the Board.
SECTION 13. AMENDMENT OR TERMINATION
----------- ------------------------
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of SunTrust (1) to
increase the number of shares reserved under Section 3, (2) to extend the
<PAGE>
maximum life of the Plan under Section 10 or the maximum exercise period under
Section 7.5, (3) to decrease the minimum option price under Section 7.4 or the
minimum SAR Share Value, (4) to change the class of employees eligible for
Options, SARs or Restricted Stock grants under Section 6 or to otherwise
materially modify (within the meaning of Rule 16b-3) the requirements as to
eligibility for participation in this Plan or (5) to otherwise materially
increase (within the meaning of Rule 16b-3) the benefits accruing to Key
Employees under this Plan. The Board also may suspend the granting of Options,
SARs and Restricted Stock under this Plan at any time and may terminate this
Plan at any time; provided, however, SunTrust shall not have the right to
modify, amend or cancel any Option, SAR or Restricted Stock granted before such
suspension or termination unless (1) the Key Employee consents in writing to
such modification, amendment or cancellation or (2) there is a dissolution or
liquidation of SunTrust or a transaction described in Section 11 or Section 12
of this Plan.
SECTION 14. MISCELLANEOUS
----------- -------------
14.1. Shareholder Rights. No Key Employee shall have any rights as a
------------------
shareholder of SunTrust as a result of the grant of an Option or a SAR under
this Plan or his or her exercise of such Option or SAR pending the actual
delivery of the Stock subject to such Option to such Key Employee. Subject to
Section 8.4, a Key Employee's rights as a shareholder in the shares of Stock
related to a Restricted Stock grant which is effective shall be set forth in the
related Restricted Stock Agreement.
14.2. No Contract of Employment. The grant of an Option, SAR or
-------------------------
Restricted Stock to a Key Employee under this Plan shall not constitute a
contract of employment and shall not confer on a Key Employee any rights upon
his or her termination of employment in addition to those rights, if any,
expressly set forth in the Option Agreement which evidences his or her Option,
the SAR Agreement which evidences his or her SAR or the Restricted Stock
Agreement related to his or her Restricted Stock.
14.3. Withholding. The exercise of any Option or SAR granted under this
-----------
Plan and the acceptance of a Restricted Stock grant shall constitute a Key
Employee's full and complete consent to whatever action the Committee deems
necessary to satisfy the federal and state tax withholding requirements, if any,
which the Committee acting in its discretion deems applicable to such exercise
or such Restricted Stock. The Committee also shall have the right to provide in
an Option Agreement, SAR Agreement or Restricted Stock Agreement that a Key
Employee may elect to satisfy federal and state tax withholding requirements
through a reduction in the number of shares of Stock actually transferred to him
or to her under this Plan, and any such election and any such reduction shall be
effected so as to satisfy the conditions to the exemption under Rule 16b-3.
<PAGE>
14.4. Construction. This Plan shall be construed under the laws of the
------------
State of Georgia.
Executed this 8th day of November, 1994.
SUNTRUST BANKS, INC.
By: /s/ Mary T. Steele
------------------
Title: First Vice President
--------------------
ATTEST:
/s/ Margaret U. Hodgson
-----------------------
Title: Assistant Secretary
----------------------
(CORPORATE SEAL)
<PAGE>
Exhibit 10.19
SunTrust Banks, Inc. Deferred Compensation Plan
Effective October 1, 1999
WHEREAS SunTrust Banks, Inc. (the "Corporation") established the SunTrust
Banks, Inc. Management Incentive Plan Deferred Compensation Fund (the "MIP
Fund") effective January 1, 1986 to provide an unfunded plan whereby
participants in the SunTrust Banks, Inc. Management Incentive Plan (the "MIP
Plan") may defer receipt of all or a portion of their MIP Plan Awards until they
retire or otherwise terminate employment with the Corporation and its
Affiliates; and
WHEREAS, the Corporation established the SunTrust Banks, Inc. Performance
Unit Plan Deferred Compensation Fund (the "PUP Fund") effective January 1, 1987,
as amended and restated February 16, 1996, to provide an unfunded plan whereby
participants in the SunTrust Banks, Inc. Performance Unit Plan (the "PUP Plan")
may defer receipt of all or a portion of their PUP Plan Awards until they retire
or otherwise terminate employment with the Corporation and its Affiliates; and
WHEREAS, the Corporation wishes to maintain a single deferred compensation
plan, which shall include the aforementioned MIP Fund and PUP Fund, and whereby
participants in certain selected bonus and incentive programs ("Eligible
Plan(s)") may defer receipt of all or a portion of their future Awards as
provided herein;
NOW THEREFORE, the Corporation amends and restates the MIP Fund and PUP
Fund as the SunTrust Banks, Inc. Deferred Compensation Plan (the "Deferral
Plan") effective October 1, 1999 in order to provide a nonqualified and unfunded
deferred compensation program to a select group of management or highly
compensated employees of the Corporation and its Affiliates who are designated
as Eligible Employees. All accounts in the MIP Fund and PUP Fund existing as of
September 30, 1999 shall be subject to the terms of this Deferral Plan.
1. Definitions
1.1 Account means the bookkeeping account that is established for each
-------
Participant and used to measure his deferred benefit under this
Deferral Plan. A Participant's Account shall be utilized solely as a
device for the determination and measurement of the amounts to be paid
to the Participant pursuant to this Deferral
1
<PAGE>
Plan. A Participant's Account shall not constitute or be treated as a
trust fund of any kind.
1.2 Award means the bonus, incentive or commission pay, or other similar
-----
variable compensation, granted under an Eligible Plan.
1.3 Beneficiary means the person or entity entitled to receive any
-----------
benefits payable under this Deferral Plan at the Participant's death.
A Participant may name one or more primary Beneficiaries and one or
more secondary Beneficiaries. A Participant may revoke a Beneficiary
designation by filing a new Beneficiary Designation Form or a written
revocation with the Deferral Plan Committee. If the Deferral Plan
Committee is not in receipt of a properly completed Beneficiary
Designation Form at the Participant's death, or if none of the
Beneficiaries named by the Participant survives the Participant or is
in existence at the date of the Participant's death, then the
Participant's Beneficiary shall be the Participant's estate.
1.4 Beneficiary Designation Form means the form that a Participant uses
----------------------------
to name his Beneficiary or Beneficiaries.
1.5 Code means the Internal Revenue Code of 1986, as amended.
----
1.6 Deferral Election Form means the form that a Participant uses to
----------------------
elect to defer receipt of all or a portion of his Eligible Plan(s)
Awards pursuant to this Deferral Plan.
1.7 Deferral Plan means the SunTrust Banks, Inc. Deferred Compensation
-------------
Plan described in this document as amended from time to time.
1.8 Deferral Plan Committee means the persons designated by the
-----------------------
Corporation's Chief Financial Officer to administer this Deferral
Plan.
1.9 Designated Distribution Date means the date determined by the
----------------------------
Deferral Plan Committee within the first quarter of the specified
calendar year selected by a Participant for payment of an in-service
distribution pursuant to paragraph 6.3.
1.10 Election Date means the date by which an Eligible Employee must
-------------
submit a valid Deferral Election Form for a Plan Year. The Election
Date shall be such date, as determined by the Deferral
2
<PAGE>
Plan Committee in its discretion, that is on or before the last
business day of the calendar year immediately prior to the Plan Year
in which an Award may be granted. If an individual becomes an Eligible
Employee after the Election Date for a Plan Year has passed, the
Deferral Plan Committee has sole discretion to determine whether such
individual may submit a Deferral Election Form for that Plan Year; if
allowed to participate, such individual shall have an Election Date
that is no more than thirty (30) days after a notice of approval from
the Deferral Plan Committee is sent, and such individual's Deferral
Election Form shall apply only to an Award that has not been earned as
of the Election Date.
1.11 Eligible Employee means an individual who is a highly compensated or
-----------------
management employee as described in Exhibit "A" for the applicable
Plan Year. The Deferral Plan Committee shall have sole discretion to
determine whether an individual qualifies as an Eligible Employee and
when he ceases to be an Eligible Employee and to resolve any disputes
regarding eligibility under this Deferral Plan.
1.12 Eligible Plans means the bonus, incentive, commission or similar
--------------
variable pay plans shown in Exhibit "A."
1.13 Investment Fund means each investment vehicle that, for bookkeeping
---------------
purposes, is used to determine the earnings that are credited and the
losses that are charged to each Participant's Account. The Deferral
Plan Committee shall be responsible for selecting the Investment Funds
available hereunder.
1.14 Participant, with respect to any Plan Year, means (i) an Eligible
-----------
Employee who has executed and timely filed with the Deferral Plan
Committee a valid Deferral Election Form for that Plan Year and (ii)
an Eligible Employee, all or part of whose Award is subject to
mandatory deferral as described in paragraph 2.3. An individual ceases
to be a Participant when his entire benefit under the Deferral Plan
has been distributed or forfeited.
1.15 Plan Year means the calendar year.
---------
1.16 Valuation Date means the last business day of each Plan Year and such
--------------
other dates as the Deferral Plan Committee may determine from time
to time.
3
<PAGE>
2. Deferral Election
2.1 Election. An Eligible Employee who wishes to defer receipt of all or
--------
a portion of an Award with respect to a Plan Year must file a Deferral
Election Form with the Deferral Plan Committee on or before the
Election Date. A deferral election under this paragraph 2.1 shall
become irrevocable once the deadline for filing such elections has
expired.
2.2 Amount of Deferral. The portion of the Award that may be deferred
------------------
shall be specified in each Eligible Plan, although the Deferral Plan
Committee is authorized, in its discretion, to set minimum or maximum
deferral amounts for each Plan Year. Except as provided in paragraph
2.3, an Award shall not be deferred pursuant to the provisions of this
Deferral Plan unless the Participant properly files a Deferral
Election Form in accordance with paragraph 2.1 herein. Thereafter,
only the portion of the Award that is subject to the Deferral Election
Form shall be controlled by, and subject to, this Deferral Plan.
2.3 Mandatory Deferrals. If any portion of an Award is subject to
-------------------
mandatory deferral (as provided in the Eligible Plan), then such
portion of the Award shall be subject to the provisions of this
Deferral Plan regardless of whether the Eligible Employee files a
Deferral Election Form with the Deferral Plan Committee, provided,
however, that the provisions of paragraphs 6.2, 6.3, 6.6 and 6.7 shall
not apply to any such portion of an Award until the Participant
becomes 100% vested in such portion.
2.4 Prior Deferral Elections. All prior deferral elections made pursuant
------------------------
to the MIP Fund and PUP Fund shall remain valid under this Deferral
Plan.
3. Investment Election
3.1 Generally. Each Participant who has a benefit in the MIP Fund or the
---------
PUP Fund as of September 30, 1999, must make an election to allocate
his existing balance in each such Fund among the Investment Funds in
increments of one percent (1%). Each new Participant must make an
investment election for his initial deferral under this Plan. All
future deferrals of Awards shall be deemed to be invested pursuant to
the Participant's most recent investment election. A Participant may
elect to
4
<PAGE>
reallocate his Account balance among the Investment Funds pursuant to
the administrative procedures established by the Deferral Plan
Committee.
3.2 Default Investment. If a Participant fails to make an initial
------------------
investment election pursuant to paragraph 3.1, his Account shall be
deemed to be invested in an Investment Fund selected by the Deferral
Plan Committee that primarily invests in fixed-income investments with
shorter average maturities than other Investment Funds.
3.3 No Actual Investment Required. Notwithstanding the preceding
-----------------------------
paragraphs of this Section 3, this Deferral Plan shall remain an
unfunded plan and the description of Investment Funds in this Section
3, including any election rights of a Participant, shall not obligate
the Corporation to set aside any funds or to make any actual
investments pursuant to this Deferral Plan.
3.4 Compliance with Securities Laws. Notwithstanding the foregoing
--------------------------------
provisions of this Section 3, if a Participant is subject to Section
16 of the Securities Exchange Act of 1934 (the "Exchange Act"), then
such Participant's investment elections shall be subject to such
additional rules as may be established by the Deferral Plan Committee
as it deems necessary to ensure that transactions by such Participant
comply with Rule 16b-3 of the Exchange Act (or any successor rules).
4. Allocation to Accounts
A Participant's benefit under this Deferral Plan is equal to the vested
balance of his Account. As of each Valuation Date, amounts shall be
allocated to and charged against each Participant's Account in accordance
with this Section 4.
4.1 Distributions and Forfeitures. A Participant's Account will be
-----------------------------
reduced by any distributions made under Section 6 and by any
forfeitures pursuant to paragraph 5.2 or 6.7.
4.2 Deferred Compensation. For each Plan Year, each Participant's Account
---------------------
shall be credited with deferrals of Awards in accordance with the
Participant's Deferral Election Form for that Plan Year or in
accordance with the provisions of any Eligible Plan requiring
mandatory deferrals. The deferred amount shall be credited to the
Account as of the date(s) that the Award
5
<PAGE>
would otherwise have been paid to the Participant but for the deferral
pursuant to this Deferral Plan.
4.3 Earnings. Each Participant's Account will be credited with earnings
--------
or charged with losses based on the performance of each Investment
Fund as though the Participant's Account were actually invested in
such Investment Fund, at such times as determined by the Deferral Plan
Committee, but not less frequently than the last business day of the
Plan Year. Earnings and losses will continue to be credited or charged
to the Participant's Account in accordance with the preceding sentence
until the Valuation Date immediately preceding the date of
distribution of Plan benefits or the date of forfeiture pursuant to
paragraph 5.2 or 6.7. The amount of such deemed investment gain or
loss shall be determined by the Deferral Plan Committee and such
determinations shall be final and conclusive upon all concerned.
5. Vesting
5.1 Generally. Except as provided in paragraphs 5.2 and 6.7, a
---------
Participant's interest in his benefit under this Deferral Plan is one
hundred percent (100%) vested and nonforfeitable at all times.
5.2 Exception. If a Participant's Account consists of an Award that is
---------
subject to a vesting period (as defined in the Eligible Plan), and the
Participant terminates employment with the Corporation or its
Affiliates for any reason prior to meeting the vesting requirements
for such Award, then that portion of his Account that is not vested,
and the earnings on such nonvested portion shall be forfeited and
deducted from the Participant's Account.
6. Distributions
6.1 Normal Form of Payment and Commencement. Except as otherwise provided
---------------------------------------
in this Section 6, when the Participant separates from service with
the Corporation and its Affiliates for any reason, he shall be paid
his vested benefit under this Deferral Plan in a single lump sum cash
payment during the first quarter of the calendar year immediately
following the year of his separation. The amount payable to the
Participant shall be equal to the vested balance of the Participant's
Account as of the Valuation Date immediately preceding the date of
6
<PAGE>
distribution, less withholding for applicable federal and state taxes.
6.2 Alternate Form of Payment Election. At any time prior to the January
----------------------------------
1 following a Participant's separation from service, a Participant may
elect, in lieu of the lump sum payment described in paragraph 6.1, to
receive payment of his total vested benefit under this Deferral Plan
in five (5) substantially equal annual installments payable in cash.
The initial installment shall be paid during the first quarter of the
calendar year immediately following the year of his separation. Each
subsequent annual installment shall be paid during the first quarter
of each of the subsequent four calendar years. Each installment
payment shall be determined based on the balance of the Participant's
Account as of the Valuation Date immediately preceding the date of
payment and shall be reduced by withholding for applicable federal and
state taxes. A Participant's election to receive installment payments
of his Deferral Plan benefit pursuant to this paragraph 6.2 shall be
made in writing on such forms as may be provided by the Deferral Plan
Committee and shall not be effective until received and approved by
the Deferral Plan Committee.
6.3 In-Service Distribution Election without Reduction. A Participant may
--------------------------------------------------
file an election with the Deferral Plan Committee for a future in-
service distribution of his deferred Award(s) for each Plan Year
without incurring a penalty, provided the election is made no less
than four (4) years and no more than fifteen (15) years prior to the
Designated Distribution Date. A Participant's election for an in-
service distribution pursuant to this paragraph 6.3 shall be a part of
his Deferral Election Form and shall be filed with the Deferral Plan
Committee on or before the Election Date for the applicable Plan Year.
A Participant's Award to which an in-service distribution election
applies pursuant to this paragraph 6.3 shall be maintained as a sub-
account of the Participant's Account unless all of the Participant's
Awards deferred pursuant to this Deferral Plan are subject to an in-
service distribution election with the same Designated Distribution
Date. Awards deferred and not subject to an in-service distribution
election are distributed pursuant to paragraph 6.1 or 6.2.
7
<PAGE>
6.3.1 Form and Commencement. An in-service distribution shall be
---------------------
paid in a single lump-sum cash payment during the first quarter
of the calendar year in which the Designated Distribution Date
occurs, based on the value of the Participant's vested sub-
account which is to be distributed in that year, as of the
Valuation Date immediately preceding the date of such
distribution. The amount of an in-service distribution shall be
reduced by applicable withholding for federal and state taxes.
6.3.2 Revoking In-Service Distribution Election. A Participant may
-----------------------------------------
revoke an election for an in-service distribution by filing a
written revocation with the Deferral Plan Committee at least
one year prior to the Designated Distribution Date. Upon such
revocation, the provisions of paragraph 6.1 shall apply, unless
the Participant makes a valid installment election payment
pursuant to paragraph 6.2.
6.3.3 Effect of Termination or Death. If a Participant should die or
------------------------------
otherwise separate from service with the Corporation and its
Affiliates before his Designated Distribution Date(s), any and
all outstanding in-service distribution elections shall be
automatically revoked, and any portion of his Account subject
to an in-service distribution election pursuant to this
paragraph 6.3 shall be paid in accordance with paragraph 6.1 or
6.2.
6.4 Death. In the event of a Participant's death, the Deferral Plan
-----
Committee shall authorize payment to the Participant's Beneficiary of
any vested benefits due hereunder but not paid to the Participant
prior to his death. Payment shall be made at the same time as if the
Participant had retired on the date of his death and shall be made in
accordance with paragraph 6.1, or if the Participant has a valid
installment election in effect at his death, then in accordance with
paragraph 6.2. The Beneficiary may request a change the form of
payment by making a written request to the Deferral Plan Committee
prior to January 1 of the calendar year in which the benefit will be
paid. The Deferral Plan Committee has sole discretion and authority to
approve or deny the Beneficiary's request, taking into account such
factors as the Deferral Plan Committee may deem appropriate.
8
<PAGE>
If a Participant dies after having received one or more installment
payments but before all installment payments have been made, the
remaining annual installment payments shall be paid to his Beneficiary
at the same time they would otherwise have been paid to the
Participant. The Beneficiary may request an accelerated payment in
the form of a lump-sum cash payment by making a written request to the
Deferral Plan Committee prior to the January 1 of the calendar year in
which the benefit will be paid. The Deferral Plan Committee has sole
discretion and authority to approve or deny the Beneficiary's request.
6.5 Disability. A Participant shall be entitled to payment of his
----------
Deferred Plan benefit in the event of his Total Disability only if the
conditions of subparagraphs 6.5.1 and 6.5.2 are met. In such
situation, payment of the Participant's benefit shall commence
pursuant to paragraph 6.1 or 6.2 as if the Participant separated from
service on the date all such conditions are met. A Participant shall
be considered to have a Total Disability only if:
6.5.1 The Participant has incurred a "Total Disability" as such term
is defined in the SunTrust Banks, Inc. Long-Term Disability
Plan (or any successor plan), which entitles the Participant
to disability payments under such Plan; and
6.5.2 The Deferral Plan Committee determines, in its sole
discretion, based upon medical evidence furnished by the
Participant, that the disability is anticipated to be a
permanent disability.
6.6 Extreme Financial Hardship. A Participant may request a distribution
--------------------------
of all or part of his vested Deferral Plan benefit prior to the date
specified in paragraphs 6.1, 6.2, 6.3, and 6.5 due to an extreme
financial hardship, by submitting a written request to the Deferral
Plan Committee with evidence satisfactory to the Deferral Plan
Committee to demonstrate the circumstances constituting the extreme
financial hardship. The Deferral Plan Committee, in its sole
discretion, shall determine whether an extreme financial hardship
exists. An extreme financial hardship means an immediate, catastrophic
financial need of the Participant occasioned by (i) a tragic event,
such as the death, total disability, serious injury or illness of a
Participant or the Participant's spouse, child or dependent; or (ii)
an extreme
9
<PAGE>
financial reversal or other impending catastrophic event which has
resulted in, or will result in, harm to the Participant or the
Participant's spouse, child or dependent. A distribution for extreme
financial hardship may not exceed the amount required to meet the
hardship and may be made only if the Deferral Plan Committee finds the
extreme financial hardship may not be alleviated from other resources
reasonably available to the Participant, including without limitation,
liquidation of investment assets or luxury assets, or loans from
financial institutions or other sources. The Deferral Plan Committee
shall have the authority to require the Participant to provide such
evidence as the Committee deems necessary to determine whether
distribution is warranted pursuant to this paragraph 6.6. The Deferral
Plan Committee shall use uniform and nondiscriminatory standards in
reviewing any requests for distributions to meet an extreme financial
hardship.
6.6.1 Form and Commencement. A hardship distribution to a
---------------------
Participant pursuant to this paragraph 6.6 shall be made in a
single lump-sum cash payment (less withholding for applicable
federal and state taxes) as soon as practicable after the
Deferral Plan Committee approves the hardship request. Amounts
distributed for hardship shall be deemed to reduce pro rata
the deemed investment in each Investment Fund in the
Participant's Account.
6.6.2 Accelerated Installment Payments. A Participant who has
--------------------------------
commenced receiving installment payments pursuant to paragraph
6.2 may request acceleration of such payments in the event of
an extreme financial hardship. The Deferral Plan Committee may
permit accelerated payments to the extent such accelerated
payment does not exceed the amount necessary to meet the
extreme financial hardship.
6.7 Early Withdrawal Election with 10% Reduction. A Participant may file
--------------------------------------------
a written election with the Deferral Plan Committee to receive an
early withdrawal of any vested portion of his Account, provided,
however, that such early withdrawal payment shall be subject to a 10%
forfeiture, which shall reduce the balance of the Participant's
Account. An early withdrawal payment shall be made in a single lump-
sum cash payment (less applicable withholding for federal and state
taxes) as soon as practicable after the Deferral Plan Committee
10
<PAGE>
receives and approves a written request for early withdrawal. Amounts
withdrawn under this paragraph 6.7 shall be deemed to reduce pro rata
the deemed investment in each Investment Fund in the Participant's
Account. A Participant who receives an early withdrawal may not make
an election to defer his Award(s) pursuant to paragraph 2.1 for a
period of one year beginning on the date the early withdrawal payment
is made.
6.8 Payment to Guardian, Legal Representative or Other. If a benefit
--------------------------------------------------
hereunder is payable to a minor or a person declared incompetent or to
a person incapable of handling the disposition of his property, the
Deferral Plan Committee may direct payment of such Plan benefit to the
guardian, legal representative or person having the care and custody
of such minor, incompetent or person. The Deferral Plan Committee may
require proof of incompetency, minority, incapacity or guardianship as
it may deem appropriate prior to distribution of the Plan benefit. A
payment pursuant to this paragraph 6.8 shall completely discharge the
Deferral Plan Committee and the Corporation from all liability with
respect to such benefit.
7. Plan Administration
7.1 Responsibility of Deferral Plan Committee. This Deferral Plan shall
-----------------------------------------
be administered by the Deferral Plan Committee, which shall consist of
not less than three (3) persons to be appointed and to serve at the
discretion of the Corporation's Chief Financial Officer. The Deferral
Plan Committee shall have sole discretionary authority for the
operation, interpretation and administration of the Plan. All
determinations and actions of the Deferral Plan Committee within its
discretionary authority shall be final, conclusive and binding on all
persons, except that the Deferral Plan Committee may revoke or modify
a determination or action it determines was previously made in error.
The Deferral Plan Committee shall exercise all powers and authority
given to it in a nondiscriminatory manner, and shall apply uniform
administrative rules of general application to insure that all
Participants and Beneficiaries in similar circumstances are treated
similarly. In addition to the implied powers and duties that may be
needed to carry out the administration of the Deferral Plan, the
Deferral Plan Committee shall have the following specific powers and
responsibilities:
11
<PAGE>
7.1.1 To establish, interpret, amend, revoke and enforce rules and
regulations as required or desirable for the efficient
administration of the Deferral Plan.
7.1.2 To review and interpret Deferral Plan provisions and to remedy
provisions that are ambiguous or inconsistent or contain
omissions.
7.1.3 To determine all questions relating to an individual's
eligibility to participate in the Deferral Plan and the
validity of an individual's Deferral Election Form.
7.1.4 To determine a Participant's or Beneficiary's eligibility for
benefits from the Deferral Plan and to authorize payment of
benefits.
7.1.5 To delegate any of its rights, powers and duties to one or more
members, or to any nonmember delegate(s). Such delegation may
include, without limitation, the power to execute any document
on behalf of the Deferral Plan Committee and to accept service
of legal process for the Committee at the principal office of
the Corporation.
7.1.6 To employ outside professionals and to enter into agreements on
behalf of the Corporation necessary or desirable for
administration of the Deferral Plan.
7.2 Deferral Plan Committee Action. The Deferral Plan Committee may take
------------------------------
action by majority vote of members attending any meeting where a
majority of the members are present. The Deferral Plan Committee may
also take any action without a meeting that is approved by a majority
of the Deferral Plan Committee by a written document signed by a
member of the Committee.
7.3 Disqualification of Deferral Plan Committee Member. A member of the
--------------------------------------------------
Deferral Plan Committee who is otherwise an Eligible Employee may
participate in this Deferral Plan but shall not make any decisions
solely with respect to his own participation and benefits under the
Deferral Plan.
7.4 Books, Records and Expenses. The books and records to be maintained
---------------------------
for the purpose of this Deferral Plan shall be maintained by the
Deferral Plan Committee and subject to the
12
<PAGE>
supervision and control of the Committee. The Corporation shall pay
the general expenses of administering this Deferral Plan.
7.5 Compensation. No member of the Deferral Plan Committee who is an
------------
employee of the Corporation or an Affiliate shall receive any
additional compensation for his services as a Deferral Plan Committee
member.
7.6 Indemnity. The Corporation shall indemnify and hold harmless the
---------
members of the Deferral Plan Committee against any and all claims,
loss, damage, expense or liability arising from any action or failure
to act with respect to this Deferral Plan, except in the case of a
member's own gross negligence or willful misconduct.
8. Miscellaneous
8.1 Construction. The headings and subheadings in this Deferral Plan have
------------
been set forth for convenience of reference only and have no
substantive effect whatsoever. Whenever any words are used herein in
the masculine, they shall be construed as though they were used in the
feminine in all cases where they would so apply; and whenever any
words are used herein in the singular or in the plural, they shall be
construed as though they were used in the plural or in the singular,
as the case may be, in all cases where they would so apply.
8.2 Validity. In case any provision of this Deferral Plan shall be held
--------
illegal or invalid for any reason, such illegality or invalidity shall
not affect the remaining parts hereof, but this Deferral Plan shall be
construed and enforced as if such illegal and invalid provision had
never been inserted herein.
8.3 Non-Alienability of Benefits. Except as required by law, neither the
----------------------------
Participant nor any Beneficiary entitled to payments after the death
of the Participant shall have any power to alienate, transfer, assign,
or otherwise encumber in advance any of the benefits that may become
due hereunder and any attempt to do so shall be null and void; nor
shall any such benefits be subject to attachment, garnishment or
execution, or be transferable by operation of law in the event of the
Participant's or Beneficiary's bankruptcy, insolvency, or otherwise.
13
<PAGE>
8.4 No Participation Rights or Contract of Employment. Nothing in this
-------------------------------------------------
Deferral Plan shall be construed to give any employee of the
Corporation or an Affiliate any right to be selected as a Participant
or to be granted an Award under the Eligible Plan(s) other than as is
provided herein. Nothing in the Deferral Plan or any Eligible Plan or
any election form executed pursuant hereto shall be construed to limit
in any way the right of the Corporation or an Affiliate to terminate a
Participant's employment at any time, without regard to the effect of
such termination on any rights such Participant would otherwise have
under the Plan or any deferral election, or give any right to a
Participant to remain employed by the Corporation or its Affiliates in
any particular position or at any particular rate of remuneration.
8.5 Liability. No member of the Corporation's Board of Directors or the
---------
Deferral Plan Committee and no officer or employee of the Corporation
or an Affiliate shall be liable to any person for any action taken or
omitted in connection with the administration of this Deferral Plan
unless attributable to his own fraud and willful misconduct; nor shall
the Corporation or any Affiliate be liable to any person for such
action unless attributable to fraud or willful misconduct on the part
of the director, officer or employee of the Corporation or an
Affiliate.
8.6 Unfunded Plan. This Deferral Plan is an unfunded plan maintained
-------------
primarily for a select group of management or highly compensated
employees. The obligation of the Corporation to provide any benefits
under the Deferral Plan is a mere contractual liability and the
Corporation is not required to establish or maintain any special or
separate fund or segregate any assets for the payment benefits under
this Deferral Plan. Participants and their Beneficiaries shall not
have any interest in any particular assets of the Corporation by
reason of its obligation under the Deferral Plan and they are at all
times unsecured creditors of the Corporation with respect to any claim
for benefits under the Deferral Plan. All amounts of compensation
deferred under this Deferral Plan, all property and rights purchased
with such amounts and any income attributable to such amounts, rights
or property shall constitute general funds of the Corporation.
The Corporation may, but is not required to, establish any special or
separate fund or segregate any assets for the
14
<PAGE>
payment of benefits under this Deferral Plan. In the event the
Corporation should establish a "rabbi" trust to assist in meeting the
Corporation's financial obligations under this Deferral Plan, the
assets of such trust shall be subject to the claims of creditors of
the Corporation in the event of the Corporation's insolvency, as
defined in such trust agreement, and Participants in this Deferral
Plan and their Beneficiaries shall have no preferred claim on, or any
legal or equitable rights, claims or interest in any particular assets
of such trust. To the extent payments of benefits under this Deferral
Plan are actually made from any such trust or from any other source,
the Corporation's obligation to make such payments is satisfied, but
to the extent not so paid, payment of benefits under this Deferral
Plan remains the obligation of, and shall be paid by, the Corporation.
8.7 Right to Amend or Terminate Plan. The Corporation expects to continue
--------------------------------
this Deferral Plan indefinitely, but reserves the right to amend or
discontinue the Deferral Plan should it deem such an amendment or
discontinuance necessary or desirable. The Corporation hereby
authorizes and empowers the Deferral Plan Committee to amend this
Deferral Plan in any manner that is consistent with the purpose of
this Deferral Plan as set forth above, without further approval from
the Board except as to any matter that the Deferral Plan Committee
determines may result in a material increased cost to the Corporation.
However, if the Corporation or Deferral Plan Committee should amend or
discontinue this Deferral Plan, the Corporation shall be liable for
payment of any Awards deferred under this Plan and earnings thereon
that have accrued and are vested as of the date of such action.
8.8 Binding Effect. This Deferral Plan shall be binding upon and inure to
--------------
the benefit of any successor of the Corporation and any successor
shall be deemed substituted for the Corporation under this Deferral
Plan and shall assume the rights, obligations and liabilities of the
Corporation hereunder and be obligated to perform the terms and
conditions of this Deferral Plan. As used in this paragraph 8.8, the
term "successor" shall include any person, firm, corporation or other
business entity or related group of such persons, firms, corporations
or business entities which at any time, whether by merger, purchase,
reorganization, liquidation or otherwise, or by means of a series of
such transactions, acquires all or substantially all of the assets or
business of the Corporation.
15
<PAGE>
8.9 Governing Law. The Deferral Plan and all actions taken pursuant to
-------------
the Deferral Plan shall be governed by the laws of the State of
Georgia except to the extent such laws are superseded by federal law.
16
<PAGE>
Executed this 1st day of September, 1999.
--- ----------
SunTrust Banks, Inc.
Attest:
By: /s/ Margaret U. Hodgson By: /s/ Mary T. Steele
----------------------------- ----------------------------
Title: Assistant Corporate Secretary Title: Senior Vice President
----------------------------- ----------------------------
17
<PAGE>
AMENDMENT NUMBER ONE TO THE
SUNTRUST BANKS, INC.
DEFERRED COMPENSATION PLAN
WHEREAS, SunTrust Banks, Inc. (the "Corporation") established the SunTrust
Banks, Inc. Deferred Compensation Plan effective October 1, 1999 (the "Deferral
Plan"), a plan whereby participants in certain selected bonus and incentive
programs sponsored by the Corporation may defer receipt of all or a portion of
their future awards; and
WHEREAS, paragraph 8.7 of the Deferral Plan authorizes the Deferral
Committee to amend the Deferral Plan in any manner that is consistent with the
Deferral Plan's purpose, except as to any matter that the Deferral Plan
Committee determines may result in a material increased cost to the Corporation;
and
WHEREAS, the Deferral Plan Committee wishes to amend the Deferral Plan to
include additional provisions with respect to Mandatory Deferrals;
NOW, THEREFORE, IN WITNESS HEREOF, the Deferral Committee through its
authorized delegate, adopts Amendment Number One attached hereto as of this 31st
day of December, 1999, effective as of the date set forth therein.
SUNTRUST BANKS, INC.
DEFERRED COMPENSATION PLAN COMMITTEE
By: /s/ Mary T. Steele
----------------------------------
Attest: /s/ Margaret U. Hodgson
--------------------------------
[Corporate Seal]
<PAGE>
AMENDMENT NUMBER ONE TO THE
SUNTRUST BANKS, INC.
DEFERRED COMPENSATION PLAN
The SunTrust Banks, Inc. Deferred Compensation Plan, effective October 1, 1999
(the "Deferral Plan"), is amended as set forth below, effective as of October
31, 1999, unless otherwise provided:
1. Paragraph 2.3 is amended to read as follows:
2.3 Mandatory Deferrals. If any portion of an Award is subject to
-------------------
mandatory deferral (as provided in the Eligible Plan), then such
portion of the Award shall be subject to the provisions of this
Deferral Plan regardless of whether the Eligible Employee files a
Deferral Election Form with the Deferral Plan Committee.
2.3.1 Exception for nonvested amounts. Notwithstanding the
--------------------------------
provisions of paragraph 2.3, paragraphs 6.2, 6.3, 6.6 and 6.7
shall not apply to any portion of an Award that is subject to
mandatory deferral until the Participant becomes 100% vested in
such portion.
2.3.2 Eligible Plan's terms. With respect to the portion of an Award
----------------------
that is subject to mandatory deferral, the terms of the
Eligible Plan shall determine whether all or part of such
portion is subject to a vesting schedule and if so, what the
vesting schedule is; whether such portion is subject to
mandatory distribution at a particular time or to further
deferral under this Deferral Plan on a voluntary basis; and
whether such portion is subject to any special investment
restrictions.
2. Paragraph 5.2 is revised to read as follows:
5.2 Exception. If a Participant's Account consists of an Award that is
---------
subject to a vesting period (as defined in the Eligible Plan), and the
Participant terminates employment with the Corporation or its
Affiliates for any reason prior to meeting the vesting requirements
for such Award, then that portion of his Account that is not vested,
and the earnings on such nonvested portion shall be forfeited and
deducted from the Participant's Account. Notwithstanding the
-------------------
foregoing, an Eligible Plan may provide that the nonvested portion of
---------------------------------------------------------------------
a Participant's Account shall not be
------------------------------------
<PAGE>
forfeited if the Participant is terminated without Cause following a
--------------------------------------------------------------------
Change in Control, and, in such case, the provisions of Section 9 of
--------------------------------------------------------------------
this Deferral Plan shall control unless the Eligible Plan provides
------------------------------------------------------------------
otherwise.
---------
3. Section 6 is amended by adding the following paragraph 6.9 to the end
thereof:
6.9 Distribution of Mandatory Deferrals. If a Participant's Account
-----------------------------------
contains a mandatory deferral Award that is subject to a vesting
schedule, the terms of the Eligible Plan shall determine when the
mandatory deferral portion of the Account shall be distributed after
it becomes vested. Unless the Eligible Plan provides otherwise, the
portion of an Account that is attributable to a mandatory deferral
shall be distributed to the Participant in a single lump sum cash
payment during the first quarter of the calendar year following the
year in which such mandatory deferral portion vests. An Eligible Plan
may provide that instead of receiving the distribution of a mandatory
deferral as provided in this paragraph, a Participant may make a
voluntary deferral of the amount otherwise distributable; in such
case, the Participant must make a deferral election in accordance with
the provisions of paragraph 2.1 and any administrative rules prior to
the year in which such portion of his Account would otherwise be
distributed.
