SunTrust Bank

SunTrust Banks, Inc. is headquartered in Atlanta, GA.  As of September 30, 2008 SunTrust had assets totaling $174.8 billion.  Through its banking subsidiaries, the company provides deposit, credit, trust, and investment services to a broad range of retail, business, and institutional clients.  Other subsidiaries provide mortgage banking, brokerage, investment management, equipment leasing, and capital market services.

The bank operates 1,692 retail branches and 2,506 ATMs in Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia, and the District of Columbia. In addition, SunTrust provides customers with a full range of technology-based banking channels, including Internet, PC, and automated telephone banking.

SunTrust’s Internet address is suntrust.com.  The contact number is 800-786-8787.
On Oct. 23, 2008 SunTrust Bank, Inc reported net income of $307.3 million for the third quarter of 2008, or $0.88 per average common diluted share, compared to $412.6 million, or $1.18 per average common diluted share, in the third quarter of 2007.

Highlights from the third quarter report include the following information and data.

Fully taxable-equivalent revenue was $2,460.9 million for the third quarter of 2008, an increase of 20.7% compared to the third quarter of 2007, driven by the securities gains from the contribution of the Coke stock, mark to market valuation gains on the Company’s public debt and related hedges carried at fair value, and increased fee income. These items were partially offset by a 3.6% decline in net interest income, a decline in trust and investment management income, and the expected market valuation write-down of ARS.

For the nine months, fully taxable-equivalent revenue was $7,284.2 million, up 12.4% over prior year.  The increase was driven by incremental net securities gains of $424.8 million, gains from the sale of non-strategic businesses and the sale/leaseback of certain corporate real estate properties, the Visa IPO gain, net positive mark-to-market valuations, and increased fee income from the Company’s core businesses.  These contributions to growth were partially offset by lower net interest income, trust and investment management income, and the write-down related to ARS.

Fully taxable-equivalent net interest income was $1,175.7 million in the third quarter of 2008, a decrease of 3.6% from the third quarter of 2007.  Net interest margin declined 11 basis points compared to the third quarter of 2007. On a sequential quarter basis, net interest margin declined 6 basis points.  The decline in net interest income was primarily due to the increase in nonaccrual loans, a reduction in Coke and Federal Home Loan Bank dividend income, LIBOR rate volatility during September in particular, and lower interest income associated with a small increase in the Company’s leverage lease reserves. While earning assets remained essentially flat over the past twelve months, higher yielding assets, such as loans held for sale, have declined and lower yielding assets, such as commercial loans, have increased.  Lower rates on customer and wholesale deposits, as well as growth in customer deposits, helped offset the decline in interest income.

For the nine months, fully taxable-equivalent net interest income was $3,528.5 million, a decline of 2.7% from 2007 while net interest margin was relatively flat.  Balance sheet management strategies initiated in 2007 led to a $3.8 billion, or 2.5%, decline in average earning assets, namely loans held for sale, real estate construction loans, and interest-earning trading assets, which was partially offset by growth in commercial loans.

Mortgage production income was $50.0 million in the third quarter of 2008 compared to $13.0 million in the third quarter of 2007.  Lower loan production and related fees in 2008 were offset by a significant reduction in valuation losses recorded in the third quarter of 2007 on the Alt-A loans held in the warehouse.  Mortgage servicing related income in the third quarter of 2008 increased primarily due to higher servicing fee income driven by growth in the servicing portfolio from $149.9 billion as of September 30, 2007 to $159.3 billion as of September 30, 2008.

In the third quarter of 2008, the Company experienced strong growth in service charges on deposit accounts and card fees, which increased 12.3% and 10.9%, respectively, over the same period of 2007.  Investment banking income grew 30.4%, related to increased loan syndication and capital markets activity; however, trust and investment income declined 15.8%, reflecting the sale of certain trust related businesses earlier in 2008 and lower fee income attributable to the decline in the equity markets.  Trading account profits and commissions includes the mark-to-market valuation adjustments on financial instruments carried at fair value including the Company’s publicly-traded debt and related hedges carried at fair value and the ARS expected loss.  Securities gains included the $183.4 million gain from the contribution of Coke shares, partially offset by a $10.3 million charge for other-than-temporary impairment of certain securities available for sale.

Average loans for the third quarter of 2008 were $125.6 billion, up $6.1 billion, or 5.1%, from the third quarter of 2007.  The increase was primarily in commercial-related categories.  Average construction loans declined $3.2 billion, or 23.3%, due to the Company’s efforts to reduce its exposure to construction loans and the transfer to nonaccrual loans. Indirect auto loans declined $0.8 billion, or 10.2%, driven by SunTrust’s de-emphasis of this business.  Average loans held-for-sale also declined $5.3 billion, or 54.3%, as loan originations declined 35.5%, production shifted to predominantly agency products, and efficiency improved in loan delivery. On a sequential quarter basis, total average loans increased slightly with the product trends remaining consistent.

Average consumer and commercial deposits for the third quarter of 2008 were $100.2 billion, up $3.5 billion, or 3.6%, from the third quarter of 2007, as increases in NOW and money market deposits were partially offset by declines in demand deposit and savings account balances.  Average brokered deposits declined $5.1 billion, or 32.3%, from the third quarter of 2007 as consumer and commercial interest bearing deposits increased $4.1 billion.  On a sequential quarter basis, total average deposits decreased $0.8 billion, or 0.7%, driven by reductions in most deposit categories.  The decline in average balances was driven largely by decreases experienced in July and August, as September reversed this trend with growing balances, particularly in the later part of the month.

The estimated Tier 1 capital, total average shareholders’ equity to total average assets, and tangible equity to tangible assets ratios at September 30, 2008 were 8.15%, 10.34%, and 6.40%, respectively. This compares to 7.44%, 10.05%, and 6.36% at September 30, 2007 and 7.47%, 10.31%, and 6.27% at June 30, 2008.  The increases are primarily attributable to completion of the Coke transactions.  The Company’s regulatory capital ratios are significantly in excess of the regulatory requirements for well capitalized status.

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