-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MlnIRTruVCCQc5NjYzNg7LCSt0FOb9FiabbzjOn3EEgv8H1UhdGy3IyXS0at+4Rq eDTmqAyujO3BGhN+cVqoQA== 0000916641-01-000331.txt : 20010316 0000916641-01-000331.hdr.sgml : 20010316 ACCESSION NUMBER: 0000916641-01-000331 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNTRUST BANKS INC CENTRAL INDEX KEY: 0000750556 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 581575035 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-08918 FILM NUMBER: 1569253 BUSINESS ADDRESS: STREET 1: 303 PEACHTREE ST N E CITY: ATLANTA STATE: GA ZIP: 30308 BUSINESS PHONE: 4045887711 MAIL ADDRESS: STREET 1: 303 PEACHTREE ST N E CITY: ATLANTA STATE: GA ZIP: 30308 10-K405 1 0001.txt FORM 10-K405 2000 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, 2000 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, 2001, SunTrust had 296,358,740 shares of common stock outstanding. The aggregate market value of SunTrust common stock held by non-affiliates on January 31, 2001 was approximately $19.6 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 2001 Annual Shareholders' Meeting, which will be filed with the Commission by March 8, 2001. 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. Part I Page Item 1 Business 2-35 Item 2 Properties 35 Item 3 Legal Proceedings 35 Item 4 Not Applicable Part II Item 5 Market for the Registrant's Common Equity and Related Stockholder Matters Inside front cover, 9, 29 Inside back cover, Item 6 Selected Financial Data 9 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 2-35 Item 7a Quantitative and Qualitative Disclosures about Market Risk 25 Item 8 Financial Statements and Supplementary Data 29-32, 36-65 Part III Item 9 Not Applicable Item 10 Directors and Executive Officers of the Registrant Proxy Statement Item 11 Executive Compensation Proxy Statement Item 12 Security Ownership of Certain Beneficial Owners and Management Proxy Statement Item 13 Certain Relationships and Related Transactions Proxy Statement Part IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 67 Certain statistical data required by the Securities and Exchange Commission are included on pages 9-32. EXECUTIVE OFFICERS ------------------
Name Business Experience Age - ------------------------------------------------------------------------------------------------- John W. Clay, Jr. A Vice Chairman of the Company since August 2000 with 59 management oversight of SunTrust Bank and responsibility for corporate and investment banking. From 1997 until August 2000 he was an Executive Vice President of the Company. Prior to 1997, he was Chief Executive Officer of the Company's Tennessee banking operations. - ------------------------------------------------------------------------------------------------- Robert H. Coords An Executive Vice President of the Company and Chief 58 Efficiency and Quality Officer. - ------------------------------------------------------------------------------------------------- Donald S. Downing An Executive Vice President of the Company and Mortgage Line 54 of Business Head. - ------------------------------------------------------------------------------------------------- Samuel O. Franklin III An Executive Vice President of the Company and Chief Executive 57 Officer of the Company's Tennessee banking operations. - ------------------------------------------------------------------------------------------------- Charles T. Hill An Executive Vice President of the Company and, since August 50 2000, President and Chief Executive Officer of the Mid-Atlantic banking operations. Prior to August 2000, Mr. Hill was Executive Vice President, Commercial Banking, and Senior Credit Officer for the Mid-Atlantic region. - ------------------------------------------------------------------------------------------------- Theodore J. Hoepner A Vice Chairman of the Company since August 2000 with 59 responsibility for the Company's technology and operations functions, asset quality, efficiency and quality initiatives, Human Resources and Legal and Regulatory Affairs. From 1997 until August 2000 he was an Executive Vice President of the Company, with responsibility for the Company's Florida banking operations, SunTrust Service Corporation, Human Resources and efficiency and quality initiatives. - ------------------------------------------------------------------------------------------------- L. Phillip Humann Chairman of the Board, President and Chief Executive Officer 55 of the Company. He is a Director of Coca-Cola Enterprises Inc., Equifax Inc. and Haverty Furniture Companies, Inc. Mr. Humann has been a director of the Company since 1991. - ------------------------------------------------------------------------------------------------- Craig J. Kelly An Executive Vice President of the Company and Marketing 55 Director since January 2000. From 1997 to 2000, Mr. Kelly served as Group Executive Vice President at Crestar Bank responsible for Marketing. From 1987 to 1997, he was Senior Vice President and Director of Marketing for Banc One Corporation. - ------------------------------------------------------------------------------------------------- George W. Koehn An Executive Vice President of the Company and, since August 57 2000, Chairman and Chief Executive Officer of the Company's Florida banking operations. Prior to August 2000, Mr. Koehn was President of the Florida banking operations and Chairman and Chief Executive Officer of the Central Florida banking unit. - ------------------------------------------------------------------------------------------------- Robert R. Long An Executive Vice President of the Company and Chief Executive 63 Officer of the Company's Georgia banking operations. - ------------------------------------------------------------------------------------------------- Carl F. Mentzer An Executive Vice President of the Company and Commercial Line 55 of Business Head. In May 1995, Mr. Mentzer was elected Chairman of the Board and Chief Executive Officer of SunTrust Bank, Tampa Bay and held that position until December 31, 1999. - ------------------------------------------------------------------------------------------------- William P. O'Halloran Senior Vice President and Controller of the Company. 57 - -------------------------------------------------------------------------------------------------
Name Business Experience Age - ------------------------------------------------------------------------------------------------- Dennis M. Patterson An Executive Vice President of the Company and Retail Banking 51 Line of Business Head, which includes the branch system, small business banking, private banking, consumer lending, insurance and credit card business. Prior to this, Mr. Patterson served as the Company's Marketing Director, with additional responsibility for corporate strategy development and SunTrust's online subsidiary (telephone and Internet banking). - ------------------------------------------------------------------------------------------------- William H. Rogers, Jr. An Executive Vice President of the Company. Since October 43 2000 Mr. Rogers has had responsibility for trust, investment and private client services. Prior to October 2000, Mr. Rogers was head of Georgia community banking and the Georgia retail line of business. - ------------------------------------------------------------------------------------------------- R. Charles Shufeldt An Executive Vice President and line of business head for the 50 Company's Corporate and Investment Banking Unit since August 2000. Prior to that, Mr. Shufeldt served as Senior Vice President in the same unit. - ------------------------------------------------------------------------------------------------- John W. Spiegel A Vice Chairman of the Company since August 2000 with 59 responsibility for the Company's finance-related functions. Mr. Spiegel is also Chief Financial Officer, a position he has held for more than five years. Prior to August 2000, he was an Executive Vice President of the Company. - ------------------------------------------------------------------------------------------------- James M. Wells III A Vice Chairman of the Company since August 2000 with 54 responsibility for oversight of the Company's commercial, retail, mortgage and private client services lines of business. He also has senior executive responsibility for the Company's marketing and corporate strategy units, as well as product management. From January 2000 to August 2000, Mr. Wells served as President and Chief Executive Officer of the Company's Mid-Atlantic region. From 1997 to January 2000 he served as President and Chief Operating Officer of Crestar Financial Corporation and Crestar Bank. - ------------------------------------------------------------------------------------------------- Robert C. Whitehead An Executive Vice President of the Company and Chief 54 Information Officer. - ------------------------------------------------------------------------------------------------- E. Jenner Wood, III President of SunTrust Bank since October 2000 and an Executive 49 Vice President of the Company. Prior to October 2000, Mr. Wood was responsible for trust, investment and private client services. - -------------------------------------------------------------------------------------------------
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K EXHIBIT INDEX
Exhibit Description - ------------ -------------------------------------------------------------------------------------------- ---------------- 3.1 Amended and Restated Articles of Incorporation of SunTrust Banks, Inc. ("Registrant") 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 Amendment to Restated Articles of Incorporation of Registrant, effective April 18, 2000, incorporated by reference to Exhibit 3.1 of Registrant's Form 10-Q as of March 31, 2000. 3.3 Bylaws of Registrant, amended effective as of August 8, 2000 (filed herewith). 4.1 Indenture Agreement between Registrant 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 Registrant and PNC, N.A., as Trustee, incorporated by reference to Exhibit 4(a) to Registration Statement No. 33-62162. 4.3 Indenture between Registrant 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. 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. 4.16 Form of Indenture, dated as of February 1, 1985, between SunTrust Bank Holding Company (as successor in interest to Crestar Financial Corporation) and The Chase Manhattan Bank, as Trustee, incorporated by reference to Exhibit 4.3 to Registration Statement No. 333-61583. 4.17 Form of Indenture, dated as of September 1, 1993, between SunTrust Bank Holding Company (as successor in interest to Crestar Financial Corporation) and The Chase Manhattan Bank, as Trustee, incorporated by reference to Exhibit 4.1 to Registration Statement No. 333-50387. 4.18 Form of Third Supplemental Indenture (to Indenture dated as of February 1, 1985), dated as of July 1, 1992, between SunTrust Bank Holding Company (as successor in interest to Crestar Financial Corporation) and The Chase Manhattan Bank, as Trustee, incorporated by reference to Registration Statement No. 333-61583. 4.19 Form of resolutions of the Board of Directors of Crestar Financial Corporation (now known as SunTrust Bank Holding Company) approving issuance of $150 million of 8 3/4% Subordinated Notes Due 2004, incorporated by reference to Exhibit 4.6 to Registration Statement No. 333-61583. 4.20 Form of First Supplemental Indenture (to Indenture dated as of September 1, 1993), dated as of January 1, 1998, between SunTrust Bank Holding Company (as successor in interest to Crestar Financial Corporation) and The Chase Manhattan Bank, as Trustee, incorporated by reference to Exhibit 4.7 to Registration Statement No. 333-61583. 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. 10.9 Amendment to SunTrust Banks, Inc. Supplemental Executive Retirement Plan effective as of February 10, 1998 (filed herewith). 10.10 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. 10.11 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. 10.12 SunTrust Banks, Inc. Management Incentive Plan, amended and restated as of February 8, 2000, incorporated by reference to Exhibit 10.11 to Registrant's 1999 Annual Report on Form 10-K. 10.13 SunTrust Banks, Inc. 401(k) Excess Plan Amended and Restated as of July 1, 1999, incorporated by reference to Exhibit 10.12 to Registrant's 1999 Annual Report on Form 10-K. 10.14 SunTrust Banks, Inc. Executive Stock Plan, incorporated by reference to Exhibit 10.16 to Registrant's 1998 Annual Report on Form 10-K.
10.15 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. 10.16 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. 10.17 SunTrust Banks, Inc. 1995 Executive Stock Plan, incorporated by reference to Exhibit 10.16 to Registrant's 1999 Annual Report on Form 10-K. 10.18 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. 10.19 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. 10.20 SunTrust Banks, Inc. Deferred Compensation Plan, effective October 1, 1999 and Amendment Number One, effective October 31, 1999, incorporated by reference to Exhibit 10.19 to Registrant's 1999 Annual Report on Form 10-K. 10.21 Amendment to Exhibit A to the SunTrust Banks, Inc. Deferred Compensation Plan, effective January 1, 2000 (filed herewith). 10.22 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. 10.23 Crestar Financial Corporation Executive Life Insurance Plan, as amended 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. 10.24 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. 10.25 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. 10.26 Employment Agreement between Registrant and James M. Wells III, effective as of December 31, 1998, incorporated by reference to Exhibit 10.24 to Registrant's 1999 Annual Report on Form 10-K. 10.27 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.
10.28 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. 10.29 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 (filed herewith). 10.30 Amendment (effective January 1, 1994) to Crestar Financial Corporation Deferred Compensation Program Under Incentive Compensation Plan of Crestar Financial Corporation and Affiliated Corporations (filed herewith). 10.31 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. 10.32 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 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. 10.33 Amendment (effective January 1, 1999) to Crestar Financial Corporation Deferred Compensation Plan for Outside Directors of Crestar Financial Corporation, incorporated by reference to Exhibit 10.32 to Registrant's 1999 Annual Report on Form 10-K. 10.34 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. 10.35 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. 10.36 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. 10.37 Crestar Financial Corporation Supplemental Executive Retirement Plan, effective January 1, 1995 (filed herewith).
10.38 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. 10.39 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. 10.40 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. 10.41 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. 10.42 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. 10.43 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. 10.44 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. 10.45 Amendment (effective October 23, 1998) to Crestar Financial Corporation Directors' Equity Program, incorporated by reference to Exhibit 10.44 to Registrant's 1999 Annual Report on Form 10-K. 11.1 Statement re computation of per share earnings (filed herewith). 12.1 Ratio of Earnings to Fixed Changes (filed herewith). 13.1 Registrant's 2000 Annual Report to Shareholders (filed herewith). 21.1 Registrant's Subsidiaries (filed herewith). 22.1 Registrant's Proxy Statement relating to the 2001 Annual Meeting of Shareholders, dated March 1, 2001, filed on March 1, 2001. 23.1 Consent of Independent Public Accountants (filed herewith).