4. A new Section 9 is added to the Plan to read as follows:
9. Change in Control
9.1 Purpose. The purpose of this Section 9 is to provide protection for
-------
nonvested benefits under this Deferral Plan of certain Participants
who are affected by a Change in Control of the Corporation.
9.2 Definitions. The following terms shall have the meanings set forth
-----------
opposite such terms for purposes of this Section 9.
9.2.1 Affiliate means as of any date any organization which is a
---------
member of a controlled group of corporations (within the
meaning of Code section 414(b)) which includes the Corporation
or a controlled group of trades or businesses (within the
meaning of Code section 414(c)) which includes the
Corporation.
<PAGE>
9.2.2 Change in Control is defined in the SunTrust Banks, Inc.
-----------------
401(k) Excess Plan, as amended and restated effective July 1,
1999 (the "Excess 401(k) Plan"), and the definition of Change
in Control as it appears in the Excess 401(k) Plan, as it may
be amended from time to time, is hereby incorporated by
reference into this Deferral Plan.
9.2.3 Cause, for termination of a Participant's employment following
-----
a Change in Control, means a Participant's act or failure to
act that is so inappropriate that, under the Corporation's
standards as in effect immediately prior to the Change in
Control, immediate dismissal would be necessary. Such conduct
includes, but is not limited to, theft, falsification of
Corporation records, fighting at work, threatening or
intimidating behavior directed toward an employee or customer,
sleeping during work hours, extreme instances of
insubordination, disorderly conduct, gross negligence,
violations of security, confidentiality, substance abuse or
violation of the Corporation's Code of Conduct.
9.3 Full Vesting. This Section 9 applies if an Eligible Plan indicates
-------------
that it applies. Unless an Eligible Plan provides for some other
treatment, if a Participant's employment with the Company or any of
its subsidiaries or affiliates or their successors is terminated
without Cause within three years of a Change in Control of the
Corporation, any portion of the Participant's Account that was
nonvested at the Change in Control and has not yet vested shall become
fully vested immediately prior to the effective time of the
Participant's termination of employment. A Participant's voluntary
termination of employment, including a Participant's retirement or
resignation, is not considered termination for Cause for purposes of
this paragraph.
<PAGE>
Exhibit 10.24
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT by and between SunTrust Banks, Inc. , a Georgia
corporation (the "Company"), and James M. Wells III (the "Executive"),
dated as of July 20, 1998, but effective as of the Effective Date (as
hereinafter defined).
The Company has determined that it is in the best interests of
the Company and its stockholders to assure that it will have the benefit
of the valuable services and continued dedication of the Executive
following consummation of the merger (the "Merger") of Crestar Financial
Corporation ("Crestar") with the Company or a subsidiary of the Company
pursuant to the Agreement and Plan of Merger dated as of July 20, 1998,
and the Executive has agreed to serve the Company and Crestar Bank (the
"Bank") on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the Company and the Executive
hereby agree as follows:
1. Effective Date. The "Effective Date" shall mean the date
--------------
of consummation of the Merger. In the event the Merger is not
consummated, this Agreement shall be null and void and of no force and
effect.
2. Employment Period. The Company acting on behalf of the
-----------------
Bank hereby agrees to employ the Executive, and the Executive hereby
agrees to be employed by the Bank, subject to the terms and conditions of
this Agreement, for the period commencing on the Effective Date and
ending on December 31, 2001 (the "Employment Period"). The Company in
addition hereby agrees to employ the Executive in accordance with Section
3(a)(iii) for at least a part of the Employment Period, and the Executive
hereby agrees to be so employed by the Company.
3. Terms of Employment.
-------------------
(a) Position; Duties; Place of Employment.
-------------------------------------
(i) Except as provided in Section 3(a)(iii) hereof, during the
Employment Period, (A) the Executive shall serve as the President and Chief
Operating Officer of the Bank, (B) the Executive's services under this
Agreement shall be performed principally in the same location or locations
as the Executive's services were performed for Crestar immediately prior to
the Effective Date, (C) Executive shall have the duties and responsibility
and authority with respect to the Bank's operations where the Bank does
business which are substantially similar to his duties, responsibilities
<PAGE>
and authority with Crestar immediately prior to the Merger, and (D) the
Executive shall report directly to the Bank's Chief Executive Officer and
shall perform such additional duties as may be reasonably requested by such
Chief Executive Officer.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his attention and time during normal
business hours to the business and affairs of the Bank and to use the
Executive's reasonable best efforts to perform faithfully and efficiently
the responsibilities assigned to him under this Agreement. During the
Employment Period, it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so long as
such activities do not unreasonably interfere with the performance of the
Executive's responsibilities as an employee of the Bank in accordance with
this Agreement. It is expressly understood and agreed that to the extent
that any such activities have been conducted regularly by the Executive
prior to the Effective Date, the continued conduct of such activities (or
the conduct of activities similar in nature and scope thereto) subsequent
to the Effective Date shall not thereafter be deemed to unreasonably
interfere with the performance of the Executive's responsibilities to the
Bank.
(iii) At such time during the Employment Period as the person
who was the Bank's Chief Executive Officer on the Effective Date (the
"Current Bank CEO") ceases for any reason to serve in such capacity, the
Company and the Bank shall take all actions necessary or appropriate to
cause the Executive to be appointed as an Executive Vice President of the
Company and to be nominated and elected the Chairman of the Bank's Board of
Directors and Chief Executive Officer of the Bank, with such duties,
authorities and reporting responsibilities as are normally associated from
time to time with such status.
(b) Board Membership. As of the Effective Date, the Company
----------------
shall cause the Board of Directors of the Bank (the "Bank Board") to
nominate the Executive (and the Bank Board shall elect Executive) as a
member of the Bank Board. So long as the Executive serves as an employee
of the Company or the Bank during the Employment Period, the Company shall
cause the Bank Board to continue to elect Executive as a member of the Bank
Board. Executive shall resign from the Bank Board effective as of the date
his employment terminates, and his resignation shall be accepted.
(c) Compensation.
------------
(i) Base Salary. With respect to each full calendar year during
-----------
the Employment Period, the Executive shall be entitled to receive base
salary ("Annual Base Salary") at an annual rate equal to $500,000 for
<PAGE>
calendar year 1998, $525,000 for calendar year 2000 and $550,000 for
calendar year 2001. Such Annual Base Salary shall be paid in accordance
with the Company's payroll policies and practices for executive employees.
(ii) Annual Bonus. With respect to each full calendar year
------------
during the Employment Period, the Executive shall receive an annual cash
bonus ("Annual Bonus") in an amount equal to $300,000 for calendar year
1999, $315,000 for calendar year 2000 and, for calendar year 2001, the
greater of $330,000 or the aggregate amount paid to the Executive for such
calendar year under the Company's Management Incentive Plan ("MIP") and
Performance Unit Plan ("PUP"). Such Annual Bonus shall be paid in
accordance with the Company's payroll policies and practices for executive
employees.
(iii) Initial Equity-Based Awards. As of the Effective Date,
---------------------------
the Company shall grant to the Executive an aggregate of 30,000 shares of
restricted the Company's common stock (the "Restricted Stock") and a ten-
year nonqualified option (the "Option") to acquire an aggregate of 90,000
shares of the Company's common stock (the "Company Stock"). The Option
shall have an exercise price per share equal to the closing price per share
of the Company Stock on the New York Stock Exchange on the Effective Date
and shall be subject to the anti-dilution adjustments set forth in the
Company's 1995 stock option plan under which the option is granted. Except
as otherwise provided herein, the Option and the Restricted Stock shall
vest in accordance with the vesting schedule applicable to Executive Vice
Presidents of the Company, but the Option and the Restricted Stock shall
fully vest in no event later than the earlier of (1) the end of the
Employment Period or (2) the occurrence of an event which fully vests all
options granted under the Company's 1995 stock option plan. The Option and
the Restricted Stock shall also become fully vested upon Executive's death,
Disability, termination of Executive's employment by the Company or the
Bank without Cause and termination of Executive's employment by the
Executive for Good Reason. The Option shall have a ten year term and shall
remain exercisable until the expiration of such term unless the Executive's
employment is terminated by the Company for Cause or by the Executive
without Good Reason; provided, however, that in the event of a merger
transaction in which the Company is not the surviving corporation, the
foregoing shall not be construed as precluding the Option from being
treated in such transaction in the same manner as other outstanding options
held by Company employees. As promptly as practicable, and in any event
within six (6) months after the Effective Date, the Company shall, at its
expense, cause all shares of Restricted Stock and all shares of Company
Stock subject to the Option (and the options referred to in paragraph (iv)
below) to be registered under the Securities Act of 1933, as amended (the
"Securities Act"), and registered or qualified under applicable state laws,
to be freely resold. The Company shall maintain the effectiveness of such
registration and qualification for so long as the Executive or any member
<PAGE>
of the Executive's immediate family owns the shares of Restricted Stock or
hold any option described in this Agreement or owns the underlying shares
of Company Stock or until such earlier date as all such shares, without
such registration or qualification, may be freely sold without any
restrictions under the Securities Act.
(iv) Future Grants. During the Employment Period, Executive
-------------
shall receive grants of PUP units, stock options, restricted stock and
other equity-based awards (and, for calendar year 2001, MIP units) at the
same time as and consistent with the grants made to Executive Vice
Presidents of the Company who have substantially the same duties and
responsibilities as the Executive but in no event shall the Executive be
granted options to purchase Company Stock under the Company's stock option
plan for less than 15,000 shares in 1999 (the "1999 option"), for less than
15,000 shares in 2000 (the "2000 option") and for less than 15,000 shares
in 2001 (the "2001 option"). Each such option shall be granted subject to
the terms of such plan for a ten (10) year term, provided, however, that
(A) each such option shall fully vest no later than the earlier of (1) the
end of the Employment Period or (2) the occurrence of an event which fully
vests all options granted under the Company's stock option plan, (B) each
such option shall fully vest upon Executive's death, Disability,
termination of employment by the Company without Cause and termination of
employment by the Executive for Good Reason, and (C) each such option shall
remain exercisable until the expiration of such term unless the Executive's
employment is terminated by the Company for Cause or by the Executive
without Good Reason. Notwithstanding clause (C) of the preceding sentence,
if the Executive's employment terminates pursuant to his resignation under
Section 4(c)(ii), the 1999 option shall remain exercisable by the
Executive until expiration of the five (5) year period starting on the date
of the grant of such option without regard to such termination; and the
2000 option shall remain exercisable until expiration of the two and one
half (2 1/2) year period starting on the date of the grant of such option
and, if the Executive does not resign under Section 4(c)(ii), until at
least the expiration of the 5-year period starting on such date of grant.
The 2001 option shall remain exercisable after a termination of employment
on the same basis as options granted to the Company's Executive Vice
Presidents who have substantially the same duties and responsibilities as
the Executive. However, no option shall be granted to the Executive under
this Section 3(c)(iv) if his employment by the Company and the Bank
terminates before the date the option is granted; provided, however, that
any such option not theretofore granted shall be deemed to have been
granted immediately prior to the date as of which Executive's employment is
terminated by the Company without Cause or by the Executive for Good Reason
(other than pursuant to Section 4(c)(ii) hereof). These grants shall be
made by the Board or an appropriate Committee thereof.
(v) Supplemental Retirement Benefit. The Company agrees that,
-------------------------------
upon the Executive's ceasing to be employed by the Company for any reason
on or before the end of the Employment Period, the Executive shall have the
right to receive, at his election (or, in the event of his death, at the
election of his surviving spouse) either (A) the benefit payable to or in
respect of Executive under the terms of the supplemental retirement plan of
Crestar as in effect on July 20, 1998 treating all service and compensation
<PAGE>
(salary and bonus) earned by the Executive with the Company on and after
the Effective Date as service and compensation with Crestar or (B) the
benefit payable to or in respect of the Executive under the terms of the
Company's supplemental retirement plan as in effect on July 20, 1998,
treating all service with and compensation from Crestar prior to the
Effective Date as service with, and compensation from, the Company to the
extent such service and compensation would have been taken into account
under such plan if such service had been performed for the Company and such
compensation had been paid by the Company. No compensation under Crestar's
value share program shall be taken into account under this Section 3(c)(v).
(vi) Other Employee Benefit Plans; Perquisites. During the
-----------------------------------------
Employment Period, the Executive shall be provided with employee benefits
(including, but not limited to, medical benefits and life insurance, but
excluding benefits which are like the benefits described in Section 3(c)(i)
through section 3(c)(v) of this Agreement) and fringe benefits and other
perquisites, at a level not less favorable than that provided to the
Executive by Crestar immediately prior to the Effective Date.
(vii) Expenses. During the Employment Period, the Executive
--------
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the Company's and the
Bank's policies.
(viii) Office and Support Staff. During the Employment Period,
------------------------
the Executive shall be entitled to an office or offices of a size and with
furnishings and to administrative and other support services as are
provided generally to other senior executives of the Company and the Bank.
(ix) Vacation. During the Employment Period, the Executive shall
--------
be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and the Bank with respect to other
senior executives of the Company and the Bank.
4. Termination of Employment.
-------------------------
(a) Death or Disability. The Executive's employment shall
-------------------
terminate automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 13(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
<PAGE>
Executive's employment with the Company and the Bank shall terminate
effective on the 30th day after receipt of such notice by the Executive
(the "Disability Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to the full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's
duties with the Company and the Bank on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company or the Bank may terminate the Executive's
-----
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) the continued failure of the Executive to perform
substantially the Executive's duties with the Company or the Bank (other
than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered
to the Executive by the Board of Directors of the Company (the "Board")
which specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct, which is materially and demonstrably injurious to the
Company or the Bank, or
(iii) conviction of a felony or guilty or nolo contendere plea
by the Executive with respect thereto, which is materially and demonstrably
injurious to the Company or the Bank.
For purposes of this provision, no act or failure to act, on the part of
the Executive, shall be considered "willful" unless it is done, or omitted
to be done, by the Executive in bad faith or without reasonable belief that
the Executive's action or omission was in the best interests of the Company
or the Bank. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the instructions
of the Chief Executive Officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and the Bank. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than two-thirds of the entire membership
of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i), (ii) or (iii) above
and specifying the particulars thereof in detail.
<PAGE>
(c) Good Reason. (i) The Executive's employment may be
-----------
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall occur upon a good faith determination by the
Executive that the Company or the Bank has materially breached any of its
obligations under this Agreement, which breach is not cured within 20 days
of the receipt of written notice of such breach by the Company or the Bank
from the Executive.
(ii) If the Executive tenders his resignation to the Chairman of
the Board effective as of the end of the eighteen (18) month period which
starts on the Effective Date and he does so before the end of such eighteen
(18) month period, the Company shall treat his resignation under this
Section 4(c)(ii) the same as a termination of employment for Good Reason
under this Agreement.
(d) Notice of Termination. Any termination by the Company or the
---------------------
Bank for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to each other party hereto given in accordance
with Section 13(b) of this Agreement. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
thirty days after the giving of such notice).
(e) Date of Termination. "Date of Termination" shall mean (i) if
-------------------
the Executive's employment is terminated by the Company or the Bank for
Cause, or by the Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein in accordance
with this Agreement, (ii) if the Executive's employment is terminated by
the Company or the Bank other than for Cause or Disability, the Date of
Termination shall be the date on which the Company or the Bank notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall
be the date of death of the Executive or the Disability Effective Date, as
the case may be.
5. Company and Bank Obligations upon Termination.
---------------------------------------------
(a) Good Reason; Other Than for Cause or Disability. If, during
-----------------------------------------------
the Employment Period, the Company or the Bank shall terminate the
Executive's employment other than for Cause or Disability or the Executive
shall terminate employment for Good Reason:
(i) the Company shall pay (or cause the Bank to pay) to the
Executive, in addition to any earned but unpaid portion of the Executive's
<PAGE>
Annual Base Salary and Annual Bonus through the Date of Termination (the
"Accrued Obligations"), a lump sum cash payment, within 10 days after the
Date of Termination, in an amount equal to the Annual Base Salary and the
Annual Bonus (which for the year 2001 shall be deemed to be $330,000) which
would have been paid to the Executive for the remainder of the Employment
Period absent such termination;
(ii) for the remainder of the Employment Period, the Company
shall continue to provide to the Executive (and, to the extent applicable,
his spouse) medical and dental benefits (collectively "Medical Benefits")
and other welfare benefits, fringe benefits and perquisites on the same
basis as such benefits and perquisites were provided to the Executive
immediately prior to the Date of Termination;
(iii) the Option, the Restricted Stock and any other nonvested
stock option or restricted stock awards, as well as the options referred to
in Section 3(c)(iv) hereof, shall vest immediately;
(iv) the Company shall pay (or cause the Bank of pay) to the
Executive a lump sum cash payment, within 30 days after the Date of
Termination, in an amount equal to the amount the Company or the Bank would
have contributed on the Executive's behalf to any qualified or supplemental
defined contribution plan for the period from the Date of Termination
through and including the end of the Employment Period, had the Executive's
employment not terminated hereunder;
(v) to the extent not theretofore paid or provided, the Company
shall timely pay or provide (or cause the Bank to pay or provide) to the
Executive any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company or the Bank through the
Date of Termination, including retiree medical and dental benefits and
executive life insurance benefits in accordance with Crestar's current
practice with respect to its "grandfathered" executives (such other amounts
and benefits shall be hereinafter referred to as the "Other Benefits"); and
(vi) the Company shall pay (or cause the Bank to pay) to
Executive (and, after his death, his surviving spouse) the supplemental
retirement benefit due under Section 3(c)(iv) as if Executive had worked
for the Bank or the Company until the end of the Employment Period and been
paid the compensation described in Section 5(a)(i).
(b) Death. If the Executive's employment is terminated by reason
-----
of the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the payment of Accrued
Obligations, the timely payment or provision of Other Benefits to or in
<PAGE>
respect of the Executive and the payment to the Executive's surviving
spouse of the supplemental retirement benefits hereunder. In addition, the
Option and the Restricted Stock, as well as the options referred to in
Section 3(c)(iv) hereof, shall vest immediately. Accrued Obligations shall
be paid to the Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination.
(c) Disability. If the Executive's employment is terminated by
----------
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations, the timely payment or
provision of Other Benefits and the payment of the supplemental retirement
benefit hereunder. In addition, the Option and the Restricted Stock, as
well as the options referred to in Section 3(c)(iv) hereof, shall vest
immediately. Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination.
(d) Cause; other than for Good Reason. If the Executive's
---------------------------------
employment shall be terminated for Cause or the Executive terminates his
employment without Good Reason during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay or provide to the Executive the Accrued Obligations and
Other Benefits, in each case to the extent theretofore unpaid or not
provided, and the payment of the supplemental retirement benefit hereunder.
(e) Effect. Any termination of the Executive's employment shall
------
have no effect on the continuing operation of this Section 5.
6. Non-exclusivity of Rights. Except as specifically provided,
-------------------------
nothing in this Agreement shall prevent or limit the Executive's continuing
or future participation in any plan, program, policy or practice provided
by the Company or any of its affiliated companies and for which the
Executive may qualify, nor, subject to Section 13(f), shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies
at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.
7. No Mitigation, etc. The Company's and the Bank's obligation
-------------------
to make the payments provided for in this Agreement and otherwise to
perform their respective obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action
which the Company or the Bank may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take
<PAGE>
any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment.
The Company agrees to pay (or to cause the Bank to pay) or promptly
reimburse the Executive for all reasonable costs and expenses (including
all reasonable legal fees and expenses) which the Executive may reasonably
incur in connection with any dispute hereunder (regardless of the outcome
thereof) relating to the validity or enforceability of, or liability under,
any provision of this Agreement (including as a result of any claim by the
Executive regarding the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable Federal
rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code"); provided, however, that the foregoing
obligation shall not apply with respect to any claim by the Executive which
is determined not to have been brought in good faith.
8. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment, distribution or other
benefit provided by the Company, the Bank or Crestar or any of their
affiliates to or for the benefit of the Executive (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income taxes, employment taxes and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be
made by KPMG Peat Marwick LLP or such other certified public accounting
firm reasonably acceptable to the Company as may be designated by the
Executive (the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days
of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. All fees and expenses
of the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 8, shall be paid by the
Company or the Bank to the Executive within five days of the later of (i)
the due date for the payment of any Excise Tax, and (ii) the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm
shall be binding upon the Company, the Bank and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Company or the Bank should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting
<PAGE>
Firm shall determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Company or the Bank to
or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company or the Bank to participate in any
proceedings relating to such claim;
provided, however, that the Company or the Bank shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 8(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
<PAGE>
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company or the Bank shall advance
the amount of such payment to the Executive, on an interest-free loan basis
and shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided that
any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company or the Bank pursuant to section 8(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's or the Bank's complying with the
requirements of Section 8(c)) promptly pay to the Company or the Bank the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of
an amount advanced as an interest free loan by the Company or the Bank
pursuant to Section 8(c), a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the Company or
the Bank does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such loan shall be forgiven and shall not be required
to be repaid and the amount of such loan shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
9. Confidential Information.
------------------------
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company and the Bank all secret or confidential information,
knowledge or data relating to the Company, the Bank or any of their
affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the
<PAGE>
Company or the Bank and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company or the Bank, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by
law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company or the Bank, and those
designated by it. In no event shall an asserted violation of the provisions
of this Section 9 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
(b) In the event of a breach or threatened breach of this
Section 9, the Executive agrees that the Company or the Bank shall (in
addition to any other remedy available) be entitled to injunctive relief in
a court of appropriate jurisdiction to remedy any such breach or threatened
breach, the Executive hereby acknowledging that damages would be inadequate
and insufficient.
(c) Any termination of the Executive's employment or of this
Agreement shall have no effect on the continuing operation of this Section
9.
10. Anti-Pirating.
-------------
(a) The Executive shall not, during the one year period following
his termination of employment for any reason under this Agreement, seek to
employ on his own behalf or on behalf of any other person, firm, or
corporation which engages, directly or indirectly, in the same business as
the Company or the Bank, any person who was employed as an employee by the
Company or the Bank in an executive, managerial or supervisory capacity at
any time during the Executive's employment by the Company or the Bank and
who has not thereafter ceased to be employed in such capacity by the
Company or the Bank for a period of at least one (1) year.
(b) In the event of a breach or threatened breach of this Section
10, the Executive agrees that the Company or the Bank shall (in addition to
any other remedy available) be entitled to injunctive relief in a court of
appropriate jurisdiction to remedy any such breach or threatened breach,
the Executive hereby acknowledging that damages would be inadequate and
insufficient.
11. Successors.
----------
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company and the Bank shall not be assignable
by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company, the Bank and their successors and assigns.
(c) The Company and the Bank each will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of its business and/or assets to
assume expressly and agree to perform this Agreement in the same manner and
<PAGE>
to the same extent that the Company or the Bank would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company and the Bank as hereinbefore
defined and any successor to their businesses and the Bank, respectively,
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
12. Noncompete. (a) If the Executive tenders his resignation
----------
under Section 4(c)(ii), the Executive for the two (2) year period starting
on the date his employment with the Bank terminates pursuant to such
resignation shall not serve as an officer, director or employee, or
consultant to, or be a significant investor in, any organization which
engages in Virginia, Maryland and/or the District of Columbia in the same
business, or same lines of business, engaged in by the Bank in Virginia,
Maryland and/or the District of Columbia on the date his employment so
terminates. The Executive shall not be treated under this Section 12 as a
significant investor in an organization unless he owns directly or
indirectly a ten percent (10%) or more equity interest in the stock or
capital or profits of such organization.
(b) Executive agrees that this Section 12 is reasonable, fair and
equitable in light of his duties and responsibilities under this Agreement
and that it is necessary to protect the ligitimate business interests of
the Company and the Bank and, further, that it consitutes a material
inducement to agree to treating a resignation under Section 4(c)(ii) the
same as a termination for Good Reason. In the event of a breach or
threatened breach of this Section 12, the Executive agrees that the Bank
shall (in addition to any other remedy available) be entitled to injunctive
relief in a court of competent jurisdiction to remedy any such breach or
threatened breach, the Executive hereby acknowledging that damages would be
inadequate and insufficient.
13. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Virginia, without reference to
principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: James M. Wells III
--------------------
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23261
<PAGE>
If to the Company or the Bank:
------------------------------
SunTrust Banks, Inc.
303 Peachtree Street
Atlanta, Georgia 30309
Attention: General Counsel
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company or the Bank may withhold from any amounts payable
under this Agreement such federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's or the Bank's failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company or the Bank may
have hereunder, including, without limitation, the right of the Executive
to terminate employment for Good Reason pursuant to Section 4(c) of this
Agreement, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.
(f) From and after the Effective Date, this Agreement shall
supersede any other employment, severance or change in control agreement
between the parties hereto or between the Executive and Crestar, including
Crestar's Executive Severance Plan as in effect for Executive immediately
prior to the Effective Date (the "Severance Agreement") and no such
employment, severance or change in control agreement, including the
Severance Agreement, shall have any further force or effect whatsoever.
14. Dispute Resolution. In the event of any dispute or
------------------
controversy arising under or in connection with this Agreement, the parties
shall settle such dispute or controversy exclusively by arbitration in
Richmond, Virginia, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
15. Indemnification. To the fullest extent permitted by law,
---------------
the Company and the Bank shall indemnify the Executive (including the
advancement of expenses) for any judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees, incurred by
the Executive in connection with the defense of any lawsuit or other claim
to which he is made a party by reason of being an officer, director or
employee of the Company or the Bank or any of their affiliates during the
Employment period and for at least three (3) years thereafter, the Company
or the Bank shall make every reasonable effort to maintain customary
<PAGE>
director and officer liability insurance covering the Executive for acts
and omissions during the Employment Period. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 15.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date and year first above written.
SunTrust Banks, Inc.
By: /s/ L. Phillip Humann
--------------------------------------
Name: L. Phillip Humann
Title: Chairman of the Board and Chief Executive
Officer
/s/ James M. Wells III
-----------------------------------------
James M. Wells III
<PAGE>
Exhibit 10.32
CRESTAR FINANCIAL CORPORATION
CERTIFICATE
-----------
RESOLUTION RELATING TO THE
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS OF
CRESTAR FINANCIAL CORPORATION
I, James J. Kelley, hereby certify that I am the duly appointed and
qualified Human Resources Director of Crestar Financial Corporation, and that
the resolution relating to the Deferred Compensation Plan for Outside Directors
of Crestar Financial Corporation, as set forth in Exhibit I, attached hereto,
was implemented by me this date pursuant to actions of the Board of Directors of
Crestar Financial Corporation taken on October 23, 1998, and the Board's Human
Resources and Compensation Committee on October 22, 1998, which actions remain
in full force and effect as of the date of this certificate.
Dated: 12-31-99 /s/ James J. Kelley
------------------------------- ----------------------
James J. Kelley
Human Resources Director
1
<PAGE>
Exhibit I
RESOLUTION RELATING TO THE
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS OF
CRESTAR FINANCIAL CORPORATION
RESOLVED, That the Deferred Compensation Plan for Outside Directors of Crestar
Financial Corporation is revised, effective as of January 1, 1999, by changing
the definition of "Members" in Section 2(u), to read as follows:
Members means Directors who are not simultaneously Employees or members of
-------
the Board of Directors of SunTrust Banks, Inc. and who also deferred under this
Plan in the 1998 Deferral Year and in each Deferral Year prior to the time for
which the determination is being made.
2
<PAGE>
Exhibit 10.44
CRESTAR FINANCIAL CORPORATION
CERTIFICATE
-----------
RESOLUTION RELATING TO THE
CRESTAR FINANCIAL CORPORATION
DIRECTORS' EQUITY PROGRAM
I, James J. Kelley, hereby certify that I am the duly appointed and
qualified Human Resources Director of Crestar Financial Corporation, and that
the resolution relating to the Crestar Financial Corporation Directors' Equity
Program, as set forth in Exhibit I, attached hereto, was implemented by me this
date pursuant to actions of the Board of Directors of Crestar Financial
Corporation taken on October 23, 1998, and the Board's Human Resources and
Compensation Committee on October 22, 1998, which actions remain in full force
and effect as of the date of this certificate.
Dated: 12-31-99 /s/ James J. Kelley
--------------------------------- -----------------------
James J. Kelley
Human Resources Director
1
<PAGE>
Exhibit I
RESOLUTION RELATING TO THE
CRESTAR FINANCIAL CORPORATION
DIRECTORS' EQUITY PROGRAM
RESOLVED, That elective deferrals under the Crestar Financial Corporation
Directors' Equity Program shall not be offered for any year after the 1998
Deferral Year.
2
<PAGE>
EXHIBIT 11.1
SunTrust Banks, Inc.
Statement re: Computation of Per Share Earnings
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic
- -----
Income before extraordinary gain $1,123,952 $ 971,017 $ 975,923 $ 858,950 $ 802,761 $ 752,278
Extraordinary gain, net of taxes 202,648 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net income $1,326,600 $ 971,017 $ 975,923 $ 858,950 $ 802,761 $ 752,278
---------- ---------- ---------- ---------- ---------- ----------
Average basic common shares 317,079 314,908 316,436 326,502 333,212 335,124
---------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary gain $ 3.54 $ 3.08 $ 3.08 $ 2.63 $ 2.41 $ 2.24
Extraordinary gain, net of taxes 0.64 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Earnings per common share - basic $ 4.18 $ 3.08 $ 3.08 $ 2.63 $ 2.41 $ 2.24
========== ========== ========== ========== ========== ==========
Diluted
- -------
Income before extraordinary gain $1,123,952 $ 971,017 $ 975,923 $ 858,950 $ 802,761 $ 752,278
Extraordinary gain, net of taxes 202,648 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net income $1,326,600 $ 971,017 $ 975,923 $ 858,950 $ 802,761 $ 752,278
---------- ---------- ---------- ---------- ---------- ----------
Average common shares outstanding 317,079 314,908 316,436 326,502 333,212 335,124
Incremental shares outstanding (1) 4,095 4,803 4,496 4,540 4,267 4,131
---------- ---------- ---------- ---------- ---------- ----------
Average diluted common shares 321,174 319,711 320,932 331,042 337,479 339,255
---------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary gain $ 3.50 $ 3.04 $ 3.04 $ 2.59 $ 2.38 $ 2.22
Extraordinary gain, net of taxes 0.63 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Earnings per common share - diluted $ 4.13 $ 3.04 $ 3.04 $ 2.59 $ 2.38 $ 2.22
========== ========== ========== ========== ========== ==========
</TABLE>
(1) Includes the incremental effect of stock options and restricted stock
outstanding computed under the treasury stock method.
<PAGE>
EXHIBIT 12.1
SunTrust Banks, Inc.
Ratio of Earnings to Fixed Charges
(In thousands)
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio 1 - including deposit interest
- ------------------------------------
Earnings:
Income before income taxes and
extraordinary gain $ 1,695,657 $ 1,498,306 $ 1,499,599 $1,265,942 $ 1,211,458 $1,135,068
Fixed charges 2,841,964 2,773,877 2,479,633 2,185,047 2,051,441 1,477,543
--------------------------------------------------------------------------------------
Total $ 4,537,621 $ 4,272,183 $ 3,979,232 $3,450,989 $ 3,262,899 $2,612,611
========================================================================================
Fixed charges:
Interest on deposits $ 1,626,132 $ 1,644,229 $ 1,627,417 $1,585,707 $ 1,481,548 $1,109,799
Interest on funds purchased 749,561 634,086 461,724 356,879 336,360 122,054
Interest on other short-term borrowings 79,521 127,800 133,814 81,683 91,271 121,711
Interest on long-term debt 359,538 340,664 230,509 134,530 118,152 101,875
Portion of rents representative of the
interest factor (1/3) of rental expense 27,212 27,098 26,169 26,248 24,110 22,104
----------------------------------------------------------------------------------------
Total $ 2,841,964 $ 2,773,877 $ 2,479,633 $2,185,047 $ 2,051,441 $1,477,543
========================================================================================
Earnings to fixed charges 1.60 x 1.54 x 1.60 x 1.58 x 1.59 x 1.77 x
Ratio 2 - excluding deposit interest
- ------------------------------------
Earnings:
Income before income taxes and
extraordinary gain $ 1,695,657 $ 1,498,306 $ 1,499,599 $1,265,942 $ 1,211,458 $1,135,068
Fixed charges 1,215,832 1,129,648 852,216 599,340 569,893 367,744
----------------------------------------------------------------------------------------
Total $ 2,911,489 $ 2,627,954 $ 2,351,815 $1,865,282 $ 1,781,351 $1,502,812
========================================================================================
Fixed charges:
Interest on funds purchased $ 749,561 $ 634,086 $ 461,724 $ 356,879 $ 336,360 $ 122,054
Interest on other short-term borrowings 79,521 127,800 133,814 81,683 91,271 121,711
Interest on long-term debt 359,538 340,664 230,509 134,530 118,152 101,875
Portion of rents representative of the
interest factor (1/3) of rental expense 27,212 27,098 26,169 26,248 24,110 22,104
----------------------------------------------------------------------------------------
Total $ 1,215,832 $ 1,129,648 $ 852,216 $ 599,340 $ 569,893 $ 367,744
========================================================================================
Earnings to fixed charges 2.39 x 2.33 x 2.76 x 3.11 x 3.13 x 4.09 x
</TABLE>
<PAGE>
Exhibit 13.1
SunTrust Banks, Inc.
SunTrust Banks, Inc., with assets of $95.4 billion, is among the nation's
largest bank holding companies. Its principal subsidiary, SunTrust Bank,
offers a full line of financial services for consumers and businesses.
SunTrust serves some 3.7 million customer households through a regional
organizational structure which encompasses more than 1,100 branches and 1,900
ATMs in six states -- Alabama, Florida, Georgia, Maryland, Tennessee and
Virginia -- plus the District of Columbia. SunTrust also offers 24-hour
delivery channels including Internet and telephone banking. In addition to
traditional deposit, credit and trust and investment services offered by
SunTrust Bank, other SunTrust subsidiaries provide mortgage banking,
commercial and auto leasing, credit-related insurance, asset management,
discount brokerage and investment banking services. As of December 31, 1999,
SunTrust had total trust assets of $141.7 billion, including more than $91
billion in assets under management, and a mortgage-servicing portfolio in
excess of $41 billion. SunTrust's corporate headquarters are in Atlanta.
<TABLE>
<S> <C> <C> <C>
Financial Highlights 1 1999 Form 10-K Front Cover
Letter To Shareholders 2 Board Of Directors 68
Management's Discussion & Management Committee 70
Analysis Of Operations &
Financial Condition 9 General Information Back Cover
Consolidated Financial Statements 36
</TABLE>
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
(Dollars in millions except per share data) Year Ended December 31
For the Year 1999 1998 1997
<S> <C> <C> <C>
Net income $ 1,326.6 $ 971.0 $ 975.9
Common dividends paid 440.6 352.5 326.3
Per Common Share
Net income - diluted $ 4.13 $ 3.04 $ 3.04
Dividends declared 1.380 1.000 0.925
Common stock closing price 68.81 76.50 71.38
Book value 24.73 25.47 23.08
Financial Ratios 1.48% 1.18% 1.34%
Return on average assets (ROA)
Return on average realized
shareholders' equity (ROE) 20.83 17.21 19.07
Net interest margin (taxable-equivalent) 3.88 3.97 4.23
Efficiency ratio 60.63 62.53 57.68
Tier 1 capital ratio 7.48 8.17 8.04
- ----------------------------------------------------------------------------------------------
Total capital ratio 11.31 12.79 12.39
- ----------------------------------------------------------------------------------------------
Selected Average Balances
Total assets $92,820.8 $85,536.9 $76,017.3
Earning assets 82,255.7 74,880.9 66,944.0
Loans 62,749.4 57,590.5 51,788.1
Deposits 57,842.1 53,725.3 51,673.7
Realized shareholders' equity 6,368.3 5,641.4 5,116.7
Total shareholders' equity 8,190.7 7,853.6 6,953.4
Common shares - diluted (thousands) 321,174 319,711 320,932
At December 31
Total assets $95,390.0 $93,169.9 $82,840.8
Earning assets 85,193.4 81,295.1 72,258.9
Loans 66,002.8 61,540.6 55,476.4
Allowance for loan losses 871.3 944.6 933.5
Deposits 60,100.5 59,033.3 54,580.8
Realized shareholders' equity 6,064.0 6,090.4 5,263.9
Total shareholders' equity 7,626.9 8,178.6 7,312.1
Common shares outstanding (thousands) 308,353 321,124 316,873
Market value of investment in common
stock of The Coca-Cola Company
(48,266,496 shares) $ 2,812 $ 3,234 $ 3,219
</TABLE>
In this report, securities available for sale, total assets and total
shareholders' equity include the net unrealized securities gain. However,
earning assets exclude this gain, as do the calculations of ROA, ROE and the
net interest margin because the gain is not included in net income.
Earnings Per Share
($ per diluted common share)
'94 '95 '96 '97 '98 '99
2.22 2.38 2.59 3.04 3.04 4.13
Dividends Declared
($ per common share)
'94 '95 '96 '97 '98 '99
.66 .74 .83 .93 1.00 1.38
Common Stock
Price & Book Value*
($ per share)
'94 '95 '96 '97 '98 '99
24.73
60.44
79.44
[BOOK VALUE PLOT POINTS GO HERE]
- -- Book Value
== Price Range
*Price range for the year and
book value at year end
SunTrust Banks, Inc. 1
<PAGE>
Letter To Shareholders
To My Fellow Shareholders
I am pleased to report that 1999 was a very good year for SunTrust.
. Our financial results were strong.
. Our key lines of business performed well.
. Our employees did a terrific job of meeting the needs of our customers with
highly competitive products, locally focused service and a multi-channel
distribution system.
. And we took a number of steps to enhance SunTrust's strategic focus and
competitive positioning for the future. Included was the consolidation of
our 27 separate bank charters into a single charter effective January 1,
2000.
Progress was crisp and measurable during 1999 in the ongoing integration of
Crestar Financial Corporation. The Crestar merger, which closed at year-end
1998, significantly expanded SunTrust's geographic scope, customer base and
asset size. Its completion reinforces our position as a leading U.S. financial
services provider with an enviable franchise in some of the most vibrant
markets in the Southeast and Mid-Atlantic states.
In February 1999, the Board of Directors voted a 38 percent increase in the
cash dividend paid on the Company's common stock to bring our dividend to a
level comparable with the former Crestar dividend. In February 2000, the
Board voted to increase the dividend by an additional 7.2 percent, bringing
our indicated annual cash dividend rate to $1.48 per common share.
Following Board authorization in August 1999--and reflecting our emphasis
on careful capital management--we purchased 15 million shares of SunTrust
common stock. In February 2000, the Board authorized the purchase of an
additional 12 million shares. We expect this purchase to take place over time
as market considerations permit.
Like the stock market in general, bank stocks in 1999 reflected the ups and
downs of market sentiment. Against this backdrop, SunTrust shares generally
outperformed bank stocks as a group.
As we look ahead, the combination of a changing financial services industry
and a continuing strong economy present considerable opportunities for
SunTrust. During 1999, our approximately 30,000 employees--nearly all of whom
are also SunTrust shareholders through participation in our 401(k) plan--
worked hard to ensure our
<PAGE>
Letter To Shareholders
organization is prepared to take advantage of those opportunities.
In the balance of this letter, I invite your attention to selected
highlights of 1999 that not only illustrate our progress last year, but also
underscore our focus on the future.
Financial Performance
SunTrust reported net income for 1999 of $1.3 billion, or $4.13 per diluted
share. The "reported" net income number reflects a substantial one-time gain
from the sale of our consumer credit card portfolio, plus merger-related
charges and other unusual items, all of which are discussed in detail in the
Management's Discussion & Analysis section of this Report.
More indicative of our earnings momentum are "normalized" earnings--that
is, earnings adjusted to exclude the impact of unusual gains or charges.
Normalized earnings in 1999 were $3.92 per diluted share, compared with $3.41
per diluted share, in 1998.
In general, our solid 1999 results reflected consistent and balanced
revenue growth coupled with increasing effectiveness at controlling growth of
operating expenses--a continuing and high priority.
Our high capital, reserve and liquidity levels can support future
growth as well as provide strength against pressures that may result from
unexpected economic cross currents.
Crestar Merger Integration
The integration of Crestar's business, operations, facilities and employees
began in earnest with the formal closing of the merger at year-end 1998.
The far-reaching merger integration process will continue through
mid-year 2000 when major systems consolidations are completed, customer accounts
converted and, most visibly, the SunTrust name is introduced in Virginia,
Maryland and Washington, D.C.
With the adoption of a common identity, SunTrust becomes the
beneficiary of Crestar's reputation for high quality service as well as its
leading market positions. Included is a highly visible role as the number one
bank in the greater Washington, D.C. area, one of the wealthiest and
fastest-growing markets in the United States.
From a financial perspective, the Crestar merger met its 1999 target of
approximately $97 million in cost-savings from the combined organization.
Savings came largely from increased back-office efficiencies plus more
effective purchasing and vendor management for the combined organization. We
are on track to achieve planned savings and revenue enhancements in 2000 and
beyond.
As expected, many employees whose positions were eliminated as a result
of merger-related consolidations have been redeployed to support growth in other
parts of the Company.
SunTrust Banks, Inc. 3
<PAGE>
Letter To Shareholders
Our number one merger goal is to ensure a smooth transition for former
Crestar customers, thus maintaining business and revenue generation momentum.
To that end, Crestar's entire product line was "mapped" to SunTrust's with an
eye towards preserving product features that provide a competitive advantage
in the market.
Finally, an extensive and highly coordinated communications effort is
designed to provide customers with clear, accurate and timely information
during the merger integration process. The goal is to pave the way for
expanded business relationships in the post-merger environment.
Meeting Evolving Customer Needs
Throughout 1999, we sharpened our focus on meeting the evolving--and
increasingly technology-related--financial services needs of a diverse
retail, commercial, corporate and institutional customer base across our
franchise. Some highlights follow:
Expanding Delivery Channels: From a customer perspective, consumer
banking is probably SunTrust's most visible line of business. With the
addition of the former Crestar customer base, more than 3 million customer
households in six states plus the District of Columbia are now being served
under the SunTrust "brand." Our banking network includes more than 1,100
branches and 1,900 ATMs, as well as a full spectrum of telephone and
computer-based banking alternatives.
Along with offering a complete array of consumer banking products,
SunTrust is also committed to providing customers with a broad range of delivery
channels. More to the point, we are investing in the technology necessary to
make good on that commitment.
As one example, we rolled out a comprehensive Internet Banking service
to SunTrust's entire customer base in September. The move builds on the Internet
service previously available to Crestar customers which was recognized in
industry surveys as one of the nation's best.
We are also supplementing our branch network as illustrated by our
mid-year announcement that we will expand in the greater Washington, D.C. and
Baltimore markets with up to 75 new SunTrust banking facilities in Safeway
Supermarkets. Also, branches opened in selected Harris Teeter stores in
Jacksonville marked our first in-store banking facilities in Florida.
Wealth Management Focus: With total trust assets of $141.7 billion,
including more than $91 billion in assets under management, SunTrust is among
the nation's largest providers of trust and investment services. We take
pride in our track record of quality--and success--in this business line.
It's no secret that changing demographics and a booming stock market are
prompting new patterns of wealth generation in the United States. Against
this backdrop, we're moving swiftly to ensure that we can meet the investment
needs of our existing
4 1999 Annual Report
<PAGE>
Letter To Shareholders
customers, as well as position SunTrust as a top tier provider of investment-
related products and services to attract new clients.
At mid-year 1999, for example, we merged the mutual funds managed and
sold by former Crestar units into the STI Classic Funds family. The combination
created a family of 34 mutual funds totaling approximately $20 billion in
assets, making the STI Classic Funds family the 13th largest U.S. bank
proprietary funds family.
Two other moves in 1999 demonstrate our commitment to developing our
investment-related capabilities. In the first, we entered into a partnership
with a leading provider of hedge funds for institutions and high net worth
clients to develop a family of hedge fund products, thus positioning SunTrust
to participate in the select but profitable market for these targeted
investment alternatives.
Late in the year, we established a limited purpose trust company in
Delaware enabling us to bring a number of specialized benefits to high net
worth clients.
Commercial & Corporate Banking: SunTrust's commercial clients range from
small businesses and "middle-market" companies, whose credit and non-credit
needs last year were met by our geographically focused banking units, to
larger corporations with annual sales of $250 million and up. This segment of
the market includes established corporations with national and often
international reach in a cross-section of industries.
During 1999, we further invested in our ability to provide corporate
clients with fully integrated solutions to their financial needs which can
range from credit facilities to access to debt and equity capital markets, as
well as specialized treasury management and investment banking services.
Specifically, clients benefited from the concentrated focus provided by our
newly configured Corporate and Investment Banking Division, which brings
together the capital markets and investment banking capabilities of our
SunTrust Equitable Securities subsidiary, acquired in 1998, and our
traditional corporate banking resources.
One indication of success during 1999 in meeting the needs of our
growth-oriented clients, and also in positioning ourselves for expanded
business relationships in the future, was significant growth in loan
syndications and financial risk management transactions. 1999 was also a
record year for SunTrust Equitable Securities in its mergers and acquisitions
area; the firm advised on 28 transactions representing over $2 billion in
deal value for clients.
We also moved forward in 1999 with an ambitious expansion program in our
industry specialties groups. On a selective basis, in both corporate banking
and investment banking, we are expanding our capabilities in specialized
fields such as textiles, health care, agrifoods, business-to-business
services, franchise and distributor finance, media and communications,
privatization,
SunTrust Banks, Inc. 5
<PAGE>
Letter To Shareholders
restaurants, and technology. As part of that growth investment, SunTrust
Equitable Securities established offices in New York and Boston and early in
2000 announced plans to open an office in San Francisco, bringing to 10 the
number of U.S. cities in which it has a presence.
Mortgage: Our mortgage banking business was among the first to benefit
from the synergies created by the Crestar merger. In October, we combined
separate mortgage companies to create an expanded, national SunTrust Mortgage,
Inc. With headquarters in Richmond and production sites in nearly 100 cities
across the country, the combined company is the nation's 13th largest
residential mortgage lender.
Though mortgage volume declined nationally in response to higher
mortgage rates, SunTrust Mortgage achieved more than $17.2 billion in loan
production for 1999, well in line with our expectations at the beginning of
the year. Meanwhile, the size of our mortgage servicing portfolio--$41
billion--stands as a clear indication of our strength in this key business line.
Credit Card Sale: With the industry trend in credit cards moving towards
consolidation among a few national providers, SunTrust sold its $1.5 billion
consumer card portfolio in November 1999 to MBNA Bank. This strategic move
permits us to continue to meet the needs of our customers with personal
credit card products that will continue to carry the SunTrust brand.
Competitive Advantage And Improved Efficiency
As we bring our considerable resources as a large, broad-based financial
institution to bear on customer needs, we also recognize the importance of
maintaining the local market focus that is one of SunTrust's historical
strengths.
Much of our past success is attributable to our emphasis on local
management and decision-making. As we see it, this approach differentiates us
from other large financial service providers that operate in our markets. We
are committed to maintaining that competitive advantage.
At the same time, shareholders are looking for us to improve our
operating efficiency. As a result, we are always trying to prudently reduce
costs so dollars can be reinvested in the technology, products and people that
permit us to better serve customers--and thus generate additional revenues.
With the consolidation of our individual bank charters, which took
effect legally on January 1, 2000 and will be implemented operationally during
the year, we will maintain our local management structure. But the move will
also promote efficiency as we standardize ways of doing things from internal
financial reporting to account opening procedures.
For customers, the charter consolidation will, over time, lead to
greater convenience, uniform service levels and consistent product delivery
6 1999 Annual Report
<PAGE>
Letter To Shareholders
throughout our markets. It will also make it easier for us to implement new
products and technology.
The number of standardization and efficiency opportunities at SunTrust
increased significantly with the Crestar merger. This made the charter
consolidation decision particularly timely.
To balance the drive for improved efficiency with our requirements for
revenue growth and service quality, we established a new, senior level
executive position at SunTrust: the Chief Efficiency and Quality Officer. The
"CQ" will ensure this critical priority receives the concentrated management
focus it warrants.
Firmly Focused On The Future
Coincident with our charter consolidation announcement, we unveiled a new
internal "operating model" for SunTrust. This is an overall framework for
making decisions about how we approach our customers, serve our markets and
configure our organization in light of our size, scope and performance
standards.
Underlying the operating model is a simple imperative. To meet the
expectations of our shareholders for consistently strong financial results,
we must do an ever-better job of meeting the needs of our customers. And we
must do so in an environment marked by rapid technological change and
continuing consolidation within the financial services industry.
During 1999, I believe, the people of SunTrust delivered a level of
performance with which shareholders can be pleased. Over time, that
performance should be reflected in the price of SunTrust stock.
But equally important, they showed that our organization is firmly
focused on the future.
Simply stated, SunTrust is ready to meet the challenges of 2000 and
beyond. As we succeed in doing so, I am confident shareholders will find their
continued support rewarded.
On behalf of our Board of Directors, I thank you for your continued
interest--and your investment--in SunTrust.
/s/ L. Phillip Humann
L. Phillip Humann
Chairman, President and Chief Executive Officer
February 8, 2000
SunTrust Banks, Inc. 7
<PAGE>
Selected Financial Data
<TABLE>
<CAPTION>
(In millions ezcept per share and other data) Year Ended December 31
Summary of Operations 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Interest and dividend income $ 5,960.2 $ 5,675.9 $ 5,238.2 $ 4,818.5 $ 4,528.7 $ 3,855.4
Interest expense 2,814.7 2,746.8 2,453.5 2,158.8 2,027.3 1,455.4
Net interest income 3,145.5 2,929.1 2,784.7 2,659.7 2,501.4 2,400.0
Provision for loan losses 170.4 214.6 225.1 171.8 143.4 149.4
Net interest income after provision
for loan losses 2,975.1 2,714.5 2,559.6 2,487.9 2,358.0 2,250.6
Noninterest income/1/ 1,660.0 1,716.2 1,355.7 1,162.7 1,021.4 967.3
Noninterest expense/2/ 2,939.4 2,932.4 2,415.7 2,384.6 2,167.9 2,082.8
Income before provision for income taxes
and extraordinary gain 1,695.7 1,498.3 1,499.6 1,266.0 1,211.5 1,135.1
Provision for income taxes 571.7 527.3 523.7 407.0 408.7 382.8
Income before extraordinary gain 1,124.0 971.0 975.9 859.0 802.8 752.3
Extraordinary gain, net of taxes/3/ 202.6 -- -- -- -- --
Net income $ 1,326.6 $ 971.0 $ 975.9 $ 859.0 $ 802.8 $ 752.3
Net interest income (taxable-equivalent) $ 3,188.0 $ 2,973.5 $ 2,832.6 $ 2,709.7 $ 2,562.1 $ 2,467.9
Per common share
Diluted
Income before extraordinary gain $ 3.50 $ 3.04 $ 3.04 $ 2.59 $ 2.38 $ 2.22
Extraordinary gain 0.63 -- -- -- -- --
Net income 4.13 3.04 3.04 2.59 2.38 2.22
Basic
Income before extraordinary gain 3.54 3.08 3.08 2.63 2.41 2.24
Extraordinary gain 0.64 -- -- -- -- --
Net income 4.18 3.08 3.08 2.63 2.41 2.24
Dividends declared 1.380 1.000 0.925 0.825 0.740 0.660
Market price:
High 79.44 87.75 75.25 52.50 35.44 25.69
Low 60.44 54.00 44.13 32.00 23.63 21.75
Close 68.81 76.50 71.38 49.25 34.25 23.88
Selected Average Balances
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $92,820.8 $85,536.9 $76,017.3 $69,252.0 $63,532.0 $59,868.5
- ----------------------------------------------------------------------------------------------------------------------------------
Earning assets 82,255.7 74,880.9 66,944.0 61,644.4 56,994.4 53,778.7
Loans 62,749.4 57,590.5 51,788.1 46,338.4 43,331.6 38,216.6
Deposits 57,842.1 53,725.3 51,673.7 50,317.6 47,240.3 46,023.5
Realized shareholders' equity 6,368.3 5,641.4 5,116.7 5,101.3 4,783.0 4,520.6
- ----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 8,190.7 7,853.6 6,953.4 6,434.3 5,635.9 5,132.0
- ----------------------------------------------------------------------------------------------------------------------------------
At December 31
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $95,390.0 $93,169.9 $82,840.8 $75,264.2 $68,799.8 $62,893.9
- ----------------------------------------------------------------------------------------------------------------------------------
Earning assets 85,193.4 81,295.1 72,258.9 65,921.8 60,555.6 56,264.2
Loans 66,002.8 61,540.6 55,476.4 49,301.4 45,284.9 41,736.0
Allowance for loan losses 871.3 944.6 933.5 897.0 915.8 887.2
Deposits 60,100.5 59,033.3 54,580.8 52,577.1 49,543.6 47,418.4
Long-term debt 6,017.3 5,807.9 4,010.4 2,427.7 1,675.6 1,645.6
Realized shareholders' equity 6,064.0 6,090.4 5,263.9 5,133.1 4,913.4 4,494.9
- ----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 7,626.9 8,178.6 7,312.1 6,713.6 6,085.2 5,065.0
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios and Other Data
ROA 1.48% 1.18% 1.34% 1.28% 1.29% 1.28%
ROE 20.83 17.21 19.07 16.84 16.78 16.64
Net interest margin 3.88 3.97 4.23 4.40 4.50 4.59
Efficiency ratio 60.63 62.53 57.68 61.58 60.50 60.63
- ----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity to assets 8.00 8.78 8.83 8.92 8.84 8.05
- ----------------------------------------------------------------------------------------------------------------------------------
Allowance to year-end loans 1.32 1.53 1.68 1.82 2.02 2.13
Nonperforming assets to total loans plus
other real estate owned 0.42 0.39 0.43 0.74 0.94 1.02
Common dividend payout ratio 33.4 32.9 30.4 31.9 31.1 29.7
Full-service banking offices 1,114 1,079 1,072 1,073 1,039 1,074
ATMs 1,968 1,839 1,691 1,394 1,191 1,107
Full-time equivalent employees 30,222 30,452 29,442 29,583 27,902 28,620
Average common shares - diluted (thousands) 321,174 319,711 320,932 331,042 337,479 339,255
Average common shares - basic (thousands) 317,079 314,908 316,436 326,502 333,212 335,124
</TABLE>
/1/ Includes securities losses of $114.9 million related to the securities
portfolio repositioning in the fourth quarter of 1999.
/2/ Includes merger-related expenses of $45.6 million in 1999 and $119.4
million in 1998 related to the acquisition of Crestar in the fourth
quarter of 1998.
/3/ Represents the gain on sale of the Company's consumer credit card
portfolio during the fourth quarter of 1999, net of $124.6 million
in taxes.
8 1999 Annual Report
<PAGE>
Management's Discussion
This narrative will assist readers in their analysis of the accompanying
consolidated financial statements and supplemental financial information. It
should be read in conjunction with the Consolidated Financial Statements and
Notes on page 36 through 65. In Management's Discussion, net interest income,
net interest margin and the efficiency ratio are presented on a fully taxable-
equivalent (FTE) basis, which is adjusted for the tax-favored status of
earnings from certain loans and investments.
On December 31, 1998, SunTrust Banks, Inc. ("SunTrust" or "Company")
completed its merger with Crestar Financial Corporation ("Crestar"), a $27.6
billion asset bank holding company headquartered in Richmond, Virginia. The
merger was accounted for as a pooling-of-interests business combination.
Accordingly, the accompanying consolidated financial information reflects the
results of operations of both SunTrust and Crestar, on a combined basis, for
all periods presented. Certain reclassifications have been made to prior year
financial statements and related information to conform them to the 1999
presentation.
SunTrust has made, and may continue to make, various forward-looking
statements with respect to financial and business matters. The following
discussion contains forward-looking statements that involve inherent risks
and uncertainties. Actual results may differ materially from those contained
in these forward-looking statements. For additional information regarding
forward-looking statements, see "A Warning About Forward-Looking Information"
on page 32 of this annual report.
Earnings Overview
SunTrust's net income for 1999 totaled $1,326.6 million, or $4.13 per diluted
share, compared with $971.0 million, or $3.04 per diluted share, for 1998.
Net income increased 36.6% compared to 1998. Results included the following
unusual items:
. Extraordinary gain of $202.6 million, net of tax, or $0.63 per diluted share,
related to the sale of the Company's $1.5 billion consumer credit card
portfolio during the fourth quarter of 1999 (see "Loans" for further
discussion).
. Securities losses of $70.2 million, net of tax, or $0.22 per diluted share,
relating to the securities portfolio repositioning during the fourth quarter
of 1999 (see "Securities Available for Sale" for further discussion).
. Merger related charges of $32.2 million, net of tax, or $0.10 per diluted
share, for 1999 and $117.1 million, net of tax, or $0.37 per diluted share,
for 1998 related to the acquisition of Crestar in 1998 (see Note 2 to the
Consolidated Financial Statements).
Operating results in 1999 primarily reflected strong loan demand compared
to 1998. Net interest income was $3,188.0 million in 1999, up $214.5 million
from 1998. The net interest margin was 9 basis points lower than last year,
but the impact of the decline was more than offset by a 9.8% increase in
average earning assets. Average loans increased 9.0% primarily due to strong
commercial, residential mortgage and consumer loan demand. Average deposits
increased 7.7%. The 1999 loan loss provision of $170.4 million was 20.6%
lower than the $214.6 million recorded in 1998 primarily due to a $60 million
reduction of the loan loss provision relating to the Company's sale of its
consumer credit card portfolio in the fourth quarter of 1999. Noninterest
income, excluding securities gains and losses, was $1,769.1 million, a 3.6%
increase compared to 1998. Although the Company had strong growth in trust
fees, other charges and fees, and service charges on deposit accounts, these
increases were offset by a 35.8% decrease in mortgage production related
income due to the higher interest rate environment in 1999 which led to a
slowdown in refinancing activities. Noninterest expense, excluding merger-
related expenses, was $2,893.8 million for 1999 compared to $2,813.0 million
for 1998, an increase of 2.9%. Noninterest expense included $34.1 million in
1999 and $42.2
Net Income
($ in Millions)
'94 '95 '96 '97 '98 '99
752.3 802.8 859.0 975.9 971.0 1,326.6
Return on Average
Realized Equity
(percent)
'94 '95 '96 '97 '98 '99
16.64 16.78 16.84 19.07 17.21 20.83
SunTrust Banks, Inc. 9
<PAGE>
Management's Discussion
million in 1998 related to the Company's completion of its year 2000 system
remediation. Total personnel expense, the single largest component of
noninterest expense, was up $82.9 million, or 5.1%, from the 1998 level.
Earnings per share were aided by the repurchase during the second half of
1999 of approximately 13.8 million shares of the Company's common stock.
Table 1 Analysis Of Changes In Net Interest Income/l/
<TABLE>
<CAPTION>
1999 Compared to 1998 1998 Compared to 1997
(In millions on a taxable-equivalent basis) Increase (Decrease) Due to Increase (Decrease) Due to
Interest Income Volume Rate Net Volume Rate Net
<S> <C> <C> <C> <C> <C> <C>
Loans
Taxable $395.1 $(203.5) $191.6 $458.0 $(157.2) $300.8
Tax-exempt/2/ 3.7 (5.5) (1.8) 6.2 (3.5) 2.7
Securities available for sale
Taxable 133.8 (25.9) 107.9 47.1 (7.3) 39.8
Tax-exempt/2/ (6.1) (1.5) (7.6) (9.6) (2.2) (11.8)
Funds sold 1.8 -- 1.8 (4.1) (4.7) (8.8)
Loans held for sale 11.7 (19.9) (8.2) 116.2 (5.8) 110.4
Other short-term investments/2/ (0.6) (0.7) (1.3) 1.8 (0.7) 1.1
- ----------------------------------------------------------------------------------------------------------------------------
Total interest income 539.4 (257.0) 282.4 615.6 (181.4) 434.2
- ----------------------------------------------------------------------------------------------------------------------------
Interest Expense
NOW/Money market accounts 46.1 (43.6) 2.5 54.0 8.3 62.3
Savings deposits 8.5 (21.6) (13.1) (5.3) (5.3) (10.6)
Consumer time deposits (28.3) (37.5) (65.8) (32.5) 4.5 (28.0)
Other time deposits 85.3 (27.0) 58.3 (2.3) (4.7) (7.0)
Funds purchased 152.3 (36.8) 115.5 183.9 (11.5) 172.4
Other short-term borrowings (34.5) (13.8) (48.3) (10.6) 4.6 (6.0)
Long-term debt 30.3 (11.5) 18.8 134.7 (24.5) 110.2
- ----------------------------------------------------------------------------------------------------------------------------
Total interest expense 259.7 (191.8) 67.9 321.9 (28.6) 293.3
- ----------------------------------------------------------------------------------------------------------------------------
Net change in net interest income $279.7 $ (65.2) $214.5 $293.7 $(152.8) $140.9
</TABLE>
/l/Changes in net interest income are attributed to either changes in average
balances (volume change) or changes in average rates (rate change) for
earning assets and sources of funds on which interest is received or paid.
Volume change is calculated as change in volume times the previous rate
while rate change is change in rate times the previous volume. The
rate/volume change, change in rate times change in volume, is allocated
between volume change and rate change at the ratio each component bears to
the absolute value of their total.
/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.
Table 2 Loan Portfolio By Types Of Loans
<TABLE>
<CAPTION>
At December 31
(In millions) 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Commercial $26,933.5 $24,589.6 $19,043.7 $15,761.4 $14,073.4 $13,831.4
Real estate
Construction 2,457.1 2,085.0 1,809.8 1,686.6 1,615.1 1,542.1
Residential mortgages 19,619.3 16,880.9 17,297.2 15,629.5 14,205.7 11,788.5
Other 7,794.9 8,254.3 7,457.6 6,455.0 6,347.1 5,614.3
Credit card 77.4 1,563.5 2,195.6 2,367.4 2,479.6 2,178.5
Other consumer loans 9,120.6 8,167.3 7,672.5 7,401.5 6,564.0 6,781.2
- --------------------------------------------------------------------------------------------------------------------
Total loans $66,002.8 $61,540.6 $55,476.4 $49,301.4 $45,284.9 $41,736.0
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
10 1999 Annual Report
<PAGE>
Management's Discussion
Net Interest
Income/Margin
Net interest income for 1999 was $3,188.0 million or 7.2% higher than the
prior year. Average earning assets were up 9.8% and the net interest margin
was 3.88% in 1999 compared to 3.97% in 1998. The average rate on earning
assets decreased 34 basis points to 7.30% and the average rate on interest-
bearing liabilities decreased 28 basis points to 4.15% primarily due to the
decrease in rates on time deposits.
Interest income that the Company was unable to recognize on
nonperforming loans had a negative impact of one and two basis points on the
net interest margin for 1999 and 1998, respectively. Table 3 contains more
detailed information concerning average balances, yields earned and rates paid.
Provision For Loan Losses
The provision for loan losses charged to expense is based upon credit loss
experience and an estimation of losses inherent in the current loan
portfolio, including the evaluation of impaired loans as prescribed under
Statement of Financial Accounting Standards (SFAS) No.114 and No.118. The
1999 loan loss provision of $170.4 million was 20.6% lower than the $214.6
million recorded in 1998. The net reduction in the provision for loan losses
was primarily attributable to the fourth quarter sale of the $1.5 billion
credit card portfolio which led the Company to lower its allowance for loan
losses by $60.0 million related to consumer credit card receivables.
Partially offsetting this reduction, however, were additional provisions for
other segments of the loan portfolio due to credit quality concerns as
evidenced by increased charge-offs and nonperforming assets.
Loans
Loan demand was strong in 1999 as average loans increased 9.0% over the prior
year. An increased emphasis by SunTrust produced strong growth in commercial
loans, consumer loans and adjustable-rate residential mortgage loans. The
Company's portfolio of residential mortgages grew 16.2% over the prior year.
Of the $19.6 billion in residential mortgages, $1.9 billion were home equity
loans. The average loan-to-deposit ratio increased to 108.5% in 1999 compared
with 107.2% in 1998.
During 1999, the Company originated a total of $17.2 billion in
residential loans available for sale in the secondary market, compared to
$20.6 billion in 1998. The decline in originations resulted from a higher
interest rate environment in 1999 compared to 1998.
During 1999, the Company thoroughly evaluated strategic alternatives for
its profitable, but slowly-growing, consumer credit card portfolio and
decided to pursue a receivables sale and agency agreement with MBNA America
Bank, N.A. ("MBNA"). Under the terms of the agreement, which closed in the
fourth quarter of 1999, SunTrust realized an extraordinary gain of $202.6
million, net of taxes, on the sale of the consumer credit card portfolio and
entered into an agency relationship with MBNA for both parties to sell
SunTrust-branded credit cards, issued by MBNA, throughout the SunTrust market
area. Although the Company is compensated for new accounts originated in its
markets, it assumes no recourse for credit or fraud loss related to these
consumer loans. The Company expects that the sale of the credit card
portfolio will negatively impact the net interest margin by approximately 10
basis points in 2000.
The loan portfolio is well-diversified with only two broad industry
sectors, Manufacturing and Financial Services, representing more than 5% of
year-end loans outstanding. The Healthcare industry continues to be a primary
area of concern as changes in the Medicare/Medicaid reimbursement process
mandated by the Balanced Budget Act of 1997 led to significant financial
deterioration in the long-term care sub-segment of this industry group.
Healthcare accounted for 20% of the Company's year-end nonperforming assets
and approximately one-third of 1999 net charge-offs. Although less than 10%
of the year end health care portfolio was adversely graded, the Company
expects that some portion of these credits may experience further
deterioration during 2000. A second industry group that has received
increased management attention is Textiles, where overseas competition
continues to adversely impact domestic manufacturers.
Average Earnings
Assets Mix
($ in millions)
Total $82,255.7
December 31, 1999
62,749.4 76.3% Loans
304.3 0.4% Other
1,338.0 1.6% Funds sold
2,577.1 3.1% Loans held for sale
15,286.9 18.6% Securities available for sale
SunTrust Banks, Inc. 11
<PAGE>
Management's Discussion
Table 3 Consolidated Daily Average Balances, Income/Expense And Average
Yields Earned And Rates Paid
(Dollars in millions; yields on taxable-equivalent basis)
<TABLE>
<CAPTION>
1999 1998 1997
Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
Assets Balances Expense Rates Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans/l/
Taxable $61,648.3 $4,691.2 7.61% $56,537.1 $4,499.6 7.96% $50,813.7 $4,198.8 8.26%
Tax-exempt/2/ 1,101.1 80.1 7.27 1,053.4 81.9 7.78 974.4 79.2 8.13
- ---------------------------------------------------------------------------------------------------------------------------
Total loans 62,749.4 4,771.3 7.60 57,590.5 4,581.5 7.96 51,788.1 4,278.0 8.26
- ---------------------------------------------------------------------------------------------------------------------------
Securities available for sale
Taxable 14,728.7 927.6 6.30 12,618.9 819.7 6.50 11,882.4 779.9 6.56
Tax-exempt/2/ 558.2 44.6 7.99 633.8 52.2 8.23 749.8 64.0 8.53
- ---------------------------------------------------------------------------------------------------------------------------
Total securities
available for sale 15,286.9 972.2 6.36 13,252.7 871.9 6.58 12,632.2 843.9 6.68
- ---------------------------------------------------------------------------------------------------------------------------
Funds sold 1,338.0 73.4 5.48 1,306.2 71.6 5.48 1,378.5 80.4 5.83
Loans held for sale 2,577.1 172.2 6.68 2,414.7 180.4 7.47 865.4 70.0 8.09
Other short-term
investments/2/ 304.3 13.6 4.48 316.8 14.9 4.70 279.8 13.8 4.94
- ---------------------------------------------------------------------------------------------------------------------------
Total earning assets 82,255.7 6,002.7 7.30 74,880.9 5,720.3 7.64 66,944.0 5,286.1 7.90
- ---------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses (942.1) (940.5) (913.3)
Cash and due from banks 3,630.3 3,306.9 3,156.7
Premises and equipment 1,596.3 1,486.6 1,395.1
Other assets 3,332.5 3,219.1 2,459.3
Unrealized gains on
securities available
for sale 2,948.1 3,583.9 2,975.5
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $92,820.8 $85,536.9 $76,017.3
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities and
Shareholders' Equity
Interest-bearing deposits
NOW/Money market
accounts $19,926.0 $ 527.0 2.64% $18,253.6 $ 524.5 2.87% $16,360.5 $ 462.2 2.82%
Savings 6,918.8 203.8 2.95 6,645.9 216.9 3.26 6,810.1 227.5 3.34
Consumer time 9,824.3 468.6 4.77 10,390.4 534.4 5.14 11,032.1 562.4 5.10
Other time 8,369.8 426.7 5.10 6,724.1 368.4 5.48 6,765.0 375.4 5.55
- ---------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
deposits 45,038.9 1,626.1 3.61 42,014.0 1,644.2 3.91 40,967.7 1,627.5 3.97
- ---------------------------------------------------------------------------------------------------------------------------
Funds purchased 15,220.8 749.6 4.92 12,164.9 634.1 5.21 8,641.9 461.7 5.34
Other short-term
borrowings 1,689.9 79.5 4.71 2,391.8 127.8 5.34 2,591.9 133.8 5.16
Long-term debt 5,858.6 359.5 6.14 5,368.0 340.7 6.35 3,275.4 230.5 7.04
- ---------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 67,808.2 2,814.7 4.15 61,938.7 2,746.8 4.43 55,476.9 2,453.5 4.42
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing
deposits 12,803.2 11,711.3 10,706.0
Other liabilities 4,018.7 4,033.3 2,881.0
Realized shareholders'
equity 6,368.3 5,641.4 5,116.7
Accumulated other
comprehensive income 1,822.4 2,212.2 1,836.7
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $92,820.8 $85,536.9 $76,017.3
- ---------------------------------------------------------------------------------------------------------------------------
Interest Rate Spread 3.15% 3.21% 3.48%
Net Interest Income $3,188.0 $2,973.5 $2,832.6
Net Interest Margin/3/ 3.88% 3.97% 4.23%
</TABLE>
/1/Interest income includes loan fees of $139.6, $118.2, $108.4, $102.1,
$87.8, and $95.1 in the six years ended December 31, 1999. 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% for all years reported and where
applicable, state income taxes, to increase tax-exempt interest income
to a taxable-equivalent basis. The net taxable-equivalent adjustment
amounts included in the above table were $42.5, $44.4, $47.9, $50.0,
$60.7, and $67.9 in the six years ended December 31, 1999.
12 1999 Annual Report
<PAGE>
Management's Discussion
<TABLE>
<CAPTION>
Growth Rate in
Average Balances
Five Year
1996 1995 1994 One Year Annualized
Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/ 1999- 1999-
Balances Expense Rates Balances Expense Rates Balances Expense Rates 1998 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$45,472.0 $3,798.5 8.35% $42,438.4 $3,629.9 8.55% $37,482.3 $2,946.8 7.86% 9.0% 10.5%
866.4 74.0 8.54 893.2 84.9 9.50 734.3 67.5 9.19 4.5 8.4
- ------------------------------------------------------------------------------------------------------------------------------------
46,338.4 3,872.5 8.36 43,331.6 3,714.8 8.57 38,216.6 3,014.3 7.89 9.0 10.4
- -----------------------------------------------------------------------------------------------------------------------------------
12,297.7 778.8 6.33 11,387.7 692.0 6.08 10,502.5 581.3 5.54 16.7 7.0
850.9 75.8 8.90 873.7 91.9 10.51 3,314.5 240.7 7.26 (11.9) (30.0)
- ------------------------------------------------------------------------------------------------------------------------------------
13,148.6 854.6 6.50 12,261.4 783.9 6.39 13,817.0 822.0 5.95 15.3 2.0
- ------------------------------------------------------------------------------------------------------------------------------------
1,044.0 56.5 5.41 886.9 53.9 6.08 967.6 45.4 4.70 2.4 6.7
984.4 77.9 7.91 417.2 31.8 7.63 407.8 28.8 7.08 6.7 44.6
129.0 7.0 5.44 97.3 5.0 5.18 369.7 12.8 3.45 (3.9) (3.8)
- ------------------------------------------------------------------------------------------------------------------------------------
61,644.4 4,868.5 7.90 56,994.4 4,589.4 8.05 53,778.7 3,923.3 7.30 9.8 8.9
- ------------------------------------------------------------------------------------------------------------------------------------
(923.8) (913.0) (873.0) 0.2 1.5
3,186.2 3,058.8 3,126.2 9.8 3.0
1,164.7 1,134.9 1,114.2 7.4 7.5
2,025.1 1,877.9 1,738.8 3.5 13.9
2,155.4 1,379.0 983.6 (17.7) 24.5
- ------------------------------------------------------------------------------------------------------------------------------------
$69,252.0 $63,532.0 $59,868.5 8.5 9.2
- ------------------------------------------------------------------------------------------------------------------------------------
$16,110.3 $ 457.4 2.84% $15,115.6 $ 437.5 2.89% $15,519.0 $ 376.2 2.42% 9.2% 5.1%
7,065.7 240.5 3.40 5,483.0 146.7 2.68 6,466.3 161.2 2.49 4.1 1.4
12,049.4 625.4 5.19 12,824.2 645.3 5.03 11,136.7 465.1 4.18 (5.4) (2.5)
4,822.1 262.4 5.44 4,050.7 251.9 6.22 3,112.8 107.3 3.45 24.5 21.9
- ------------------------------------------------------------------------------------------------------------------------------------
40,047.5 1,585.7 3.96 37,473.5 1,481.4 3.95 36,234.8 1,109.8 3.06 7.2 4.4
- ------------------------------------------------------------------------------------------------------------------------------------
6,965.8 356.9 5.12 5,533.5 336.4 6.08 4,082.6 122.0 2.99 25.1 30.1
1,501.4 81.7 5.44 1,940.7 91.3 4.70 1,892.6 121.7 6.43 (29.3) (2.2)
1,961.8 134.5 6.86 1,655.8 118.2 7.14 1,496.7 101.9 6.81 9.1 31.4
- ------------------------------------------------------------------------------------------------------------------------------------
50,476.5 2,158.8 4.28 46,603.5 2,027.3 4.35 43,706.7 1,455.4 3.33 9.5 9.2
- ------------------------------------------------------------------------------------------------------------------------------------
10,270.1 9,766.8 9,788.7 9.3 5.5
2,071.1 1,525.8 1,241.1 (0.4) 26.5
5,101.3 4,783.0 4,520.6 12.9 7.1
1,333.0 852.9 611.4 (17.6) 24.4
- ------------------------------------------------------------------------------------------------------------------------------------
$69,252.0 $63,532.0 $59,868.5 8.5 9.2
- ------------------------------------------------------------------------------------------------------------------------------------
3.62% 3.70% 3.97%
$2,709.7 $2,562.1 $2,467.9
4.40% 4.50% 4.59%
</TABLE>
/3/Derivative instruments used to help balance the Company's interest-
sensitivity position increased net interest income by $16.3 and
$0.7 in 1999 and 1998, decreased net interest income by $7.7 in
1997 and increased net interest income by $0.1, $3.6 and $48.7 in
1996, 1995 and 1994, respectively. Without these derivative
instruments, the net interest margin would have been 3.86% in 1999,
3.97% in 1998, 4.24% in 1997, 4.40% in 1996, 4.49% in 1995 and
4.50% in 1994.