Certain instruments defining rights of holders of long-term debt of Registrant and its subsidiaries are not filed herewith pursuant to Item 601(b)(4)(iii) of Regulation S-K. At the Commission's request, Registrant agrees to give the Commission a copy of any instrument with respect to long-term debt of Registrant 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 Registrant 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 32. SIGNATURES ---------- Pursuant to the requirements of the 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 13, 2001 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 Act of 1934, this report has been signed on February 13, 2001 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 Vice Chairman and Chief Financial Officer By: /s/ William P. O'Halloran ---------------------------------------- William P. O'Halloran Senior Vice President and Controller (Chief Accounting Officer) /s/ J. Hyatt Brown Director - --------------------------------------- J. Hyatt Brown /s/ Alston D. Correll Director - --------------------------------------- Alston D. Correll /s/ Douglas N. Daft Director - --------------------------------------- Douglas N. Daft /s/ A. W. Dahlberg Director - --------------------------------------- A. W. Dahlberg Director - --------------------------------------- Patricia C. Frist /s/ David H. Hughes Director - --------------------------------------- David H. Hughes Director - --------------------------------------- M. Douglas Ivester /s/ Summerfield K. Johnston, Jr. Director - --------------------------------------- Summerfield K. Johnston, Jr. /s/ Joseph L. Lanier, Jr. Director - --------------------------------------- Joseph L. Lanier, Jr. Director - --------------------------------------- Frank E. McCarthy /s/ G. Gilmer Minor, III Director - --------------------------------------- G. Gilmer Minor, III /s/ Larry L. Prince Director - --------------------------------------- Larry L. Prince /s/ R. Randall Rollins Director - --------------------------------------- R. Randall Rollins /s/ Frank S. Royal, M.D. Director - --------------------------------------- Frank S. Royal, M.D. /s/ James B. Williams Director - --------------------------------------- James B. Williams EX-3.3 2 0002.txt EXHIBIT 3.3 EXHIBIT 3.3 ----------- SUNTRUST BANKS, INC. BYLAWS (As Amended August 8, 2000) ARTICLE I SHAREHOLDERS SECTION 1. Annual Meeting. The annual meeting of the shareholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held at such place, on such date and at such time as the Board of Directors may by resolution provide. If the Board of Directors fails to provide such date and time, then such meeting shall be held at the corporate headquarters at 9:30 A.M. local time on the third Tuesday in April of each year, or, if such date is a legal holiday, on the next succeeding business day. The Board of Directors may specify by resolution prior to any special meeting of shareholders held within the year that such meeting shall be in lieu of the annual meeting. SECTION 2. Special Meeting; Call of Meetings. Special meetings of the shareholders may be called at any time by the Chairman of the Board or the President. Special meetings of the shareholders may also be called at any time by the Board of Directors or the holders of at least twenty-five percent (25%) of the outstanding common stock of the Corporation. Such meetings shall be held at such place as is stated in the call and notice thereof. SECTION 3. Notice of Meetings. Written notice of each meeting of shareholders, stating the place, day and hour of the meeting, and the purpose or purposes for which the meeting is called if a special meeting, shall be mailed to each shareholder entitled to vote at or to notice of such meeting at his address shown on the books of the Corporation not less than ten (10) nor more than sixty (60) days prior to such meeting unless such shareholder waives notice of the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the records of shareholders of the Corporation, with postage thereon prepaid. Any shareholder may execute a waiver of notice, in person or by proxy, either before or after any meeting, and shall be deemed to have waived notice if he is present at such meeting in person or by proxy. Neither the business transacted at, nor the purpose of, any meeting need be stated in a waiver of notice of such meeting. Notice of any meeting may be given by the Chairman of the Board, President, the Corporate Secretary or any Assistant Secretary. No notice need be given of the time and place of reconvening of any adjourned meeting, if the time and place to which the meeting is adjourned are announced at the adjourned meeting. SECTION 4. Quorum; Required Shareholder Vote. Each outstanding share of common stock of the Corporation is entitled to one vote on each matter submitted to a vote. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless a different vote is required by law, the Articles of Incorporation or these Bylaws, except in the case of elections for Director, for which the vote of a plurality of the votes cast by the shares entitled to vote for such election shall be the act of the shareholders. When a quorum is once present to organize a meeting, the shareholders present may continue to do business at the meeting or at any adjournment thereof (unless a new record date is or must be set for the adjourned meeting) notwithstanding the withdrawal of enough shareholders to leave less than a quorum, and the holders of a majority of the voting shares present at such meeting shall be the act of the shareholders unless a different vote is required by law, the Articles of Incorporation or these Bylaws. The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time. SECTION 5. Proxies. A shareholder may vote either in person or by proxy. A shareholder may appoint a proxy: (i) by executing a written document, which may be accomplished by any reasonable means, including facsimile transmission; (ii) orally, which may be by telephone; or (iii) by any other form of electronic communication. No proxy shall be valid for more than eleven (11) months after the date of such appointment, unless, in the case of a written proxy, a longer period is expressly provided for in the written document. SECTION 6. Judges of Elections. At every meeting of shareholders, the vote shall be conducted by two or more judges appointed for that purpose by the Board of Directors or by the chairman of the meeting. All questions concerning the qualification of voters, the validity of proxies, or the acceptance or rejection of votes shall be decided by such judges. ARTICLE II DIRECTORS SECTION 1. Board of Directors. The Board of Directors shall manage the business and affairs of the Corporation and may exercise all of the powers of the Corporation subject to any restrictions imposed by law. SECTION 2. Composition of the Board. The Board of Directors of the Corporation shall consist of not less than ten (10) nor more than twenty (20) natural persons, the exact number to be set from time to time by the Board of Directors. No decrease in the number of Directors shall shorten the term of an incumbent Director. Each Director shall be a shareholder of the Corporation and a citizen of the United States of America. In the absence of the Board of Directors setting the number of Directors, the number shall be twelve (12). The Directors of the Corporation shall be divided into three classes, as nearly equal in size as practicable. The term of each class shall be three years. Each Director shall hold office for the term for which elected, which term shall end at the annual meeting of the shareholders, and until his successor has been elected and qualified, or until his earlier retirement, resignation, removal from office, or death. SECTION 3. Election of Directors. Nominations for election to the Board of Directors may be made by the Board of Directors, or by any shareholder of any outstanding class of capital stock of the Corporation entitled to vote for the election of Directors. Nominations shall specify the class of Directors to which each person is nominated, and nominations, other than those made by the existing Board of Directors, shall be made in writing and shall be delivered or 2 mailed to the Chairman of the Board not less than thirty (30) days nor more than seventy-five (75) days prior to any meeting of the shareholders called for the election of Directors; provided, however, that if less than thirty-five (35) days notice of the meeting is given to shareholders such nomination shall be mailed or delivered to the Chairman of the Board not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such nomination and notification shall contain the following information: (i) The names and addresses of the proposed nominee or nominees; (ii) The principal occupation of each proposed nominee; (iii) The total number of shares that, to the knowledge of the notifying or nominating shareholder, will be voted for each of the proposed nominees; (iv) The name and residence address of each notifying or nominating shareholder; (v) The number of shares owned by the notifying or nominating shareholder; (vi) The total number of shares that, to the knowledge of the notifying or nominating shareholder, are owned by the proposed nominee; and (vii) The signed consent of the proposed nominee to serve, if elected. Nominations not made in accordance herewith may, in his discretion, be disregarded by the chairman of the meeting, and upon his instructions, the judges of election shall disregard all votes cast for each such nomination. SECTION 4. Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding to fill director vacancies, vacancies resulting from retirement, resignation, removal from office (with or without cause), death or a vacancy resulting from an increase in the number of Directors comprising the Board, shall be filled by the Board of Directors. Any Director so elected shall hold office until the next annual meeting of shareholders. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. SECTION 5. Retirement. Each Director serving as an officer of the Corporation or any of its direct or indirect subsidiaries shall cease to be a Director on the date of the first to occur of (a) such Director's 65th birthday, (b) the date of his termination of employment, (c) the date of his resignation from employment, or (d) the date of his retirement from employment. The foregoing shall not apply to any Director serving as an officer of the Corporation who is the Chairman of the Executive Committee. Each Director who is not an officer of the Corporation or any of its direct or indirect subsidiaries, including any Director serving pursuant to the previous sentence, shall cease to be a Director at the end of such Director's term coinciding with or following such Director's 70th birthday. SECTION 6. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any Director, or all Directors, may be removed from office at any time with or without cause, but only by the same affirmative vote of the shareholders required to amend this Article II as provided in the Corporation's Articles of Incorporation. 3 SECTION 7. Resignations. Any Director of the Corporation may resign at any time by giving written notice thereof to the Chairman of the Board, the President, or the Corporate Secretary. Such resignation shall take effect when delivered unless the notice specifies a later effective date; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. ARTICLE III ACTION OF THE BOARD OF DIRECTORS; COMMITTEES SECTION 1. Quorum; Vote Requirement. A majority of the Directors holding office shall constitute a quorum for the transaction of business; if a quorum is present, a vote of a majority of the Directors present at such time shall be the act of the Board of Directors, unless a greater vote is required by law, the Articles of Incorporation, or by these Bylaws. SECTION 2. Executive Committee. There is hereby established an Executive Committee which shall consist of not less than four (4) Directors. The Board of Directors shall at the Board of Directors' meeting immediately following the Corporation's annual shareholders' meeting, and may at such other time as the Board of Directors determines, elect the Directors who shall be members of the Executive Committee. The Executive Committee shall have and may exercise all the authority of the Board of Directors as permitted by law. The Board of Directors shall elect the Chairman of the Executive Committee who shall preside at all meetings of the Executive Committee and shall perform such other duties as may be designated by the Executive Committee. The Board of Directors may also elect one member of the Executive Committee as Vice Chairman of the Executive Committee who shall preside at Executive Committee meetings in the absence of the Chairman of the Executive Committee. The Executive Committee shall serve as the Nominating Committee and shall have the power to recommend candidates for election to the Board of Directors and shall consider other issues related to the size and composition of the Board of Directors. SECTION 3. Audit Committee. There is hereby established an Audit Committee which shall consist of not less than four (4) Directors. No Director who is an officer of the Corporation or any direct or indirect subsidiary of the Corporation shall be a member of the Audit Committee. The Board of Directors shall at the Board of Directors' meeting immediately following the Corporation's annual shareholders' meeting, and may at such other time as the Board of Directors determine, elect the members of the Audit Committee. The Audit Committee shall require that an audit of the books and affairs of the Corporation be made at such time or times as the members of the Audit Committee shall choose. The Board of Directors shall elect the Chairman of the Audit Committee who shall preside at all meetings of the Audit Committee and shall perform such other duties as may be designated by the Audit Committee. SECTION 4. Other Committees. The Board of Directors may designate from among its members one or more other committees, each consisting of one (1) or more Directors, and each of which, to the extent provided in the resolution establishing such committee, shall have and may exercise all authority of the Board of Directors to the extent permitted by law. 4 SECTION 5. Committee Meetings. Regular meetings of committees, of which no notice shall be necessary, shall be held at such times and at such places as shall be fixed, from time to time, by resolution adopted by such committees. Special meetings of any committee may be called by the Chairman of the Board or the President, or by the Chairman of such committee or by any other two members of the committee, at any time. Notice of any special meeting of any committee may be given in the manner provided in the Bylaws for giving notice of a special meeting of the Board of Directors, but notice of any such meeting need not be given to any member of the committee if waived by him before or after the meeting, in writing (including telegram, cablegram, facsimile, or radiogram) or if he shall be present at the meeting; and any meeting of any committee shall be a legal meeting, without any notice thereof having been given, if all the members shall be present thereat. A majority of any committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of the committee. SECTION 6. Committee Records. Each committee shall keep a record of its acts and proceedings and shall report the same, from time to time, to the Board of Directors. SECTION 7. Alternate Members; Vacancies. The Board of Directors may designate one or more Directors as alternate members of any committee, and such alternate members may act in the place and stead of any absent member or members at any meeting of such committee. The Board of Directors may fill any vacancy or vacancies occurring in any committee. SECTION 8. Place, Time, Notice and Call of Directors' Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and transacting such other business as may be brought before the meeting shall be held each year immediately following the annual meeting of shareholders or at such other time and place as the Chairman of the Board may designate. Regular meetings of the Board of Directors shall be held at such times as the Board of Directors may determine from time to time. Regular meetings of the Board of Directors may be held without notice. Special meetings of the Board of Directors shall be held upon notice of the date, time and place of such special meetings as shall be given to each Director orally, either by telephone or in person, or in writing, either by personal delivery or by mail, telegram, facsimile, or cablegram no later than the day before such meeting. Notice of a meeting of the Board of Directors need not be given to any Director who signs and delivers to the Corporation a waiver of notice either before or after the meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a Director states, at the beginning of the meeting (or promptly upon his arrival), any such objection or objections to the transaction of business and thereafter does not vote for or assent to action taken at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting unless required by law or these Bylaws. A majority of the Directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. No notice of any adjourned meeting need be given. Meetings of the Board of Directors may be called by the Chairman of the Board, the President or any two Directors. 