SunTrust Banks, Inc. 13
<PAGE>
Management's Discussion
Noninterest Income
Significant progress has been made in diversifying the Company's sources of
income. Noninterest income now makes up 36% of total revenues compared with
28% in 1994. Noninterest income, excluding securities gains and losses, was
$1,769.1 million in 1999, an increase of $61.1 million or 3.6% compared to
1998. Trust income, SunTrust's largest source of noninterest income,
increased $42.7 million or 9.3% compared to 1998. Service charges on deposit
accounts rose $37.0 million or 9.2%. Miscellaneous charges and fees were up
$8.6 million or 4.7%. Mortgage production related income decreased by 35.8%,
or $85.3 million, due primarily to a drop in refinancing activities resulting
from the rising rate environment for residential mortgages. The Company
incurred security losses during 1999 of $109.1 million compared to a gain of
$8.2 million in the previous year. The majority of this loss was incurred
during the fourth quarter of 1999 as a result of the portfolio repositioning
program undertaken by the Company to improve future income. Other income in
1999 included a $15.3 million gain on the sale of student loans. Other income
in 1998 included a $54.0 million gain on the sale of $576.0 million in out of
market credit card loans by Crestar in the third quarter of 1998. Other
income in 1997 included a $17.3 million gain from the sale of Crestar's
merchant credit card business and a $9.3 million gain from the securitization
of student loans.
During the third quarter of 1999, SunTrust began to record amortization
expense for mortgage-servicing rights as a reduction to mortgage servicing
related income, conforming to industry practice. The $30.3 million of
amortization expense recorded in the third and fourth quarter of 1999 was
charged to noninterest expense in prior periods.
Table 4 Noninterest Income
<TABLE>
<CAPTION>
Year Ended December 31
(In millions) 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Trust income $ 502.8 $ 460.1 $ 393.0 $ 344.1 $ 319.5 $305.3
Service charges on deposit accounts 438.1 401.1 374.1 346.9 321.9 322.1
Miscellaneous charges and fees 192.9 184.3 161.2 138.7 120.6 118.1
Mortgage production related income 153.0 238.3 97.0 70.5 36.0 26.3
Mortgage servicing related income 61.2 65.1 47.3 42.3 36.3 17.1
Credit card and other fees 106.2 87.3 81.1 59.3 56.1 79.6
Retail investment services 97.4 64.6 51.5 37.7 27.7 24.1
Corporate and institutional investment services 67.8 55.8 16.8 12.2 6.9 5.7
Trading account profits and commissions 35.1 44.6 22.7 18.2 14.9 9.9
Other income 114.6 106.8 104.1 75.2 90.2 72.6
Securities (losses) gains (109.1) 8.2 6.9 17.6 (8.7) (13.5)
- --------------------------------------------------------------------------------------------------------------
Total noninterest income $1,660.0 $1,716.2 $1,355.7 $1,162.7 $1,021.4 $967.3
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Noninterest Expense
Noninterest expense increased 0.2% in 1999. Excluding merger-related charges
for 1999 and 1998, noninterest expense increased 2.9%. Total personnel
expense increased 5.1% or $82.9 million due to increased salary expense, Year
2000 programming costs and bonuses, and higher pay for business development
incentive plans. Outside processing and software increased 8.6% or $11.9
million. The decrease in the amortization of intangible assets of $39.4
million or 37.4% is primarily due to the Company recording the amortization
of mortgage servicing rights as a reduction of other income beginning with
the third quarter of 1999. In addition, the higher amortization expense in
1998 related to increased amortization of intangibles associated with the
acquisition of Equitable Securities Corporation on January 2, 1998. Merger-
related expenses were $45.6 million in 1999 compared to $119.4 million in
1998. For 1998, these costs primarily included transaction costs, severance
and termination-related accruals, write-offs of certain tangible assets and
adjustments to accounting estimates for litigation and deferred compensation
liabilities related to the Company's merger with Crestar. In 1999, merger-
related costs included additional severance, accelerated depreciation and
system conversion costs. The Company expects to record approximately $42.5
million in additional
14 1999 Annual Report
<PAGE>
Management's Discussion
Table 5 Noninterest Expense
<TABLE>
<CAPTION>
Year Ended December 31
(In millions) 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Salaries $1,174.5 $1,095.5 $ 977.9 $ 924.1 $ 857.0 $ 861.4
Other compensation 348.1 338.2 218.1 198.5 155.2 96.1
Employee benefits 175.8 181.8 176.9 169.5 166.7 165.8
- ---------------------------------------------------------------------------------------------------------------
Total personnel expense 1,698.4 1,615.5 1,372.9 1,292.1 1,178.9 1,123.3
- ---------------------------------------------------------------------------------------------------------------
Equipment expense 198.5 178.8 167.7 158.6 147.9 138.4
Net occupancy expense 197.4 192.2 187.2 203.0 193.6 190.1
Outside processing and software 150.3 138.4 112.7 103.8 87.4 65.3
Marketing and customer development 105.4 107.1 95.4 104.6 72.1 90.5
Credit and collection services 68.7 70.4 59.5 54.1 40.2 36.5
Postage and delivery 68.1 64.4 64.1 63.3 57.5 34.1
Communications 66.3 62.1 52.7 50.7 43.3 57.0
Amortization of intangible assets 66.0 105.4 65.0 54.0 43.9 28.3
Consulting and legal 62.5 67.5 51.7 55.0 41.0 40.6
Operating supplies 51.9 54.0 50.0 52.9 47.2 41.2
Merger-related expenses 45.6 119.4 -- -- -- --
FDIC premiums 7.9 8.4 8.5 59.3 61.2 101.5
Other real estate (income) expense (4.8) (9.8) (8.6) 8.2 (13.8) 3.5
Other expense 157.2 158.6 136.9 125.0 167.5 132.5
- ---------------------------------------------------------------------------------------------------------------
Total noninterest expense $2,939.4 $2,932.4 $2,415.7 $2,384.6 $2,167.9 $2,082.8
- ---------------------------------------------------------------------------------------------------------------
Efficiency ratio 60.63% 62.53% 57.68% 61.58% 60.50% 60.63%
</TABLE>
merger-related charges during 2000 primarily related to systems conversions and
business line integration (See Note 2 to the Consolidated Financial Statements).
Provision For Income Taxes
The provision for income taxes covers federal and state income taxes. In 1999,
the provision was $571.7 million, compared to $527.3 million in 1998. In
addition to the 1999 provision, the Company recorded $124.6 million in income
tax expense related to the sale of the Company's consumer credit card portfolio.
The extraordinary gain on the consolidated financial statements is shown net of
this amount. The 1998 provision for income taxes included $22.5 million in
merger-related charges consisting of $9.2 million related to various federal and
state income tax matters and $13.3 million related to certain severance payments
exceeding statutory limitations.
Allowance For Loan Losses
SunTrust maintains an allowance for loan losses sufficient to absorb inherent
losses in the loan portfolio. The Company is committed to the early recognition
of problems and to a strong, conservative allowance and believes the current
allowance is at a level adequate to cover such inherent losses. At year-end
1999, the Company's total allowance was $871.3 million, which represented 1.32%
of period-end loans. The allowance for loan losses was impacted by the sale of
the Company's $1.5 billion consumer credit card portfolio in the fourth quarter
of 1999. The sale of this higher risk, unsecured consumer portfolio allowed the
Company to lower its allowance for loan losses by $60.0 million through an
adjustment to the provision for loan losses.
The Company's allowance at year-end equated to approximately 3.1 times the
average charge-offs for the last three years and 4.3 times the average net
charge-offs for the same three-year period. Because historical charge-offs are
not necessarily indicative of future charge-off levels, the Company also gives
consideration to other risk indicators when determining the appropriate
allowance level.
The allowance for loan losses consists of three elements: (i) allowances
established on specific loans, (ii) general allowances based on historical loan
loss experience and current trends, and (iii) allowances based on general
economic conditions and other risk factors in the Company's individual markets.
SunTrust Banks, Inc. 15
<PAGE>
Management's Discussion
The first element - specific allowance - is based on a regular analysis of
classified loans where the internal credit ratings are below a predetermined
classification. This analysis is performed at the relationship manager level for
those loans with total credit exposure of $500 thousand or greater. The specific
allowance established for these classified loans is based on a careful analysis
of related collateral value, cash flow considerations and guarantor capacity (if
applicable).
The second element - general allowance - is determined by the mix of loan
products within the portfolio, an internal loan grading process and associated
allowance factors. These general allowance factors are updated at least annually
and are based on a statistical loss migration analysis and current loan
charge-off trends. The loss migration analysis, which is prepared annually for
commercial and commercial real estate loans, examines loss experience in
relation to internal loan grades. An annual charge-off trend analysis is
completed for homogeneous loan pool types (e.g., residential real estate, open-
and closed-end consumer loans, etc.). While formal loss migration and charge-off
trend analyses are conducted annually, the Company may revise the general
allowance factors whenever necessary in order to address improving or
deteriorating credit quality trends or specific risks associated with a given
loan pool type.
The third element - general economic conditions and other risk factors - is
based on local marketplace conditions and/or events that could affect loan
repayment. This element inherently involves a higher degree of uncertainty as it
requires management to anticipate the impact that economic trends, legislative
actions or other unique market and/or portfolio issues have on estimated credit
losses. For example, in assessing economic risks in the marketplace, management
might consider local unemployment trends, population shifts within the region,
real estate absorption rates, expansion and contraction plans of major
employers, and other similar indicators. Consideration of other risk factors
typically includes such issues as recent loss experience in specific portfolio
segments, trends in loan quality, changes in account acquisition strategy or
market focus, concentrations of credit, foreign exposure and relevant
international economic conditions, together with any internal administrative
risk factors. These other risk factors are carefully reviewed by management and
may be revised if conditions indicate that actual results differ materially from
the estimates initially applied.
Concentrations of credit risk, discussed in Note 14 to the consolidated
financial statements, may affect the Company's analysis of other risks and,
ultimately, the level of the allowance. Concentrations typically involve loans
to one borrower, an affiliated group of borrowers, borrowers engaged in or
dependent upon the same industry, or a group of borrowers whose loans are
predicated on the same type of collateral. SunTrust's only significant
concentration of credit is a collateral concentration of loans secured by
residential real estate. At December 31, 1999, the Company had $19.6 billion in
loans secured by residential real estate, representing 29.7% of total loans, up
from 27.4% at December 31, 1998. In addition, the Company is subject to a
geographic concentration of credit because it operates primarily in the
Southeastern and Mid-Atlantic regions of the United States. Although not
material enough to constitute a significant concentration of credit risk, the
Company has meaningful credit exposure to various industry sectors, including
healthcare, textiles, telecommunications and real estate developers/investors,
among others. Levels of exposure to these and other industry groups, together
with an assessment of current trends and expected future financial performance
are carefully analyzed for each industry in order to determine an adequate
allowance level. An example of this would be the Company's credit exposure to
the healthcare industry, which includes segments experiencing structural change
and market pressures. At year-end 1999, the Company had outstanding loans of
$1.2 billion to various healthcare segments, of which less than 10% were
adversely graded. Problem loan activity in this industry group increased during
1999 and charge-offs in the health care segment represented 33% of total net
charge-offs during the year. Accordingly, allowance levels reflect the higher
risk profile that currently exists for this industry sector.
As for foreign risk, SunTrust engages in international banking activities;
however, only minor exposure exists in areas of concern in Latin America or
Asia. The Company's total cross border outstandings are less than $500.0 million
and no significant changes in trends occurred in that portfolio during 1999.
The Company prepares a comprehensive analysis of the allowance for loan losses
on a quarterly basis and conducts a peer review of allowance levels of large
banks annually. In addition, the SunTrust Allowance for Loan Losses Review
Committee has the responsibility of affirming the allowance methodology and
assessing the
16 1999 Annual Report
<PAGE>
Management's Discussion
general and specific allowance factors in relation to estimated and actual net
charge-off trends. This committee is also responsible for assessing the
appropriateness of the allowance for loan losses for each loan pool
classification for the Company. As a result of this process, the general
allowance factors for classified commercial loans and commercial credit card
receivables were raised for 2000.
Nonperforming assets increased from $242.1 million at December 31, 1998 to
$275.7 million at December 31, 1999 (See "Nonperforming Assets" and Table 9 for
further discussion). Many of these loans are of the size where the Company's
allowance for loan loss methodology requires that they be specifically analyzed
by a relationship manager as previously described. This analysis results in a
specific allowance being required for these loans. The ratio for allowance for
loan losses to total nonperforming loans (excluding other real estate owned)
decreased from 456.0% at December 31, 1998 to 350.0% at December 31, 1999.
The SunTrust charge-off policy is consistent with regulatory standards,
although a somewhat more conservative policy governs the unsecured consumer loan
portfolio. Losses on unsecured consumer loans are recognized at 90 days past
due, compared to the regulatory loss criteria of 120 days. Secured installment
loans are typically charged off at 120 days past due if repayment from all
sources has been determined to be improbable, or at the occurrence of a loss
confirming event (i.e., bankruptcy or repossession). Commercial loans and real
estate loans are typically placed on nonaccrual when principal or interest is
due and has remained unpaid for 90 days or more unless the loan is both secured
by collateral having realizable value sufficient to discharge the debt in full,
and the loan is in the legal process of collection. Once a loan has been
classified as nonaccrual, it also meets the criteria for an impaired loan.
Accordingly, secured loans may be charged down to the estimated value of the
collateral and previously accrued unpaid interest is reversed. Subsequent
charge-offs may be required as a result of changes in collateral, market values
or repayment prospects.
Consistent with regulatory policy and industry practices, credit card losses
are based on a pre-determined number of days that the credit card loan is past
due. SunTrust's policy for credit cards requires accounts to be charged off in
the month that they become 180 days past due, or in the month following a loss
confirming event (i.e., bankruptcy).
The Company's provision for loan losses in 1999 was $170.4 million, which was
less than total charge-offs of $296.1 million and 26.0% less than net charge-
offs of $230.4 million. The comparable provision and net charge-off amounts for
1998 were $214.6 million and $193.5 million, respectively. Provision expense
declined in 1999 when compared to 1998 due to the sale of the Company's consumer
credit card portfolio, which resulted in the Company reversing $60.0 million
from the allowance for loan losses, offset by a slightly higher provision
expense in the commercial portfolio, where the Company recognized higher fourth
quarter charge-offs. Net charge-offs for 1999 represented .37% of average loans
relative to .34% of average loans for 1998. Actual recoveries decreased from
$70.8 million at December 31, 1998 to $65.7 million at December 31, 1999. In
addition, the ratio of recoveries to total charge-offs of 26.8% in 1998 also
decreased to 22.2% at December 31, 1999. The Company believes this downward
trend in recoveries is likely to continue consistent with relatively low levels
of charge-offs in recent years.
SunTrust Banks, Inc. 17
<PAGE>
Management's Discussion
Table 6 Loans By Industry
<TABLE>
<CAPTION>
At December 31, 1999
(Dollars in millions) Loans % of Total Loans
<S> <C> <C>
Manufacturing $4,648.1 7.0
Financial Services 4,042.9 6.1
Business Services 3,277.2 5.0
Transportation 2,932.9 4.4
Construction/Contractors 2,614.1 4.0
Wholesale Trade 2,381.7 3.6
Real Estate Investors 2,259.1 3.4
Hospitality/Entertainment 1,832.2 2.8
Textiles 1,247.8 1.9
Health Care 1,176.4 1.8
Telecommunications 1,128.0 1.7
</TABLE>
Table 7 Allowance For Loan Losses
<TABLE>
<CAPTION>
(Dollars in millions) At December 31
Allocation by Loan Type 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Commercial $286.7 $251.4 $247.8 $229.9 $211.2 $261.8
Real estate 208.0 229.8 229.3 262.8 325.5 322.4
Consumer loans 339.3 420.9 406.9 350.5 327.1 247.6
Unallocated 37.3 42.5 49.5 53.8 52.0 55.4
- ----------------------------------------------------------------------------------------------------
Total $871.3 $944.6 $933.5 $897.0 $915.8 $887.2
- ----------------------------------------------------------------------------------------------------
Allocation as a Percent of Total Allowance
Commercial 32.9% 26.6% 26.5% 25.6% 23.1% 29.5%
Real estate 23.9 24.3 24.6 29.3 35.5 36.4
Consumer loans 38.9 44.6 43.6 39.1 35.7 27.9
Unallocated 4.3 4.5 5.3 6.0 5.7 6.2
- ----------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
- ----------------------------------------------------------------------------------------------------
Year-end Loan Types as a Percent of Total Loans
Commercial 40.8% 40.0% 34.3% 32.0% 31.1% 33.1%
Real estate 45.3 44.2 47.9 48.2 49.0 45.4
Consumer loans 13.9 15.8 17.8 19.8 19.9 21.5
- ----------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
- ----------------------------------------------------------------------------------------------------
</TABLE>
18 1999 Annual Report
<PAGE>
Management's Discussion
Table 8 Summary Of Loan Loss Experience
<TABLE>
<CAPTION>
Year Ended December 31
(Dollars in millions)
Allowance for Loan Losses 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Balance - beginning of year $ 944.6 $ 933.5 $ 897.0 $ 915.8 $ 887.2 $ 815.9
Allowance from acquisitions and other (13.3) (10.0) 2.2 0.3 14.7 24.0
activity - net
Provision for loan losses 170.4 214.6 225.1 171.8 143.4 149.4
Charge-offs
Commercial (142.0) (49.0) (30.0) (44.5) (37.8) (45.6)
Real estate
Construction (2.2) (3.2) (4.0) (4.0) (1.5) (1.5)
Residential mortgages (15.0) (13.8) (11.8) (10.1) (8.4) (9.1)
Other (5.2) (5.2) (6.9) (11.3) (21.9) (33.5)
Credit card (78.9) (129.5) (143.2) (129.6) (85.3) (54.9)
Other consumer loans (52.8) (63.6) (79.3) (74.8) (60.1) (44.8)
- -----------------------------------------------------------------------------------------------------------------
Total charge-offs (296.1) (264.3) (275.2) (274.3) (215.0) (189.4)
- -----------------------------------------------------------------------------------------------------------------
Recoveries
Commercial 15.5 14.8 22.0 24.2 29.6 28.8
Real estate
Construction 0.7 0.3 2.5 2.3 4.3 5.1
Residential mortgages 3.4 2.7 2.8 2.3 2.1 1.9
Other 6.1 8.4 8.9 12.7 10.9 12.8
Credit card 11.9 14.9 17.7 13.5 12.2 12.0
Other consumer loans 28.1 29.7 30.5 28.4 26.4 26.7
- -----------------------------------------------------------------------------------------------------------------
Total recoveries 65.7 70.8 84.4 83.4 85.5 87.3
- -----------------------------------------------------------------------------------------------------------------
Net charge-offs (230.4) (193.5) (190.8) (190.9) (129.5) (102.1)
Balance - end of year $ 871.3 $ 944.6 $ 933.5 $ 897.0 $ 915.8 $ 887.2
- -----------------------------------------------------------------------------------------------------------------
Total loans outstanding at year end $66,002.8 $61,540.6 $55,476.4 $49,301.4 $45,284.9 $41,736.0
- -----------------------------------------------------------------------------------------------------------------
Average loans $62,749.4 $57,590.5 $51,788.1 $46,338.4 $43,331.6 $38,216.6
Ratios
Allowance to year-end loans 1.32% 1.53% 1.68% 1.82% 2.02% 2.13%
Allowance to nonperforming loans 350.0 456.0 494.6 305.5 279.3 303.7
Net charge-offs to average loans 0.37 0.34 0.37 0.41 0.30 0.27
Provision to average loans 0.27 0.37 0.43 0.37 0.33 0.39
Recoveries to total charge-offs 22.2 26.8 30.7 30.4 39.8 46.1
</TABLE>
Nonperforming Assets
Nonperforming assets were $275.7 million at December 31, 1999, increasing 13.9%
from December 31, 1998. Much of the increase occurred in healthcare credits, an
industry sector that continues to experience structural change and intense
market pressures. At December 31, 1999, the ratio of nonperforming assets to
total loans plus other real estate owned was .42% compared to .39% at December
31, 1998. The Company may experience a modest increase in nonperforming assets
during 2000 as a result of stresses in certain sectors coupled with the very low
current levels of nonperforming assets. The sale of the consumer credit card
portfolio did not impact the Company's level of nonperforming assets as SunTrust
followed the standard bankcard industry practice of charging-off delinquent
credit card accounts at 180 days past due rather than carrying them in
nonaccrual status for a period of time.
Interest income on nonaccrual loans, if recognized, is recorded using the cash
basis method of accounting. When a loan is placed on nonaccrual, unpaid interest
is reversed against interest income if it was accrued in the current year and is
charged to the allowance for loan losses if it was accrued in prior years. When
a nonaccrual loan is returned to accruing status, any unpaid interest is
recorded as interest income only after all principal has been collected.
For the year 1999, the gross amount of interest income that would have been
recorded on nonaccrual
SunTrust Banks, Inc. 19
<PAGE>
Management's Discussion
loans and restructured loans at December 31, 1999, if all such loans had been
accruing interest at the original contractual rate, was $25.9 million. Interest
payments recorded in 1999 as interest income (excluding reversals of previously
accrued interest) for all such nonperforming loans at December 31, 1999, were
$16.5 million.
Table 9 Nonperforming Assets And Accruing Loans Past Due
90 Days Or More
<TABLE>
<CAPTION>
At December 31
(Dollars in millions)
Nonperforming Assets 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans
Commercial $105.0 $ 50.1 $ 35.1 $ 68.2 $ 58.1 $ 68.0
Real estate
Construction 9.0 13.5 16.0 23.7 11.0 24.7
Residential mortgages 82.6 83.9 75.2 74.7 111.3 58.9
Other 34.9 46.6 47.6 103.7 127.6 110.2
Consumer loans 17.4 12.5 12.1 13.4 16.9 17.5
- ----------------------------------------------------------------------------------------------------------
Total nonaccrual loans 248.9 206.6 186.0 283.7 324.9 279.3
- ----------------------------------------------------------------------------------------------------------
Restructured loans -- 0.6 2.7 9.9 2.9 12.9
- ----------------------------------------------------------------------------------------------------------
Total nonperforming loans 248.9 207.2 188.7 293.6 327.8 292.2
- ----------------------------------------------------------------------------------------------------------
Other real estate owned 26.8 34.9 48.2 71.1 97.8 136.0
- ----------------------------------------------------------------------------------------------------------
Total nonperforming assets $275.7 $242.1 $236.9 $364.7 $425.6 $428.2
- ----------------------------------------------------------------------------------------------------------
Ratios
Nonperforming loans to total loans 0.38% 0.34% 0.34% 0.60% 0.72% 0.70%
Nonperforming assets to total loans plus other
real estate owned 0.42 0.39 0.43 0.74 0.94 1.02
Accruing Loans Past Due 90 Days or More $117.4 $108.2 $109.0 $106.1 $ 79.8 $ 55.7
</TABLE>
Securities Available For Sale
The investment portfolio is proactively managed to optimize yield over an entire
interest rate cycle while providing liquidity and managing market risk. The
portfolio yield decreased from 6.58% in 1998 to 6.36% in 1999. The portfolio
yield improved during the fourth quarter to 6.41%. The securities portfolio was
repositioned in the fourth quarter of 1999 to take advantage of higher market
rates. A total of $5.0 billion in securities and interest rate swaps were sold
or terminated during the fourth quarter at a pre-tax loss of $114.9 million, and
the proceeds were reinvested in higher-yielding securities which will generate
approximately $38.0 million in additional annual pre-tax income when compared to
the return from securities which were sold. This repositioning also shifted the
portfolio mix away from mortgage-backed securities which are subject to
prepayments toward non-callable securities with more attractive yields. High-
grade corporate bonds were also added to the portfolio in 1999 to increase
diversification and to improve yield. Portfolio turnover from sales totaled $5.9
billion in 1999, representing 38.3% of the average portfolio size. The average
portfolio size increased by $2.0 billion for the year on an amortized cost
basis. The average life of the portfolio increased from 3.9 years at year-end
1998 to 5.5 years at year-end 1999.
The carrying value of the investment portfolio, all of which is classified as
"securities available for sale" reflected $2.5 billion in net unrealized gains
at December 31, 1999, including a $2.8 billion unrealized gain on the Company's
investment in common stock of The Coca-Cola Company. The market value of this
common stock investment decreased $422.3 million during 1999, which did not
affect the net income of SunTrust, but was included in comprehensive income.
20 1999 Annual Report
<PAGE>
Management's Discussion
Table 10 Securities Available For Sale
<TABLE>
<CAPTION>
At December 31
Amortized Fair Unrealized Unrealized
(In millions) Cost Value Gains Losses
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. government
sponsored enterprises
1999 $ 2,543.5 $ 2,510.3 $ 2.5 $ 35.7
1998 2,208.8 2,243.9 35.3 0.2
1997 3,289.3 3,310.8 26.7 5.2
States and political subdivisions
1999 530.3 528.6 5.9 7.6
1998 599.1 617.9 19.6 0.8
1997 668.9 689.8 21.2 0.3
Mortgage-backed and asset-backed securities
1999 9,904.6 9,712.1 9.0 201.5
1998 9,860.4 9,895.1 57.5 22.8
1997 6,997.9 7,019.7 53.6 31.8
Corporate bonds
1999 1,920.2 1,848.3 -- 71.9
1998 867.2 918.1 50.9 --
1997 663.0 674.4 17.4 6.0
Other securities/1/
1999 891.0 3,718.0 2,829.4 2.4
1998 643.8 3,884.0 3,251.8 11.6
1997 1,256.9 4,502.2 3,246.6 1.3
Total securities available for sale
1999 $15,789.6 $18,317.3 $2,846.8 $319.1
1998 14,179.3 17,559.0 3,415.1 35.4
1997 12,876.0 16,196.9 3,365.5 44.6
</TABLE>
/1/ Includes the Company's investment in 48,266,496 shares of common stock of
The Coca-Cola Company
Liquidity
Liquidity is managed to ensure there is sufficient cash flow to satisfy demand
for credit, deposit withdrawals and attractive investment opportunities. A
large, stable core deposit base, strong capital position and excellent credit
ratings are the solid foundation for the Company's liquidity position. Liquidity
is enhanced by an investment portfolio structured to provide liquidity as
needed. It is also strengthened by ready access to a diversified base of
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
advances.
Funding sources primarily include customer-based core deposits, but also
include borrowed funds and cash flows from operations. Customer-based core
deposits, the Company's largest and most cost-effective source of funding,
accounted for 71% of the funding base. Net borrowed funds, which primarily
include short term funds purchased and sold, other short term borrowings and
long term debt, were $22.6 billion at December 31, 1999, compared with $20.3
billion at December 31, 1998. The increase is due mainly to loan growth,
investment portfolio purchases, and the stock repurchase program announced in
the third quarter of 1999. Cash flows from operations are also a significant
source of liquidity. Net cash from operations primarily results from net income
adjusted for noncash items such as depreciation and amortization, provision for
loan losses, and deferred tax items.
The Company has a contingency funding plan that stress tests liquidity needs
that may arise from certain events such as rapid loan growth or significant
deposit runoff. The plan also provides for continual monitoring of net borrowed
funds dependence and available sources of liquidity. Management believes the
Company has the funding capacity to meet the liquidity needs arising from
potential events.
SunTrust Banks, Inc. 21
<PAGE>
Management's Discussion
Deposits
Average interest-bearing deposits increased 7.2% in 1999 and comprised 77.9%,
78.2% and 79.3% of average total deposits in 1999, 1998 and 1997, respectively.
Average non-interest bearing deposits grew by 9.3% over 1998, and average
NOW/Money market accounts, a lower cost funding source, increased by 9.2%.
Average consumer time deposits decreased 5.4% in the same period while other
time deposits increased 24.5% compared to 1998.
Table 11 Composition Of Average Deposits
<TABLE>
<CAPTION>
Year Ended December 31 Percent of Total
(Dollars in millions) 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing $12,803.2 $11,711.3 $10,706.0 22.1% 21.8% 20.7%
NOW/Money market 19,926.0 18,253.6 16,360.5 34.4 34.0 31.7
accounts
Savings 6,918.8 6,645.9 6,810.1 12.0 12.4 13.2
Consumer time 9,824.3 10,390.4 11,032.1 17.0 19.3 21.3
Other time 8,369.8 6,724.1 6,765.0 14.5 12.5 13.1
- -------------------------------------------------------------------------------------------------------------------------
Total deposits $57,842.1 $53,725.3 $51,673.7 100.0% 100.0% 100.0%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Funds Purchased
Average funds purchased increased $3,055.9 million or 25.1% in 1999 and average
net purchased funds (average funds purchased less average funds sold) increased
$3,024.1 million in 1999. Average net purchased funds were 16.9% of earning
assets for 1999 compared to 14.5% in 1998.
Table 12 Funds Purchased/1/
<TABLE>
<CAPTION>
Maximum
Outstanding
At December 31 Daily Average at Any
(Dollars in millions) Balance Rate Balance Rate Month-end
<S> <C> <C> <C> <C> <C>
1999 $15,911.9 4.69% $15,220.8 4.92% $16,982.3
1998 13,295.8 4.43 12,164.9 5.21 14,191.7
1997 9,736.0 5.61 8,641.9 5.34 10,449.0
</TABLE>
/1/ Consists of federal funds purchased and securities sold under agreements to
repurchase that mature either overnight or at a fixed maturity generally not
exceeding three months. Rates on overnight funds reflect current market
rates. Rates on fixed maturity borrowings are set at the time of borrowings.
Capital Resources
Regulatory agencies measure capital adequacy within a framework that makes
capital requirements sensitive to the risk profiles of individual banking
companies. The guidelines define capital as either Tier 1 (primarily common
shareholders' equity, as defined to include certain debt obligations) or Tier 2
(to include certain other debt obligations and a portion of the allowance for
loan losses and since 1998, 45% of the unrealized gains on equity securities).
The Company is subject to a minimum Tier 1 capital ratio (Tier 1 capital to
risk-weighted assets) of 4%, total capital ratio (Tier 1 plus Tier 2 to risk-
weighted assets) of 8% and Tier 1 leverage ratio (Tier 1 to average quarterly
assets) of 3%. To be considered a "well capitalized" institution, the Tier 1
capital ratio, the total capital ratio, and the Tier 1 leverage ratio must equal
or exceed 6%, 10% and 5%, respectively. SunTrust is committed to remaining well
capitalized.
In April 1997, the Board of Directors authorized the Company to repurchase up
to 15 million shares of SunTrust common stock. At December 31, 1997, the Company
had repurchased approximately 1.9 million shares. Approximately 3.8 million
shares of the Company's common stock were repurchased during the first half of
1998 under this authorization. In connection with the July 1998 announcement of
the merger with Crestar, the Board of Directors rescinded their
22 1999 Annual Report
<PAGE>
Management's Discussion
authorization to repurchase additional shares of the Company stock. The Company
privately placed 2.7 million common shares in December 1998.
On August 10, 1999, the Board of Directors authorized the purchase of up to 15
million shares of SunTrust common stock. As of December 31, 1999, 13.8 million
shares had been purchased and the purchase of the remaining authorized shares
was completed subsequent to year end. In February 2000, the Board of Directors
authorized the purchase of up to 12 million shares of SunTrust common stock and
management anticipates that these additional purchases will occur over an
extended period of time as market conditions permit.
Table 13 Capital Ratios
<TABLE>
<CAPTION>
At December 31
(Dollars in millions) 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital/1/ $ 6,579.6 $ 6,586.5 $ 5,587.2 $ 4,920.6 $ 4,497.2 $ 4,191.5
- --------------------------------------------------------------------------------------------------------------------------------
Total capital 9,939.1 10,307.9 8,608.2 6,807.9 5,712.6 5,379.4
- --------------------------------------------------------------------------------------------------------------------------------
Risk-weighted assets 87,866.1 80,586.4 69,503.3 58,112.8 53,999.5 48,712.0
Risk-based ratios
Tier 1 capital 7.48% 8.17% 8.04% 8.47% 8.33% 8.60%
- --------------------------------------------------------------------------------------------------------------------------------
Total capital 11.31 12.79 12.39 11.71 10.58 11.04
- --------------------------------------------------------------------------------------------------------------------------------
Tier 1 leverage ratio 7.17 7.68 7.70 7.12 7.09 7.04
- --------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity to
assets 8.00 8.78 8.83 8.92 8.84 8.05
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Tier 1 capital includes trust preferred obligations of $1,050, $1,050 and
$800 at the end of 1999, 1998 and 1997, respectively.
Table 14 Loan Maturity
<TABLE>
<CAPTION>
At December 31, 1999
Remaining Maturities of Selected Loans
Within 1-5 After
(In millions) Total 1 Year Years 5 Years
<S> <C> <C> <C> <C>
Loan Maturity
Commercial/1/ $24,883.5 $10,359.8 $ 9,882.1 $4,641.6
Real estate -
construction 2,457.1 1,667.0 790.1 -
- ----------------------------------------------------------------------------------------------------------
Total $27,340.6 $12,026.8 $10,672.2 $4,641.6
- ----------------------------------------------------------------------------------------------------------
Interest Rate Sensitivity
Selected loans with
Predetermined interest rates $ 4,559.6 $1,795.6
Floating or adjustable interest rates 6,112.6 2,846.0
- ----------------------------------------------------------------------------------------------------------
Total $10,672.2 $4,641.6
- ----------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Excludes $2,050.0 million in lease financing.
SunTrust Banks, Inc. 23
<PAGE>
Management's Dicussion
Table 15 Maturity Distribution Of Securities Available For Sale
<TABLE>
<CAPTION>
At December 31, 1999
(Dollars in millions) Average
1 Year 1-5 5-10 After 10 Maturity
Amortized Cost or Less Years Years Years Total in Years
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury and other U.S. government
sponsored enterprises $ 465.1 $ 2,053.9 $ 21.3 $ 3.2 $ 2,543.5 3.3
States and political subdivisions 112.3 229.0 108.1 80.9 530.3 4.5
Mortgage-backed and asset-backed securities/1/ 662.9 7,480.2 1,578.2 183.3 9,904.6 4.1
Corporate bonds - 828.5 334.4 757.3 1,920.2 15.4
- -----------------------------------------------------------------------------------------------------------------------------
Total debt securities $1,240.3 $10,591.6 $2,042.0 $1,024.7 $14,898.6 5.5
- -----------------------------------------------------------------------------------------------------------------------------
Fair Value
U.S. Treasury and other U.S. government
sponsored enterprises $ 465.6 $ 2,020.7 $ 20.8 $ 3.2 $ 2,510.3
States and political subdivisions 112.8 230.3 108.3 77.2 528.6
Mortgage-backed and asset-backed securities/1/ 659.4 7,321.4 1,553.5 177.8 9,712.1
Corporate bonds - 819.6 310.6 718.1 1,848.3
- -----------------------------------------------------------------------------------------------------------------------------
Total debt securities $1,237.8 $10,392.0 $1,993.2 976.3 $14,599.3
- -----------------------------------------------------------------------------------------------------------------------------
Weighted average yield (FTE)
U.S. Treasury and other U.S. government
sponsored enterprises 6.25% 6.23% 6.38% 7.28% 6.24%
States and political subdivisions 7.76 7.56 7.67 7.13 7.56
Mortgage-backed and asset-backed securities/1/ 5.65 6.24 6.75 6.89 6.29
Corporate bonds - 6.92 6.98 7.42 7.13
- -----------------------------------------------------------------------------------------------------------------------------
Total debt securities 6.07 6.32 6.84 7.30 6.44
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Distribution of maturities is based on the average life of the asset.
Table 16 Maturity Of Consumer Time And Other Time Deposits
In Amounts Of $100,000 Or More
<TABLE>
<CAPTION>
(In millions) At December 31, 1999
Months to maturity Consumer Time Other Time Total
<S> <C> <C> <C>
3 or less $2,286.7 $4,827.9 $7,114.6
Over 3 through 6 669.9 36.1 706.0
Over 6 through 12 726.0 41.3 767.3
Over 12 414.0 36.2 450.2
- -------------------------------------------------------------------------------------------------------
Total $4,096.6 $4,941.5 $9,038.1
- -------------------------------------------------------------------------------------------------------
</TABLE>
Interest Rate And Market Risk
The normal course of business activity exposes SunTrust to interest rate risk.
Fluctuations in interest rates may result in changes in the fair market value of
the Company's financial instruments, cash flows and net interest income.
SunTrust's asset/liability management process manages the Company's interest
rate risk position. The objective of this process is the optimization of the
Company's financial position, liquidity and net interest income, while
maintaining a relatively neutral interest rate sensitive position.
SunTrust uses a simulation modeling process to measure interest rate risk and
evaluate potential strategies. These simulations incorporate assumptions
regarding balance sheet growth and mix, pricing, and the repricing and maturity
characteristics of the existing and projected balance sheet. Other interest-
rate-related risks such as prepayment, basis and option risk are also
considered. Simulation results quantify interest rate risk under various
interest rate scenarios. Senior management regularly reviews the overall
interest rate risk position and develops and implements appropriate strategies
to manage the risk. Management estimates the
24 1999 Annual Report
<PAGE>
Management's Discussion
Company's net interest income for the next twelve months would decline 1.5%
under an instantaneous increase in interest rates of 100 basis points, versus
the projection under stable rates. Net interest income would increase 1.9% under
an instantaneous decrease in interest rates of 100 basis points, versus the
projection under stable rates.
A fair market value analysis of the Company's on and off balance sheet
positions calculated under an instantaneous 100 basis point increase in rates
over December 31, 1999 estimates a 1.0% decrease in market value as a percent of
assets compared to a 0.7% decrease at December 31, 1998. SunTrust estimates a
like decrease in rates from December 31, 1999 would increase net market value
0.9% compared to an increase of 0.6% based on 1998 year-end balances.
The computations of interest rate risk do not necessarily include certain
actions that management may undertake to manage this risk in response to
anticipated changes in interest rates.
The Company is also subject to risk from changes in equity prices. SunTrust
owns 48,266,496 shares of common stock of The Coca-Cola Company which had a
carrying value of $2.8 billion at December 31, 1999. A 10% decrease in share
price of The Coca-Cola Company at December 31, 1999 would result in a decrease,
net of deferred taxes, of approximately $179 million in total shareholders'
equity.
The Company's trading portfolio at December 31, 1999 is not significant
compared to the remainder of the balance sheet. The increase or decrease in
portfolio equity from trading assets caused by a hypothetical 10% increase or
decrease in interest rates or equity prices would not be material. Nevertheless,
the Company closely monitors market risk.
Derivative Instruments
Derivative financial instruments, such as interest rate swaps, options, caps,
floors, futures and forward contracts, are components of the Company's risk
management profile. The Company also enters into such instruments as a service
to corporate banking customers. Where contracts have been created for customers,
the Company generally enters into offsetting positions to eliminate the
Company's exposure to market risk.
The Company monitors its sensitivity to changes in interest rates and may use
derivative instruments to limit the volatility of net interest income.
Derivative instruments increased net interest income by $16.3 million and $0.7
million in 1999 and 1998 and decreased net interest income by $7.7 million in
1997. The following table shows the derivative instruments entered into by the
Company as an end-user.
Table 17 Derivative Instruments
<TABLE>
<CAPTION>
As of December 31, 1999
Weighted
Average Average Estimated Fair Value
Notional Maturity Received Average Carrying Unrealized Unrealized
(Dollars in thousands) Balance In Months Rate Pay Rate amount/1/ Gains Losses Net
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hedges on Lending
Commitments
Forward Contracts $1,707,556 2 -- -- -- $14,588 $ (135) $14,453
Hedges on Foreign
Currency
Forward Contracts 901,268 2 -- -- -- 14,030 (7,290) 6,740
Interest Rate Swaps 2,621,184 48 6.39% 6.09% $ (2,064) 31,600 (7,925) 21,611
Interest Rate Caps/
Floors 4,317,197 19 6.46/2/ -- (10,230) 11,808 -- 1,578
Futures Contracts 300,000 23 -- -- -- 1,074 -- 1,074
- ---------------------------------------------------------------------------------------------------------------------
Total Derivatives $45,456
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Carrying amount includes accrued interest receivable or payable and
unamortized premiums.
/2/ Average option strike price.
SunTrust Banks, Inc. 25
<PAGE>
Management's Discussion
Earnings And Balance Sheet Analysis 1998 vs.1997
Net income was $971.0 million in 1998 compared with $975.9 million in 1997, a
decrease of 0.5%. Diluted earnings per common share in both 1998 and 1997 were
$3.04. Excluding merger-related charges in 1998, net income was $1,088.1
million, an 11.5% increase over 1997, and diluted earnings per share were $3.41,
a 12.2% increase over 1997.
Operating results in 1998 reflected strong loan demand, robust noninterest
income growth and continued excellent credit quality. Net interest income was
$2,973.5 million in 1998, up $140.9 million from 1997. The Company's net
interest margin declined from 4.23% in 1997 to 3.97% in 1998, but the impact of
the decline was more than offset by an 11.9% increase in average earning assets.
The provision for loan losses decreased 4.7% from $225.1 million in 1997 to
$214.6 million in 1998. The allowance for loan losses as a percentage of loans
decreased from 1.68% to 1.53%. Net charge-offs to average loans were 0.34% in
1998 versus 0.37% in 1997. Nonperforming assets increased 2.2% from $236.9
million at December 31, 1997 to $242.1 million at December 31, 1998.
Noninterest income was $1,716.2 million in 1998, an increase of $360.5
million, or 26.6%, from 1997. Trust income, the Company's largest source of
noninterest income, increased $67.1 million, or 17.1%. Noninterest expense was
up $516.7 million or 21.4%. This increase primarily relates to the merger-
related expenses recorded during 1998 and an increase in personnel expenses.
Loans at December 31, 1998 were $61.5 billion, an increase of 10.9%. At December
31, 1998, deposits were $59.0 billion, an increase of $4.5 billion, or 8.2%,
from December 31, 1997.
Fourth Quarter Results
SunTrust's net income for the fourth quarter of 1999 totaled $429.8 million or
$1.35 per diluted share compared with $157.9 million or $0.49 per diluted share
for the fourth quarter of 1998. Results included the following unusual items,
net of income taxes:
. Extraordinary gain of $202.6 million, net of tax, or $0.64 per diluted share,
for 1999 related to the sale of the Company's $1.5 billion consumer credit
card portfolio during the fourth quarter of 1999.
. Securities losses of $70.2 million, net of tax, or $0.22 per diluted share
related to the securities portfolio repositioning during the fourth quarter
of 1999.
. Merger related charges of $4.7 million, net of tax, or $0.01 per diluted
share for 1999 and $117.1 million, net of tax, or $0.37 per diluted share for
1998 related to the acquisition of Crestar in 1998. (See Note 2 to the
Consolidated Financial Statements.)
Operating results for the fourth quarter of 1999 were also impacted by the
following:
. Average earning assets were $84.4 billion in the 1999 fourth quarter, an
increase of 8.0% over 1998. This gain, offset somewhat by a 9 basis point
decline in the net interest margin, produced an increase of $41.9 million in
net interest income on a taxable-equivalent basis.
. The 1999 fourth quarter provision for loan losses of $33.1 million was $34.0
million lower than the $67.1 million in 1998 and includes a $60 million
reduction to the allowance as a result of the consumer credit card sale. Net
loan charge-offs for the fourth quarter of 1999 were at $109.0 million, $56.5
million more than in the 1998 fourth quarter.
. Noninterest income decreased by $136.9 million in the 1999 fourth quarter
compared to the fourth quarter of 1998 primarily due to the loss on the sale
of securities of $114.9 million due to the securities portfolio repositioning
in the fourth quarter of 1999 and a decline of $33.4 million in mortgage
production related income.
. Noninterest expense, excluding merger-related charges, increased 2.1% from
the fourth quarter of 1998. Equipment expense was up $10.2 million or 22.6%
primarily due to increased depreciation expense which resulted from upgrading
and standardizing the Company's personal computers.
. The 1999 fourth quarter provision for income taxes of $81.0 million was $32.6
million, or 28.7%, lower than the $113.6 million provision for the fourth
quarter of 1998. The higher income taxes in 1998 primarily related to the
non-deductible acquisition expenses which were recorded during the fourth
quarter of 1998.
26 1999 Annual Report
<PAGE>
Management's Discussion
Table 18 Quarterly Financial Data
<TABLE>
<CAPTION>
(Dollars in millions
except per share data) 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations 4 3 2 1 4 3 2 1
Interest and dividend income $ 1,559.4 $ 1,506.4 $ 1,452.5 $ 1,442.0 $ 1,443.0 $ 1,419.5 $ 1,425.7 $ 1,387.7
Interest expense 763.4 711.4 667.8 672.2 689.5 698.2 691.1 668.0
Net interest income 796.0 795.0 784.7 769.8 753.5 721.3 734.6 719.7
Provision for loan losses 33.1 46.5 48.8 42.0 67.1 40.5 55.3 51.7
Net interest income after
provision for loan losses 762.9 748.5 735.9 727.8 686.4 680.8 679.3 668.0
Noninterest income/1/ 299.2 446.6 469.3 444.9 436.1 460.1 421.3 398.7
Noninterest expense/2/ 753.9 692.3 752.3 740.9 851.0 732.9 688.1 660.4
Income before provision for
income taxes and
extraordinary gain 308.2 502.8 452.9 431.8 271.5 408.0 412.5 406.3
Provision for income taxes 81.0 181.4 159.2 150.1 113.6 131.3 141.0 141.4
Income before
extraordinary gain 227.2 321.4 293.7 281.7 157.9 276.7 271.5 264.9
Extraordinary gain,
net of taxes/3/ 202.6 -- -- -- -- -- -- -
Net income $ 429.8 $ 321.4 $ 293.7 $ 281.7 $ 157.9 $ 276.7 $ 271.5 $ 264.9
Net interest income
(taxable-equivalent) $ 806.5 $ 805.4 $ 795.4 $ 780.7 $ 764.6 $ 732.4 $ 745.6 $ 730.9
Per common share
Diluted
Income before
extraordinary gain $ 0.71 $ 1.00 $ 0.91 $ 0.87 $ 0.49 $ 0.87 $ 0.85 $ 0.83
Extraordinary gain 0.64 -- -- -- -- -- -- --
Net income 1.35 1.00 0.91 0.87 0.49 0.87 0.85 0.83
Basic
Income before
extraordinary gain 0.72 1.01 0.92 0.89 0.50 0.88 0.86 0.84
Extraordinary gain 0.64 -- -- -- -- -- -- -
Net income 1.36 1.01 0.92 0.89 0.50 0.88 0.86 0.84
Dividends declared 0.345 0.345 0.345 0.345 0.250 0.250 0.250 0.250
Book value 24.73 24.50 25.47 25.32 25.47 23.92 25.81 24.88
Market Price
High 76.00 70.88 73.00 79.44 80.63 87.75 83.44 77.44
Low 64.19 61.56 63.06 60.44 55.06 54.00 73.38 65.25
Close 68.81 65.75 69.44 62.25 76.50 62.00 81.31 75.38
Selected Average Balances
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $94,804.6 $92,447.7 $92,304.2 $91,696.6 $89,283.1 $85,372.1 $ 85,087.5 $82,330.5
- ------------------------------------------------------------------------------------------------------------------------------
Earning assets 84,447.9 82,517.2 81,329.1 80,684.8 78,224.4 74,731.7 74,372.8 72,129.4
Loans 64,941.7 62,859.8 61,973.8 61,180.0 59,995.6 57,493.6 57,090.0 55,737.1
- ------------------------------------------------------------------------------------------------------------------------------
Total deposits 58,284.0 58,423.6 57,743.7 56,895.4 54,828.4 53,658.3 53,607.5 52,785.4
- ------------------------------------------------------------------------------------------------------------------------------
Realized shareholders' equity 6,496.4 6,522.5 6,328.2 6,120.2 5,898.6 5,618.9 5,568.9 5,474.8
- ------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 8,083.1 8,210.7 8,322.5 8,146.9 7,947.6 7,990.8 7,937.1 7,532.6
- ------------------------------------------------------------------------------------------------------------------------------
Common shares
-diluted (thousands) 317,701 322,223 322,448 322,364 320,224 317,920 319,689 320,387
Common shares
-basic (thousands) 313,706 318,239 318,315 318,090 315,403 313,572 314,999 315,678
Ratios (Annualized)
ROA 1.85% 1.42% 1.32% 1.29% 0.73% 1.35% 1.34% 1.36%
ROE 26.25 19.55 18.61 18.67 10.62 19.54 19.55 19.63
Net interest margin 3.79 3.87 3.92 3.92 3.88 3.89 4.02 4.11
</TABLE>
/1/ Includes securities losses of $114.9 million for the fourth quarter of 1999
related to the securities portfolio repositioning.
/2/ Includes merger-related expenses of $7.1 million, $7.1 million, $17.6
million and $13.8 million for the fourth quarter, third quarter, second
quarter and first quarter of 1999, respectively, and $119.4 million for the
fourth quarter of 1998 related to the acquisition of Crestar.
/3/ Represents the gain on sale of the Company's consumer credit card portfolio
during the fourth quarter of 1999, net of $124.6 million in taxes.
SunTrust Banks, Inc. 27
<PAGE>
Management's Discussion
Table 19 Consolidated Daily Average Balances, Income/Expense
And Average Yields Earned And Rates Paid
<TABLE>
<CAPTION>
Quarter Ended
(Dollars in millions; December 31, 1999 December 31, 1998
yields on taxable-equivalent basis)
Average Income/ Yields/ Average Income/ Yields/
Assets Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C>
Loans/1/
Taxable $63,884.5 $1,236.6 7.68% $58,873.2 $1,137.2 7.66%
Tax-exempt/2/ 1,057.2 19.8 7.43 1,122.4 21.2 7.50
- -------------------------------------------------------------------------------------------------------------------
Total loans 64,941.7 1,256.5 7.68 59,995.6 1,158.4 7.66
- -------------------------------------------------------------------------------------------------------------------
Securities available for sale
Taxable 15,443.8 247.5 6.36 12,868.0 206.2 6.36
Tax-exempt/2/ 538.1 10.6 7.80 610.2 12.2 7.95
- -------------------------------------------------------------------------------------------------------------------
Total securities available for sale 15,981.9 258.1 6.41 13,478.2 218.4 6.43
- -------------------------------------------------------------------------------------------------------------------
Funds sold 1,509.4 23.5 6.16 1,293.5 16.9 5.20
Loans held for sale 1,700.7 28.3 6.60 3,138.4 56.6 7.15
Other short-term investments/2/ 314.2 3.5 4.42 318.7 3.8 4.79
- -------------------------------------------------------------------------------------------------------------------
Total earning assets 84,447.9 1,569.8 7.38 78,224.4 1,454.1 7.37
- -------------------------------------------------------------------------------------------------------------------
Allowance for loan losses (920.7) (955.0)
Cash and due from banks 3,826.0 3,600.3
Premises and equipment 1,633.4 1,524.9
Other assets 3,251.9 3,576.6
Unrealized gains on securities
available for sale 2,566.1 3,311.9
- -------------------------------------------------------------------------------------------------------------------
Total assets $94,804.6 $89,283.1
- -------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Interest-bearing deposits
NOW/Money market accounts $20,369.6 $ 141.3 2.75% $19,003.7 $ 131.5 2.74%
Savings 6,791.3 52.6 3.07 6,714.3 52.2 3.09
Consumer time 9,675.4 115.3 4.73 10,135.0 129.8 5.08
Other time 8,469.0 118.1 5.53 6,710.4 87.0 5.14
- -------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 45,305.3 427.3 3.74 42,563.4 400.5 3.73
- -------------------------------------------------------------------------------------------------------------------
Funds purchased 16,417.1 219.2 5.30 14,166.8 172.3 4.82
Other short-term borrowings 1,901.3 21.0 4.40 2,031.6 25.5 4.98
Long-term debt 6,120.3 95.8 6.21 5,844.9 91.2 6.19
- -------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 69,744.0 763.3 4.34 64,606.7 689.5 4.23
- -------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits 12,978.7 12,265.0
Other liabilities 3,998.8 4,463.8
Realized shareholders' equity 6,496.4 5,898.6
Accumulated other comprehensive income 1,586.7 2,049.0
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $94,804.6 $89,283.1
- -------------------------------------------------------------------------------------------------------------------
Interest Rate Spread 3.04% 3.14%
Net Interest Income $ 806.5 $ 764.6
Net Interest Margin/3/ 3.79% 3.88%
</TABLE>
/1/ Interest income includes loan fees of $35.5 and $30.4 in the quarters ended
December 31, 1999 and 1998, respectively. 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 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 $10.5 and $11.1 in the quarters ended December 31, 1999 and 1998,
respectively.
/3/ Derivative instruments used to help balance the Company's interest-
sensitivity position increased net interest income by $1.3 and $2.1 in the
fourth quarter of 1999 and 1998, respectively. Without these derivative
instruments, the net interest margin would have been 3.78% in 1999 and 3.87%
in 1998.
28 1999 Annual Report
<PAGE>
Management's Discussion
Table 20 Quarterly Noninterest Income And Expense
<TABLE>
<CAPTION>
(In millions) 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest Income 4 3 2 1 4 3 2 1
Trust income $ 123.8 $126.4 $126.3 $126.3 $117.7 $112.9 $116.3 $113.2
Service charges on
deposit accounts 113.3 111.6 107.1 106.1 105.7 102.6 97.6 95.2
Miscellaneous charges and fees 48.1 49.0 49.3 46.5 50.8 45.4 45.8 42.3
Credit card and other fees 25.7 29.2 28.2 23.1 23.5 20.1 22.9 20.8
Mortgage production
related income 25.2 26.7 47.6 53.5 58.6 64.9 65.3 49.5
Mortgage servicing
related income/3/ 7.5 12.0 21.5 20.2 18.9 17.4 15.0 13.8
Retail investment services 24.0 23.9 26.0 23.5 15.2 16.1 18.5 14.8
Corporate and institutional
investment services 19.6 13.2 16.3 18.7 20.2 13.8 12.3 9.5
Trading account profits
and commissions 6.9 6.2 11.4 10.6 11.7 8.3 12.4 12.2
Other income/2/ 20.0 45.8 31.7 17.1 12.8 59.4 10.7 23.9
Securities (losses) gains/1/ (114.9) 2.6 3.9 (0.7) 1.0 (0.8) 4.5 3.5
- ---------------------------------------------------------------------------------------------------------
Total noninterest income $ 299.2 $446.6 $469.3 $444.9 $436.1 $460.1 $421.3 $398.7
- ---------------------------------------------------------------------------------------------------------
Noninterest Expense
Salaries $ 287.1 $288.5 $300.4 $298.5 $289.9 $278.1 $269.2 $258.3
Other compensation 93.9 80.9 88.9 84.4 86.2 100.8 80.3 70.9
Employee benefits 40.2 39.7 41.5 54.4 39.2 45.7 46.1 50.8
- ---------------------------------------------------------------------------------------------------------
Total personnel expense 421.2 409.1 430.8 437.3 415.3 424.6 395.6 380.0
- ---------------------------------------------------------------------------------------------------------
Equipment expense 55.4 48.0 49.8 45.3 45.2 45.5 43.9 44.2
Net occupancy expense 50.0 49.8 49.9 47.7 49.8 49.1 47.0 46.3
Outside processing
and software 39.8 37.0 38.7 34.8 37.7 32.9 34.6 33.2
Marketing and
customer development 35.0 24.7 23.9 21.8 34.7 22.7 25.6 24.1
Consulting and legal 18.5 13.0 15.6 15.4 19.6 19.6 15.1 13.2
Postage and delivery 17.3 16.3 17.4 17.1 16.1 15.9 16.0 16.4
Communications 16.1 16.5 17.6 16.1 15.8 15.8 15.6 14.9
Credit and collection services 15.1 17.8 19.2 16.6 18.9 17.8 17.5 16.2
Operating supplies 13.6 10.7 14.3 13.3 14.3 13.2 13.3 13.2
Merger-related expenses 7.1 7.1 17.6 13.8 119.4 -- -- --
Amortization of
intangible assets/3/ 6.3 9.1 24.9 25.7 28.9 28.0 26.7 21.8
FDIC premiums 2.0 1.8 2.1 2.0 2.3 2.3 2.1 1.7
Other real estate expense (1.2) 0.2 (2.7) (1.1) (1.0) (4.0) (1.8) (3.0)
Other expense 57.7 31.2 33.2 35.1 34.0 49.5 36.9 38.2
- ---------------------------------------------------------------------------------------------------------
Total noninterest expense $ 753.9 $692.3 $752.3 $740.9 $851.0 $732.9 $688.1 $660.4
- ---------------------------------------------------------------------------------------------------------
</TABLE>
/1/ The fourth quarter of 1999 includes a pre-tax loss of $114.9 million
relating to the securities portfolio repositioning.
/2/ The third quarter of 1998 includes a $54 million pre-tax gain on the sale of
credit card loans.
/3/ Beginning with the third quarter of 1999, the Company recorded the
amortization of mortgage servicing rights as a reduction to mortgage
servicing related income.
SunTrust Banks, Inc. 29
<PAGE>
Management's Discussion
Table 21 Summary Of Loan Loss Experience, Nonperforming Assets And Accruing
Loans Past Due 90 Days Or More
<TABLE>
<CAPTION>
Quarters
(Dollars in millions) 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allowance for Loan Losses 4 3 2 1 4 3 2 1
Balance - Beginning of quarter $947.2 $941.4 $952.6 $944.6 $928.5 $908.9 $939.8 $933.5
Allowance from acquisitions
and other activity - net -- 0.1 (13.4) -- 1.5 21.9 (34.9) 1.5
Provision for loan losses 33.1 46.5 48.8 42.0 67.1 40.5 55.3 51.7
Charge-offs (123.8) (56.7) (63.4) (52.2) (67.8) (59.5) (69.8) (67.2)
Recoveries 14.8 15.9 16.8 18.2 15.3 16.7 18.5 20.3
Balance - End of quarter $871.3 $947.2 $941.4 $952.6 $944.6 $928.5 $908.9 $939.8
Ratios
Allowance to quarter-end loans 1.32% 1.48% 1.50% 1.55% 1.53% 1.58% 1.59% 1.65%
Allowance to nonperforming
loans 350.0 398.6 392.9 481.5 456.0 468.3 462.6 478.5
Net loan charge-offs to average
loans (annualized) 0.67 0.26 0.30 0.23 0.35 0.30 0.36 0.34
Provision to average loans
(annualized) 0.20 0.29 0.32 0.28 0.44 0.28 0.39 0.38
Nonperforming Assets
Nonaccrual loans $ 248.9 $237.6 $239.6 $197.8 $206.6 $197.7 $196.5 $193.7
Restructured loans -- 0.1 -- 0.1 0.6 0.5 -- 2.7
- --------------------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 248.9 237.7 239.6 197.9 207.2 198.2 196.5 196.4
- --------------------------------------------------------------------------------------------------------------------------------
Other real estate owned 26.8 24.2 28.2 36.1 34.9 33.1 43.4 52.0
- --------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 275.7 $261.9 $267.8 $234.0 $242.1 $231.3 $239.9 $248.4
- --------------------------------------------------------------------------------------------------------------------------------
Ratios
Nonperforming loans to
total loans 0.38% 0.37% 0.38% 0.32% 0.34% 0.34% 0.34% 0.35%
Nonperforming assets to
total loans plus other real
estate owned 0.42 0.41 0.43 0.38 0.39 0.39 0.42 0.44
Accruing Loans Past Due
90 Days or More $ 117.4 $113.1 $101.7 $103.8 $108.2 $ 89.8 $101.5 $110.3
</TABLE>
Supervision And Regulation
As a bank holding company, the Company is subject to the regulation and
supervision of the Board of Governors of the Federal Reserve System (the
"Federal Reserve"). As of December 31, 1999, the Company had 29 bank
subsidiaries which were subject to supervision and regulation by applicable
state and federal banking agencies, including the Federal Reserve, the Office of
the Comptroller of the Currency (the "Comptroller") and the Federal Deposit
Insurance Corporation (the "FDIC"). Effective January 1, 2000, 27 of the bank
subsidiaries merged into SunTrust Bank, Atlanta, which changed its name to
SunTrust Bank. SunTrust Bank (the "Bank") is a Georgia state bank which now has
branches in Georgia, Florida, Tennessee, Alabama, Virginia, Maryland, and the
District of Columbia. The Bank is a member of the Federal Reserve System, and it
is regulated by the Federal Reserve and the Georgia Department of Banking and
Finance.
The Bank is subject to various requirements and restrictions under federal and
state law, including requirements to maintain reserves against deposits,
restrictions on the types and amounts of loans that may be made and the interest
that may be charged thereon, and limitations on the types of investments that
may be made and the types of services that may be offered. Various consumer laws
and regulations also affect the operations of the Bank. In addition to the
impact of regulation, commercial banks are affected significantly by the actions
of the Federal Reserve as it attempts to
30 1999 Annual Report
<PAGE>
Management's Discussion
control the money supply and credit availability in order to influence the
economy.
Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, bank holding companies from any state may now acquire banks located in any
other state, subject to certain conditions, including concentration limits. In
addition, a bank may now establish branches across state lines by merging with a
bank in another state (unless applicable state law prohibits such interstate
mergers), provided certain conditions are met.
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by federal law and
regulatory policy that are designed to reduce potential loss exposure to the
depositors of such depository institutions and to the FDIC insurance fund in the
event the depository institution becomes in danger of default or is in default.
For example, under a policy of the Federal Reserve with respect to bank holding
company operations, a bank holding company is required to serve as a source of
financial strength to its subsidiary depository institutions and commit
resources to support such institutions in circumstances where it might not do so
absent such policy. In addition, the "cross-guarantee" provisions of federal law
require insured depository institutions under common control to reimburse the
FDIC for any loss suffered or reasonably anticipated as a result of the default
of a commonly controlled insured depository institution or for any assistance
provided by the FDIC to a commonly controlled insured depository institution in
danger of default.
The federal banking agencies have broad powers under current federal law to
take prompt corrective action to resolve problems of insured depository
institutions. The extent of these powers depends upon whether the institutions
in question are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized" as such terms are defined under regulations issued by each of
the federal banking agencies.
There are various legal and regulatory limits on the extent to which the Bank
may pay dividends or otherwise supply funds to the Company. In addition, federal
and state bank regulatory agencies also have the authority to prevent a bank or
bank holding company from paying a dividend or engaging in any other activity
that, in the opinion of the agency, would constitute an unsafe or unsound
practice.
FDIC regulations require that management report annually on its responsibility
for preparing its institution's financial statements, and establishing and
maintaining an internal control structure and procedures for financial reporting
and compliance with designated laws and regulations concerning safety and
soundness.
The Company's nonbanking subsidiaries are regulated and supervised by various
regulatory bodies. For example, SunTrust Equitable Securities Corporation is a
broker-dealer and investment adviser registered with the Securities and Exchange
Commission ("SEC") and a member of the New York Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. ("NASD"). SunTrust Securities,
Inc. and Crestar Securities Corporation are also broker-dealers registered with
the SEC and members of the NASD. Trusco Capital Management, Inc. and Crestar
Asset Management Company are investment advisers registered with the SEC. The
Company also has one limited purpose national bank subsidiary, SunTrust
BankCard, N.A., which is regulated by the Comptroller.
On November 12, 1999, financial modernization legislation known as the Gramm-
Leach-Bliley Act (the "Act") was signed into law. The Act creates a new type of
financial services company called a financial holding company. A bank holding
company which elects to become a financial holding company may engage in
expanded securities activities and insurance sales and underwriting activities,
and may also acquire securities firms and insurance companies, subject in each
case to certain conditions. Securities firms and insurance companies may also
choose to establish or become financial holding companies and thereby acquire
banks, subject to certain conditions. The Company expects to file with the
Federal Reserve an election to become a financial holding company under the Act,
major provisions of which become effective on March 11, 2000.
In addition to the Act, there have been a number of legislative and regulatory
proposals that would have an impact on the operation of bank/financial holding
companies and their bank and nonbank subsidiaries. It is impossible to predict
whether or in what form these proposals may be adopted in the future and, if
adopted, what their effect will be on the Company.
SunTrust Banks, Inc. 31
<PAGE>
Management's Discussion
Year 2000
SunTrust and its subsidiaries addressed the Year 2000 challenges in a prompt and
responsible manner. The Company dedicated resources to ensure that systems and
services would not be compromised or otherwise negatively impacted by the
century date change. SunTrust also put in place processes to monitor liquidity,
fiduciary and credit quality issues related to the Year 2000.
SunTrust successfully completed its transition to the Year 2000 with no impact
to the Company's results of operations or financial condition other than the
cost of the project. In addition, the Company is not aware of any significant
third party relationships which were negatively impacted by their lack of Year
2000 readiness; however, the Company continues to monitor its third party
relationships for such problems.
The total cost of the Year 2000 project since its inception was $87.7 million,
of which $34.1 million was incurred in 1999 and $42.2 million in 1998. The total
cost of the project did not materially differ from the original estimate of $82
million. These expenses did not have a material effect on the results of
operations or financial condition of SunTrust. To make resources available for
Year 2000 efforts, certain discretionary data processing projects were deferred;
however, the Company does not anticipate that the deferral of these projects
will have a material negative impact on the Company's future results of
operations or financial condition.
A Warning About Forward-Looking Information
This annual report contains forward-looking statements. The Company may also
make written forward-looking statements in periodic reports to the Securities
and Exchange Commission, proxy statements, offering circulars and prospectuses,
press releases and other written materials and oral statements made by
SunTrust's officers, directors or employees to third parties. Statements that
are not historical facts, including statements about the Company's beliefs and
expectations, are forward-looking statements. These statements are based on
beliefs and assumptions of SunTrust's management, and on information currently
available to such management. Forward-looking statements include statements
preceded by, followed by or that include the words "believes," "expects,"
"anticipates," "plans," "estimates" or similar expressions. Forward-looking
statements speak only as of the date they are made, and the Company undertakes
no obligation to update publicly any of them in light of new information or
future events.
Forward-looking statements involve inherent risks and uncertainties.
Management cautions the readers that a number of important factors could cause
actual results to differ materially from those contained in any forward-looking
statement. Such factors include, but are not limited to, the following:
competitive pressures among depository and other financial institutions may
increase significantly; changes in the interest rate environment may reduce
margins; general economic or business conditions may lead to a deterioration in
credit quality or a reduced demand for credit; legislative or regulatory
changes, including changes in accounting standards, may adversely affect the
business in which SunTrust is engaged; changes may occur in the securities
markets; and competitors of SunTrust may have greater financial resources and
develop products that enable such competitors to compete more successfully than
SunTrust.
Management of SunTrust believes these forward-looking statements are
reasonable; however, undue reliance should not be placed on such forward-looking
statements, which are based on current expectations.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and shareholder values
of SunTrust may differ materially from those expressed in the forward-looking
statements contained in this annual report. Many of the factors that will
determine these results and values are beyond SunTrust's ability to control or
predict.
Community Reinvestment
"Build your community and you build your bank" has always been the operating
philosophy of SunTrust. In SunTrust's communities, where you find people working
together to build, rebuild or improve their quality of life, SunTrust is there.
Even as the Company consolidates its banking operations under a single charter,
this locally-focused approach remains at the heart of SunTrust's commitment to
its communities.
The SunTrust market area is extremely diverse, ranging from major metropolitan
areas to small rural communities. SunTrust's decentralized management approach
is ideally structured to provide for community
32 1999 Annual Report
<PAGE>
Management's Discussion
reinvestment in each market it serves. SunTrust's Community Reinvestment
programs are locally designed under an overall corporate structure and are
driven by the SunTrust philosophy that it will be a force in building its
community. This approach ensures that even as Crestar's operations are
integrated into SunTrust, its traditional commitment to its local communities
will continue.
SunTrust is an integral part of each community it serves. Bankers work side by
side with community groups, non-profit organizations, governmental agencies, and
individuals to provide decent, safe, affordable housing; opportunities for small
businesses; and redevelopment of blighted areas. SunTrust employees can be found
hammering nails in Habitat homes, serving on the boards of Community Development
Corporations, teaching small-business owners the keys to success, walking for
charity, and anywhere there is an activity to improve its communities. The
Company's role as a community leader is a responsibility that SunTrust takes
seriously. SunTrust has designated local senior executives to oversee community
activities and ensure that the Company is doing its part.
SunTrust provides financial support to community building efforts through its
extensive corporate contributions, investments, and lending activities. In 1999,
SunTrust approved over 15,000 loans for nearly $1.3 billion to provide or
improve housing in low and moderate-income areas. SunTrust also approved 38,600
loans for more than $2.8 billion for low and moderate-income families to
purchase or rehabilitate their homes. More than 40,000 businesses in SunTrust's
communities received $4.2 billion in loans from the Company. The vast majority
of these loans (75%) had an original amount of $100,000 or less, and more than
half were to businesses with annual revenues of $1 million or less. In addition,
SunTrust originated over $500 million in community development loans. Through
membership in the Federal Home Loan Bank, SunTrust has provided additional
funding for affordable housing projects under the FHLB's Affordable Housing
Program and Community Reinvestment Program.
Through its acquisition of Regency Developers, Inc. ("Regency") in April
19999, SunTrust Community Development Corporation has become a significant
developer of affordable housing for low and moderate-income families. During
1999, SunTrust committed to equity investments of approximately $61 million to
finance over 3,700 units of affordable housing in communities from Virginia to
Florida. SunTrust is excited about the impact that Regency is having on its
community development efforts.
SunTrust supports its communities through a variety of investments and
contributions such as low-income housing tax credits, funding for local and
regional groups engaging in providing affordable housing or promoting small
business development and targeted mortgage-backed securities. The Company's
combined investment in community development projects and organizations totals
over $140 million. By participating in the public finance efforts of state,
county and municipal governments, SunTrust has financed activities such as
school construction, public housing and environmental cleanup and protection
programs.
Legal Proceedings
The Company and its subsidiaries are parties to numerous claims and lawsuits
arising in the course of their normal business activities, some of which involve
claims for substantial amounts. Although the ultimate outcome of these suits
cannot be ascertained at this time, it is the opinion of management that none of
these matters, when resolved, will have a material effect on the Company's
consolidated results of operations or financial position.
Competition
All aspects of the Company's business are highly competitive. The Company faces
aggressive competition from other domestic and foreign lending institutions and
from numerous other providers of financial services. The ability of nonbanking
financial institutions to provide services previously reserved for commercial
banks has intensified competition. Because nonbanking financial institutions are
not subject to the same regulatory restrictions as banks and bank holding
companies, they can often operate with greater flexibility.
Properties
The Company's headquarters are located in Atlanta, Georgia. As of December 31,
1999, bank subsidiaries of the Company owned 853 of their 1,114 full-service
banking offices, and leased the remaining banking offices. See Note 7 to the
Consolidated Financial Statements.