5 SECTION 9. Action by Directors Without a Meeting; Participation in Meeting by Telephone. Except as limited by law, any action to be taken at a meeting of the Board, or by any committee of the Board, may be taken without a meeting if written consent, setting forth the action so taken, shall be signed by all the members of the Board or such Committee and shall be filed with the minutes of the proceedings of the Board or such committee. Such written consent shall have the same force and effect as a unanimous vote of the Board or such committee and any document executed on behalf of the Corporation may recite that the action was duly taken at a meeting of the Board or such committee. Members of the Board or any committee of the Board may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment by which means all persons participating in the meeting can hear each other, and participation in a meeting of the Board or such committee by such means shall constitute personal presence at such meeting. SECTION 10. Directors' Compensation. The Board of Directors shall have authority to determine from time to time the amount of compensation which shall be paid to its members for attendance at meetings of, or services on, the Board of Directors or any committee of the Board. The Board of Directors shall also have the power to reimburse Directors for reasonable expenses of attendance at Directors' meetings and committee meetings. ARTICLE IV OFFICERS SECTION 1. Executive Structure. The Board of Directors shall elect the following officers: Chairman of the Board, President, Chief Financial Officer, Corporate Secretary, and Treasurer, and may elect one or more Vice Chairmen and Executive Vice Presidents, as the Board of Directors may deem necessary. The Board of Directors shall designate from among such elected officers a Chief Executive Officer. The Chief Executive Officer may appoint such assistant officers, whose duties shall consist of assisting one or more of the Officers in the discharge of the duties of any such Officer, as may be specified from time to time by the Chief Executive Officer, whose titles may include such designations as the Chief Executive Officer shall deem appropriate. All Officers (including assistant officers) shall be elected for a term of office running until the meeting of the Board of Directors following the next annual meeting of shareholders. All assistant officers shall be appointed for a term specified by the Chief Executive Officer but not later than the meeting of the Board of Directors following the next annual meeting of shareholders. Any two or more offices may be held by the same person. SECTION 2. Chief Executive Officer. The Chief Executive Officer shall be the most senior officer of the Corporation, and all other officers and agents of the Corporation shall be subject to his direction. He shall be accountable to the Board of Directors for the fulfillment of his duties and responsibilities and, in the performance and exercise of all his duties, responsibilities and powers, he shall be subject to the supervision and direction of, and any limitations imposed by, the Board of Directors. The Chief Executive Officer shall be responsible for interpretation and required implementation of the policies of the Corporation as determined and specified from time to time by the Board of Directors and he shall be responsible for the general management and direction of the business and affairs of the Corporation. For the purpose of fulfilling his duties and responsibilities, the Chief Executive Officer shall have, subject to these Bylaws and the Board of Directors, plenary authorities 6 and powers, including general executive powers, the authority to delegate and assign duties, responsibilities and authorities, and, in the name of the Corporation and on its behalf, to negotiate and make any agreements, waivers or commitments which do not require the express approval of the Board of Directors. SECTION 3. Chairman of the Board. The Chairman of the Board shall be a member of the Board of Directors and shall preside at all meetings of the shareholders and Board of Directors. SECTION 4. President. The President shall have such powers and perform such duties as may be assigned by the Board of Directors, the Chairman of the Board of Directors or the Chief Executive Officer. SECTION 5. Vice Chairman. Any Vice Chairman elected shall have such duties and authority as may be conferred upon him by the Board of Directors or delegated to him by the Chief Executive Officer. SECTION 6. Chief Financial Officer. The Chief Financial Officer shall have the care, custody, control and handling of the funds and assets of the Corporation, and shall render a statement of the assets, liabilities and operations of the Corporation to the Board of Directors at its regular meetings. SECTION 7. Treasurer. The Treasurer shall perform such duties as may be assigned to the Treasurer and shall report to the Chief Financial Officer or, in the absence of the Chief Financial Officer, to the President. SECTION 8. Corporate Secretary. Due notice of all meetings of the shareholders and directors shall be given by the Corporate Secretary or the person or persons calling such meeting. The Corporate Secretary shall report the proceedings of all meetings in a book of minutes and shall perform all the duties pertaining to his office including authentication of corporate documents and shall have custody of the Seal of the Corporation. Each assistant Corporate Secretary appointed by the Chief Executive Officer may perform all duties of the Corporate Secretary. SECTION 9. Other Duties and Authority. Each officer, employee and agent of the Corporation shall have such other duties and authority as may be conferred upon him by the Board of Directors or delegated to him by the Chief Executive Officer. SECTION 10. Removal of Officers. Any officer may be removed by the Board of Directors with or without cause whenever in its judgment the best interests of the Corporation will be served thereby. In addition, an officer of the Corporation shall cease to be an officer upon ceasing to be an employee of the Corporation or any of its subsidiaries. ARTICLE V STOCK SECTION 1. Stock Certificates. The shares of stock of the Corporation shall be represented by certificates in such form as may be approved by the Board of Directors, which certificates shall be issued to the shareholders of the Corporation and shall be signed by the Chairman of the Board, or the President, together with the Corporate Secretary or an Assistant Secretary of the Corporation; and which shall be sealed with the seal of the Corporation. 7 The signatures of such officers upon a certificate may be facsimile if the certificate is countersigned by a transfer agent or registrar other than the Corporation itself or an employee of the Corporation. No share certificates shall be issued until consideration for the shares represented thereby has been fully paid. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue. SECTION 2. Transfer of Stock. Shares of stock of the Corporation shall be transferred on the books of the Corporation only upon surrender to the Corporation of the certificate or certificates representing the shares to be transferred accompanied by an assignment in writing of such shares properly executed by the shareholder of record or his duly authorized attorney-in-fact and with all taxes on the transfer having been paid. The Corporation may refuse any requested transfer until furnished evidence satisfactory to it that such transfer is proper. Upon the surrender of a certificate for transfer of stock, such certificate shall be marked on its face "Canceled". The Board of Directors may make such additional rules concerning the issuance, transfer and registration of stock and requirements regarding the establishment of lost, destroyed or wrongfully taken stock certificates (including any requirement of an indemnity bond prior to issuance of any replacement certificate and provision for appointment of a transfer agent and a registrar) as it deems appropriate. SECTION 3. Registered Shareholders. The Corporation may deem and treat the holder of record of any stock as the absolute owner thereof for all purposes and shall not be required to take any notice of any right or claim of right of any other person. SECTION 4. Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the Board of Directors of the Corporation may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days and, in the case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. ARTICLE VI DEPOSITORIES, SIGNATURES AND SEAL SECTION 1. Depositories. All funds of the Corporation shall be deposited in the name of the Corporation in such bank, banks, or other financial institutions as the Board of Directors may from time to time designate and shall be drawn out on checks, drafts or other orders signed on behalf of the Corporation by such person or persons as the Board of Directors may from time to time designate. SECTION 2. Seal. The seal of the Corporation shall be as follows: 8 [SEAL] If the seal is affixed to a document, the signature of the Corporate Secretary or an Assistant Secretary shall attest the seal. The seal and its attestation may be lithographed or otherwise printed on any document and shall have, to the extent permitted by law, the same force and effect as if it has been affixed and attested manually. SECTION 3. Execution of Instruments. All bills, notes, checks, and other instruments for the payment of money, all agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents may be signed, executed, acknowledged, verified, delivered, or accepted on behalf of the Corporation by the Chairman of the Board, the President, any Vice Chairman, Executive Vice President, Senior Vice President or Vice President, the Secretary or the Treasurer. Any such instruments may also be signed, executed, acknowledged, verified, delivered or accepted on behalf of the Corporation in such manner and by such other officers, employees or agents of the Corporation as the Board of Directors or Executive Committee may from time to time direct. ARTICLE VII INDEMNIFICATION OF OFFICERS, DIRECTORS, AND EMPLOYEES SECTION 1. Definitions. As used in this Article, the term: (A) "Corporation" includes any domestic or foreign predecessor entity of this Corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. (B) "Director" means an individual who is or was a director of the Corporation or an individual who, while a director of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other entity. A "director" is considered to be serving an employee benefit plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director. (C) "Disinterested director" means a director who at the time of a vote referred to in Section 3(C) or a vote or selection referred to in Section 4(B), 4(C) or 7(A) is not: (i) a party to the proceeding; or (ii) an individual who is a party to a proceeding having a familial, financial, professional, or employment relationship with the director whose indemnification or advance for expenses is the subject of the decision being made with respect to the proceeding, which relationship would, in the circumstances, reasonably be expected to exert an influence on the director's judgment when voting on the decision being made. 9 (D) "Employee" means an individual who is or was an employee of the Corporation or an individual who, while an employee of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. An "Employee" is considered to be serving an employee benefit plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Employee" includes, unless the context requires otherwise, the estate or personal representative of an employee. (E) "Expenses" includes counsel fees. (F) "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding. (G) "Officer" means an individual who is or was an officer of the Corporation which for purposes of this Article VII shall include an assistant officer, or an individual who, while an Officer of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other entity. An "Officer" is considered to be serving an employee benefit plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Officer" includes, unless the context requires otherwise, the estate or personal representative of an Officer. (H) "Official capacity" means: (i) when used with respect to a director, the office of a director in a corporation; and (ii) when used with respect to an Officer, the office in a corporation held by the Officer. Official capacity does not include service for any other domestic or foreign corporation or any partnership, joint venture, trust, employee benefit plan, or other entity. (I) "Party" means an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (J) "Proceeding" means any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative or investigative and whether formal or informal. SECTION 2. Basic Indemnification Arrangement. (A) Except as provided in subsections 2(D) and 2(E) below and, if required by Section 4 below, upon a determination pursuant to Section 4 in the specific case that such indemnification is permissible in the circumstances under this subsection because the individual has met the standard of conduct set forth in this subsection (A), the Corporation shall indemnify an individual who is made a party to a proceeding because he is or was a director or Officer against liability incurred by him in the proceeding if he conducted himself in good faith and, in the case of conduct in his official capacity, he reasonably believed such conduct was in the best interest of the Corporation, or in all other cases, he reasonably believed such conduct was at least not opposed to the best interests of the Corporation and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. 10 (B) A person's conduct with respect to an employee benefit plan for a purpose he believes in good faith to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection 2(A) above. (C) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the proposed indemnitee did not meet the standard of conduct set forth in subsection 2(A) above. (D) The Corporation shall not indemnify a person under this Article in connection with (i) a proceeding by or in the right of the Corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that such person has met the relevant standard of conduct under this section, or (ii) with respect to conduct for which such person was adjudged liable on the basis that personal benefit was improperly received by him, whether or not involving action in his official capacity. SECTION 3. Advances for Expenses. (A) The Corporation may advance funds to pay for or reimburse the reasonable expenses incurred by a director or Officer who is a party to a proceeding because he is a director or Officer in advance of final disposition of the proceeding if: (i) such person furnishes the Corporation a written affirmation of his good faith belief that he has met the relevant standard of conduct set forth in subsection 2(A) above or that the proceeding involves conduct for which liability has been eliminated under the Corporation's Articles of Incorporation; and (ii) such person furnishes the Corporation a written undertaking meeting the qualifications set forth below in subsection 3(B), executed personally or on his behalf, to repay any funds advanced if it is ultimately determined that he is not entitled to any indemnification under this Article or otherwise. (B) The undertaking required by subsection 3(A)(ii) above must be an unlimited general obligation of the director or Officer but need not be secured and shall be accepted without reference to financial ability to make repayment. (C) Authorizations under this Section shall be made: (i) By the Board of Directors: (a) when there are two or more disinterested directors, by a majority vote of all disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote; or (b) when there are fewer than two disinterested directors, by a majority of the directors present, in which authorization directors who do not qualify as disinterested directors may participate; or (ii) by the shareholders, but shares owned or voted under the control of a director who at the time does not qualify as a disinterested director with respect to the proceeding may not be voted on the authorization. SECTION 4. Authorization of and Determination of Entitlement to Indemnification. (A) The Corporation shall not indemnify a director or Officer under Section 2 above unless authorized thereunder and a determination has been made for a specific proceeding that indemnification of such person is permissible in the circumstances because he has met the relevant standard of conduct set forth in subsection 2(A) above; provided, however, that regardless of the result or absence of any such determination, to the extent that a director or Officer has been wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director or Officer, the Corporation shall indemnify such person against reasonable expenses incurred by him in connection therewith. 11 (B) The determination referred to in subsection 4(A) above shall be made: (i) If there are two or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote; (ii) by special legal counsel: (1) selected by the Board of Directors or its committee in the manner prescribed in subdivision (i); or (2) If there are fewer than two disinterested directors, selected by the Board of Directors (in which selection directors who do not qualify as disinterested directors may participate); or (iii) by the shareholders; but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the determination. (C) Authorization of indemnification or an obligation to indemnify and evaluation as to reasonableness of expenses of a director or Officer in the specific case shall be made in the same manner as the determination that indemnification is permissible, as described in subsection 4(B) above, except that if there are fewer than two disinterested directors or if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection 4(B)(ii)(2) above to select counsel. (D) The Board of Directors, a committee thereof, or special legal counsel acting pursuant to subsection (B) above or Section 5 below, shall act expeditiously upon an application for indemnification or advances, and cooperate in the procedural steps required to obtain a judicial determination under Section 5 below. (E) The Corporation may, by a provision in its Articles of Incorporation or Bylaws or in a resolution adopted or a contract approved by its Board of Directors or shareholders, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification or advance funds to pay for or reimburse expenses consistent with this part. Any such obligatory provision shall be deemed to satisfy the requirements for authorization referred to in Section 3(C) or Section 4(C). SECTION 5. Court-Ordered Indemnification and Advances for Expenses. A director or Officer who is a party to a proceeding because he is a director or Officer may apply for indemnification or advances for expenses to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of an application and after giving any notice it considers necessary, the court shall order indemnification or advances for expenses if it determines that: (i) The director is entitled to indemnification under this part; or (ii) In view of all the relevant circumstances, it is fair and reasonable to indemnify the director or Officer or to advance expenses to the director or Officer, even if the director or Officer has not met the 12 relevant standard of conduct set forth in subsection 2(A) above, failed to comply with Section 3, or was adjudged liable in a proceeding referred to in subsections (i) or (ii) of Section 2(D), but if the director or Officer was adjudged so liable, the indemnification shall be limited to reasonable expenses incurred in connection with the proceeding, unless the Articles of Incorporation of the Corporation or a Bylaw, contract or resolution approved or ratified by shareholders pursuant to Section 7 below provides otherwise. If the court determines that the director or Officer is entitled to indemnification or advance for expenses, it