SunTrust Banks, Inc. 33
<PAGE>
Management's Statement Of Responsibility For Financial Information
Financial statements and information in this Annual Report were prepared in
conformity with generally accepted accounting principles. Management is
responsible for the integrity and objectivity of the financial statements and
related information. Accordingly, it maintains an extensive system of internal
controls and accounting policies and procedures to provide reasonable assurance
of the accountability and safeguarding of Company assets, and of the accuracy of
financial information. These procedures include management evaluations of asset
quality and the impact of economic events, organizational arrangements that
provide an appropriate division of responsibility and a program of internal
audits to evaluate independently the adequacy and application of financial and
operating controls and compliance with Company policies and procedures.
The Company's independent public accountants, Arthur Andersen LLP, express
their opinion as to the fairness of the financial statements presented. Their
opinion is based on an audit conducted in accordance with generally accepted
auditing standards as described in the second paragraph of their report.
The Board of Directors, through its Audit Committee, is responsible for
ensuring that both management and the independent public accountants fulfill
their respective responsibilities with regard to the financial statements. The
Audit Committee, composed entirely of directors who are not officers or
employees of the Company, meets periodically with both management and the
independent public accountants to ensure that each is carrying out its
responsibilities. The independent public accountants have full and free access
to the Audit Committee and meet with it, with and without management present, to
discuss auditing and financial reporting matters.
The Company assessed its internal control system as of December 31, 1999, in
relation to criteria for effective internal control over consolidated financial
reporting described in "Internal Control - Integrated Framework" issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this
assessment, the Company believes that, as of December 31, 1999, its system of
internal controls over consolidated financial reporting met those criteria.
<TABLE>
<S> <C> <C>
L. Phillip Humann John W. Spiegel William P. O'Halloran
Chairman of the Board of Directors, Executive Vice President Senior Vice President
President and Chief Executive Officer And Chief Financial Officer and Controller
</TABLE>
Abbreviations
Within the consolidated financial statements and the notes thereto, the
following references will be used:
SunTrust Banks, Inc. - Company or SunTrust
SunTrust Banks of Florida, Inc. - STI of Florida
SunTrust Banks of Georgia, Inc. - STI of Georgia
SunTrust Banks of Tennessee, Inc. - STI of Tennessee
Crestar Financial Corporation - Crestar
SunTrust Banks, Inc. Parent Company - Parent Company
Index To Consolidated Financial Statements
<TABLE>
<CAPTION>
Page
<S> <C>
Consolidated Statements Of Income 36
Consolidated Balance Sheets 37
Consolidated Statements Of Shareholders' Equity 38
Consolidated Statements Of Cash Flows 39
Notes To Consolidated Financial Statements 40
</TABLE>
34 1999 Annual Report
<PAGE>
Report Of Independent Public Accountants
To SunTrust Banks, Inc.
We have audited the accompanying consolidated balance sheets of SunTrust Banks,
Inc. (a Georgia corporation) and subsidiaries as of December 31, 1999 and 1998
and the related consolidated statements of income, shareholders' equity and cash
flow for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SunTrust
Banks, Inc. and subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flow for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
Arthur Andersen LLP
Atlanta, Georgia
February 8, 2000
SunTrust Banks, Inc. 35
<PAGE>
Consolidated Statements Of Income
<TABLE>
<CAPTION>
(Dollars in thousands except per share data)
Year Ended December 31
----------------------------------------
Interest Income 1999 1998 1997
<S> <C> <C> <C>
Interest and fees on loans $ 4,744,609 $ 4,555,244 $ 4,252,551
Interest and fees on loans held for sale 172,153 180,383 69,970
Interest and dividends on securities available for
sale
Taxable interest 859,002 759,653 728,035
Tax-exempt interest 30,682 35,733 43,381
Dividends/1/ 66,906 58,531 50,326
Interest on funds sold 73,382 71,639 80,386
Interest on deposits in other banks 2,665 5,772 2,860
Other interest 10,809 8,945 10,778
- -------------------------------------------------------------------------------------------------------
Total interest income 5,960,208 5,675,900 5,238,287
- -------------------------------------------------------------------------------------------------------
Interest Expense
Interest on deposits 1,626,132 1,644,229 1,627,417
Interest on funds purchased 749,561 634,086 461,724
Interest on other short-term borrowings 79,521 127,800 133,814
Interest on long-term debt 359,538 340,664 230,509
- -------------------------------------------------------------------------------------------------------
Total interest expense 2,814,752 2,746,779 2,453,464
- -------------------------------------------------------------------------------------------------------
Net Interest Income 3,145,456 2,929,121 2,784,823
Provision for loan losses - Note 6 170,437 214,602 225,140
- -------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 2,975,019 2,714,519 2,559,683
- -------------------------------------------------------------------------------------------------------
Noninterest Income
Trust income 502,761 460,052 392,966
Other charges and fees 464,338 392,036 310,580
Service charges on deposit accounts 438,107 401,095 374,122
Mortgage production related income 153,055 238,234 96,961
Mortgage servicing related income 61,171 65,131 47,339
Other noninterest income - Note 19 149,675 151,418 126,843
Securities gains (losses) - Note 4 (109,076) 8,207 6,851
- -------------------------------------------------------------------------------------------------------
Total noninterest income 1,660,031 1,716,173 1,355,662
- -------------------------------------------------------------------------------------------------------
Noninterest Expense
Salaries and other compensation - Note 12 1,522,570 1,433,703 1,195,979
Employee benefits - Note 12 175,801 181,781 176,913
Equipment expense 198,464 178,766 167,712
Net occupancy expense 197,439 192,198 187,185
Marketing and customer development 105,429 107,092 95,446
Merger-related expenses - Note 2 45,556 119,419
Other noninterest expense - Note 20 694,134 719,427 592,511
- -------------------------------------------------------------------------------------------------------
Total noninterest expense 2,939,393 2,932,386 2,415,746
- -------------------------------------------------------------------------------------------------------
Income before provision for income taxes and
extraordinary gain 1,695,657 1,498,306 1,499,599
Provision for income taxes - Note 11 571,705 527,289 523,676
- -------------------------------------------------------------------------------------------------------
Income before extraordinary gain 1,123,952 971,017 975,923
Extraordinary gain, net of taxes - Notes 3 and 11 202,648 -- --
- -------------------------------------------------------------------------------------------------------
Net Income $ 1,326,600 $ 971,017 $ 975,923
=======================================================================================================
Net income per average common share - Note 10:
Diluted
Income before extraordinary gain $ 3.50 $ 3.04 $ 3.04
Extraordinary gain 0.63 -- --
- -------------------------------------------------------------------------------------------------------
Net income $ 4.13 $ 3.04 $ 3.04
=======================================================================================================
Basic
Income before extraordinary gain $ 3.54 $ 3.08 $ 3.08
Extraordinary gain 0.64 -- --
- -------------------------------------------------------------------------------------------------------
Net income $ 4.18 $ 3.08 $ 3.08
=======================================================================================================
Dividends declared per common share $ 1.380 $ 1.000 $ 0.925
Average common shares - diluted 321,174 319,711 320,932
Average common shares - basic 317,079 314,908 316,436
/1/Includes dividends on 48,266,496 shares of
common stock of The Coca-Cola Company $ 30,891 $ 28,960 $ 27,029
=======================================================================================================
See notes to consolidated financial statements
</TABLE>
36 1999 Annual Report
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Dollars in thousands) At December 31
-------------------------------
1999 1998
<S> <C> <C>
Assets
Cash and due from banks $ 3,909,687 $ 4,289,889
Interest-bearing deposits in other banks 22,237 385,945
Trading account 259,547 239,665
Securities available for sale/1/ -Note 4 18,317,297 17,559,043
Funds sold 1,587,442 1,401,000
Loans held for sale 1,531,787 3,548,555
Loans - Notes 5, 13 and 14 66,002,831 61,540,646
Allowance for loan losses - Note 6 (871,323) (944,557)
- ---------------------------------------------------------------------------------------------------------
Net loans 65,131,508 60,596,089
Premises and equipment - Note 7 1,636,484 1,519,711
Intangible assets 804,632 797,045
Customers' acceptance liability 192,045 628,235
Other assets - Note 12 1,997,302 2,204,755
- ---------------------------------------------------------------------------------------------------------
Total assets $ 95,389,968 $ 93,169,932
=========================================================================================================
Liabilities and Shareholders' Equity - Notes 10 and 12
Noninterest-bearing deposits $ 14,200,522 $ 14,065,720
Interest-bearing deposits 45,900,007 44,967,563
- ---------------------------------------------------------------------------------------------------------
Total deposits 60,100,529 59,033,283
- ---------------------------------------------------------------------------------------------------------
Funds purchased 15,911,917 13,295,833
Other short-term borrowings -Note 8 2,259,010 2,636,986
Long-term debt - Note 9 4,967,346 4,757,869
Guaranteed preferred beneficial interests in debentures -Note 9 1,050,000 1,050,000
Acceptances outstanding 192,045 628,235
Other liabilities - Note 11 3,282,259 3,589,082
- ---------------------------------------------------------------------------------------------------------
Total liabilities 87,763,106 84,991,288
=========================================================================================================
Commitments and contingencies - Notes 7, 9, 13 and 16
Preferred stock, no par value; 50,000,000 shares authorized; none issued -- --
Common stock, $1.00 par value 323,163 322,485
Additional paid in capital 1,293,387 1,293,011
Retained earnings 5,461,351 4,575,382
Treasury stock and other (1,013,861) (100,441)
- ---------------------------------------------------------------------------------------------------------
Realized shareholders' equity 6,064,040 6,090,437
Accumulated other comprehensive income - Notes 4 and 18 1,562,822 2,088,207
- ---------------------------------------------------------------------------------------------------------
Total shareholders' equity 7,626,862 8,178,644
- ---------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 95,389,968 $ 93,169,932
=========================================================================================================
Common shares outstanding 308,353,207 321,124,134
Common shares authorized 500,000,000 500,000,000
Treasury shares of common stock 14,809,550 1,360,928
=========================================================================================================
/1/Includes net unrealized gains on securities available for sale $ 2,527,705 $ 3,379,725
See notes to consolidated financial statements
</TABLE>
SunTrust Banks, Inc. 37
<PAGE>
Consolidated Statements Of Shareholders' Equity
<TABLE>
<CAPTION>
Accumulated
Additional Treasury Other
Common Paid in Retained Stock and Comprehensive
(In thousands) Stock Capital Earnings Other/1/ Income Total
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $331,083 $ 981,566 $4,051,347 $ (230,918) $1,580,493 $6,713,571
Net income - - 975,923 - - 975,923
Other comprehensive income:
Change in unrealized gains (losses)
on securities, net of taxes - - - - 467,660 467,660
----------
Total comprehensive income 1,443,583
Cash dividends declared,
$0.925 per share - - (292,001) - - (292,001)
Exercise of stock options 1,125 4,970 - 25,343 - 31,438
Acquisition and retirement of stock (15,880) (8,052) (767,910) 81,693 - (710,149)
Restricted stock activity - 3,344 - (3,344) - -
Amortization of compensation
element of restricted stock - - - 9,196 - 9,196
Stock issued for acquisitions 1,186 61,446 - - - 62,632
Issuance of stock for employee
benefit plans 1,057 44,237 - 8,527 - 53,821
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 318,571 1,087,511 3,967,359 (109,503) 2,048,153 7,312,091
Net income - - 971,017 - - 971,017
Other comprehensive income:
Change in unrealized gains (losses)
on securities, net of taxes - - - - 40,054 40,054
----------
Total comprehensive income 1,011,071
Cash dividends declared,
$1.00 per share - - (352,454) - - (352,454)
Exercise of stock options 810 1,366 - 21,166 - 27,342
Acquisition and retirement of stock (190) - (10,540) (294,878) - (305,608)
Restricted stock activity 90 8,378 - (8,468) - -
Amortization of compensation -
element of restricted stock - - - 12,771 - 12,771
Stock issued for acquisitions 1,619 108,607 - 93,846 - 204,072
Issuance of stock for employee
benefit plans 1,005 58,742 - 17,912 - 77,659
Stock issued in private placement 580 28,407 - 162,713 - 191,700
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 322,485 1,293,011 4,575,382 (100,441) 2,088,207 8,178,644
Net income - - 1,326,600 - - 1,326,600
Other comprehensive income: -
Change in unrealized gains (losses) -
on securities, net of taxes - - - - (525,385) (525,385)
----------
Total comprehensive income - 801,215
Cash dividends declared, -
$1.380 per share - - (440,631) - - (440,631)
Exercise of stock options 575 (8,661) - 23,116 - 15,030
Acquisition of stock - (954,642) - (954,642)
Restricted stock activity 11 735 - (746) - -
Amortization of compensation
element of restricted stock - - - 15,557 - 15,557
Issuance of stock for employee -
benefit plans 92 8,302 - 3,295 - 11,689
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $323,163 $1,293,387 $5,461,351 $(1,013,861) $1,562,822 $7,626,862
=================================================================================================================================
/1/Balance at December 31, 1999 includes $957,412 for treasury stock and $56,449 for compensation element of
restricted stock.
</TABLE>
See notes to consolidated financial statements.
38 1999 Annual Report
<PAGE>
Consolidated Statements Of Cash Flow
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Cash flow from operating activities
Net income $ 1,326,600 $ 971,017 $ 975,923
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Extraordinary gain, net of taxes (202,648)
Depreciation, amortization and accretion 284,993 282,599 240,393
Provisions for loan losses and foreclosed property 173,789 215,225 228,850
Deferred income tax provision 183,842 39,115 20,913
Amortization of compensation element of
restricted stock 15,557 12,771 9,196
Securities losses (gains) 109,076 (8,207) (6,851)
Net gain on sale of noninterest earning assets (28,887) (8,823) (97,507)
Net decrease (increase) in loans held for sale 2,016,768 (2,259,825) (490,467)
Net increase in accrued interest receivable,
prepaid expenses and other assets (108,769) (897,527) (346,060)
Net (decrease) increase in accrued interest payable,
accrued expenses and other liabilities (164,030) 706,691 561,978
Other, net - 45,735 12,019
- -----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 3,606,291 (901,229) 1,108,387
- -----------------------------------------------------------------------------------------------------------
Cash flow from investing activities
Proceeds from maturities of securities available for sale 3,668,622 4,484,087 2,180,519
Proceeds from sales of securities available for sale 5,857,310 4,343,241 4,374,680
Purchases of securities available for sale (11,249,089) (10,572,056) (5,567,108)
Net increase in loans (4,454,927) (6,328,474) (6,057,147)
Capital expenditures (257,179) (259,032) (410,465)
Proceeds from sale of assets 59,577 136,875 89,672
Net funds received in acquisitions - 14,857 111,026
Loan recoveries 65,650 70,684 84,560
Other, net - (4,611) (159,578)
- -----------------------------------------------------------------------------------------------------------
Net cash used in investing activities (6,310,036) (8,114,429) (5,353,841)
- -----------------------------------------------------------------------------------------------------------
Cash flow from financing activities
Net increase in deposits 1,067,246 4,452,499 1,559,782
Net increase in funds purchased and other
short-term borrowings 2,238,108 2,671,305 2,127,711
Proceeds from issuance of long-term debt 1,095,872 2,205,211 1,812,708
Repayment of long-term debt (886,395) (407,700) (272,645)
Proceeds from the exercise of stock options 15,030 27,342 31,438
Proceeds from stock issuance 11,689 191,700
Proceeds used in acquisition and retirement of stock (954,642) (305,608) (710,149)
Dividends paid (440,631) (352,454) (326,343)
Other, net - - (164)
- -----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 2,146,277 8,482,295 4,222,338
- -----------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (557,468) (533,363) (23,116)
Cash and cash equivalents at beginning of year 6,076,834 6,610,197 6,633,313
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 5,519,366 $ 6,076,834 $ 6,610,197
===========================================================================================================
Supplemental Disclosure
Interest paid $ 2,812,819 $ 2,770,872 $ 2,376,050
Income taxes paid 530,786 482,621 455,019
===========================================================================================================
See notes to consolidated financial statements.
SunTrust Banks, Inc. 39
</TABLE>
<PAGE>
Notes To Consolidated Financial Statements
Note 1 Accounting Policies
General
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated. Results of operations of companies purchased are included from
the dates of acquisition. Assets and liabilities of purchased companies are
stated at estimated fair values at the date of acquisition.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could vary from these estimates; however, in the opinion of
management, such variances would not be material. Certain reclassifications have
been made to prior year amounts to conform with the 1999 presentation.
Securities
Securities in the investment portfolio are classified as securities available
for sale and are carried at market value with unrealized gains and losses, net
of any tax effect, included in accumulated other comprehensive income and added
to or deducted from realized shareholders' equity to determine total
shareholders' equity.
Trading account securities are carried at market value with the gains and
losses, determined using the specific identification method, recognized
currently in the statement of income. Included in noninterest income are
realized and unrealized gains and losses resulting from such market value
adjustments of trading account securities and from recording the results of
sales.
Loans Held For Sale
Loans held for sale are carried at the lower of aggregate cost or market value.
Adjustments to reflect market value and realized gains and losses upon ultimate
sale of the loans are classified as other income.
Loans
Interest income on all types of loans is accrued based upon the outstanding
principal amounts except those classified as nonaccrual loans. Interest accrual
is discontinued when it appears that future collection of principal or interest
according to the contractual terms may be doubtful. Interest income on
nonaccrual loans is recognized on a cash basis if there is no doubt of future
collection of principal. Loans classified as nonaccrual, except for smaller
balance homogenous loans, which include consumer and residential loans, meet the
criteria to be considered impaired loans. The Company classifies a loan as
nonaccrual with the occurrence of one of the following events: (i) interest or
principal has been in default 90 days or more, unless the loan is well secured
and in the process of collection; (ii) collection of recorded interest or
principal is not anticipated; or (iii) income for the loan is recognized on a
cash basis due to the deterioration in the financial condition of the debtor.
However, other consumer and residential real estate loans are normally placed on
nonaccrual when payments have been in default for 90 days or more.
SunTrust measures the impairment of a loan based on the present value of
expected future cash flows discounted at the loan's effective interest rate. The
exception to this policy is real estate loans, whose impairment is based on the
estimated fair value of the collateral. If the present value of the expected
future cash flows (or the fair value of the collateral) is less than the
recorded investments in the loans (principal, accrued interest, net deferred
loan fees or costs, and unamortized premium or discount) SunTrust includes this
deficiency in evaluating the overall adequacy of the allowance for loan losses.
40 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
Fees and incremental direct costs associated with the loan origination and
pricing process are deferred and amortized as level yield adjustments over the
respective loan terms. Fees received for providing loan commitments and letter
of credit facilities that result in loans are deferred and then recognized over
the term of the loan as an adjustment of the yield. Fees on commitments and
letters of credit that are not expected to be funded are amortized into
noninterest income by the straight-line method over the commitment period.
Allowance For Loan Losses
The Company's allowance for loan losses is that amount considered adequate to
absorb inherent losses in the portfolio based on management's evaluations of the
size and current risk characteristics of the loan portfolio. Such evaluations
consider the balance of problem loans and prior loan loss experience as well as
the impact of current economic conditions and other risk factors. Specific
allowances for loan losses are allocated for impaired loans based on a
comparison of the recorded carrying value in the loan to either the present
value of the loan's expected cash flow, the loan's estimated market price or the
estimated fair value of the underlying collateral. Prior loss experience is
based on a statistical loss migration analysis that examines loss experience and
the related internal gradings of loans charged off. The general economic
conditions and other risk elements are determined primarily by local management
and are based on knowledge of specific economic factors in their markets that
might affect the collectibility of loans.
Long-lived Assets
Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation has been calculated primarily using the straight-line
method over the assets' estimated useful lives. Certain leases are capitalized
as assets for financial reporting purposes. Such capitalized assets are
amortized, using the straight-line method, over the terms of the leases.
Maintenance and repairs are charged to expense and betterments are capitalized.
Intangible assets consist primarily of goodwill and mortgage servicing rights.
Goodwill associated with purchased companies is being amortized on the straight-
line method over various periods ranging from 25 to 40 years. The Company
recognizes as assets the rights to service mortgage loans for others whether the
servicing rights are acquired through purchase or loan origination. Purchased
mortgage servicing rights are capitalized at cost. For loans originated and sold
where the servicing rights have been retained, the Company allocates the cost of
the loan and the servicing rights based on their relative fair market values.
Mortgage servicing rights are amortized over the estimated period of the related
net servicing revenues.
Long-lived assets are evaluated regularly for other-than-temporary impairment.
If circumstances suggest that their value may be impaired and the write-down
would be material, an assessment of recoverability is performed prior to any
write-down of the asset. Impairment on intangibles is evaluated at each balance
sheet date or whenever events or changes in circumstances indicate that the
carrying amount should be assessed. Impairment for mortgage servicing rights is
determined based on the fair value of the rights stratified on the basis of
interest rate and type of related loan. Impairment, if any, is recognized
through a valuation allowance with a corresponding charge recorded in the income
statement.
Income Taxes
Deferred income tax assets and liabilities result from temporary differences
between the tax bases of assets and liabilities and their reported amounts in
the financial statements that will result in taxable or deductible amounts in
future years.
SunTrust Banks, Inc. 41
<PAGE>
Notes To Consolidated Financial Statements
Earnings Per Share
Basic earnings per share are based on the weighted average number of common
shares outstanding during each period, excluding outstanding shares that are
contingently returnable shares. Diluted earnings per share are based on the
weighted average number of common shares outstanding during each period, plus
common shares calculated for stock options and performance restricted stock
outstanding using the treasury stock method.
Cash Flows
For purposes of reporting cash flows, cash and cash equivalents include cash and
due from banks, interest-bearing deposits in other banks and funds sold (only
those items with an original maturity of three months or less).
Derivative Financial Instruments
SunTrust uses derivatives 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 such derivatives is recorded as an
adjustment to the carrying value of the underlying asset or liability and
recognized in net interest income over the expected remaining life of the
related asset or liability. In instances where the underlying instrument is
sold, the fair value of the associated derivative is recognized immediately in
the component of earnings relating to the underlying instrument.
Recent Accounting Developments
During the first quarter of 1998, the American Institute of 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. The
Company adopted SOP 98-1 effective January 1, 1999. SOP 98-1 did not have a
material impact on the Company's financial position or results of operations.
In June 1998, the Financial Accounting Standards Board ("FASB") 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 certain
derivative instruments embedded in other contracts and for hedging activities.
It requires that an entity recognize 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. In June of 1999, SFAS No. 133 was amended by SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133". SFAS No. 137 delays the effective date of SFAS
No. 133 until fiscal years beginning after June 15, 2000. SunTrust will adopt
SFAS No. 133 effective January 1, 2001 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.
In October 1998, the FASB issued SFAS No. 134, "Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise." The adoption of Statement No. 134 in the first
quarter of 1999 had no impact on the Company's financial position or results of
operations.
42 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
Note 2 Acquisitions
On December 31, 1998, the Company 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 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 the Company for all periods presented was restated to include
Crestar's financial information. Certain conforming adjustments and
reclassifications were made to Crestar's historical financial 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 1999, the Company recorded $45.6 million in pre-tax merger-related
charges. These charges included $12.7 million in accelerated depreciation and
amortization reflecting shortened lives of certain fixed assets based upon
estimates of systems integration time tables, $9.5 million in severance and
$23.4 million in miscellaneous integration costs, primarily programming and
systems conversion costs. SunTrust expects to record additional merger-related
charges of approximately $42.5 million for the year 2000. During 1998, the
Company recorded $161.9 million in pre-tax merger-related charges. These charges
included: costs of the transaction, severance and termination-related accruals,
write-off of certain tangible assets with no ongoing benefit to the Company, and
adjustments recorded by Crestar in the fourth quarter in connection with
evaluating accounting estimates for litigation, probable loan losses, income tax
matters and the liabilities related to certain deferred compensation plans.
These estimates and the related charges were based on evaluation of either
objective evidence of probable obligations incurred by the Company as of the
merger consummation date or specifically identified assets. The following table
shows the merger-related charges and the remaining liability at December 31,
1999. Transaction costs consist of investment banking and other professional
service fees incurred by SunTrust and Crestar in connection with the merger.
These fees were paid during the first quarter of 1999. The severance and
termination accruals are based on the Company's pre-existing severance policies
and other contractual termination provisions. These accruals include amounts to
be paid to employees when the Company no longer employs them. Prior to December
31, 1998, management had approved and committed the Company to a plan that
involved the involuntary termination of certain employees. The benefit
arrangements associated with this plan were communicated to all employees in
December 1998. The plan specifically identified the number of employees to be
terminated and their job classifications. The termination of these employees is
scheduled to continue into 2000. Further as a result of the merger, certain
other employees exercised their contractual rights under existing employment
arrangements to resign from the Company. Management's merger plan also included
the limited use of "stay bonuses" for certain employees who agreed to continue
to work for the Company through a designated date. Such bonuses are accrued over
the employees' periods of continued service.
In connection with the merger, a review was made during 1998 of Crestar's
estimates and assumptions used in valuing and recording certain obligations and
accruals. Revisions to estimates included reducing the discount rate applied to
certain long-term deferred compensation arrangements to a discount rate
historically applied by SunTrust in evaluating similar obligations. Further, a
reassessment of general loan allowance factors, including increasing consumer
delinquencies and charge-offs, resulted in Crestar increasing its allowance for
loan losses by approximately $20 million as of December 31, 1998. Probable loss
exposure from outstanding legal claims resulted in additional legal accruals of
$7.5 million as of December 31, 1998. Management also evaluated Crestar's
exposure related to certain income tax matters and recorded an additional
provision of $9.2 million for 1998. In addition, tax provisions on certain
severance payments exceeding statutory limitations totaled $13.3 million.
SunTrust Banks, Inc. 43
<PAGE>
Notes To Consolidated Financial Statements
<TABLE>
<CAPTION>
Remaining Remaining
Balance Balance
(In thousands) Utilized December 31, Utilized December 31,
Merger-Related Charges Pretax In 1998 1998 In 1999 1999
<S> <C> <C> <C> <C> <C>
Transaction costs $ 40,300 $ 6,858 $33,442 $33,442 $ -
Severance and termination
accruals 36,860 - 36,860 27,140 9,720
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 6,040 1,296 4,744 4,744 -
- ----------------------------------------------------------------------------------------------------------------------------
Merger-related expenses 119,419 44,373 75,046 65,326 9,720
- ----------------------------------------------------------------------------------------------------------------------------
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 $65,326 $9,720
============================================================================================================================
</TABLE>
The historical results of operations for SunTrust and Crestar (prior to the
merger), adjustments related to conforming accounting policies and the
consolidated results of operations for the Company after giving effect to the
merger are as follows:
<TABLE>
<CAPTION>
Historical Conforming of
--------------------- Accounting
(Dollars in thousands except per share data) SunTrust Crestar Policies SunTrust
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Net interest income $2,001,989 $ 920,508 $ 6,624 $2,929,121
Net interest income and noninterest income 3,156,307 1,482,363 6,624 4,645,294
Noninterest expense 1,942,473 978,113 11,800 2,932,386
Net income 723,299 251,082 (3,364) 971,017
Net income per average common share - diluted -- -- -- 3.04
Net income per average common share - basic -- -- -- 3.08
Year ended December 31, 1997
Net interest income 1,894,366 886,347 4,110 2,784,823
Net interest income and noninterest income 2,801,941 1,334,434 4,110 4,140,485
Noninterest expense 1,658,932 750,954 5,860 2,415,746
Net income 667,253 309,808 (1,138) 975,923
Net income per average common share - diluted 3.13 2.77 -- 3.04
Net income per average common share - basic 3.17 2.80 -- 3.08
===========================================================================================================
</TABLE>
During the three year period ended December 31, 1999, the Company has
consummated the following acquisitions that were accounted for as purchases and
individually did not have a material effect on the consolidated financial
statements.
<TABLE>
<CAPTION>
Date Entity Consideration Assets Acquired
- -------- ---------------------------------- -------------------------------- -----------------
<S> <C> <C> <C>
10/98 Citizens Bancorporation, Inc. $39.2 million in cash and $183 million
(Marianna, Florida) 603,919 shares of Company stock
1/98 Equitable Securities Corporation 2.3 million shares of $48 million
(Nashville, Tennessee) Company stock
11/97 American National Bancorp, Inc. $14 million in cash and $500 million
(Baltimore, Maryland) 1.236 million shares of
Crestar common stock, or
1.187 million shares of equivalent
SunTrust common stock
</TABLE>
44 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
Note 3 Extraordinary Gain
During the fourth quarter of 1999, the Company recorded an extraordinary gain of
$327.2 million, before taxes of $124.6 million, for the sale of the Company's
$1.5 billion consumer credit card portfolio to MBNA America Bank, N.A.
Note 4 Securities Available For Sale
Securities available for sale at December 31 were as follows:
<TABLE>
<CAPTION>
1999
------------------------------------------------------
Amortized Fair Unrealized Unrealized
(In thousands) Cost Value Gains Losses
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. government
sponsored enterprises $ 2,543,472 $ 2,510,259 $ 2,536 $ 35,749
States and political subdivisions 530,310 528,616 5,955 7,649
Mortgage-backed and asset-backed securities 9,904,578 9,712,062 8,977 201,493
Corporate bonds 1,920,236 1,848,343 11 71,904
Common stock of The Coca-Cola Company 110 2,811,523 2,811,413 --
Other equity securities 890,886 906,494 17,958 2,350
- ------------------------------------------------------------------------------------------------------------------------
Total securities available for sale $15,789,592 $18,317,297 $ 2,846,850 $ 319,145
========================================================================================================================
1998
------------------------------------------------------
Amortized Fair Unrealized Unrealized
(In thousands) Cost Value Gains Losses
U.S. Treasury and other U.S. government
sponsored enterprises $ 2,208,723 $ 2,243,823 $ 35,343 $ 243
States and political subdivisions 599,149 617,940 19,633 842
Mortgage-backed and asset-backed securities 9,860,392 9,895,095 57,466 22,763
Corporate bonds 867,239 918,132 50,893 --
Common stock of The Coca-Cola Company 110 3,233,855 3,233,745 --
Other equity securities 643,705 650,198 18,075 11,582
- ------------------------------------------------------------------------------------------------------------------------
Total securities available for sale $14,179,318 $17,559,043 $ 3,415,155 $ 35,430
========================================================================================================================
</TABLE>
The amortized cost and fair value of investments in debt securities at
December 31, 1999 by contractual maturities are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Fair
(In thousands) Cost Value
<S> <C> <C>
Due in one year or less $ 577,463 $ 578,375
Due in one year through five years 3,111,296 3,070,594
Due after five years through ten years 463,866 439,724
After ten years 841,393 798,525
Mortgage-backed and asset-backed securities 9,904,578 9,712,062
- ------------------------------------------------------------------------------
Total $14,898,596 $14,599,280
==============================================================================
</TABLE>
Proceeds from the sale of investments in debt securities were $5.9 billion,
$4.3 billion and $4.4 billion in 1999, 1998 and 1997. Gross realized gains were
$10.9, $7.9 and $10.1 million and gross realized losses on such sales were
$117.2, $1.2 and $6.8 million in 1999, 1998 and 1997.
Securities available for sale that were pledged to secure public deposits,
trust and other funds had fair values of $11.7 and $12.2 billion at December 31,
1999 and 1998.
SunTrust Banks, Inc. 45
<PAGE>
Notes To Consolidated Financial Statements
Note 5 Loans
The composition of the Company's loan portfolio at December 31 is shown in the
following table:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
<S> <C> <C>
Commercial $26,933,477 $24,589,592
Real estate
Construction 2,457,095 2,084,982
Residential mortgages 19,619,353 16,880,963
Other 7,794,942 8,254,330
Credit card 77,364 1,563,464
Other consumer loans 9,120,600 8,167,315
- -------------------------------------------------------------------------------------------------------------------------------
Total loans $66,002,831 $61,540,646
===============================================================================================================================
</TABLE>
Total nonaccrual and restructured loans at December 31, 1999 and 1998 were
$248.9 and $207.2 million, respectively. The gross amounts of interest income
that would have been recorded in 1999, 1998 and 1997 on nonaccrual and
restructured loans at December 31 of each year, if all such loans had been
accruing interest at their contractual rates, were $25.9, $22.8 and $22.7
million, while interest income actually recognized totaled $16.5, $8.2 and $9.3
million, respectively.
In the normal course of business, the Company's banking subsidiaries have made
loans at prevailing interest rates and terms to directors and executive officers
of the Company and its subsidiaries, and to their related interests. The
aggregate dollar amount was $1,648.9 million at December 31, 1999 and $1,784.1
million at December 31, 1998. During 1999, $5,156.7 million of such loans were
made and repayments totaled $5,291.9 million. None of these loans has been
restructured, nor were any related party loans charged off during 1999 and 1998.
Note 6 Allowance For Loan Losses
Activity in the allowance for loan losses is summarized in the table below:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Balance at beginning of year $ 944,557 $ 933,533 $ 896,972
Allowance from acquisitions and other activity - net (13,331) (10,000) 2,163
Provision 170,437 214,602 225,140
Loan charge-offs (295,990) (264,262) (275,302)
Loan recoveries 65,650 70,684 84,560
- -------------------------------------------------------------------------------------------------
Balance at end of year $ 871,323 $ 944,557 $ 933,533
=================================================================================================
</TABLE>
It is the opinion of management that the allowance was adequate at December
31, 1999, based on conditions reasonably known to management; however, the
allowance may be increased or decreased in the future based on loan balances
outstanding, changes in internally generated credit quality ratings of the loan
portfolio, trends in credit losses, changes in general economic conditions or
other risk factors.
46 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
Note 7 Premises And Equipment
Premises and equipment at December 31 were as follows:
<TABLE>
<CAPTION>
(In thousands) Useful Life 1999 1998
<S> <C> <C> <C>
Land $ 335,564 $ 311,966
Buildings and improvements 10 - 40 years 1,221,079 1,119,062
Leasehold improvements 5 - 20 years 245,665 228,385
Furniture and equipment 3 - 20 years 1,035,086 909,623
Construction in progress 119,603 146,883
2,956,997 2,715,919
Less accumulated depreciation and amortization 1,320,513 1,196,208
- -------------------------------------------------------------------------------------------------------------------------------
Total premises and equipment $1,636,484 $1,519,711
===============================================================================================================================
</TABLE>
The carrying amounts of premises and equipment subject to mortgage
indebtedness (included in long-term debt) were not significant at December 31,
1999 and 1998.
Various Company facilities and equipment are leased under both capital and
noncancelable operating leases with initial remaining terms in excess of one
year. Minimum payments, by year and in aggregate, as of December 31, 1999 were
as follows:
<TABLE>
<CAPTION>
Operating Capital
(In thousands) Leases Leases
<S> <C> <C>
2000 $ 73,810 $ 3,165
2001 70,030 3,175
2002 57,784 2,125
2003 50,796 2,138
2004 44,818 2,143
Thereafter 111,428 30,850
Total minimum lease payments 408,666 43,596
- ------------------------------------------------------------------------------------------------------------------------------
Amounts representing interest 20,277
- ------------------------------------------------------------------------------------------------------------------------------
Present value of net minimum lease payments $23,319
==============================================================================================================================
</TABLE>
Net premises and equipment include $15.7 and $17.4 million at December 31,
1999 and 1998, respectively, related to capital leases.
Aggregate rent expense for all operating leases (including contingent rental
expense) amounted to $89.2, $87.6 and $93.8 million for 1999, 1998 and 1997,
respectively.
Note 8 Other Short-Term Borrowings
Other short-term borrowings at December 31 includes:
<TABLE>
<CAPTION>
1999 1998
(In thousands) Balance Rates Balance Rates
<S> <C> <C> <C> <C>
Commercial paper $ 719,025 5.00% - 6.50% $ 734,471 4.93% - 6.50%
Federal funds purchased maturing in over one day 175,260 5.00% - 5.50% 53,000 4.34% - 5.06%
Short-term borrowing facility 61,154 5.90% 1,219,670 4.91% - 5.10%
Master notes 369,340 4.25% 434,695 4.50% - 5.01%
U.S. Treasury demand notes 918,933 3.74% 188,090 3.82%
Other 15,298 various 7,060 various
- --------------------------------------------------------------------------------------------------------------------------------
Total other short-term borrowings $2,259,010 $2,636,986
================================================================================================================================
</TABLE>
SunTrust Banks, Inc. 47
<PAGE>
Notes To Consolidated Financial Statements
At December 31, 1999, $290.0 million of unused borrowings under unsecured
lines of credit from non-affiliated banks were available to the Parent Company
to support the outstanding commercial paper and provide for general liquidity
needs. The average balances of short-term borrowings for the years ended
December 31, 1999, 1998 and 1997, were $1.7, $2.4 and $2.6 billion,
respectively, while the maximum amount outstanding at any month-end during the
years ended December 31, 1999, 1998 and 1997, were $2.3, $3.5 and $3.5 billion,
respectively.
Note 9 Long-Term Debt And Guaranteed Preferred Beneficial Interests In
Debentures
Long-term debt at December 31 consisted of the following:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
Parent Company
<S> <C> <C>
Floating rate notes due 1999 $ - $ 200,000
Payment agreement due 2001 15,233 22,195
7.375% notes due 2002 200,000 200,000
Floating rate notes due 2002 250,000 250,000
6.125% notes due 2004 200,000 200,000
7.375% notes due 2006 200,000 200,000
6.250% notes due 2008 300,000 300,000
Floating rate note due 2019 50,563 -
6.0% notes due 2026 200,000 200,000
SunTrust Capital I, floating rate due 2027 350,000 350,000
SunTrust Capital II, 7.9% due 2027 250,000 250,000
SunTrust Capital III, floating rate due 2028 250,000 250,000
6.0% notes due 2028 250,000 250,000
Capital lease obligations 4,155 4,720
Total Parent Company (excluding intercompany
of $160,000 in 1999 and $70,000 in 1998) 2,519,951 2,676,915
Subsidiaries
8.25% notes due 2002 125,000 125,000
8.75% notes due 2004 149,810 149,771
7.25% notes due 2006 250,000 250,000
6.90% notes due 2007 100,000 100,000
6.5% notes due 2018 152,215 152,489
Crestar Capital Trust I, 8.16% due 2026 200,000 200,000
Capital lease obligations 19,164 21,093
FHLB advances (1999: 4.0 - 8.79%; 1998: 4.25-8.79%) 2,497,211 2,120,842
Other 3,995 11,759
- ----------------------------------------------------------------------------------------------------------------------
Total subsidiaries 3,497,395 3,130,954
Total long-term debt and guaranteed preferred beneficial interest in
debentures $6,017,346 $5,807,869
======================================================================================================================
</TABLE>
Principal amounts due for the next five years on long-term debt at December 31,
1999 are: 2000 - $144.4 million; 2001 - $36.1 million; 2002 - $1,311.7 million;
2003 - $742.3 million and 2004 -$624.8 million.
Restrictive provisions of several long-term debt agreements prevent the
Company from creating liens on, disposing of, or issuing (except to related
parties) voting stock of subsidiaries. Further, there are restrictions on
mergers, consolidations, certain leases, sales or transfers of assets, minimum
shareholders' equity, and maximum borrowings by the Company. As of December 31,
1999, the Company was in compliance with all covenants and provisions of long-
term debt agreements.
In both 1999 and 1998, $1,050.0 million of long-term debt qualifies as Tier 1
capital, and $1,232.1 million in 1999 and $1,324.3 million in 1998 qualifies as
Tier 2 capital, as currently defined by Federal bank regulators.
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
48 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
the trusts, were invested in junior subordinated deferrable interest debentures
of the Parent Company and Crestar. The sole assets of these special purpose
trusts are the debentures. These debentures rank junior to the senior and
subordinated debt of the issuing company. The Parent Company and Crestar own 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 the Parent Company and Crestar under the debentures, the
indentures, the relevant trust agreements and the guarantees, in the aggregate,
constitute a full and unconditional guarantee by the Parent Company and Crestar
of the obligations of the trusts under the trust preferred securities and rank
subordinate and junior in right of payment to all liabilities of the Parent
Company and Crestar. The trust preferred securities may be called prior to
maturity at the option of the Parent Company or Crestar.
Note 10 Capital
The Company is subject to various regulatory capital requirements which involve
quantitative measures of the Company's assets, liabilities and certain off-
balance sheet items. The Company's capital requirements and classification are
ultimately subject to qualitative judgments by the regulators about components,
risk weightings and other factors. The Company and its subsidiary banks are
subject to a minimum Tier 1 capital ratio (Tier 1 capital to risk-weighted
assets) of 4%, total capital ratio (Tier 1 plus Tier 2 to risk-weighted assets)
of 8% and Tier 1 leverage ratio (Tier 1 to average quarterly assets) of 3%. To
be considered a "well capitalized" institution, the Tier 1 capital ratio, the
total capital ratio, and the Tier 1 leverage ratio must equal or exceed 6%, 10%
and 5%, respectively. SunTrust is committed to remaining well capitalized.
Management believes, as of December 31, 1999, that the Company meets all capital
adequacy requirements to which it is subject.
A summary of Tier 1 and Total capital and the Tier 1 leverage ratio for the
Company and its principal subsidiaries as of December 31 is as follows:
<TABLE>
<CAPTION>
1999 1998
(Dollars in millions) Amount Ratio Amount Ratio
<S> <C> <C> <C> <C>
Tier 1 capital
SunTrust Banks, Inc. $6,580 7.48% $ 6,587 8.17%
SunTrust Banks of Florida, Inc. 2,519 9.64 2,347 10.21
SunTrust Banks of Georgia, Inc. 2,057 6.81 1,721 6.99
SunTrust Banks of Tennessee, Inc. 730 9.30 672 9.48
Crestar Financial Corporation 2,556 10.61 2,314 10.10
SunTrust Bank, Atlanta 1,620 6.38 1,310 6.40
Crestar Bank 1,939 8.27 1,725 7.60
Total capital
SunTrust Banks, Inc. 9,939 11.31 10,308 12.79
SunTrust Banks of Florida, Inc. 2,951 11.30 2,794 12.16
SunTrust Banks of Georgia, Inc. 3,769 12.48 3,441 13.98
SunTrust Banks of Tennessee, Inc. 846 10.78 775 10.94
Crestar Financial Corporation 3,117 12.94 2,969 12.96
SunTrust Bank, Atlanta 2,658 10.47 2,461 12.03
Crestar Bank 2,690 11.47 2,580 11.37
Tier 1 leverage
SunTrust Banks, Inc. 7.17 7.68
SunTrust Banks of Florida, Inc. 7.93 8.04
SunTrust Banks of Georgia, Inc. 8.25 8.09
SunTrust Banks of Tennessee, Inc. 7.99 7.89
Crestar Financial Corporation 9.51 9.01
SunTrust Bank, Atlanta 7.85 7.76
Crestar Bank 7.41 6.77
</TABLE>
SunTrust Banks, Inc. 49
<PAGE>
Notes To Consolidated Financial Statements
Substantially all the Company's retained earnings are undistributed earnings
of its banking subsidiaries, which are restricted by various regulations
administered by federal and state bank regulatory authorities. Retained earnings
of bank subsidiaries available for payment of cash dividends to STI of Florida,
STI of Georgia, STI of Tennessee and Crestar under these regulations totaled
approximately $1,136.7 million at December 31, 1999.
In the calculation of basic and diluted EPS, net income is identical. Below is
a reconciliation for the three years ended December 31, 1999, of the difference
between average basic common shares outstanding and average diluted common
shares outstanding.
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Average common shares - basic 317,079 314,908 316,436
Effect of dilutive securities
Stock options 2,396 3,164 2,797
Performance restricted stock 1,699 1,639 1,699
- ---------------------------------------------------------------------------------------------------------------------------
Average common shares - diluted 321,174 319,711 320,932
===========================================================================================================================
</TABLE>
Note 11 Income Taxes
The provision for income taxes for the three years ended December 31, 1999
consisted of the following:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
Provision for federal income taxes
<S> <C> <C> <C>
Current $399,097 $452,988 $455,638
Deferred 175,742 33,571 17,839
Provision for federal income taxes 574,839 486,559 473,477
(Benefit) provision for state income taxes
Current (11,234) 35,186 47,125
Deferred 8,100 5,544 3,074
(Benefit) provision for state income taxes (3,134) 40,730 50,199
Provision for income taxes 571,705 527,289 523,676
Current provision for federal income taxes on extraordinary gain 109,118 - -
Current provision for state income taxes on extraordinary gain 15,463 - -
Provision for income taxes on extraordinary gain 124,581 - -
- ------------------------------------------------------------------------------------------------------------------------
Total provision for income taxes $696,286 $527,289 $523,676
========================================================================================================================
</TABLE>
The Company's income, before provision for income taxes, from international
operations was not significant.
The Company's provisions for income taxes for the three years ended December
31, 1999, which exclude the effects of the extraordinary gain, differ from the
amounts computed by applying the statutory federal income tax rate of 35% to
income before income taxes. A reconciliation of this difference is as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Tax provision at federal statutory rate $593,480 $524,407 $524,860
Increase (decrease) resulting from
Tax-exempt interest (29,198) (30,455) (32,238)
Disallowed interest deduction 8,599 6,911 5,948
Income tax credits (net) (4,341) (3,012) (2,709)
State income taxes, net of federal benefit (2,037) 26,475 32,654
Dividend exclusion (9,085) (8,707) (8,439)
Favorable tax settlements - (25,048) (2,845)
Goodwill 8,778 11,012 9,805
Non-deductible acquisition expenses - 14,140 -
Non-deductible compensation 2,555 8,663 -
Other 2,954 2,903 (3,360)
- ------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes $571,705 $527,289 $523,676
==============================================================================================================================
</TABLE>
50 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
Temporary differences create deferred tax assets and liabilities that are
detailed below as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
Deferred Tax Assets (Liabilities)
(In thousands) 1999 1998
<S> <C> <C>
Allowance for loan losses $ 315,812 $ 354,471
Intangible assets 8,043 2,845
Employee benefits (54,302) (51,034)
Fixed assets (18,571) (7,508)
Securities (6,595) (8,559)
Loans (23,795) (21,109)
Mortgage servicing (97,190) (44,883)
Leasing (236,841) (145,200)
Other real estate 7,035 12,107
Unrealized gains on securities available for sale (964,883) (1,291,518)
Other 50,161 60,271
- ------------------------------------------------------------------------------------------------------------------------------
Total deferred tax liability $(1,021,126) $(1,140,117)
==============================================================================================================================
</TABLE>
SunTrust and its subsidiaries file consolidated income tax returns where
permissible. Each subsidiary remits current taxes to or receives current refunds
from the Parent Company based on what would be required had the subsidiary filed
an income tax return as a separate entity. The Company's federal and state
income tax returns are subject to review and examination by government
authorities. Various such examinations are now in progress. In the opinion of
management, any adjustments which may result from these examinations will not
have a material effect on the Company's consolidated financial statements.
Note 12 Employee Benefit Plans
SunTrust sponsors various incentive plans for eligible employees. The
nonqualified Performance Bonus Plan has the broadest participation among
employees and awards amounts to employees based on compensation and earnings
performance. Crestar's Thrift and Profit Sharing Plan merged into the SunTrust
401(k) Plan on July 1, 1999. At that time, the Company's performance-based match
was changed to a guaranteed match of 50% of eligible employees' pre-tax
contributions. The Management Incentive Plan for key executives provides for
annual cash awards, if any, based on compensation and earnings performance. The
Performance Unit Plan for key executives provides awards, if any, based on
multi-year earnings performance in relation to earnings goals established by the
Compensation Committee (Committee) of the Company's Board of Directors.
The Company also sponsors an Executive Stock Plan (Stock Plan) under which the
Committee has the authority to grant stock options, restricted stock and
Performance-based Restricted Stock (Performance Stock) to key employees of the
Company. The Company has 10 million shares of common stock reserved for issuance
under the plan of which no more than 5 million shares may be issued as
Performance Stock. Options granted are at no less than the fair market value of
a share of stock on the grant date and may be either tax-qualified incentive
stock options or nonqualified options. The Company does not record expense as a
result of the grant or exercise of any of the stock options. With respect to
Performance Stock, shares must be granted, awarded and vested before
participants take full title. After Performance Stock is granted by the
Committee, specified portions are awarded based on increases in the average
market value of SunTrust common stock from the initial price specified by the
Committee. Awards are distributed on the earliest of: (i) fifteen years after
the date shares are awarded to participants; (ii) the participant attaining age
64; (iii) death or disability of a participant; or (iv) a change in control of
the Company as defined in the Stock Plan. Dividends are paid on awarded but
unvested Performance Stock, and participants may exercise voting privileges on
such shares. The compensation element for Performance Stock (which is deferred
and shown as a reduction of shareholders' equity) is equal to the fair market
value of the shares at the date of award and is amortized to compensation
expense over the period from the award date to age 64 or the 15th anniversary of
the award date, whichever comes first. Approximately 40% of Performance Stock
awarded will fully vest in February 2000.
SunTrust Banks, Inc. 51
<PAGE>
Notes To Consolidated Financial Statements
Compensation expense related to the incentive plans for the three years ended
December 31 were as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
401(k) Plan and Performance Bonus Plan $52,553 $49,733 $47,670
Management Incentive Plan and Performance Unit Plan 31,580 27,541 25,418
Value Share Program/1/ - 13,589 1,000
Performance Stock 15,557 12,771 9,196
</TABLE>
/1/ The Crestar Value Share Program was terminated upon the Company's merger
with Crestar on December 31, 1998.
The following table presents information on stock options and Performance
Stock:
<TABLE>
<CAPTION>
Stock Options Performance Stock
Weighted
Price Average Deferred
(Dollars in thousands except per share data) Shares Range Exercise Price Shares Compensation
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 6,895,085 $ 3.46 - 46.63 $21.84 3,722,000 $ 49,464
Granted 1,354,838 35.42 - 65.25 49.33 300,000 19,172
Exercised/Vested (1,776,427) 3.46 - 33.19 15.50 (738,0000) -
Cancelled/Expired/Forfeited (49,302) 26.04 - 46.63 39.75 (56,000) (1,400)
Amortization of compensation
for Performance Stock (9,196)
Balance, December 31, 1997 6,424,194 3.46 - 65.25 29.33 3,228,000 58,040
Granted 1,612,237 55.21 - 70.81 65.40 383,800 30,495
Exercised/Vested (1,260,385) 3.46 - 46.63 19.42 (196,800) -
Cancelled/Expired/Forfeited (151,976) 11.19 - 70.81 33.26 (145,800) (4,003)
Amortization of compensation
for Performance Stock (12,771)
Balance, December 31, 1998 6,624,070 3.46 - 70.81 39.90 3,269,200 71,761
Granted 2,654,680 62.87 - 73.06 71.71 13,980 958
Exercised/Vested (1,025,930) 3.46 - 70.81 20.21 (10,000) -
Cancelled/Expired/Forfeited (148,032) 33.19 - 71.94 64.27 (14,400) (713)
Amortization of compensation
for Performance Stock (15,557)
- -----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 8,104,788 $ 3.46 - 73.06 $52.54 3,258,780 $ 56,449
=======================================================================================================================
</TABLE>
The Company does not recognize compensation cost in accounting for its stock
option plans. If the Company had elected to recognize compensation cost for
options granted in 1999, 1998 and 1997 based on the fair value of the options
granted at the grant date, net income and earnings per share would have been
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
(In millions except per share amounts) 1999 1998 1997
<S> <C> <C> <C>
Net income - as reported $1,326.6 $971.0 $975.9
Net income - pro forma 1,312.5 961.3 970.0
Diluted earnings per share - as reported 4.13 3.04 3.04
Diluted earnings per share - pro forma 4.10 3.01 3.02
Basic earnings per share - as reported 4.18 3.08 3.08
Basic earnings per share - pro forma 4.15 3.05 3.07
</TABLE>
52 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
The weighted average fair values of options granted during 1999,1998 and 1997
were $13.16, $18.00 and $11.55 per share, respectively. The fair value of each
option grant is estimated on the date of grant using the Black-Scholes option-
pricing model with the following assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Expected dividend yield 1.92% 1.41% 1.53%
Expected stock price volatility 10.76% 11.35% 11.50%
Risk-free interest rate 5.77% 4.75% 6.50%
Expected life of options 5 years 5 years 5 years
</TABLE>
At December 31, 1999, options for 2,989,273 shares were exercisable with a
weighted average exercise price of $28.70. The weighted average remaining
contractual life of all options at December 31, 1999 was 7.5 years.
SunTrust maintains noncontributory qualified retirement plans (Plans) covering
all employees meeting certain service requirements. The Crestar retirement plan
merged with the SunTrust retirement plan effective January 1, 2000. The Plans
provide benefits based on salary and years of service. The Company funds the
Plans with at least the minimum amount required by federal regulations. The
SunTrust benefits plan committee establishes investment policies and strategies
and regularly monitors the performance of the funds and portfolio managers. As
of December 31, 1999, the Plans' assets included 58,789 shares of SunTrust
Banks, Inc. common stock. SunTrust also maintains nonqualified supplemental
retirement plans that cover key executives of the Company.
Although not under contractual obligation, SunTrust provides certain health
care and life insurance benefits to current and retired employees ("Other
Postretirement Benefits" in the table below). As currently structured,
substantially all employees become eligible for benefits upon employment or
within a year of employment. At the option of SunTrust, retirees may continue
certain health and life insurance benefits if they meet age and service
requirements for postretirement welfare benefits while working for the Company.
The cost of the retiree life benefit is currently paid by the Company. Certain
retiree health and life benefits are prefunded in a Voluntary Employees'
Beneficiary Association (VEBA). As of December 31, 1999, the Retiree VEBA's
assets consisted of common trust funds, mutual funds, municipal and corporate
bonds and a cash equivalent cash reserve fund.
Components of the net periodic benefit cost for the various plans were as
follows:
<TABLE>
<CAPTION>
Supplemental Other
(In thousands) Retirement Benefits Retirement Plans Postretirement Benefits
1999 1998 1997 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service cost $ 41,997 $ 39,594 $ 33,234 $ 710 $ 795 $1,217 $ 3,205 $ 2,594 $ 2,641
Interest cost 51,954 48,451 42,303 3,779 3,667 2,791 10,905 10,729 10,891
Expected return
on assets (91,466) (69,880) (60,277) - - - (7,541) (7,130) (6,723)
Prior service cost
amortization (2,562) (2,562) (3,045) 1,431 1,429 1,184 163 163 520
Actuarial (gain)/loss (307) 5,270 3,623 3,020 1,691 1,246 875 835 703
Transition amount
amortization (4,940) (4,940) (4,940) 417 417 417 4,603 4,603 4,603
- -------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost $ (5,324) $ 15,933 $ 10,898 $ 9,357 $7,999 $6,855 $12,210 $11,794 $12,635
===================================================================================================================
</TABLE>
Assumed health care cost trend rates have a significant affect on the amounts
reported for the health care plans. A one-percentage point change in assumed
health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
(In thousands) 1% Increase 1% Decrease
<S> <C> <C>
Effect on total of service and interest cost components $ 453 $ (481)
Effect on postretirement benefit obligation 9,235 (8,026)
</TABLE>
SunTrust Banks, Inc. 53
<PAGE>
Notes To Consolidated Financial Statements
The funded status of the plans at December 31 were as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) Retirement Benefits Other Postretirement Benefits
Change in Benefit Obligation 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Benefit obligation $ 747,424 $642,424 $154,888 $154,432
Service cost 41,997 39,594 3,205 2,594
Interest cost 51,954 48,451 10,905 10,729
Plan participants' contributions - - 3,721 2,834
Plan amendments (12,260) - (6,653) -
Actuarial (gain) loss (73,332) 61,514 (8,502) (4,102)
Benefits paid (53,595) (44,559) (15,422) (11,599)
- ------------------------------------------------------------------------------------------------------------------
Benefit obligation $ 702,188 $747,424 $142,142 $154,888
==================================================================================================================
Change in Plan Assets
Fair value of plan assets $ 946,223 $816,513 $117,690 $111,353
Actual return on plan assets 70,417 127,884 2,598 10,810
Company contribution 47,345 46,385 - -
Plan participants' contributions - - 2,742 2,834
Benefits paid (53,595) (44,559) (9,906) (7,307)
- ------------------------------------------------------------------------------------------------------------------
Fair value of plan assets $ 1,010,390 $946,223 $113,124 $117,690
==================================================================================================================
Funded status of plan $ 308,202 $198,799 $(29,018) $(37,198)
Unrecognized actuarial (gain) loss (255) 26,477 19,962 24,499
Unrecognized prior service cost (8,223) 1,473 939 1,453
Unrecognized net transition obligation (5,426) (10,367) 53,531 64,436
- ------------------------------------------------------------------------------------------------------------------
Net amount recognized $ 294,298 $216,382 $ 45,414 $ 53,190
==================================================================================================================
Weighted-average assumptions:
Discount rate 7.75% 6.85% 7.75% 6.85%
Expected return on plan assets 9.50% 9.50% 6.50% 6.50%
Rate of compensation increase 4.00% 4.00% 4.00% 4.00%
</TABLE>
The supplemental retirement plans cover key executives of the Company, for
which the cost is accrued but may be unfunded. At December 31, 1999 and 1998,
the projected benefit obligation for these plans was $55.7 million and $38.7
million. Included in other liabilities at December 31, 1999 and 1998 are $47.2
million and $30.7 million representing accumulated benefit obligations.
Note 13 Off-Balance Sheet Financial Instruments
In the normal course of business, the Company utilizes various financial
instruments to meet the needs of customers and to manage the Company's exposure
to interest rate and other market risks. These financial instruments, which
consist of derivatives contracts and credit-related arrangements, involve, to
varying degrees, elements of credit and market risk in excess of the amount
recorded on the balance sheet in accordance with generally accepted accounting
principles.
Credit risk represents the potential loss that may occur because a party to a
transaction fails to perform according to the terms of the contract. Market risk
is the possibility that a change in interest rates may cause the value of a
financial instrument to decrease or become more costly to settle. The
contract/notional amounts of financial instruments, which are not included in
the consolidated balance sheet, do not necessarily represent credit or market
risk. However, they can be used to measure the extent of involvement in various
types of financial instruments.
The Company controls the credit risk of its off-balance sheet portfolio by
limiting the total amount of arrangements outstanding by individual
counterparty; by monitoring the size and maturity structure of the portfolio; by
obtaining collateral based on management's credit assessment of the
counterparty; and by applying uniform credit standards maintained for all
activities with credit risk. Collateral held varies but may include marketable
securities, accounts receivable, inventory, property, plant and equipment, and
income-producing commercial properties. Collateral may
54 1999 Annual Report
<PAGE>
cover the entire expected exposure for transactions or may be called for when
credit exposure exceeds defined thresholds or credit risk. In addition, the
Company enters into master netting agreements which incorporate the right of
set-off to provide for the net settlement of covered contracts with the same
counterparty in the event of default or other termination of the agreement.
<TABLE>
<CAPTION>
At December 31, 1999 At December 31, 1998
Contract or Notional Amount Contract or Notional Amount
(In millions) For Credit Risk For Risk Credit
Derivatives contracts End User Customers Amount End User Customers Amount
<S> <C> <C> <C> <C> <C> <C>
Interest rate contracts
Swaps $ 2,621 $15,954 $ 162 $ 4,764 $13,779 $ 131
Futures and forwards 2,008 2,604 - 4,232 1,105 -
Caps/Floors 4,317 4,734 - 4,155 3,766 -
- --------------------------------------------------------------------------------------------------------------------------
Total interest rate contracts 8,946 23,292 162 13,151 18,650 131
Foreign exchange rate contracts 901 297 29 1,093 - 10
Commodity and other contracts - - 28 20 - 2
- --------------------------------------------------------------------------------------------------------------------------
Total derivatives contracts $ 9,847 $23,589 $ 219 $14,264 $18,650 $ 143
==========================================================================================================================
Credit-related arrangements
Commitments to extend credit $43,800 $ 43,800 $36,657 $ 36,657
Standby letters of credit and
similar arrangements 5,721 5,721 5,750 5,750
- --------------------------------------------------------------------------------------------------------------------------
Total credit-related arrangements $49,521 $ 49,521 $42,407 $ 42,407
- --------------------------------------------------------------------------------------------------------------------------
Total credit risk amount $ 49,740 $ 42,550
==========================================================================================================================
</TABLE>
Derivatives
The Company enters into various derivatives contracts in managing its own
interest rate risk and in a dealer capacity as a service for customers. Where
contracts have been created for customers, the Company generally enters into
offsetting positions to eliminate its exposure to interest rate risk.
Interest rate swaps are contracts in which a series of interest rate flows,
based on a specific notional amount and a fixed and floating interest rate, are
exchanged over a prescribed period. Caps and floors are contracts that transfer,
modify or reduce interest rate risk in exchange for the payment of a premium
when the contract is issued. The true measure of credit exposure is the
replacement cost of contracts that have become favorable to the Company.
The Company monitors its sensitivity to changes in interest rates and uses
derivative instruments to limit the volatility of net interest income. At
December 31, 1999, deferred gains totaled $11.5 million; as of December 31,
1998, deferred gains totaled $6.7 million.
Futures and forwards are contracts for the delayed delivery of securities or
money market instruments in which the seller agrees to deliver on a specified
future date, a specified instrument, at a specified price or yield. The credit
risk inherent in futures is the risk that the exchange party may default.
Futures contracts settle in cash daily; therefore, there is minimal credit risk
to the Company. The credit risk inherent in forwards arises from the potential
inability of counterparties to meet the terms of their contracts. Both futures
and forwards are also subject to the risk of movements in interest rates or the
value of the underlying securities or instruments.
The Company also enters into transactions involving "when-issued securities."
When-issued securities are commitments to purchase or sell securities authorized
for issuance but not yet actually issued. Accordingly, they are not recorded on
the balance sheet until issued. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movements in
securities values and interest rates.
SunTrust Banks, Inc. 55
<PAGE>
Notes To Consolidated Financial Statements
Credit-Related Arrangements
In meeting the financing needs of its customers, the Company issues commitments
to extend credit, standby and other letters of credit and guarantees. The
Company also provides securities lending services. For these instruments, the
contractual amount of the financial instrument represents the maximum potential
credit risk if the counterparty does not perform according to the terms of the
contract. A large majority of these contracts expire without being drawn upon.
As a result, total contractual amounts do not represent actual future credit
exposure or liquidity requirements.
Commitments to extend credit are agreements to lend to a customer who has
complied with predetermined contractual conditions. Commitments generally have
fixed expiration dates.
Standby letters of credit and guarantees are conditional commitments issued by
the Company generally to guarantee the performance of a customer to a third
party in borrowing arrangements, such as commercial paper, bond financing and
similar transactions. The credit risk involved in issuing standby letters of
credit is essentially the same as that involved in extending loan facilities to
customers and may be reduced by selling participations to third parties. The
Company holds collateral to support those standby letters of credit and
guarantees for which collateral is deemed necessary.
The Company services mortgage loans other than those included in the
accompanying consolidated financial statements and, in some cases, accepts a
recourse liability on the serviced loans. The Company's exposure to credit loss
in the event of nonperformance by the other party to these recourse loans is
approximately $3.1 billion. In addition to the value of the property serving as
collateral, approximately $2.2 billion of the balance of these loans serviced
with recourse as of December 31, 1999, is insured by governmental agencies and
private mortgage insurance firms.
Note 14 Concentrations Of Credit Risk
Credit risk represents the maximum accounting loss that would be recognized at
the reporting date if counterparties failed completely to perform as contracted
and any collateral or security proved to be of no value. Concentrations of
credit risk or types of collateral (whether on or off-balance sheet) arising
from financial instruments exist in relation to certain groups of customers. A
group concentration arises when a number of counterparties have similar economic
characteristics that would cause their ability to meet contractual obligations
to be similarly affected by changes in economic or other conditions. The Company
does not have a significant concentration to any individual customer or
counterparty except for the U.S. government and its agencies. The major
concentrations of credit risk for the Company arise by collateral type in
relation to loans and credit commitments. The only significant concentration
that exists is in loans secured by residential real estate. At December 31,
1999, the Company had $19.6 billion in residential real estate loans and an
additional $2.5 billion in commitments to extend credit for such loans. A
geographic concentration arises because the Company operates primarily in the
Southeastern and Mid-Atlantic regions of the United States.
56 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
Note 15 Fair Values Of Financial Instruments
The following table presents the carrying amounts and fair values of the
Company's financial instruments at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
<S> <C> <C> <C> <C>
Financial assets
Cash and cash equivalents $ 5,519,366 $ 5,519,366 $ 6,076,834 $ 6,076,834
Trading account 259,547 259,547 239,665 239,665
Securities available for sale 18,317,297 18,317,297 17,559,043 17,559,043
Loans held for sale 1,531,787 1,533,273 3,548,555 3,564,807
Loans, net 65,131,508 64,950,161 60,596,089 61,648,485
Financial liabilities
Deposits 60,100,529 59,945,453 59,033,283 59,059,204
Short-term borrowings 18,170,927 18,170,927 15,932,819 15,932,819
Long-term debt and guaranteed preferred
beneficial interests in debentures 6,017,346 5,863,099 5,807,869 5,949,991
Off-balance sheet financial instruments
Interest rate swaps
In a net gain position 31,600 125,687
In a net loss position (7,925) (34,972)
Commitments to extend credit 45,389 32,018
Standby letters of credit 3,570 2,052
Other 23,845 32,232
</TABLE>
The following methods and assumptions were used by the Company in
estimating the fair value of financial instruments:
* Short-term financial instruments are valued at their carrying amounts
reported in the balance sheet, which are reasonable estimates of fair value
due to the relatively short period to maturity of the instruments. This
approach applies to cash and cash equivalents and short-term investments,
short-term borrowings and certain other assets and liabilities.
* Securities available for sale and trading account assets are valued at
quoted market prices where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments except in the case of certain options and swaps where pricing
models are used.
* Loans held for sale are valued based on quoted market prices in the
secondary market.
* Loans are valued on the basis of estimated future receipts of principal and
interest, discounted at rates currently being offered for loans with
similar terms and credit quality. Loan prepayments are assumed to occur at
the same rate as in previous periods when interest rates were at levels
similar to current levels. The fair values for certain mortgage loans and
credit card loans are based on quoted market prices of similar loans sold
in conjunction with securitization transactions, adjusted for differences
in loan characteristics. The carrying amount of accrued interest
approximates its fair value.
* Deposit liabilities with no defined maturity such as demand deposits,
NOW/money market accounts and savings accounts have a fair value equal to
the amount payable on demand at the reporting date, i.e., their carrying
amounts. Fair values for certificates of deposit are estimated using a
discounted cash flow calculation that applies current interest rates to a
schedule of aggregated expected maturities. The intangible value of
long-term relationships with depositors is not taken into account in
estimating fair values.
* Fair values for long-term debt and guaranteed preferred beneficial
interests in debentures are based on quoted market prices for similar
instruments or estimated using discounted cash flow analysis and the
Company's current incremental borrowing rates for similar types of
instruments.
* Fair values for off-balance-sheet instruments (futures, swaps, forwards,
options, guarantees, and lending commitments) are based on quoted market
prices, current settlement values, or pricing models or other formulas.
SunTrust Banks, Inc. 57
<PAGE>
Notes To Consolidated Financial Statements
Note 16 Contingencies
The Company and its subsidiaries are parties to numerous claims and lawsuits
arising in the course of their normal business activities, some of which involve
claims for substantial amounts. Although the ultimate outcome of these suits
cannot be ascertained at this time, it is the opinion of management that none of
these matters, when resolved, will have a material effect on the Company's
consolidated results of operations or financial position.
Note 17 Segment Reporting
The Company's reportable segments are determined based on management's internal
reporting approach, which is aligned along geographic regions. The reportable
segments as of December 31, 1999 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 certain fees
related to trust, deposit, lending and other services provided to customers. The
All Other segment consists primarily of the Company's credit card bank and
nonbank subsidiaries. Most of the revenue earned by the nonbank subsidiaries is
classified in noninterest income and consists primarily of retail, corporate and
institutional investment income. No transactions with a single customer
contributed 10% or more to the Company's total revenue. The accounting policies
for each segment are the same as those used by the Company. The segment results
include certain 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.
58 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
<TABLE>
<CAPTION>
1999
(In thousands) Florida Georgia Tennessee Crestar All Other Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $ 2,010,545 $ 1,526,902 $ 601,294 $ 1,820,749 $ 406,587 $ (405,869) $ 5,960,208
Total interest expense 909,438 737,365 291,655 841,875 440,288 (405,869) 2,814,752
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income 1,101,107 789,537 309,639 978,874 (33,701) -- 3,145,456
Provision for loan losses 46,328 29,880 8,042 34,042 52,145 -- 170,437
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income
after provision 1,054,779 759,657 301,597 944,832 (85,846) -- 2,975,019
- ---------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 535,151 389,744 143,900 550,049 1,022,719 (981,532) 1,660,031
Total noninterest expense 920,009 630,252 263,644 942,896 1,164,124 (981,532) 2,939,393
- ---------------------------------------------------------------------------------------------------------------------------------
Income before taxes and
extraordinary gain 669,921 519,149 181,853 551,985 (227,251) -- 1,695,657
Provision for income taxes 242,776 178,100 66,932 190,781 (106,884) -- 571,705
- ---------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary
gain 427,145 341,049 114,921 361,204 (120,367) -- 1,123,952
Extraordinary gain,
net of tax -- -- -- 66,424 136,224 -- 202,648
- ---------------------------------------------------------------------------------------------------------------------------------
Net income $ 427,145 $ 341,049 $ 114,921 $ 427,628 $ 15,857 $ -- $ 1,326,600
=================================================================================================================================
Other Significant Items
Total assets $ 31,834,153 $ 28,810,141 $ 9,112,933 $ 27,824,616 $ 16,926,536 $(19,118,411) $ 95,389,968
Investment in subsidiaries 2,596,099 3,892,182 736,880 2,520,510 255,391 (10,001,062) --
Depreciation, amortization,
and accretion (net) 53,093 27,760 13,451 159,620 94,554 (63,485) 284,993
Total expenditures for
long-lived assets 99,019 26,142 12,189 46,544 73,285 -- 257,179
Revenues from external
customers
Total interest income $ 1,900,118 $ 1,441,885 $ 587,408 $ 1,798,635 $ 232,162 -- $ 5,960,208
Total noninterest income 447,501 317,585 114,041 532,068 248,836 -- 1,660,031
- ---------------------------------------------------------------------------------------------------------------------------------
Total income $ 2,347,619 $ 1,759,470 $ 701,449 $ 2,330,703 $ 480,998 -- $ 7,620,239
=================================================================================================================================
Revenues from affiliates
Total interest income $ 110,427 $ 85,017 $ 13,886 $ 22,114 $ 174,425 $ (405,869) $ --
Total noninterest income 87,650 72,159 29,859 17,981 773,883 (981,532) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total income $ 198,077 $ 157,176 $ 43,745 $ 40,095 $ 948,308 $ (1,387,401) $ --
=================================================================================================================================
</TABLE>
SunTrust Banks, Inc. 59
<PAGE>
Notes To Consolidated Financial Statements
Note 17 continued
<TABLE>
<CAPTION>
1998
(In thousands) Florida Georgia Tennessee Crestar All Other Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $ 1,934,603 $ 1,354,555 $ 578,697 $ 1,799,325 $ 413,928 $ (405,208) $ 5,675,900
Total interest expense 906,971 645,863 285,941 865,633 447,579 (405,208) 2,746,779
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income 1,027,632 708,692 292,756 933,692 (33,651) -- 2,929,121
Provision for loan losses 41,897 24,790 8,056 83,327 56,532 -- 214,602
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income
after provision 985,735 683,902 284,700 850,365 (90,183) -- 2,714,519
- --------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 509,479 368,556 142,685 683,982 863,152 (851,681) 1,716,173
Total noninterest expense 852,145 575,996 251,120 1,118,395 986,411 (851,681) 2,932,386
- --------------------------------------------------------------------------------------------------------------------------------
Income before taxes 643,069 476,462 176,265 415,952 (213,442) -- 1,498,306
Provision for income taxes 235,477 161,009 63,538 168,258 (100,993) -- 527,289
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 407,592 $ 315,453 $ 112,727 $ 247,694 $ (112,449) $ -- $ 971,017
================================================================================================================================
Other Significant Items
Total assets $ 30,327,182 $ 25,634,005 $ 8,643,992 $ 28,447,292 $ 17,638,256 $(17,520,795) $ 93,169,932
Investment in subsidiaries 2,502,024 3,850,050 696,753 2,352,178 352,241 (9,753,246) --
Depreciation, amortization,
and accretion (net) 71,138 37,587 17,649 181,890 67,570 (93,235) 282,599
Total expenditures for
long-lived assets 58,182 30,351 10,461 48,080 111,958 -- 259,032
Revenues from external
customers
Total interest income $ 1,792,969 $ 1,280,216 $ 564,689 $ 1,799,325 $ 238,701 $ -- $ 5,675,900
Total noninterest income 423,797 299,476 112,457 683,982 196,461 -- 1,716,173
- --------------------------------------------------------------------------------------------------------------------------------
Total income $ 2,216,766 $ 1,579,692 $ 677,146 $ 2,483,307 $ 435,162 $ -- $ 7,392,073
================================================================================================================================
Revenues from affiliates
Total interest income $ 141,634 $ 74,339 $ 14,008 $ -- $ 175,227 $ (405,208) $ --
Total noninterest income 85,682 69,080 30,228 -- 666,691 (851,681) --
- --------------------------------------------------------------------------------------------------------------------------------
Total income $ 227,316 $ 143,419 $ 44,236 $ -- $ 841,918 $ (1,256,889) $ --
================================================================================================================================
</TABLE>
60 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
<TABLE>
<CAPTION>
1997
(In thousands) Florida Georgia Tennessee Crestar All Other Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $ 1,817,791 $ 1,264,988 $ 552,449 $ 1,600,337 $ 315,176 $ (312,454) $ 5,238,287
Total interest expense 826,897 613,879 267,532 709,227 348,383 (312,454) 2,453,464
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 990,894 651,109 284,917 891,110 (33,207) -- 2,784,823
Provision for loan losses 32,423 20,332 6,076 108,338 57,971 -- 225,140
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income
after provision 958,471 630,777 278,841 782,772 (91,178) -- 2,559,683
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 430,694 315,100 123,388 504,672 616,265 (634,457) 1,355,662
Total noninterest expense 800,239 523,561 232,732 813,318 680,353 (634,457) 2,415,746
- -----------------------------------------------------------------------------------------------------------------------------------
Income before taxes 588,926 422,316 169,497 474,126 (155,266) -- 1,499,599
Provision for income taxes 217,410 140,861 59,394 165,189 (59,178) -- 523,676
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 371,516 $ 281,455 $ 110,103 $ 308,937 $ (96,088) $ -- $ 975,923
===================================================================================================================================
Other Significant Items
Total assets $ 27,386,872 $ 22,718,262 $ 8,142,207 $ 25,111,456 $ 14,468,169 $(14,986,146) $ 82,840,820
Investment in subsidiaries 2,218,653 3,776,832 650,713 2,060,876 205,998 (8,913,072) --
Depreciation, amortization,
and accretion (net) 60,476 26,351 13,193 115,464 59,553 (34,644) 240,393
Total expenditures for
long-lived assets 47,086 39,025 13,441 98,695 212,218 -- 410,465
Revenues from external
customers
Total interest income $ 1,706,743 $ 1,181,749 $ 540,570 $ 1,600,337 $ 208,888 $ -- $ 5,238,287
Total noninterest income 379,297 265,032 105,509 504,672 101,152 -- 1,355,662
- -----------------------------------------------------------------------------------------------------------------------------------
Total income $ 2,086,040 $ 1,446,781 $ 646,079 $ 2,105,009 $ 310,040 $ -- $ 6,593,949
===================================================================================================================================
Revenues from affiliates
Total interest income $ 111,048 $ 83,239 $ 11,879 $ -- $ 106,288 $ (312,454) $ --
Total noninterest income 51,397 50,068 17,879 -- 515,113 (634,457) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total income $ 162,445 $ 133,307 $ 29,758 $ -- $ 621,401 $ (946,911) $ --
===================================================================================================================================
</TABLE>
SunTrust Banks, Inc. 61
<PAGE>
Notes To Consolidated Financial Statements
Note 18 Comprehensive Income
The Company's comprehensive income, which includes certain transactions and
other economic events that bypass the income statement, consists of net income
and unrealized gains and losses on securities available for sale, net of income
taxes.