may also order the Corporation to pay the director's or Officer's reasonable expenses to obtain court-ordered indemnification or advance for expenses. SECTION 6. Indemnification of Officers and Employees. (A) Unless the Corporation's Articles of Incorporation provide otherwise, the Corporation shall indemnify and advance expenses under this Article to an employee of the Corporation who is not a director or Officer to the same extent, consistent with public policy, as to a director or Officer. (B) The Corporation may indemnify and advance expenses under this Article to an Officer of the Corporation who is a party to a proceeding because he is an Officer of the Corporation: (i) to the same extent as a director; and (ii) if he is not a director, to such further extent as may be provided by the Articles of Incorporation, the Bylaws, a resolution of the Board of Directors, or contract except for liability arising out of conduct that is enumerated in subsections (A)(i) through (A)(iv) of Section 7. The provisions of this Section shall also apply to an Officer who is also a director if the sole basis on which he is made a party to the proceeding is an act or omission solely as an Officer. SECTION 7. Shareholder Approved Indemnification. (A) If authorized by the Articles of Incorporation or a Bylaw, contract or resolution approved or ratified by shareholders of the Corporation by a majority of the votes entitled to be cast, the Corporation may indemnify or obligate itself to indemnify a person made a party to a proceeding, including a proceeding brought by or in the right of the Corporation, without regard to the limitations in other sections of this Article, but shares owned or voted under the control of a director who at the time does not qualify as a disinterested director with respect to any existing or threatened proceeding that would be covered by the authorization may not be voted on the authorization. The Corporation shall not indemnify a person under this Section 7 for any liability incurred in a proceeding in which the person is adjudged liable to the Corporation or is subjected to injunctive relief in favor of the Corporation: (i) for any appropriation, in violation of his duties, of any business opportunity of the Corporation; (ii) for acts or omissions which involve intentional misconduct or a knowing violation of law; (iii) for the types of liability set forth in Section 14-2-832 of the Georgia Business Corporation Code; or 13 (iv) for any transaction from which he received an improper personal benefit. (B) Where approved or authorized in the manner described in subsection 7(A) above, the Corporation may advance or reimburse expenses incurred in advance of final disposition of the proceeding only if: (i) the proposed indemnitee furnishes the Corporation a written affirmation of his good faith belief that his conduct does not constitute behavior of the kind described in subsection 7(A)(i)-(iv) above; and (ii) the proposed indemnitee furnishes the Corporation a written undertaking, executed personally, or on his behalf, to repay any advances if it is ultimately determined that he is not entitled to indemnification. SECTION 8. Liability Insurance. The Corporation may purchase and maintain insurance on behalf of an individual who is a director, officer, employee, or agent of the Corporation or who, while a director, officer, employee, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other entity against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee, or agent, whether or not the Corporation would have power to indemnify him against the same liability under Section 2 or Section 3 above. SECTION 9. Witness Fees. Nothing in this Article shall limit the Corporation's power to pay or reimburse expenses incurred by a person in connection with his appearance as a witness in a proceeding at a time when he is not a party. SECTION 10. Report to Shareholders. If the Corporation indemnifies or advances expenses to a director in connection with a proceeding by or in the right of the Corporation, the Corporation shall report the indemnification or advance, in writing, to shareholders with or before the notice of the next shareholders' meeting. SECTION 11. Severability. In the event that any of the provisions of this Article (including any provision within a single section, subsection, division or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions of this Article shall remain enforceable to the fullest extent permitted by law. SECTION 12. Indemnification Not Exclusive. The rights of indemnification provided in this Article VII shall be in addition to any rights which any such director, Officer, employee or other person may otherwise be entitled by contract or as a matter of law. ARTICLE VIII AMENDMENTS OF BYLAWS The Board of Directors shall have the power to alter, amend or repeal the Bylaws or adopt new Bylaws, but any Bylaws adopted by the Board of Directors may be altered, amended or repealed and new Bylaws adopted by the shareholders. 14 Action by the Directors with respect to the Bylaws shall be taken by an affirmative vote of a majority of all of the Directors then elected and serving, unless a greater vote is required by law, the Articles of Incorporation or these Bylaws. ARTICLE IX EMERGENCY TRANSFER OF RESPONSIBILITY SECTION 1. Emergency Defined. In the event of a national emergency threatening national security or a major disaster declared by the President of the United States or the person performing his functions, which directly or severely affects the operations of the Corporation, the officers and employees of this Corporation will continue to conduct the affairs of the Corporation under such guidance from the Directors as may be available except as to matters which by law or regulation require specific approval of the Board of Directors and subject to conformance with any applicable laws, regulations, and governmental directives during the emergency. SECTION 2. Officers Pro Tempore. The Board of Directors shall have the power, in the absence or disability of any officer, or upon the refusal of any officer to act as a result of said national emergency directly and severely affecting the operations of the Corporation, to delegate and prescribe such officer's powers and duties to any other officer, or to any Director. In the event of a national emergency or state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of this Corporation by its Directors and officers as contemplated by the Bylaws, any two or more available members or alternate members of the then incumbent Executive Committee shall constitute a quorum of such Committee for the full conduct and management of the Corporation in accordance with the provisions of Articles II and III of the Bylaws. If two members or alternate members of the Executive Committee cannot be expeditiously located, then three available Directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Corporation until the then remaining Board can be convened. These provisions shall be subject to implementation by resolutions of the Board of Directors passed from time to time, and any provisions of the Bylaws (other than this Section) and any resolutions which are contrary to the provisions of this Section or the provisions of any such implementary resolutions shall be suspended until it shall be determined by any such interim Executive Committee acting under this Section that it shall be to the advantage of this Corporation to resume the conduct and management of its affairs and business under all of the other provisions of these Bylaws. SECTION 3. Officer Succession. If, in the event of a national emergency or disaster which directly and severely affects the operations of the Corporation, the Chief Executive Officer cannot be located expeditiously or is unable to assume or to continue normal duties, then the authority and duties of the office shall be automatically assumed, without Board of Directors action, in order of title, and subject only to willingness and ability to serve, by the Chairman of the Board, President, Vice Chairman, Executive Vice President, Senior Vice President, Vice President, Corporate Secretary or their successors in office at the time of the emergency or disaster. Where two or more officers hold equivalent titles and are willing and able to serve, seniority in title controls initial appointment. If, in the same manner, the Corporate Secretary or Treasurer cannot be located or is unable to assume or continue normal duties, the responsibilities attached thereto shall, in like manner as described immediately above, be assumed by any Executive Vice President, Senior Vice 15 President, or Vice President. Any officer assuming authority and position hereunder shall continue to serve until the earlier of his resignation or the elected officer or a more senior officer shall become available to perform the duties of the position of Chief Executive Officer, Corporate Secretary, or Treasurer. SECTION 4. Certification of Authority. In the event of a national emergency or disaster which directly and severely affects the operations of the Corporation, anyone dealing with this Corporation shall accept a certification by the Corporate Secretary or any three officers that a specified individual is acting as Chairman of the Board, Chief Executive Officer, President, Corporate Secretary, or Treasurer, in accordance with these Bylaws; and that anyone accepting such certification shall continue to consider it in force until notified in writing of a change, such notice of change to carry the signature of the Corporate Secretary or three officers of the Corporation. SECTION 5. Alternative Locations. In the event of a national emergency or disaster which destroys, demolishes, or renders the Corporation's offices or facilities unserviceable, or which causes, or in the judgment of the Board of Directors or the Executive Committee probably will cause, the occupancy or use thereof to be a clear and imminent hazard to personal safety, the Corporation shall temporarily lease or acquire sufficient facilities to carry on its business as may be designated by the Board of Directors. Any temporarily relocated place of business of this Corporation shall be returned to its legally authorized location as soon as practicable and such temporary place of business shall then be discontinued. SECTION 6. Amendments to Article IX. At any meeting called in accordance with Section 2 of this Article IX, the Board of Directors or Executive Committee, as the case may be, may modify, amend or add to the provisions of this Article IX so as to make any provision that may be practical or necessary for the circumstances of the emergency. ARTICLE X BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS All of the requirements of Article 11A of the Georgia Business Corporation Code (currently codified in Sections 14-2-1131 through 14-2-1133 thereof), as may be in effect from time to time (the "Business Combination Statute"), shall apply to all "business combinations" (as defined in Section 14-2-1131 of the Georgia Business Corporation Code) involving the Corporation. The requirements of the Business Combination Statute shall be in addition to the requirements of Article XI of the Corporation's Articles of Incorporation. Nothing contained in the Business Combination Statute shall be deemed to limit the provisions contained in Article XI of the Corporation's Articles of Incorporation, and nothing contained in Article XI of the Corporation's Articles of Incorporation shall be deemed to limit the provisions contained in the Business Combination Statute. 16 ARTICLE XI INSPECTION OF BOOKS AND RECORDS The Board of Directors shall determine whether and to what extent the accounts and books of the Corporation, or any of them, other than the share records, shall be open to the inspection of shareholders, and no shareholder shall have any right to inspect any account or books or document of the Corporation except as conferred by law or by resolution of the shareholders or the Board of Directors. Without prior approval of the Board of Directors in their discretion, the right of inspection set forth in Section 14-2-1602(c) of the Georgia Business Corporation Code shall not be available to any shareholder owning two (2%) percent or less of the shares outstanding. 17 EX-10.9 3 0003.txt EXHIBIT 10.9 EXHIBIT 10.9 ------------ AMENDMENTS TO THE SUNTRUST BANKS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AS AMENDED AND RESTATED EFFECTIVE AUGUST 13, 1996 - -------------------------------------------------------------------------------- WHEREAS, SunTrust Banks, Inc. ("SunTrust") maintains the SunTrust Banks, Inc. Supplemental Executive Retirement Plan (the "SERP") to provide post- retirement benefits for certain key executives of SunTrust and its Affiliates; and WHEREAS, (S) 11 of the SERP authorizes the Compensation Committee of SunTrust's Board of Directors (the "Committee") to amend the SERP from time to time and to delegate the exercise of such amendment authority to such other person or persons as the Committee deems appropriate; and WHEREAS, on February 10, 1998, the Committee approved certain changes to the SERP and authorized and directed the staff of SunTrust to prepare and execute plan amendments reflecting such changes; NOW, THEREFORE, IN WITNESS HEREOF, as authorized by the Committee, the Human Resources Director of SunTrust hereby adopts the amendments attached hereto as Exhibit I, effective as of February 10, 1998 unless other provided. SUNTRUST BANKS, INC. By: /s/ Mary T. Steele -------------------------- Mary T. Steele Human Resources Director SunTrust Banks, Inc. Attest: /s/ Margaret U. Hodgson ----------------------- Exhibit I --------- AMENDMENTS TO THE SUNTRUST BANKS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AS AMENDED AND RESTATED EFFECTIVE AUGUST 13, 1996 - -------------------------------------------------------------------------------- The SunTrust Banks, Inc. Supplemental Executive Retirement Plan, as amended and restated effective as of August 13, 1996 (the "SunTrust SERP"), is further amended as follows, effective as of February 10, 1998, unless otherwise noted: 1. The definition of "Vested Date" in (S) 2.20 is revised by adding the following sentence to the end of that section: Notwithstanding the provisions of paragraph (b) above, in the case of SERP Benefits for L. Phillip Humann, John W. Spiegel, Theodore J. Hoepner and John Clay, Jr., Vested Date shall mean February 10, 2000, provided there is no transaction which results in a Change In Control (as defined in (S) 13.2(b)) between February 10, 1998 and February 10, 2000. 2. The following paragraph (3) is added to the end of (S) 4.1(b): (3) Special Early Retirement Reduction. This paragraph shall apply only to a Participant who is specifically designated by the Committee as eligible under this paragraph 4.1(b)(3) (a "Designated Participant"), including the following Participants who were so designated on February 10, 1998: L. Phillip Humann, John W. Spiegel, Theodore J. Hoepner and John Clay, Jr. For purposes of determining the SERP Benefit payable to such a Designated Participant who elects early retirement after his or her Vested Date and prior to attaining age 60, the product of 60% and his or her SERP Average Compensation will be reduced by a fraction, the numerator of which is such Participant's SERP Service as of his or her early retirement date and the denominator of which is the SERP Service such Participant would have completed if he or she had continued in employment until such Participant's Retirement Date, and then further reduced by a factor of 5/12% for each month by which such Participant's early retirement date precedes the date he or she would attain age 60. 3. The following subparagraph (iii) is added to the end of (S) 4.3(c)(2): (iii) This subparagraph shall apply only to a Participant who is designated by the Committee as eligible under this subparagraph 4.3(c)(2)(iii) (a "Designated Participant"), including the following Participants who were so designated on February 10, 1998: L. Phillip Humann, John W. Spiegel, Theodore J. Hoepner and John Clay, Jr. If the Annuity Starting Date is before the date such Participant would have reached age 60, then the reduction in paragraph (ii) is not used and the amount determined in Step One as reduced in Step Two(i) above will be reduced further by a factor of 5/12% for each month by which such Participant's date of death precedes the date he or she would have attained age 60. EX-10.21 4 0004.txt EXHIBIT 10.21 EXHIBIT 10.21 ------------- EXHIBIT A ELIGIBLE PLANS The Eligible Participants that participate in the Eligible Plans listed below are highly compensated or management employees and considered to be "Top Hat". These participants have the power to negotiate and the ability to influence design and operation of their individual Plans. Management Incentive Plan (MIP) Performance Unit Plan (PUP) The following plans will be eligible on January 1, 2000: Crestar Asset Management Company Compensation Incentive Plan (CAP 13) Senior Manager - Crestar Asset Management Company Incentive Compensation Plan (CAP 01) Crestar Mortgage Corporation Secondary Marketing Manager (CMC19) Incentive Plan Mortgage Corporation Production Group Operations Manager (CMC14) Incentive Plan Mortgage Corporation Senior Management (CMC01) Incentive Plan SunTrust Equitable Securities Regional Institutional Sales Incentive Plan SunTrust Equitable Securities Debt Division Bonus Plan SunTrust Equitable Securities Debt Capital Markets Division Manager Bonus Plan Crestar Bank Commercial Incentive Plan (COM01) Participants Guide Crestar Bank Retail Management Incentive Plan (RTL03) Corporate and Investment Banking Division Team Bonus Plan 2000 The following Plans will be eligible effective January 1, 2001: Trust and Investment Services Trust Business Development Sales Incentive Plan Trust and Investment Services Life Specialist Incentive Plan Corporate and Investment Banking Division Team Bonus Plan 2000 EX-10.28 5 0005.txt EXHIBIT 10.28 EXHIBIT 10.28 ------------- AMENDMENT TO THE DEFERRED COMPENSATION PROGRAM UNDER INCENTIVE COMPENSATION PLAN OF CRESTAR FINANCIAL CORPORATION AND AFFILIATED CORPORATIONS - -------------------------------------------------------------------------------- Effective for the Award Year 1994 and subsequent Award Years, Plan section 3(h) is amended to read as follows: (h) Notwithstanding any other provision of the Plan, a Participant's Deferred Income Benefit Award Election Form for any Award Year is not valid if that Participant is not an Employee on December 31 of the Year following that Award Year for any reason other than Termination because of Retirement, total disability, or death. If a Participant's Deferred Income Benefit Award Election Form is invalid because of this subsection (h), that Participant