Comprehensive income for the years ended December 31, 1999, 1998, and 1997 is
calculated as follows:
<TABLE>
<CAPTION>
(In thousands) Before Net of
Income Tax Income Tax Income Tax
<S> <C> <C> <C>
Unrealized (losses) gains, net recognized in
other comprehensive income:
1999 $ (859,877) $ (334,492) $ (525,385)
1998 58,782 18,728 40,054
1997 759,680 292,020 467,660
====================================================================================================
(In thousands) 1999 1998 1997
Amounts reported in net income
(Loss) gain on sale of securities $ (109,076) $ 8,207 $ 6,851
Net (accretion) amortization (291) 3,524 (225)
- ----------------------------------------------------------------------------------------------------
Reclassification adjustment (109,367) 11,731 6,626
Income tax benefit (expense) 42,544 (4,563) (2,578)
- ----------------------------------------------------------------------------------------------------
Reclassification adjustment, net of tax $ (66,823) $ 7,168 $ 4,048
====================================================================================================
Amounts reported in other comprehensive income
Unrealized (loss) gain arising during period,
net of tax $ (592,208) $ 47,222 $ 471,708
Reclassification adjustment, net of tax 66,823 (7,168) (4,048)
- ----------------------------------------------------------------------------------------------------
Net unrealized (losses) gains recognized
in other comprehensive income (525,385) 40,054 467,660
Net income 1,326,600 971,017 975,923
- ----------------------------------------------------------------------------------------------------
Total comprehensive income $ 801,215 $ 1,011,071 $ 1,443,583
====================================================================================================
</TABLE>
Note 19 Other Noninterest Income
Other noninterest income in the consolidated statements of income includes:
<TABLE>
<CAPTION>
Year Ended December 31
(In millions) 1999 1998 1997
<S> <C> <C> <C>
Trading account profits and commissions $ 35.1 $ 44.6 $ 22.7
Other income 114.6 106.8 104.1
- ---------------------------------------------------------------------------
Total noninterest income $ 149.7 $ 151.4 $ 126.8
===========================================================================
</TABLE>
Note 20 Other Noninterest Expense
Other noninterest expense in the consolidated statements of income includes:
<TABLE>
<CAPTION>
Year Ended December 31
(In millions) 1999 1998 1997
<S> <C> <C> <C>
Outside processing and software $ 150.3 $ 138.4 $ 112.7
Credit and collection services 68.7 70.4 59.5
Postage and delivery 68.1 64.4 64.1
Communications 66.3 62.1 52.7
Amortization of intangible assets 66.0 105.4 65.0
Consulting and legal 62.5 67.5 51.7
Operating supplies 51.9 54.0 50.0
FDIC premiums 7.9 8.4 8.5
Other real estate (income) expense (4.8) (9.8) (8.6)
Other expense 157.2 158.6 136.9
- ----------------------------------------------------------------------------
Total noninterest expense $ 694.1 $ 719.4 $ 592.5
============================================================================
</TABLE>
62 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
Note 21 SunTrust Banks, Inc. (Parent Company Only) Financial Information
Statements of Income -- Parent Only
<TABLE>
<CAPTION>
(In thousands) Year Ended December 31
1999 1998 1997
<S> <C> <C> <C>
Operating Income
From subsidiaries:
Dividends - substantially all from banking subsidiaries $1,074,010 $ 616,263 $ 527,015
Service fees 146,161 83,523 80,044
Interest on loans 55,909 52,219 25,007
Other income 11 4 4
Other operating income/1/ 74,736 83,045 36,036
- ---------------------------------------------------------------------------------------------------
Total operating income 1,350,827 835,054 668,106
- ---------------------------------------------------------------------------------------------------
Operating Expense
Interest on short-term borrowings 48,498 51,308 42,184
Interest on long-term debt/2/ 162,456 161,842 112,121
Salaries and employee benefits 91,784 45,354 38,951
Amortization of intangible assets 7,644 7,644 7,650
Service fees to subsidiaries 81,467 104,806 35,152
Other operating expense/3/ 91,866 77,291 40,952
- ---------------------------------------------------------------------------------------------------
Total operating expense 483,715 448,245 277,010
- ---------------------------------------------------------------------------------------------------
Income before income taxes and equity in
undistributed income of subsidiaries 867,112 386,809 391,096
Income tax benefit 99,087 104,916 48,595
- ---------------------------------------------------------------------------------------------------
Income before equity in undistributed income of subsidiaries 966,199 491,725 439,691
Extraordinary gain, net of taxes 202,648 -- --
Equity in undistributed income of subsidiaries,
net of extraordinary gain 157,753 479,292 536,232
- ---------------------------------------------------------------------------------------------------
Net Income $1,326,600 $ 971,017 $ 975,923
===================================================================================================
</TABLE>
/1/ Other operating income includes $57.6 million, $56.6 million and $25.8
million in 1999, 1998 and 1997, respectively, for interest income on
Company owned trust preferred securities.
/2/ Interest on long-term debt includes $73.9 million, $72.9 million and $42.7
million in 1999, 1998 and 1997, respectively, for interest expense from
Company issued trust preferred securities.
/3/ Other operating expense for 1999 and 1998 includes merger-related expenses
of $45.6 million and $29.4 million, respectively. Included in 1997 are
expenses incurred on behalf of certain banking subsidiaries in connection
with the Company's growth initiatives.
SunTrust Banks, Inc. 63
<PAGE>
Notes To Consolidated Financial Statements
Balance Sheets -- Parent Only
<TABLE>
<CAPTION>
(Dollars in thousands) December 31
Assets 1999 1998
<S> <C> <C>
Cash in subsidiary banks $ 80,506 $ 42,744
Interest-bearing deposits in banks 4,562 3,813
Funds sold -- 243,336
Securities available for sale 892,078 930,001
Loans to subsidiaries 924,646 1,077,078
Investment in capital stock of subsidiaries stated on the
basis of the Company's equity in subsidiaries' capital accounts
Banking subsidiaries 9,553,598 9,346,518
Nonbanking and holding company subsidiaries 348,564 340,724
Premises and equipment 20,099 18,254
Intangible assets 83,374 91,018
Other assets - Note 12 511,398 392,457
- ------------------------------------------------------------------------------------------------------
Total assets $ 12,418,825 $ 12,485,943
======================================================================================================
Liabilities and Shareholders' Equity - Notes 10 and 12
Short-term borrowings from
Subsidiaries $ 627,429 $ 1,900
Non-affiliated companies - Note 8 768,315 847,596
Long-term debt - Note 9 2,679,951 2,746,915
Other liabilities - Note 11 716,268 710,888
- ------------------------------------------------------------------------------------------------------
Total liabilities 4,791,963 4,307,299
======================================================================================================
Preferred stock, no par value; 50,000,000 shares authorized; none issued -- --
Common stock, $1.00 par value 323,163 322,485
Additional paid in capital 1,293,387 1,293,011
Retained earnings 5,461,351 4,575,382
Treasury stock and other (1,013,861) (100,441)
- ------------------------------------------------------------------------------------------------------
Realized shareholders' equity 6,064,040 6,090,437
Accumulated other comprehensive income 1,562,822 2,088,207
- ------------------------------------------------------------------------------------------------------
Total shareholders' equity 7,626,862 8,178,644
- ------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 12,418,825 $ 12,485,943
======================================================================================================
Common shares outstanding 308,353,207 321,124,134
Common shares authorized 500,000,000 500,000,000
Treasury shares of common stock 14,809,550 1,360,928
</TABLE>
64 1999 Annual Report
<PAGE>
Notes To Consolidated Financial Statements
Statements of Cash Flow -- Parent Only
<TABLE>
<CAPTION>
(In thousands) Year Ended December 31
Cash flow from operating activities: 1999 1998 1997
<S> <C> <C> <C>
Net income $ 1,326,600 $ 971,017 $ 975,923
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary gain, net of taxes (202,648) -- --
Equity in undistributed income of subsidiaries (157,753) (479,292) (536,232)
Depreciation and amortization 12,392 13,064 12,511
Securities losses (gains) 851 (640) (3,503)
Deferred income tax provision (benefit) 22,313 10,609 (5,562)
Changes in period end balances of:
Prepaid expenses (54,830) (44,384) (45,049)
Other assets (50,741) (11,052) 143,219
Taxes payable (9,221) 8,481 44,803
Interest payable 4,928 5,266 4,828
Other accrued expenses 32,468 257,644 267,694
Net cash provided by operating activities 924,359 730,713 858,632
Cash flow from investing activities:
Proceeds from sales and maturities of securities available 125,946 143,764 9,305
for sale
Purchase of securities available for sale (184,930) (347,212) (667,830)
Net change in loans to subsidiaries 152,431 (460,048) (219,312)
Capital expenditures (15,077) (8,407) (1,347)
Capital contributions to subsidiaries (317,595) (63,784) (212,103)
Other, net 11,000 17,894 109
Net cash used in investing activities (228,225) (717,793) (1,091,178)
Cash flow from financing activities:
Net change in short-term borrowings 546,248 (44,081) 393,156
Proceeds from issuance of long-term debt 140,563 800,000 920,000
Repayment of long-term debt (207,527) (101,577) (24,802)
Proceeds from the exercise of stock options 15,030 27,342 31,438
Proceeds from stock issuance -- 191,700 --
Proceeds used in acquisition and retirement of stock (954,642) (305,608) (710,149)
Dividends paid (440,631) (352,454) (326,343)
Net cash (used in) provided by financing activities (900,959) 215,322 283,300
Net decrease in cash and cash equivalents (204,825) 228,242 50,754
Cash and cash equivalents at beginning of year 289,893 61,651 10,897
Cash and cash equivalents at end of year $ 85,068 $ 289,893 $ 61,651
Supplemental Disclosure
Income taxes received from subsidiaries $ 631,626 $ 382,847 $ 394,908
Income taxes paid by Parent Company (520,412) (290,648) (298,520)
Net income taxes received by Parent Company $ 111,214 $ 92,199 $ 96,388
Interest paid $ 206,033 $ 207,912 $ 106,311
</TABLE>
SunTrust Banks, Inc. 65
<PAGE>
Exhibits, Financial Statement Schedules, And Reports On Form 8-K
Financial Statements Filed. See Index To Consolidated Financial Statements on
page 34 of this Annual Report and Form 10-K.
All financial statement schedules are omitted because the data is either not
applicable or is discussed in the financial statements or related footnotes. The
Company filed a Form 8-K dated October 14, 1999 reporting the sale of its credit
card portfolio to MBNA America Bank, N.A.
The Company's principal banking subsidiary is owned by SunTrust Bank Holding
Company, a Florida corporation. A directory of the Company's principal banking
units and non-banking subsidiaries is on pages 71-72 of this Annual Report and
Form 10-K. The Company's Articles of Incorporation, By-laws, certain instruments
defining the rights of securities holders, including designations of the terms
of outstanding indentures, constituent instruments relating to various employee
benefit plans and certain other documents are filed as Exhibits to this Report
or incorporated by reference herein pursuant to the Securities Exchange Act of
1934. Shareholders may obtain the list of such Exhibits and copies of such
documents upon request to: Corporate Secretary, SunTrust Banks, Inc., Mail Code
643, P.O. Box 4418, Atlanta, Georgia, 30302. A copying fee will be charged for
the Exhibits.
Consent Of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of our
report incorporated by reference in this Form 10-K, into the Registrant's
previously filed Registration Statement Nos. 33-28250, 33-58723, 333-50719,
333-69331, 333-91519, and 333-91512 on Form S-8 and Registration Statement Nos.
333-46093, 333-46123, and 333-61583 on Form S-3.
Arthur Andersen LLP
Atlanta, GA
March 15, 2000
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf on February 8, 2000 by the undersigned, thereunto duly authorized.
SunTrust Banks, Inc. L. Phillip Humann
(Registrant) Chairman of the Board of Directors,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed on February 8, 2000 by the following persons on behalf of the
Registrant and in the capacities indicated.
L. Phillip Humann William P. O'Halloran
Chairman of the Board of Directors, Senior Vice President and Controller
President and Chief Executive Officer
John W. Spiegel
Executive Vice President and
Chief Financial Officer
All Directors of the registrant listed on pages 68-69.
SunTrust Banks, Inc. 67
<PAGE>
Board of Directors
<TABLE>
<S> <C> <C> <C>
L. Phillip Humann J. Hyatt Brown A. W. Dahlberg M. Douglas Ivester
Chairman of the Board, Chairman of the Board, Chairman of the Board and Chairman of the Board and
President and President and Chief Executive Officer, Chief Executive Officer,
Chief Executive Officer Chief Executive Officer, The Southern Company, The Coca-Cola Company,
Brown & Brown, Inc., Atlanta, Georgia Atlanta, Georgia
Richard G. Tilghman Daytona Beach, Florida
Vice Chairman David H. Hughes Summerfield K. Johnston, Jr.
Alston D. Correll Chairman of the Board and Chairman of the Board and
Chairman of the Board and Chief Executive Officer, Chief Executive Officer
Chief Executive Officer, Hughes Supply, Inc., Coca-Cola Enterprises Inc.,
Georgia-Pacific Corporation, Orlando, Florida Atlanta, Georgia
Atlanta, Georgia
</TABLE>
Pictured from left to right: L. Phillip Humann, James B. Williams, Richard G.
Tilghman, Scott L. Probasco, Jr., M. Douglas Ivester, J. Hyatt Brown, Larry L.
Prince, Frank S. Royal, M.D., Summerfield K. Johnston, Jr., A. W. Dahlberg,
Alston D. Correll, R. Randall Rollins, Frank E. McCarthy, David H. Hughes, G.
Gilmer Minor, III, Joseph L. Lanier, Jr.
68 1999 Annual Report
<PAGE>
Board Of Directors
<TABLE>
<S> <C> <C> <C>
Joseph L. Lanier, Jr. G. Gilmer Minor, III Scott L. Probasco, Jr. Frank S. Royal, M.D.
Chairman of the Board and Chairman of the Board and Chairman of the President,
Chief Executive Officer, Chief Executive Officer, Executive Committee, Frank S. Royal, M.D., P.C.,
Dan River, Inc., Owens & Minor, Inc., SunTrust Bank, Chattanooga Richmond, Virginia
Danville, Virginia Richmond, Virginia Chattanooga, Tennessee
James B. Williams
Frank E. McCarthy Larry L. Prince R. Randall Rollins Chairman of the
President, National Automobile Chairman of the Board and Chairman of the Board and Executive Committee,
Dealers Association, Chief Executive Officer, Chief Executive Officer, SunTrust Banks, Inc.,
McLean, Virginia Genuine Parts Company, Rollins, Inc., Atlanta, Georgia
Atlanta, Georgia Atlanta, Georgia
</TABLE>
SunTrust Banks, Inc. 69
<PAGE>
Management Committee
<TABLE>
<S> <C> <C> <C>
L. Phillip Humann Samuel O. Franklin III Carl F. Mentzer James M. Wells III
Chairman, President and Chief Tennessee Banking Commercial Banking Mid-Atlantic Banking
Executive Officer
Theodore J. Hoepner Joy Wilder Morgan Robert C. Whitehead
John W. Clay, Jr. Florida Banking, Technology & Strategic Planning Chief Information Officer
Corporate and Investment Operations and Human
Banking Resources Dennis M. Patterson E. Jenner Wood, III
Retail Banking Wealth Management
Robert H. Coords Craig J. Kelly
Chief Efficiency and Marketing John W. Spiegel
Quality Officer Chief Financial Officer
Robert R. Long
Donald S. Downing Georgia Banking
Mortgage Banking
</TABLE>
70 1999 Annual Report
<PAGE>
Banking Units
<TABLE>
<CAPTION>
Name Headquarters CEO
<S> <C> <C>
Florida Orlando, FL Theodore J. Hoepner
Central Florida Orlando, FL George W. Koehn
East Central Florida Daytona Beach, FL William H. Davison
Gulf Coast Sarasota, FL William R. Klich
Miami Miami, FL John P. Hashagen
Mid-Florida Lakeland, FL Charles W. McPherson
Nature Coast Brooksville, FL James H. Kimbrough
North Central Florida Ocala, FL William H. Evans
North Florida Jacksonville, FL John R. Schmitt
South Florida Fort Lauderdale, FL Thomas G. Kuntz
Southwest Florida Fort Myers, FL Charles K. Idelson
Tampa Bay Tampa, FL Daniel W. Mahurin
Northwest Florida Tallahassee, FL David B. Ramsay
Georgia Atlanta, GA Robert R. Long
Atlanta Atlanta, GA Robert R. Long
Augusta Augusta, GA William R. Thompson
Middle Georgia Macon, GA James B. Patton
Northeast Georgia Athens, GA Robert D. Bishop
Northwest Georgia Rome, GA William H. Pridgen
Savannah Savannah, GA William B. Haile
South Georgia Albany, GA Willis D. Sims
Southeast Georgia Brunswick, GA Jack E. Hartman
West Georgia Columbus, GA Frank S. Etheridge, III
Tennessee Nashville, TN Samuel O. Franklin III
Chattanooga Chattanooga, TN Robert J. Sudderth, Jr.
East Tennessee Knoxville, TN Larry D. Mauldin
Nashville Nashville, TN Samuel O. Franklin III
South Central Tennessee Pulaski, TN W. David Jones
Alabama Florence, AL Robert E. McNeilly, III
Mid-Atlantic Richmond, VA James M. Wells III
Central Virginia Richmond, VA A. Dale Cannady
Greater Washington Washington, DC Peter F. Nostrand
Hampton Roads Norfolk, VA William K. Butler II
Maryland Baltimore, MD J. Scott Wilfong
Western Virginia Roanoke, VA F. Edward Harris
</TABLE>
SunTrust Banks, Inc. 71
<PAGE>
Non-Banking Subsidiaries
<TABLE>
<CAPTION>
Name Headquarters CEO
<S> <C> <C>
Crestar Asset Management Company Richmond, VA Douglas S. Phillips
Crestar Securities Corporation Richmond, VA Charles F. Wright
Executive Auto Leasing, Inc. Baltimore, MD Joseph R. Kessler
Premium Assignment Corporation Tallahassee, FL Peter Kugelmann
STI Credit Corporation Little Rock, AR Donald J. Wright
STI Trust & Investment Operations, Inc. Atlanta, GA Dennis B. Dills
SunTrust BankCard, N.A. Orlando, FL Ronald W. Eastburn
SunTrust Community Development Atlanta, GA Peter P. Walczuk
Corporation
SunTrust Equitable Securities Nashville, TN William P. Johnston
Corporation
SunTrust Insurance Company Atlanta, GA Michael A. Kinsey
SunTrust International Services, Inc. Atlanta, GA Gian Rossi-Espagnet
SunTrust Leasing Corporation Baltimore, MD Daniel E. McKew
SunTrust Mortgage, Inc. Richmond, VA Donald S. Downing
SunTrust Online, Inc. Atlanta, GA John J. McGuire
SunTrust Personal Loans, Inc. Atlanta, GA Wynn E. Cline
SunTrust Securities, Inc. Atlanta, GA Felicia Speetjens
SunTrust Service Corporation Atlanta, GA Robert C. Whitehead
Trusco Capital Management, Inc. Atlanta, GA Douglas S. Phillips
</TABLE>
72 1999 Annual Report
<PAGE>
General Information
Corporate Headquarters
SunTrust Banks, Inc.
303 Peachtree Street, NE
Atlanta, GA 30308
(404) 588-7711
Corporate Mailing Address
SunTrust Banks, Inc.
P.O. Box 4418
Center 645
Atlanta, GA 30302-4418
Notice Of Annual Meeting
The Annual Meeting of Shareholders will be held on Tuesday, April 18,
2000 at 9:30 a.m. in Room 10 of the SunTrust Bank Tower at 25 Park
Place, Atlanta.
Stock Trading
SunTrust Banks, Inc. common stock is traded on the New York Stock Exchange under
the symbol "STI."
Debt Ratings
SunTrust Banks, Inc. debt ratings are as follows:
Senior Long-Term Debt
Moody's Investors Service, Inc.: A1
Standard & Poor's Corp: A+
Thomson BankWatch: AA
Fitch IBCA: AA-
Commercial Paper
Moody's Investors Service, Inc.: P-1
Standard & Poor's Corp.: A-1
Thomson BankWatch: TBW-1
Shareholders Of Record
SunTrust has 41,275 shareholders of record as of December 31, 1999.
Shareholder Services
Shareholders who wish to change the name, address or ownership of stock, to
report lost certificates or to consolidate accounts should contact the Transfer
Agent:
SunTrust Bank
P.O. Box 4625
Atlanta, GA 30302-4625
(404) 588-7815
(800) 568-3476
Dividend Reinvestment
SunTrust offers a Dividend Reinvestment Plan that provides automatic
reinvestment of dividends in additional shares of SunTrust common stock. For
more information, contact:
Stock Transfer Department
SunTrust Bank
P.O. Box 4625
Atlanta, GA 30302-4625
(404) 588-7822
Financial Information
Those seeking information should contact:
Eugene S. Putnam, Jr.
Senior Vice President
Investor Relations and
Corporate Communications
(404) 658-4879
Internet Information
Information about STI, including quarterly earnings releases, press releases and
product information, can be obtained from the SunTrust home page on the World
Wide Web. The address is http://www.SunTrust.com.
Independent Public Accountants
Arthur Andersen LLP
Atlanta, GA
[RECYCLE LOGO] This report is printed on recycled paper.
<PAGE>
Exhibit 21.1
SunTrust Banks, Inc.
ORGANIZATION CHART
January 2, 2000
<TABLE>
<CAPTION>
===================================================================================================================================
<S> <C>
SunTrust Banks, Inc. Atlanta, GA
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Lower Tier Bank Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Bank Holding Company Orlando, FL
- --------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% (see pages 3 - 6 for subsidiaries)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Direct Bank Subsidiaries
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust BankCard, National Association Orlando, FL
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Direct Non Bank Subsidiaries
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% STSC Leasing Corporation Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% STI Trust & Investment Operations, Inc. Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Capital I Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Capital II Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Capital III Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Community Development Corporation Atlanta, GA
--------------------------------------------------------------------------------------------------------------------
100% Regency Development Associates, Inc. Raleigh, NC
---------- ---------------------------------------------------------------------------------------------------------
---------- ---------------------------------------------------------------------------------------------------------
100% Regency Constructors, Inc. Raleigh, NC
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
100% SunTrust Equitable Securities Corporation Nashville, TN
--------------------------------------------------------------------------------------------------------------------
100% Equitable Trust Company Nashville, TN
---------------------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Equitable Asset Management, Inc. Nashville, TN
- -------------- ---------- ---------- ----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Insurance Company Chattanooga, TN
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust International Services, Inc. Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Online, Inc. Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Real Estate Corporation Richmond, VA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Delaware Trust Company Wilmington, DE
- -------------- --------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
SunTrust Banks, Inc. (continued)
===================================================================================================================================
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Direct Non Bank Subsidiaries
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
99.99% SunTrust Plaza Associates, L.L.C. Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Properties, Inc. Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% SunTrust Securities, Inc. Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------- --------------------------------------------------------------------------------------------------------------------
100% Trusco Capital Management, Inc. Atlanta, GA
- -------------- --------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
============== ====================================================================================================================
100% SunTrust Bank Holding Company
============== ====================================================================================================================
<S> <C>
--------------------------------------------------------------------------------------------------------------------
100% SunTrust Bank (see pages 3 - 6 for subsidiaries) Atlanta, GA
---------------------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Acquisition and Equity Corporation Knoxville, TN
----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Atlanta Community Investment Corporation Atlanta, GA
----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Cherokee Insurance Company Burlington, VT
----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Florida Aviation, Inc. Miami, FL
----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Kasalta Miramar, Inc. Miami, FL
----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Service of Volusia County, Inc. Daytona Beach, FL
----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Receivables (Central Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Management (Atlanta), Inc. Newark, DE
--------- ------------------------------------------------------------------------------------
100% STB FNC Corporation Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB STR Newark, DE
------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Atlanta), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Atlanta), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Atlanta), Inc. Newark, DE
------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Augusta), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Augusta), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Augusta), Inc. Newark, DE
------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Middle Georgia), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Middle Georgia), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Middle Georgia), Inc. Newark, DE
------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Northeast Georgia), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Northeast Georgia), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Northeast Georgia), Inc. Newark, DE
--------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Northwest Georgia), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Northwest Georgia), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Northwest Georgia), Inc. Newark, DE
--------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Savannah), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Savannah), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Savannah), Inc. Newark, DE
--------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (South Georgia), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (South Georgia), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (South Georgia), Inc. Newark, DE
----------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Southeast Georgia), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Southeast Georgia), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Southeast Georgia), Inc. Newark, DE
---------- ---------- --------- ------- ----------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
============== ====================================================================================================================
100% SunTrust Bank Holding Company (continued)
============== ====================================================================================================================
<S> <C>
--------------------------------------------------------------------------------------------------------------------
100% SunTrust Bank (continued)
---------------------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (West Georgia), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (West Georgia), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (West Georgia), Inc. Newark, DE
---------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Central Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Central Florida), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Central Florida), Inc. Newark, DE
---------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (East Central Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (East Central Florida), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (East Central Florida), Inc. Newark, DE
---------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Gulf Coast), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Gulf Coast), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Gulf Coast), Inc. Newark, DE
---------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Miami), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Miami), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Miami), Inc. Newark, DE
---------- --------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Mid-Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Mid-Florida), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Mid-Florida), Inc. Newark, DE
------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Nature Coast), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Nature Coast), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Nature Coast), Inc. Newark, DE
---------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (North Central Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (North Central Florida), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (North Central Florida), Inc. Newark, DE
---------- --------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (North Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (North Florida), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (North Florida), Inc. Newark, DE
---------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (South Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (South Florida), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (South Florida), Inc. Newark, DE
---------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Southwest Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Southwest Florida), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Southwest Florida), Inc. Newark, DE
---------- ---------- --------- ------- ----------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
============== ====================================================================================================================
100% SunTrust Bank Holding Company (continued)
============== ====================================================================================================================
<S> <C>
--------------------------------------------------------------------------------------------------------------------
100% SunTrust Bank (continued)
---------------------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STB Real Estate (Northwest Florida), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Northwest Florida), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Northwest Florida), Inc. Newark, DE
--------- ------- ----------------------------------------------------------------------------
----------
100% STB Real Estate (Tampa Bay), Inc. Newark, DE
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% STB Real Estate Parent (Tampa Bay), Inc. Newark, DE
------------------------------------------------------------------------------------
------- ----------------------------------------------------------------------------
100% STB Real Estate Holdings (Tampa Bay), Inc. Newark, DE
---------- --------- ------- ----------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% STI Credit Corporation Little Rock AR
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust Annuities, Inc. Orlando, FL
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust Annuities (Alabama), Inc. Florence, AL
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust of Chattanooga Mortgage Corporation Fort Oglethorpe, GA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust Insurance Services (Florida), Inc. Lake Buena Vista, FL
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust Insurance Services (Georgia), Inc. Madison, GA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust Insurance Services (Tennessee), Inc. Lookout Mountain, TN
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust International Banking Company Atlanta, GA
----------------------------------------------------------------------------------------------
--------- ------------------------------------------------------------------------------------
100% SunTrust Asia, Limited Atlanta, GA
---------- ------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
100% SunTrust Leasing of Tennessee, Inc. Nashville, TN
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust Service Corporation Atlanta, GA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% TCB Holdings, Inc. Atlanta, GA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% DC Properties, Inc. Washington, DC
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% MD Properties, Inc. Baltimore, MD
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% VA Properties, Inc. Richmond, VA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
85% SunTrust Benefits Management, Inc. Baltimore, MD
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Citizens Community Development Company Baltimore, MD
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Crestview, L.L.C. Richmond, VA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% CB Finance, Inc. Richmond, VA
----------------------------------------------------------------------------------------------
---------- -----------------------------------------------------------------------------------
100% STB Real Estate Parent Mid-Atlantic Newark, DE
-----------------------------------------------------------------------------------
---------- ------------------------------------------------------------------------
100% CRL, Inc. Richmond, VA
---------- -----------------------------------------------------------------------------------
99.99% CM Finance, L.L.C. Schaumburg, IL
-----------------------------------------------------------------------------------
---------- ------------------------------------------------------------------------
99.99% CBP Finance, L.L.C. Schaumburg, IL
---------- ---------- ---------- ---------- ------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
============== ====================================================================================================================
100% SunTrust Bank Holding Company (continued)
============== ====================================================================================================================
<S> <C>
--------------------------------------------------------------------------------------------------------------------
100% SunTrust Bank (continued)
---------------------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Jefferson Funding Corporation I Richmond, VA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust Leasing Corporation Richmond, VA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Southern Service Corporation Richmond, VA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% SunTrust Mortgage, Inc. Richmond, VA
----------------------------------------------------------------------------------------------
---------- -----------------------------------------------------------------------------------
100% Chesapeake Settlement and Escrow, L.L.C. Richmond, VA
-----------------------------------------------------------------------------------
--------- -------------------------------------------------------------------------
100% Chesapeake Settlement and Escrow of Maryland, L.L.C. Richmond, VA
---------- --------- -------------------------------------------------------------------------
---------- -----------------------------------------------------------------------------------
100% CMC Oreo, Inc. Richmond, VA
---------- ---------- -----------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Crestar Asset Management Company Richmond, VA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Crestar Procurement Services, L.L.C. Baltimore, MD
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Executive Auto Leasing, Inc. Washington, DC
---------- ----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
100% SunTrust Education Financial Services Corporation Richmond, VA
----------------------------------------------------------------------------------------------
---------- -----------------------------------------------------------------------------------
51% SunTrust Student Loan, L.L.C. Richmond, VA
---------- -----------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Crestar Community Development Corporation Richmond, VA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% CBRE II, Inc. St. Thomas, Virgin Islands
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
99% Crestar Securitization, L.L.C. Richmond, VA
---------- ----------------------------------------------------------------------------------------------
---------- ----------------------------------------------------------------------------------------------
100% Crestar SP Corporation Richmond, VA
---------- ----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% CF Finance, L.L.C. Schaumburg, IL
---------- ---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% Crestar Capital Trust I Richmond, VA
---------- ---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% Crestar Securities Corporation Richmond, VA
---------- ---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% Crestar Insurance Agency, Inc. Richmond, VA
---------- ---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% SunTrust Banks Trust Company (Cayman) LTD Grand Cayman, Cayman Island, B.W.I.
---------- ---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% SunTrust Personal Loans, Inc. Atlanta, GA
---------- ---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% Premium Assignment Corporation Tallahassee, FL
---------- ---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% Trust Company of Tennessee (inactive) Nashville, TN
---------- ---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
100% Preferred Surety Holdings, Inc. Atlanta, GA
---------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
100% Preferred Surety Corporation Madison, GA
----------
---------- -----------------------------------------------------------------------------------
100% Madison Insurance Company Madison, GA
---------- -----------------------------------------------------------------------------------
===================================================================================================================
</TABLE>
6
<PAGE>
Exhibit 23.1
Consent Of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of our
report incorporated by reference in this Form 10-K, into the Registrant's
previously filed Registration Statement Nos. 33-28250, 33-58723, 333-50719,
333-69331, 333-91519, and 333-91512 on Form S-8 and Registration Statement Nos.
333-46093, 333-46123, and 333-61583 on Form S-3.
Arthur Andersen LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,909,687
<INT-BEARING-DEPOSITS> 22,237
<FED-FUNDS-SOLD> 1,587,442
<TRADING-ASSETS> 259,547
<INVESTMENTS-HELD-FOR-SALE> 18,317,297
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 67,534,618<F1>
<ALLOWANCE> 871,323
<TOTAL-ASSETS> 95,389,968
<DEPOSITS> 60,100,529
<SHORT-TERM> 18,170,927
<LIABILITIES-OTHER> 3,474,304
<LONG-TERM> 6,017,346
0
0
<COMMON> 323,163
<OTHER-SE> 7,303,699
<TOTAL-LIABILITIES-AND-EQUITY> 95,389,968
<INTEREST-LOAN> 4,916,762<F2>
<INTEREST-INVEST> 956,590
<INTEREST-OTHER> 86,856
<INTEREST-TOTAL> 5,960,208
<INTEREST-DEPOSIT> 1,626,132
<INTEREST-EXPENSE> 2,814,752
<INTEREST-INCOME-NET> 3,145,456
<LOAN-LOSSES> 170,437
<SECURITIES-GAINS> (109,076)
<EXPENSE-OTHER> 2,939,393
<INCOME-PRETAX> 1,695,657
<INCOME-PRE-EXTRAORDINARY> 1,123,952
<EXTRAORDINARY> 202,648
<CHANGES> 0
<NET-INCOME> 1,326,600
<EPS-BASIC> 4.18
<EPS-DILUTED> 4.13
<YIELD-ACTUAL> 3.88
<LOANS-NON> 248,943
<LOANS-PAST> 117,438
<LOANS-TROUBLED> 7
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 944,557
<CHARGE-OFFS> 259,990
<RECOVERIES> 65,650
<ALLOWANCE-CLOSE> 871,323
<ALLOWANCE-DOMESTIC> 871,323
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 871,323
<FN>
<F1>Includes loans held for sale of 1,531,787
<F2>Includes interest on loans held for sale of 172,153
</FN>
</TABLE>