must be paid the amounts he would then have been entitled to receive if he had not submitted that Deferred Income Benefit Award Election Form. EX-10.29 6 0006.txt EXHIBIT 10.29 EXHIBIT 10.29 ------------- AMENDMENTS TO THE UNITED VIRGINIA BANKSHARES INCORPORATED DEFERRED COMPENSATION PROGRAM UNDER INCENTIVE COMPENSATION PLAN OF UNITED VIRGINIA BANKSHARES INCORPORATED AND AFFILIATED CORPORATIONS --------------------------------------- Effective for the Award Year 1987, Plan section 3 is amended by adding new Subsection (h), to read as follows: (h) Notwithstanding any other provision of the Plan, a Participant's Deferred Income Benefit Award Election Form for any Award Year is not valid if that Participant is not an Employee on December 31 of the Year following that Award Year. If a Participant's Deferred Income Benefit Award Election Form is invalid because of this subsection (h), that Participant must be paid the amounts he would then have been entitled to receive if he had not submitted that Deferred Income Benefit Award Election Form. AMENDMENTS TO THE UNITED VIRGINIA BANKSHARES INCORPORATED DEFERRED COMPENSATION PROGRAM UNDER INCENTIVE COMPENSATION PLAN OF UNITED VIRGINIA BANKSHARES INCORPORATED AND AFFILIATED CORPORATIONS --------------------------------------- FIRST: Effective January 1, 1988, the name of the program is changed to the Crestar Financial Corporation Deferred Compensation Program Under Management Incentive Compensation Plan of Crestar Financial Corporation and Affiliated Corporations (the "Program"), and all references in the Program to "United Virginia Bankshares Incorporated" are changed to "Crestar Financial Corporation." SECOND: Effective January 1, 1988, Program section 2 is amended by adding new Subsection (o); and its remaining Subsections are realphabetized accordingly. New Subsection (o) reads as follows: (o) Security means the same as it does under section 2(1) of the Securities Act of 1933, 15 U.S.C. 77B(1), except when it refers to an Employer Security. An Employer Security means a Security issued by an Employer or by an Employee Retirement Income Security Act of 1974 (ERISA) Affiliate. A contract to which ERISA section 408(b)(5) applies is not treated as a Security for purposes of this Plan. THIRD: Effective for the Award Year 1987, Program section 3 is amended by adding new subsection (h), to read as follows: (h) Notwithstanding any other provision of the Plan, a Participant's Deferred Income Benefit Award Election Form for any Award Year is not valid if that Participant is not an Employee on December 31 of the Year following that Award Year. If a Participant's Deferred Income Benefit Award Election Form is invalid because of this subsection (h), that Participant must be paid the amounts he would then have been entitled to receive if he had not submitted that Deferred Income Benefit Award Election Form. FOURTH: Effective January 1, 1988, Program subsection 11(b) is amended by deleting from its first sentence the phrase: "if there is a change in the voting control of the Employer that the Board does not recommend to the shareholders," and substituting the following phrase: if there is a Control Change in the Corporation, FIFTH: Effective January 1, 1988, Program subsection 11(b) is further amended by substituting the word "Program" for the word "Plan" at the end of the second sentence. SIXTH: Effective January 1, 1988, Program subsection 11(b) is further amended by substituting in its last sentence the phrase "Control Change" for the phrase "change in control." SEVENTH: Effective January 1, 1988, Program section 11 is amended by adding a new Subsection (c) at the end thereof, to read as follows: (c) Control Change. For purposes of this Program, a Control Change occurs if: (1) any person (within the meaning of sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of Securities of the Corporation representing thirty percent or more of the combined voting power of the Corporation's then outstanding Securities; or (2) during any period of two consecutive calendar years, individuals who at the beginning of such period constitute the Corporation's board of directors cease for any reason to constitute a majority of the Corporation's board of directors, unless the election (or the nomination for election by the Corporation's shareholders) 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 such period; and (3) in the case of an ownership change described in paragraph (1), a majority of the directors in office immediately before the ownership change and who are not employees of the Corporation or any corporation within its controlled group (within the meaning of section 1563(a) of the Internal Revenue Code of 1986, as amended) determine, within ten days of the ownership change, that a Control Change has occurred. EX-10.37 7 0007.txt EXHIBIT 10.37 EXHIBIT 10.37 ------------- CRESTAR FINANCIAL CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Effective January 1, 1995 CRESTAR FINANCIAL CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Introduction The Board of Directors of Crestar Financial Corporation (the Corporation) determined that the adoption of the Crestar Financial Corporation Supplemental Executive Retirement Plan (the Plan) should assist it in attracting and retaining those employees whose judgment, abilities and experience will contribute to its continued progress and success. The Board of Directors also determined that the Plan should further those objectives by providing retirement and related benefits that supplement the amounts payable under the deferred compensation plans and arrangements currently maintained by the Corporation. The Plan is effective January 1, 1995. The Plan is intended to provide an unfunded supplemental retirement benefit to a select group of management and highly compensated employees as such terms are used in sections 201, 301, and 501 of the Employee Retirement Income Security Act of 1974. The Plan must be interpreted and administered in a manner that is consistent with that intent. Article I Definitions ----------- 1.01. Accounting Firm means the accounting firm most recently approved by the Corporation's shareholders as the Corporation's auditor; provided, however, that if such accounting firm declines to undertake the determinations assigned to it under this Agreement, then the "Accounting Firm" shall mean such other accounting firm designated by the Corporation. 1.02. Actuarial Equivalent means, when used in reference to any form of benefit, a form of benefit which has the same value as the referenced benefit based on the actuarial assumptions, methods and procedures adopted for such purposes under the Retirement Plan. 1.03. Administrator means the Committee and any delegate of the Committee appointed in accordance with Section 6.07. 1.04. Affiliate means any corporation which, when considered with the Corporation, would constitute a controlled group of corporations within the meaning of Code section 1563(a) determined without reference to Code sections 1563(a)(4) and 1563(e)(3)(C) and any entity, whether or not incorporated, which would be under common control with the Corporation within the meaning of Code section 414(c). 1.05. ANEX Plan means the portion of the Crestar Financial Corporation Additional Nonqualified Executive Plan that provides "Defined-benefit Benefit Entitlements" (as such term is defined therein), as amended from time to time, and any successor thereto. 1.06. Average Compensation means the average of the Compensation paid to the Executive during the three calendar years, whether or not consecutive, that yields the highest number. 1.07. Board means the Board of Directors of the Corporation. 1.08. Capped Parachute Payments means the largest amount of Parachute Payments that may be paid to the Participant without liability under Code section 4999. 1.09. Change in Control is defined in Section 1.06 of the Crestar Financial Corporation 1993 Stock Incentive Plan, as amended from time to time, and any successor thereto. 1.10. Code means the Internal Revenue Code of 1986, as amended, or any successor thereto, as in effect at the relevant time. 1.11. Committee means the Human Resources and Compensation Committee of the Board. 1.12. Compensation means the sum of the base salary and bonus earned by the Executive and paid by the Corporation, an Affiliate, or both, for a calendar year. For purposes of this Section 1.12, an Executive's "bonus" for any calendar year shall be the Executive's incentive award under the Management Incentive Compensation Plan of Crestar Financial Corporation (or any successor or substitute plan) earned for the calendar year, regardless of whether such award is determined or payable after the end of the calendar year. An Executive's Compensation shall be determined without regard to any compensation reductions or deferrals under Code section 125 or 401(k) and without regard to any salary or bonus deferrals under nonqualified deferred compensation plans of the Corporation or an Affiliate. 1.13. Control Change Date is defined in Section 1.13 of the Crestar Financial Corporation 1993 Stock Incentive Plan, as amended from time to time, and any successor thereto. 1.14. Corporation means Crestar Financial Corporation and any successor corporation. -2- 1.15. Designated Participant means a Participant who (i) will not be credited with twenty Years of Service on his Normal Retirement Date even if he remains in the continuous employ of the Corporation until his Normal Retirement Date and (ii) is identified as a Designated Participant on Exhibit I to the Plan as approved by the Committee from time to time. 1.16. Early Retirement Allowance means the benefit described in Section 3.02. 1.17. Early Retirement Date means the date prior to the Normal Retirement Date which is the first day of the month coincident with or next following a Participant's retirement from the Corporation or an Affiliate after attaining age 55. 1.18. Excess Plan means the Crestar Financial Corporation Excess Benefit Plan, as amended from time to time, and any successor thereto. 1.19. Executive means an individual employed by the Corporation or an Affiliate whose position is evaluated at Grade 41 or above as of January 1, 1995, and such other individual who is an employee of the Corporation or an Affiliate and who is designated as an Executive by the Committee for purposes of this Plan. 1.20. Net After-Tax Amount means the amount of any Parachute Payments or Capped Parachute Payments, as applicable, net of taxes imposed under Code sections 1, 3101(b) and 4999 and any State or local income taxes applicable to the Participant as in effect on the date of the first payment to the Participant under the Crestar Financial Corporation Executive Severance Plan after a Control Change Date. The determination of the Net After Tax Amount shall be made using the highest combined effective rate imposed by the foregoing taxes on income of the same character as the Parachute Payments or Capped Parachute Payments, as applicable, in effect for the year for which the determination is made. 1.21. Normal Retirement Allowance means the benefit described in Section 3.01. 1.22. Normal Retirement Date means the first day of the month coincident with or next following a Participant's retirement from the Corporation or an Affiliate after attaining age 60. 1.23. Offset Amount means the sum of the annual benefits, if any, payable to or on behalf of a Participant, for his lifetime under the Retirement Plan, the ANEX Plan, the Excess Plan, any other supplemental executive retirement plan maintained by the Corporation or an Affiliate and any other qualified defined benefit pension plan maintained by the Corporation or an Affiliate and assuming a benefit commencement date as of the date that benefits are scheduled to commence under Article III or IV. 1.24. Parachute Payment means a payment that is described in Code section 280G(b)(2) (without regard to whether the aggregate present value of such payments exceeds the limit prescribed by Code section 280G(b)(2)(A)(ii)). The -3- amount of any Parachute Payment shall be determined in accordance with Code section 280G and the regulations promulgated thereunder, or, in the absence of final regulations, the proposed regulations promulgated under Code section 280G. 1.25. Participant means an Executive who satisfies the requirements of Article II. 1.26. Plan means the Crestar Financial Corporation Supplemental Executive Retirement Plan. 1.27. Pro Rata Compensation means the amount determined by multiplying a Participant's Average Compensation by a fraction, the numerator of which is the Participant's Years of Service as of the date of reference (not to exceed twenty), and the denominator of which is twenty. 1.28. Retirement Plan means the Retirement Plan for Employees of Crestar Financial Corporation and Affiliated Corporations, as amended from time to time, and any successor thereto. 1.29. Surviving Spouse means the person to whom the Participant is legally married on the date of reference and who survives the Participant. 1.30. Total and Permanent Disability means a disability which entitles the Participant to benefits under a long-term disability plan maintained by the Corporation and its Affiliates or, in the absence of such a plan, entitles the Participant to Social Security disability benefits. 1.31. Years of Service means the total years of service as determined under the terms of the Retirement Plan for purposes of determining the Participant's vested or nonforfeitable interest in the Retirement Plan. In addition, Years of Service also includes service with a successor corporation following a Change in Control to the extent that such service would be recognized for purposes of determining the Participant's vested or nonforfeitable interest in the Retirement Plan if such successor were the Corporation. To the extent approved by the Committee, Years of Service also includes service with a predecessor employer or entity acquired by the Corporation or an Affiliate. Notwithstanding the foregoing, a Participant's Years of Service shall not be less than the number of years determined in accordance with the provisions of Exhibit I to the Plan as approved by the Committee from time to time. A period of service with the Corporation, an Affiliate, a predecessor employer or entity, a successor or any other period shall only be counted once in determining a Participant's Years of Service. -4- Article II Participation ------------- 2.01. Beginning Participation ----------------------- Each person who is an Executive on January 1, 1995 shall be a Participant in the Plan effective January 1, 1995. Each person who becomes an Executive after January 1, 1995 shall be a Participant in the Plan as of the date that his participation is approved in writing by a resolution adopted by the Committee. 2.02. Change in Status ---------------- Except as provided in Section 2.03, a Participant shall cease to be a Participant in the Plan as of the date that he ceases to be an Executive if, as of that date, he has not satisfied the requirements to receive a retirement allowance under Article III. Despite the preceding sentence, with the written approval of, and subject to such terms and conditions as may be prescribed by, the Committee in its sole discretion, a Participant who ceases to be an Executive before he has satisfied the requirements to receive a retirement allowance under Article III may continue to be a Participant if he continues to be an employee of the Corporation or an Affiliate. 2.03. Change in Control ----------------- Section 2.02 to the contrary notwithstanding, each person who is a Participant on a Control Change Date shall continue to be a Participant in the Plan thereafter until the date that he ceases to be an employee of the Corporation, an Affiliate or a successor of the Corporation or an Affiliate and all of the benefits payable to or on behalf of the Participant have been paid. Article III Retirement Allowances --------------------- 3.01. Normal Retirement Allowance --------------------------- (a) Subject to the requirements of Article V and Section 8.01, a Participant who retires from the Corporation or an Affiliate on or after his Normal Retirement Date and after being credited with twenty Years of Service shall be entitled to receive his Normal Retirement Allowance under the Plan. The Normal Retirement Allowance is an annual benefit which shall be equal to the difference between (i) and (ii) below where -5- (i) = 50% times the Participant's Average Compensation (determined as of his Normal Retirement Date), and (ii) = Offset Amount. The Normal Retirement Allowance shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, commencing as of the Participant's Normal Retirement Date and ending with the payment for the month in which the Participant dies. Payments of the Normal Retirement Allowance shall be reduced in accordance with income and employment tax withholding requirements. (b) Subject to the requirements of Article V and Section 8.01, a Designated Participant who retires from the Corporation or an Affiliate on or after his Normal Retirement Date shall be entitled to receive his Normal Retirement Allowance under the Plan. The Normal Retirement Allowance payable to the Designated Participant is an annual benefit which shall be equal to the difference between (i) and (ii) below where (i) = 50% times the Designated Participant's Pro Rata Compensation (determined as of his Normal Retirement Date), and (ii) = Offset Amount. The Normal Retirement Allowance shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, commencing as of the Designated Participant's Normal Retirement Date and ending with the payment for the month in which the Designated Participant dies. Payments of the Normal Retirement Allowance shall be reduced in accordance with income and employment tax withholding requirements. 3.02. Early Retirement Allowance -------------------------- (a) Subject to the requirements of Article V and Section 8.01, a Participant who retires from the Corporation or an Affiliate on or after being credited with twenty Years of Service is eligible for an Early Retirement Allowance beginning as of the first day of any month coincident with or following the Participant's Early Retirement Date. The Early Retirement Allowance is an annual benefit which shall be the difference between (i) and (ii) below where (i) = the Applicable Percentage times the Participant's Average Compensation (determined as of his Early Retirement Date), and (ii) = the Offset Amount. -6- For purposes of this Section 3.02(a), the "Applicable Percentage" is equal to 50% reduced by 0.20833% for each full month that the commencement of the Participant's Early Retirement Allowance precedes the Participant's Normal Retirement Date. The Early Retirement Allowance shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, until the payment for the month in which the Participant dies. Payments of the Early Retirement Allowance shall be reduced in accordance with income and employment tax withholding requirements. (b) Subject to the requirements of Article V and Section 8.01, a Designated Participant who retires from the Corporation or an Affiliate on or after his Early Retirement Date is eligible for an Early Retirement Allowance beginning as of the first day of any month coincident with or following the Designated Participant's Early Retirement Date. The Early Retirement Allowance is an annual benefit which shall be the difference between (i) and (ii) below where (i) = the Applicable Percentage times the Designated Participant's Pro Rata Compensation (determined as of his Early Retirement Date), and (ii) = the Offset Amount. For purposes of this Section 3.02(b), the "Applicable Percentage" is equal to 50% reduced by 0.20833% for each full month that the commencement of the Designated Participant's Early Retirement Allowance precedes the Participant's Normal Retirement Date. The Early Retirement Allowance shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, until the payment for the month in which the Designated Participant dies. Payments of the Early Retirement Allowance shall be reduced in accordance with income and employment tax withholding requirements. 3.03. Change in Control Benefit ------------------------- (a) Subject to the requirements of Article V and Section 8.01, a Participant who is credited with twenty Years of Service may retire from the Corporation, an Affiliate or a successor of the Corporation or an Affiliate on or after a Control Change Date. In that event, the Participant shall be entitled to an annual benefit (with the benefit payments commencing on the first day of a month selected by the Participant if such election is made while the Participant is employed by the Corporation or an Affiliate or, absent such an election, on the first day of the month following the date he attains age 55 (the "Benefit Commencement Date")), equal to the difference between (i) and (ii) below where (i) = the Applicable Percentage times the Participant's Average Compensation (determined as of the date that the Participant ceases to be employed by the Corporation and its Affiliates after a Control Change Date), and -7- (ii) = the Offset Amount. For purposes of this Section 3.03(a), the "Applicable Percentage" is equal to 50% reduced by 0.20833% for each full month that the Benefit Commencement Date precedes the month in which the Participant will attain age 60. The benefit payable under this Section 3.03(a) shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, commencing as of the Benefit Commencement Date and ending with the payment for the month in which the Participant dies. Payments of the benefit described in this Section 3.03(a) shall be reduced in accordance with income and employment tax withholding requirements. (b) Subject to the requirements of Article V and Section 8.01, a Participant who is credited with less than twenty Years of Service may retire from the Corporation, an Affiliate or a successor of the Corporation or an Affiliate on or after a Control Change Date. In that event, the Participant shall be entitled to an annual benefit (with the benefit payments commencing on the first day of a month selected by the Participant if such election is made while the Participant is employed by the Corporation or an Affiliate or, absent such an election, on the first day of the month following the date he attains age 55 (the "Benefit Commencement Date")), equal to the difference between (i) and (ii) below where (i) = the Applicable Percentage times the Participant's Pro Rata Compensation (determined as of the date that the Participant ceases to be employed by the Corporation and its Affiliates after a Control Change Date), and (ii) = the Offset Amount. For purposes of this Section 3.03(b), the "Applicable Percentage" is equal to 50% reduced by 0.20833% for each full month that the Benefit Commencement Date precedes the month in which the Participant will attain age 60. The benefit payable under this Section 3.03(b) shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, commencing as of the Benefit Commencement Date and ending with the payment for the month in which the Participant dies. Payments of the benefit described in this Section 3.03(b) shall be reduced in accordance with income and employment tax withholding requirements. 3.04. Disability Retirement Allowance ------------------------------- Subject to the requirements of Article V and Section 8.01, a Participant shall be entitled to receive a retirement allowance under Section 3.02 if his employment with the Corporation and its Affiliates terminates on account of Total and Permanent Disability and such Total and Permanent Disability continues -8- without interruption until the date that would have been the Participant's Early Retirement Date had he remained employed by the Corporation and its Affiliates. The retirement allowance under Section 3.02 shall commence as of the first day of the month coincident with or next following the date that would have been the Participant's earliest Early Retirement Date. 3.05. Optional Forms of Benefit ------------------------- A Participant who is entitled to receive a retirement allowance under this Article III may elect to have his benefit payable in a form other than a single life annuity. The optional forms of payment that are available under this Plan are the same optional forms of payment provided under the Retirement Plan (without regard to any requirement that the Participant's Spouse consent to such payment election) as in effect on the date that the Participant retires; provided, however, that only the Surviving Spouse may be designated under this Plan as the contingent annuitant for any form of payment that provides lifetime benefits to another person after the Participant's death. If the Participant elects an optional form of payment under this Section 3.05, any contingent annuitant or beneficiary designated in connection with that election need not be the same as any contingent annuitant or beneficiary designated under the Retirement Plan, the Excess Plan, the ANEX Plan or any other plan providing a benefit that is part of the Offset Amount. If the Participant elects an optional form of payment under this Section 3.05, the amount payable under the optional form shall be the Actuarial Equivalent of the amount of the retirement allowance otherwise payable under this Article III in the form of a single life annuity. A Participant shall be entitled to elect an optional form of payment at such time and in such manner as the Administrator may decide; provided, however, that a Participant may not change his payment election after benefit payments have begun. Article IV Payments in the Event of Death ------------------------------ 4.01. Death Prior to Age 55 --------------------- (a) Subject to the requirements of Article V and Section 8.01, a benefit will be payable under this Plan to the Surviving Spouse of a Participant who dies before attaining age 55, after completing twenty Years of Service, but before the commencement of a retirement allowance under Article III. The benefit payable to the Surviving Spouse will be determined as follows: (i) First: Calculate the Participant's Early Retirement Allowance under Article III using the Participant's Average Compensation as of his date of death and an Applicable Percentage equal to 37.5002%. -9- (ii) Second: Calculate the Actuarial Equivalent, payable as a Joint and 50% Survivor Annuity, of the single life annuity determined in (i) above. The Surviving Spouse's benefit is the survivor's portion of the Joint and 50% Survivor Annuity determined in (ii) above. For purposes of this Section 4.01(a), the term "Joint and 50% Survivor Annuity" means an annuity for the life of the Participant with a survivor annuity for the life of the Surviving Spouse which is equal to 50% of the amount of the annuity which is payable during the joint lives of the Participant and Surviving Spouse and which is the Actuarial Equivalent of an annuity for the life of the Participant. The benefit payable under this Section 4.01(a) shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, commencing as of the month in which the Participant would have attained age 55 and ending with the month in which the Surviving Spouse dies. Payments of the benefit described in this Section 4.01(a) shall be reduced in accordance with income and employment tax withholding requirements. Except as provided in this Section 4.01(a), no death benefit shall be payable under this Plan on behalf of a Participant who dies before attaining age 55. (b) Subject to the requirements of Article V and Section 8.01, a benefit will be payable under this Plan to the Surviving Spouse of a Participant who dies before attaining age 55, after completing less than twenty Years of Service, but before the commencement of a retirement allowance under Article III. The benefit payable to the Surviving Spouse will be determined as follows: (i) First: Calculate the Participant's Early Retirement Allowance under Article III using the Participant's Pro Rata Compensation as of his date of death and an Applicable Percentage equal to 37.5002%. (ii) Second: Calculate the Actuarial Equivalent, payable as a Joint and 50% Survivor Annuity, of the single life annuity determined in (i) above. The Surviving Spouse's benefit is the survivor's portion of the Joint and 50% Survivor Annuity determined in (ii) above. For purposes of this Section 4.01(b), the term "Joint and 50% Survivor Annuity" means an annuity for the life of the Participant with a survivor annuity for the life of the Surviving Spouse which is equal to 50% of the amount of the annuity which is payable during the joint lives of the Participant and Surviving Spouse and which is the Actuarial Equivalent of an annuity for the life of the Participant. The benefit payable under this Section 4.01(b) shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, commencing as of the month in -10- which the Participant would have attained age 55 and ending with the month in which the Surviving Spouse dies. Payments of the benefit described in this Section 4.01(b) shall be reduced in accordance with income and employment tax withholding requirements. Except as provided in this Section 4.01(b), no death benefit shall be payable under this Plan on behalf of a Participant who dies before attaining age 55. 4.02. Death on or After Age 55 ------------------------ (a) Subject to the requirements of Article V and Section 8.01, a benefit will be payable under this Plan to the Surviving Spouse of a Participant who dies on after attaining age 55, after completing 20 Years of Service, but before the commencement of a retirement allowance under Article III. The benefit payable to the Surviving Spouse will be determined as follows: (i) First: Calculate the Participant's Early Retirement Allowance under Article III using the Participant's Average Compensation as of his date of death and an Applicable Percentage equal to 50% reduced by 0.20833% times each month that the Participant's death precedes the Participant's Normal Retirement Date. (ii) Second: Calculate the Actuarial Equivalent, payable as a Joint and 100% Survivor Annuity, of the single life annuity determined in (i) above. The Surviving Spouse's benefit is the survivor's portion of the Joint and 100% Survivor Annuity determined in (ii) above. For purposes of this Section 4.02, the term "Joint and 100% Survivor Annuity" means an annuity for the life of the Participant with a survivor annuity for the Surviving Spouse which is equal to 100% of the amount of the annuity which is payable for the joint lives of the Participant and Surviving Spouse and which is the Actuarial Equivalent of an annuity for the life of the Participant. The benefit payable under this Section 4.02 shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, commencing as of the first day of the month following the Participant's death and ending with the payment for the month in which the Surviving Spouse dies. Payments of the benefit described in this Section 4.02 shall be reduced in accordance with income and employment tax withholding requirements. Except as provided in this Section 4.02, no death benefit shall be payable under this Plan on behalf of a Participant who dies after attaining age 55 but before the commencement of a retirement allowance under Article III. (b) Subject to the requirements of Article V and Section 8.01, a benefit will be payable under this Plan to the Surviving Spouse of a Participant who dies on after attaining age 55, after completing less than 20 Years of Service, but before the commencement of a retirement allowance under Article III. The benefit payable to the Surviving Spouse will be determined as follows: -11- (i) First: Calculate the Participant's Early Retirement Allowance under Article III using the Participant's Pro Rata Compensation as of his date of death and an Applicable Percentage equal to 50% reduced by 0.20833% times each month that the Participant's death precedes the Participant's Normal Retirement Date. (ii) Second: Calculate the Actuarial Equivalent, payable as a Joint and 100% Survivor Annuity, of the single life annuity determined in (i) above. The Surviving Spouse's benefit is the survivor's portion of the Joint and 100% Survivor Annuity determined in (ii) above. For purposes of this Section 4.02(b), the term "Joint and 100% Survivor Annuity" means an annuity for the life of the Participant with a survivor annuity for the Surviving Spouse which is equal to 100% of the amount of the annuity which is payable for the joint lives of the Participant and Surviving Spouse and which is the Actuarial Equivalent of an annuity for the life of the Participant. The benefit payable under this Section 4.02(b) shall be payable in equal or nearly equal monthly installments, or more frequently based on the payroll practices of the Corporation and its Affiliates, commencing as of the first day of the month following the Participant's death and ending with the payment for the month in which the Surviving Spouse dies. Payments of the benefit described in this Section 4.02(b) shall be reduced in accordance with income and employment tax withholding requirements. Except as provided in this Section 4.02(b), no death benefit shall be payable under this Plan on behalf of a Participant who dies after attaining age 55 but before the commencement of a retirement allowance under Article III. 4.03. Death After Retirement ---------------------- If a Participant dies after the commencement of a retirement allowance under Article III, all payments from this Plan shall cease with the payment made for the month in which the Participant dies if the Participant was receiving a retirement allowance under this Plan in the form of a single life annuity. If the Participant elected an optional form of payment as provided in Section 3.05 and dies after the commencement of a retirement allowance under Article III, the amount of benefit, if any, payable under this Plan following the Participant's death shall be determined on the basis of the optional form of payment selected by the Participant. Article V Vesting and Continuous Participation ------------------------------------ -12- No benefit will be payable to a Participant or Surviving Spouse under the Plan unless the Participant is a Participant on the date he ceases to be an employee of the Corporation or an Affiliate or a successor. Article VI Administration of the Plan -------------------------- 6.01. Generally --------- The Plan shall be administered by the Administrator. Subject to the provisions of the Plan, the Administrator may adopt such rules and regulations as may be necessary to carry out the purposes of the Plan. The Administrator's discretion to perform or consent to any act or to interpret the Plan is exclusive and shall be final and conclusive if all similarly situated Participants are treated in a consistent manner. 6.02. Indemnification --------------- The Corporation shall indemnify and save harmless the Administrator against any and all expenses and liabilities arising out of the administration of the Plan, excepting only expenses and liabilities arising out of his own willful misconduct. Expenses against which the Administrator shall be indemnified hereunder shall include without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement of a claim. The foregoing right of indemnification shall be in addition to any other rights to which the Administrator may be entitled. 6.03. Determining Benefits -------------------- In addition to the powers hereinabove specified, the Administrator shall have the power to compute and certify the amount and kind of benefits from time to time payable to or on behalf of Participants under the Plan, to authorize all disbursements for such purposes, and to determine whether a Participant or Surviving Spouse is entitled to a benefit under the Plan. 6.04. Cooperation ----------- To enable the Administrator to perform its functions, the Corporation and its Affiliates shall supply full and timely information to the Administrator on all matters relating to the compensation of all Participants, their retirement, death or other reason for termination of employment, and such other pertinent facts as the Administrator may require. -13- 6.05. Claims ------ It is not necessary to file a claim in order to receive Plan benefits. On receipt of a claim for Plan benefits, the Administrator must respond in writing within ninety days. If necessary, the Administrator's first notice must indicate any special circumstances requiring an extension of time for the Administrator's decision. The extension notice must indicate the date by which the Administrator expects to render a decision; an extension of time for processing may not exceed ninety days after the end of the initial period. If a claim is wholly or partially denied, the Administrator must give written notice within the time provided in the preceding paragraph. An adverse notice must specify each reason for denial. There must be specific reference to provisions of the Plan or related documents on which the denial is based. If additional material or information is necessary for the claimant to perfect the claim, it must be described and there must be an explanation of why that material or information is necessary. Adverse notice must disclose appropriate information about the steps that the claimant must take if he wishes to submit the claim for review. If notice that a claim has been denied is not furnished within the time required in the preceding paragraph, the claim is deemed denied. The full value of a payment made according to the provisions of the Plan satisfies that much of the claim and all related claims under the Plan against the Administrator and the Corporation and its Affiliates, each of whom, as a condition to a payment from it or directed by it, may require the Participant, Surviving Spouse, beneficiary or contingent annuitant or legal representative to execute a receipt and release of the claim in a form determined by the person requesting the receipt and release. 6.06. Review of Claims ---------------- The Committee must review a claimant's proper written request for review of a denied claim. The Committee must receive the written request before sixty-one days after the claimant's receipt of notice that a claim has been denied according to the preceding Plan Section. The claimant and an authorized representative are entitled to be present and heard if any hearing is used as part of the review. The Committee must determine whether there will be a hearing. Before any hearing, the claimant or a duly authorized representative may review all Plan documents and other papers that affect the claim and may submit issues and comments in writing. The Committee must schedule any hearing to give sufficient time for this review and submission, giving notice of the schedule and deadlines for submissions. -14- The Committee must advise the claimant in writing of the final determination after review. The decision on review must be written in a manner calculated to be understood by the claimant, and it must include specific reasons for the decision and specific references to the pertinent provisions of the Plan or related documents on which the decisions is based. Except as otherwise provided in this Section, the written advice must be rendered within sixty days after the request for review is received, unless special circumstances require an extension of time for processing. If an extension is necessary, the decision must be rendered as soon as possible but no later than 120 days after receipt of the request for review. If the Committee has regularly scheduled meetings at least quarterly, the following rules govern the time for the decision after review. If the claimant's written request for review is received more than thirty days before a Committee meeting, the decision of the Committee must be rendered at the next meeting after the request for review is received. If the claimant's written request for review is received thirty days or less before a Committee meeting, the decision of the Committee must be rendered at the Committee's second meeting after the request for review has been received. If special circumstances (such as the need to hold a hearing) require an extension of time for processing, the decision of the Committee must be rendered not later than the Committee's third meeting after the request for review has been received. If an extension of time for review is required, written notice of the extension must be furnished to the claimant before the extension begins. If notice that a claim has been denied on review is not received by the claimant within the time required in this paragraph, the claim is deemed denied on review. 6.07. Delegation of Committee Responsibilities ---------------------------------------- The Committee, in its discretion, may delegate to one or more officers of the Corporation or an Affiliate all or part of the Committee's authority and duties under the Plan; provided, however, that the Committee may not delegate its authority or duties under Article II, Article VII or Section 6.06. The Committee may revoke or amend the terms of a delegation in accordance with the preceding sentence but such action shall not invalidate any prior actions of the Committee's delegate or delegates that were consistent with the terms of the Plan and the prior delegation. Article VII Termination, Amendment or Modification of Plan ---------------------------------------------- -15- 7.01. Reservation of Rights --------------------- Except as otherwise specifically provided, the Corporation reserves the right to terminate, amend or modify this Plan wholly or partially at any time and from time to time. Such right to terminate, amend or modify the Plan shall be exercised by the Committee or its delegate. Notwithstanding the preceding, with respect to an affected Participant, the Plan may not be amended, modified or terminated after a Change in Control unless the affected Participant agrees to such amendment, modification or termination in writing. 7.02. Limitation on Actions --------------------- The rights of the Corporation set forth in the preceding Section are subject to the condition that unless required by regulatory authorities governing the Corporation or its Affiliates, the Committee or its delegate shall take no action to terminate the Plan or decrease the benefit that would become payable or is payable, as the case may be, with respect to a Participant or his Surviving Spouse after the Participant has satisfied the requirements for an Early Retirement Allowance (regardless of whether he has retired) or the Participant or his Surviving Spouse has become entitled to a benefit under the Plan. 7.03. Effect of Termination --------------------- Except as otherwise provided in this Article VII, upon the termination of this Plan by the Committee, the Plan shall be of no further force or effect, and neither the Corporation or its Affiliates or the Administrator nor the Participant or his Surviving Spouse shall have any further obligation or right under this Plan. Likewise, except as otherwise provided in this Article VII, the rights of any individual who was a Participant and who ceases to be a Participant shall be forfeited on the date that the individual ceases to be a Participant. Article VIII Miscellaneous ------------- 8.01. Limitation on Benefits ---------------------- (a) If any benefits payable under this Plan and any other payments that the Participant is entitled to receive under other plans and agreements constitute Parachute Payments that are subject to the "golden parachute" rules of Code section 280G and the excise tax of Code section 4999, the Parachute Payments shall be reduced if, and only to the extent that, a reduction will allow the Participant to receive a greater Net After Tax Amount than he would receive absent a reduction. The remaining provisions of this Section describe how that intent will be effectuated. -16- (b) The Accounting Firm will first determine the amount of any Parachute Payments that are payable to the Participant. The Accounting Firm will also determine the Net After Tax Amount attributable to the Participant's total Parachute Payments. (c) The Accounting Firm will next determine the amount of the Participant's Capped Parachute Payments. Thereafter, the Accounting Firm will determine the Net After Tax Amount attributable to the Participant's Capped Parachute Payments. (d) The Participant will receive the total Parachute Payments unless the Accounting Firm determines that the Capped Parachute Payments will yield the Participant a higher Net After Tax Amount, in which case the Participant will receive the Capped Parachute Payments. If the Participant will receive the Capped Parachute Payments, the Participant's total Parachute Payments will be adjusted by first reducing the amount payable under any other plan, program, or agreement that, by its terms, requires a reduction to prevent a "golden parachute" payment under Code section 280G; by next reducing any benefit payable under this Plan to the extent such benefit is a Parachute Payment; and by next reducing the Participant's Parachute Payments as provided under the terms of the Crestar Financial Corporation Executive Severance Plan. The Accounting Firm will notify the Participant and the Corporation if it determines that the Parachute Payments must be reduced to the Capped Parachute Payments and will send the Participant and the Corporation a copy of its detailed calculations supporting that determination. (e) As a result of any uncertainty in the application of Code sections 280G and 4999 at the time that the Accounting Firm makes its determinations under this Section, it is possible that amounts will have been paid or distributed to the Participant that should not have been paid or distributed under this Section 8.01 ("Overpayments"), or that additional amounts should be paid or distributed to the Participant under this Section 8.01 ("Underpayments"). If the Accounting Firm determines, based on either controlling precedent, substantial authority or the assertion of a deficiency by the Internal Revenue Service against the Participant or the Corporation, which assertion the Accounting Firm believes has a high probability of success, that an Overpayment has been made, then the Participant shall have an obligation to pay the Corporation upon demand an amount equal to the sum of the Overpayment plus interest on such Overpayment at the prime rate of Crestar Bank (or its successor) as such prime rate shall change from time to time (or, if higher, the rate provided in Code section 7872(f)(2)) from the date of the Participant's receipt of such Overpayment until the date of such repayment; provided, however, the Participant shall not be obligated to make such repayment if, and only to the extent, that the repayment would either reduce the amount on which the Participant is subject to tax under Code section 4999 or generate a refund of tax imposed under Code section 4999. If the Accounting Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the Accounting Firm will notify the Participant and the Corporation of that determination and the -17- Corporation will pay the amount of that Underpayment to the Participant promptly in a lump sum, with interest calculated on such Underpayment at the prime rate of Crestar Bank (or its successor) as such prime rate shall change from time to time (or, if higher, the rate provided in Code section 7872(f)(2)) from the date such Underpayment should have been paid until actual payment. (f) All determinations made by the Accounting Firm under this Section 8.01 are binding on the Participant and the Corporation and must be made within thirty days after the Participant's termination of employment with the Corporation and its Affiliates. 8.02. Unfunded Plan ------------- The Corporation and its Affiliates have only a contractual obligation to make payments of the benefits described in the Plan. All benefits are to be satisfied solely out of the general corporate assets of the Corporation and its Affiliates which shall remain subject to the claims of its creditors. No assets of the Corporation or its Affiliates will be segregated or committed to the satisfaction of its obligations to any Participant or Surviving Spouse under this Plan. If the Corporation or an Affiliate, in its sole discretion, elects to purchase life insurance on the life of a Participant in connection with the Plan, the Participant must submit to a physical examination, if required by the insurer, and otherwise cooperate in the issuance of such policy or his rights under the Plan will be forfeited. 8.03. Other Benefits and Agreements ----------------------------- The benefits, if any, provided for a Participant or a Surviving Spouse under the Plan are in addition to any other benefits available to such persons under any other plan or program of the Corporation for its employees, and, except as may otherwise be expressly provided for, the Plan shall supplement and shall not supersede, modify or amend any other plan or program of the Corporation or an Affiliate in which a Participant is participating. 8.04. Restrictions on Transfer of Benefits ------------------------------------ No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If any Participant or his Surviving Spouse should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right to a benefit hereunder, then such right or benefit, in the discretion of the Administrator, shall cease and terminate, and, in such event, the Administrator may hold or apply all or part of the benefit of such Participant or Surviving Spouse in such manner and in such portion as the Administrator may deem proper. -18- 8.05. No Guarantee of Employment -------------------------- The Plan does not in any way limit the right of the Corporation or an Affiliate at any time and for any reason to terminate the Participant's employment or such Participant's status as an officer of the Corporation or an Affiliate. In no event shall the Plan by its terms or implications constitute an employment contract of any nature whatsoever between the Corporation or an Affiliate and a Participant. 8.06. Successors ---------- The Plan shall be binding upon the Corporation and its successors and assigns; subject to the powers set forth in Article VII, and upon a Participant and his Surviving Spouse and either of their assigns, heirs, executors and administrators. 8.07. Construction ------------ Headings are given for ease of reference and must be disregarded in interpreting the Plan. Masculine pronouns wherever used shall include feminine pronouns and the use of the singular shall include the plural. 8.08. Governing Law ------------- This Plan shall be governed by the laws of the Commonwealth of Virginia (other than its choice-of-laws provisions) except to the extent that the laws of the Commonwealth of Virginia are preempted by the laws of the United States. As evidence of its adoption of the Plan, Crestar Financial Corporation has caused this instrument to be signed by its duly authorized officer effective as of January 1, 1995. CRESTAR FINANCIAL CORPORATION By /s/ James J. Kelly ------------------------------------ Title GEVP-Director of Human Resources -------------------------------- RI-EB t:\crestar\85\0196plan.doc first draft: 10\25\95 EX-11.1 8 0008.txt EXHIBIT 11.1 EXHIBIT 11.1 SunTrust Banks, Inc. Statement re: Computation of Per Share Earnings (In thousands, except per share data)
Year Ended December 31 -------------------------------------------------------- 2000 1999 1998 ----------------- ---------------- -------------- Basic Income before extraordinary gain $ 1,294,100 $ 1,123,952 $ 971,017 Extraordinary gain, net of taxes - 202,648 - ----------------- ---------------- -------------- Net income $ 1,294,100 $ 1,326,600 $ 971,017 ----------------- ---------------- -------------- Average basic common shares 297,834 317,079 314,908 ----------------- ---------------- -------------- Income before extraordinary gain $ 4.35 $ 3.54 $ 3.08 Extraordinary gain, net of taxes - 0.64 - ----------------- ---------------- -------------- Earnings per common share - basic $ 4.35 $ 4.18 $ 3.08 ================= ================ ============== Diluted Income before extraordinary gain $ 1,294,100 $ 1,123,952 $ 971,017 Extraordinary gain, net of taxes - 202,648 - ----------------- ---------------- -------------- Net income $ 1,294,100 $ 1,326,600 $ 971,017 ----------------- ---------------- -------------- Average common shares outstanding 297,834 317,079 314,908 Incremental shares outstanding (1) 3,122 4,095 4,803 ----------------- ---------------- -------------- Average diluted common shares 300,956 321,174 319,711 ----------------- ---------------- -------------- Income before extraordinary gain $ 4.30 $ 3.50 $ 3.04 Extraordinary gain, net of taxes - 0.63 - ----------------- ---------------- -------------- Earnings per common share - diluted $ 4.30 $ 4.13 $ 3.04 ================= ================ ==============
Year Ended December 31 ---------------------------------------------------- 1997 1996 1995 -------------- --------------- -------------- Basic Income before extraordinary gain $ 975,923 $ 858,950 $ 802,761 Extraordinary gain, net of taxes - - - -------------- --------------- -------------- Net income $ 975,923 $ 858,950 $ 802,761 -------------- --------------- -------------- Average basic common shares 316,436 326,502 333,212 -------------- --------------- -------------- Income before extraordinary gain $ 3.08 $ 2.63 $ 2.41 Extraordinary gain, net of taxes - - - -------------- --------------- -------------- Earnings per common share - basic $ 3.08 $ 2.63 $ 2.41 ============== =============== ============== Diluted Income before extraordinary gain $ 975,923 $ 858,950 $ 802,761 Extraordinary gain, net of taxes - - - -------------- --------------- -------------- Net income $ 975,923 $ 858,950 $ 802,761 -------------- --------------- -------------- Average common shares outstanding 316,436 326,502 333,212 Incremental shares outstanding (1) 4,496 4,540 4,267 -------------- --------------- -------------- Average diluted common shares 320,932 331,042 337,479 -------------- --------------- -------------- Income before extraordinary gain $ 3.04 $ 2.59 $ 2.38 Extraordinary gain, net of taxes - - - -------------- --------------- -------------- Earnings per common share - diluted $ 3.04 $ 2.59 $ 2.38 ============== =============== ==============
(1) Includes the incremental effect of stock options and restricted stock outstanding computed under the treasury stock method. EX-12.1 9 0009.txt EXHIBIT 12.1 Exhibit 12.1
Year Ended December 31 -------------------------------------------------------- 2000 1999 1998 -------------------------------------------------------- Ratio 1 - including deposit interest - ------------------------------------ Earnings: Income before income taxes and extraordinary gain $1,919,556 $1,695,657 $1,498,306 Fixed charges 3,764,603 2,841,964 2,773,877 -------------------------------------------------------- Total $5,684,159 $4,537,621 $4,272,183 ======================================================== Fixed charges: Interest on deposits $2,452,919 $1,626,132 $1,644,229 Interest on funds purchased 651,235 749,561 634,086 Interest on other short-term borrowings 97,903 79,521 127,800 Interest on long-term debt 534,924 359,538 340,664 Portion of rents representative of the interest factor (1/3) of rental expense 27,622 27,212 27,098 -------------------------------------------------------- Total $3,764,603 $2,841,964 $2,773,877 ======================================================== Earnings to fixed charges 1.51 x 1.60 x 1.54 x Ratio 2 - excluding deposit interest - ------------------------------------ Earnings: Income before income taxes and extraordinary gain $1,919,556 $1,695,657 $1,498,306 Fixed charges 1,311,684 1,215,832 1,129,648 -------------------------------------------------------- Total $3,231,240 $2,911,489 $2,627,954 ======================================================== Fixed charges: Interest on funds purchased $ 651,235 $ 749,561 $ 634,086 Interest on other short-term borrowings 97,903 79,521 127,800 Interest on long-term debt 534,924 359,538 340,664 Portion of rents representative of the interest factor (1/3) of rental expense 27,622 27,212 27,098 -------------------------------------------------------- Total $1,311,684 $1,215,832 $1,129,648 ======================================================== Earnings to fixed charges 2.46 x 2.39 x 2.33 x
Year Ended December 31 -------------------------------------------------------- 1997 1996 1995 -------------------------------------------------------- Ratio 1 - including deposit interest - ------------------------------------ Earnings: Income before income taxes and extraordinary gain $1,499,599 $1,265,942 $1,211,458 Fixed charges 2,479,633 2,185,047 2,051,441 -------------------------------------------------------- Total $3,979,232 $3,450,989 $3,262,899 ======================================================== Fixed charges: Interest on deposits $1,627,417 $1,585,707 $1,481,548 Interest on funds purchased 461,724 356,879 336,360 Interest on other short-term borrowings 133,814 81,683 91,271 Interest on long-term debt 230,509 134,530 118,152 Portion of rents representative of the interest factor (1/3) of rental expense 26,169 26,248 24,110 -------------------------------------------------------- Total $2,479,633 $2,185,047 $2,051,441 ======================================================== Earnings to fixed charges 1.60 x 1.58 x 1.59 x Ratio 2 - excluding deposit interest - ------------------------------------ Earnings: Income before income taxes and extraordinary gain $1,499,599 $1,265,942 $1,211,458 Fixed charges 852,216 599,340 569,893 -------------------------------------------------------- Total $2,351,815 $1,865,282 $1,781,351 ======================================================== Fixed charges: Interest on funds purchased $ 461,724 $ 356,879 $ 336,360 Interest on other short-term borrowings 133,814 81,683 91,271 Interest on long-term debt 230,509 134,530 118,152 Portion of rents representative of the interest factor (1/3) of rental expense 26,169 26,248 24,110 -------------------------------------------------------- Total $ 852,216 $ 599,340 $ 569,893 ======================================================== Earnings to fixed charges 2.76 x 3.11 x 3.13 x
EX-13 10 0010.txt EXHIBIT 13 SUNTRUST 2000 Annual Report SunTrust Banks, Inc. SunTrust SunTrust Banks, Inc., with assets of $103.5 billion, is among the nation's largest financial holding companies. Its principal subsidiary, SunTrust Bank, offers a full line of financial services for consumers and businesses. SunTrust serves more than 3.7 million customer households through a regional organizational structure that 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 capital market services. As of December 31, 2000, SunTrust had total trust assets of $138.4 billion, including more than $91.6 billion in discretionary trust assets, and a mortgage-servicing portfolio in excess of $42.3 billion. On The Cover SunTrust's corporate headquarters are in Atlanta, Georgia. Financial Highlights 1 - -------------------------------------------------- Letter to Shareholders 2 - -------------------------------------------------- Management's Discussion and Analysis of Operations and Financial Condition 10 - -------------------------------------------------- Consolidated Financial Statements 36 - -------------------------------------------------- 2000 Form 10-K 66 - -------------------------------------------------- Board of Directors 68 - -------------------------------------------------- Management Committee 70 - -------------------------------------------------- General Information Inside Back Cover - --------------------------------------------------
Financial Highlights
Year Ended December 31 (Dollars in millions except per share data) 2000 1999 1998 - ----------------------------------------------------------------------------------------- For the Year Income before extraordinary gain $ 1,294.1 $ 1,124.0 $ 971.0 Extraordinary gain, net of taxes -- 202.6 -- - ----------------------------------------------------------------------------------------- Net income 1,294.1 1,326.6 971.0 ========================================================================================= Common dividends paid 443.4 440.6 352.5 Per Common Share Income - diluted before extraordinary gain $ 4.30 $ 3.50 $ 3.04 Extraordinary gain -- 0.63 -- - ----------------------------------------------------------------------------------------- Net income - diluted 4.30 4.13 3.04 ========================================================================================= Dividends declared 1.48 1.38 1.00 Common stock closing price 63.00 68.81 76.50 Book value 27.81 24.73 25.47 ========================================================================================= Financial Ratios Return on average assets (ROA) 1.35% 1.48% 1.18% Return on average realized shareholders' equity (ROE) 21.46 20.83 17.21 Net interest margin (taxable-equivalent) 3.55 3.88 3.97 Efficiency ratio 57.47 60.35 62.02 Tier 1 capital ratio 7.09 7.48 8.17 Total capital ratio 10.85 11.31 12.79 ========================================================================================= Selected Average Balances Total assets $ 98,397.8 $ 92,820.8 $ 85,536.9 Earning assets 88,609.0 82,255.7 74,880.9 Loans 70,044.3 62,749.4 57,590.5 Deposits 66,691.9 57,842.1 53,725.3 Realized shareholders' equity 6,031.6 6,368.3 5,641.4 Total shareholders' equity 7,501.9 8,190.7 7,853.6 Common shares - diluted (thousands) 300,956 321,174 319,711 ========================================================================================= At December 31 Total assets $ 103,496.4 $ 95,390.0 $ 93,169.9 Earning assets 91,983.8 85,193.4 81,295.1 Loans 72,239.8 66,002.8 61,540.6 Allowance for loan losses 874.5 871.3 944.6 Deposits 69,533.3 60,100.5 59,033.3 Realized shareholders' equity 6,296.4 6,064.0 6,090.4 Total shareholders' equity 8,239.2 7,626.9 8,178.6 Common shares outstanding (thousands) 296,266 308,353 321,124 Market value of investment in common stock of The Coca-Cola Company (48,266,496 shares) $ 2,941 $ 2,812 $ 3,234 =========================================================================================
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 Before Extraordinary Gain ($ per diluted common share) '95 2.38 '96 2.59 '97 3.04 '98 3.04 '99 3.50 '00 4.30 Dividends Declared ($ per common share) '95 .74 '96 .83 '97 .93 '98 1.00 '99 1.38 '00 1.48 Common Stock Price & Book Value* ($ per share) 2000 1999 1998 1997 1996 1995 Stock Price High 68.06 79.81 87.75 75.25 52.50 35.44 Stock Price Low 41.63 60.44 54.00 44.13 32.00 23.63 Book Value 27.81 24.73 25.47 23.08 20.60 19.29
- - Price Range = Book Value * Price range for the year and book value at year end SunTrust Banks, Inc. 1 "...SunTrust benefits from a distinct combination of strengths: an enviable franchise in very attractive markets...a good business mix... a strong balance sheet...the necessary capital, technology and human resources... and a proven execution capability." [PICTURE APPEARS HERE] [PHOTO OF L. PHILIP HUMANN] To Our Shareholders Thanks primarily to the hard work of SunTrust's 28,000 employees, I am proud to report that our Company successfully met the challenges posed by an uncertain operating environment in the year 2000. We delivered solid financial results in a year that our Company -- and our industry -- dealt with the impact of emerging crosscurrents in the U.S. economy. We also made progress in implementing an ambitious program of organizational change designed to enhance our performance prospects for the future. Solid Financial Results Operating earnings -- earnings attributable to our core business activities -- were $4.39 per diluted share in 2000, a 12 percent increase from $3.92 per diluted share a year earlier. Total operating earnings were $1.32 billion, up from the $1.26 billion earned in 1999. Reported net income, which includes $27.6 million in planned after-tax charges related to the completion of our merger with the former Crestar Financial Corporation, was $1.29 billion, or $4.30 per diluted share, compared with $1.33 billion, or $4.13 per diluted share, a year earlier. Looking at key performance ratios, reported return on average assets for the full year 2000 was 1.35 percent and return on average realized equity was 21.46 percent. The year's financial results are discussed in detail in the Management's Discussion and Analysis section of this report. However, it is appropriate to comment briefly about the impact on our performance of some external economic trends in 2000. The year was characterized first by unexpectedly high interest rates and then, continuing into 2001, increasing signs of a slowdown in economic growth. Despite healthy loan volume, our net interest margin was compressed early in the year due to a series of hikes in short-term interest rates initiated by the Federal Reserve Board. This had a dampening effect on net interest income growth that was later mitigated as rates moved lower -- and as we adjusted loan pricing and stepped up growth of low-cost core deposits. Economic factors also slowed growth in noninterest income. A weak stock market, for example, was reflected in lower trust-related fees and we experienced a rate-related drop in mortgage origination fees. We are moving to compensate for these factors through fine-tuning our business mix and stepping up new business generation. When the economy shows signs of slowing, perhaps the most visible impact on banks is in the credit quality area. We saw some weakness in loans to borrowers in certain industries and, predictably, an increase in non-performing assets overall. We continue to monitor this situation very closely; the state of the economy is always a major consideration. But given the composition of our loan portfolio and the strength of our reserves, we are confident our historical focus on superior credit quality will be maintained. L. Phillip Humann Chairman, President and Chief Executive Officer _______________ SunTrust enjoys a leading market position in Orlando, Florida, which consistently ranks as one of the fastest-growing metropolitan areas in the United States. SunTrust Banks, Inc. 3 "As our efficiency-related initiatives take hold, resources are made available for new investments in technology -- and in people -- to grow our five revenue- generating lines of business: Retail Banking, Commercial Banking, Corporate and Investment Banking, Mortgage, and Personal Client Services..." [PICTURE APPEARS HERE] [PHOTO OF JOHN W. SPIEGEL, JAMES M. WELLS III, JOHN W. CLAY, JR., THEODORE J. HOEPNER] In February 2001, the Board of Directors voted an 8.1 percent increase in the cash dividend paid on the Company's common stock, bringing the annual dividend to $1.60 per common share. Stock Performance Earnings momentum notwithstanding, 2000 was without doubt a disappointing year in terms of the performance of SunTrust stock. Our shares, like those of virtually all banks, traded at markedly lower levels than shareholders enjoyed in recent years when the stock reached all-time highs. The fact that our experience paralleled that of the industry did not make it any more pleasant for shareholders. It is, however, important to note that SunTrust has not been singled out by investors for harsh treatment. Investors tended to move away from bank stocks as a group during 2000 without differentiating between individual institutions. As one of the largest banks in the nation, SunTrust was not insulated from this industry trend. It is impossible at any time to predict the direction of the stock market - -- and especially so when the economic outlook itself is cloudy. But we believe SunTrust benefits from a distinct combination of strengths: an enviable franchise in very attractive markets...a good business mix... a strong balance sheet...the necessary capital, technology and human resources...and a proven execution capability. As the financial markets come to understand the steps we are taking to leverage these strengths -- and as we translate those steps into consistently strong earnings growth -- we hope and expect that the market price of our shares will reflect that understanding. Management Focus To provide concentrated corporate-level focus on SunTrust's major lines of business, geographic operations and support functions -- while also maintaining strong local market emphasis, we announced in mid-year a realignment of certain senior management responsibilities. The centerpiece of our announcement was the promotion of four of SunTrust's most capable and experienced executives to new vice chairman positions with the Company. The new vice chairmen, pictured above, have joined me in creating the SunTrust Policy Committee, an internal forum for policy formulation and business plan coordination. This new Committee will help ensure that management resources are sharply focused on implementing the organization's broad strategic plans, as well as initiatives aimed at achieving enhanced standardization and operating efficiency. These initiatives are discussed in more detail later in this letter. We were also pleased during 2000 to welcome to our Board of Directors Douglas N. Daft, Chairman of the Board and Chief Executive Officer of The Coca- Cola Company, and Patricia C. Frist, partner in Frist Capital Partners, President of the Nashville-based Frisco, Inc. and President of the Patricia C. Frist and Thomas F. Frist, Jr. Foundation. Vice Chairmen (pictured left to right) John W. Spiegel Chief Financial Officer James M. Wells III Commercial, Retail, Mortgage, Private Client Services Lines of Business, Corporate Strategy, Marketing John W. Clay, Jr. Geographic Banking, Corporate and Investment Banking Line of Business Theodore J. Hoepner Technology & Operations, Human Resources, Asset Quality, Legal & Regulatory Affairs, and Efficiency and Quality Initiatives _____________ In Nashville, Tennessee, as in all SunTrust markets, ATMs and internet banking complement telebanking and traditional branches to provide 24-hour service capability. SunTrust Banks, Inc. 5 [PICTURE APPEARS HERE] "The completion of the Crestar merger brought with it planned cost savings as well as the prospect of additional revenue growth as we tap the potential of the Mid-Atlantic markets." Mid-Atlantic Conversion Underscoring the scope of our geographic franchise, the final step in the completion of our merger with the former Crestar Financial Corporation was concluded over the three-day Memorial Day weekend in May 2000. In a well-coordinated, multi-dimensional effort, accounts at more than 1.5 million customer households were converted to SunTrust systems. At the same time, more than 4,000 distinctive SunTrust signs went up on banking offices, ATMs, data centers, and other facilities throughout Virginia, Maryland and Washington, D.C. Reflecting the overall success of the conversion, we saw essentially no loss of customers or business in the Mid-Atlantic market. This was a significant achievement given the magnitude and technical complexity of the conversion process. It also sets SunTrust's Mid-Atlantic experience apart from some other large bank mergers nationally which, in some cases, were characterized by widespread customer dislocation and reported integration problems. The completion of the Crestar merger brought with it planned cost savings as well as the prospect of additional revenue growth as we tap the potential of the Mid-Atlantic markets. In particular, the Greater Washington, D.C. market, with its affluent population base and expanding high-tech corporate sector, holds considerable opportunity. In the post-merger environment, SunTrust Bank, Mid-Atlantic takes its place along with SunTrust Bank, Georgia; SunTrust Bank, Florida; and SunTrust Bank, Tennessee, as one of our four flagship banking units. Becoming "One-Bank" With the merger behind us, technology resources dedicated to the Mid-Atlantic customer conversion were freed up to operationally support SunTrust's move to "one-bank." This initiative got underway with the legal consolidation of 28 previously separate SunTrust bank charters into a single charter on January 1, 2000. Historically, one of SunTrust's greatest competitive strengths has been our reliance on strong local management of individual, geography-oriented banking units. Even with the charter consolidation, individual SunTrust "banks" -- although no longer separate legal entities -- remain the primary vehicles in the marketplace for our community involvement, business generation efforts and customer relationships. Our decentralized management structure permits us to deliver big bank capabilities with a true local touch, something that differentiates us from other large, multi-state banks. We are committed to maintaining this competitive advantage even as we move toward greater standardization across our Company. For customers, a tangible result of the charter consolidation is the ability to uniformly conduct banking transactions-- such as accessing account information or cashing a check -- anywhere 6 2000 Annual Report [PICTURE APPEARS HERE] in the SunTrust system. Under our old multi-bank structure, individual SunTrust "banks" often had different product features or customer procedures, in some cases mandated by legal or regulatory requirements that varied from state to state. While consistent customer service is a major benefit, the charter move will also have a big behind-the-scenes impact. Operating as one bank, with common processes and operating procedures, permits many back-office and administrative functions to be streamlined. This in turn contributes to improved operating efficiency, always a critical corporate priority for SunTrust, but never more so than in 2000. Toward Improved Efficiency As external economic pressures caused a slowdown in revenue growth in some business lines, the importance of operating more efficiently across the Company was highlighted last year. The focal point for SunTrust's Company-wide efficiency drive is our "Corporate Efficiency and Quality Officer" organization -- referred to internally as the "CEQO." Under the CEQO's auspices, and with the support of business units and staff groups throughout the Company, more than 20 separate programs and projects are underway in areas ranging from corporate hiring trends to real estate management to purchasing to branch configuration. A major goal in this area is to reduce immediate expense levels. But in our definition, efficiency means more than cost cutting: it also means "re- engineering" parts of the Company to take advantage of cost-save and revenue enhancement opportunities afforded by our size, scope and new one-bank structure. And it means doing this without sacrificing any quality in the level of service required to attract and, equally important, to retain customers. Recognizing that salaries are one of the single largest components of SunTrust's noninterest expenses, we moved at mid-year to restrict the hiring of new employees from outside the organization unless they had specialized skills needed to implement specific, revenue-generating plans. Using this approach, we were able to reduce head count and salary expense at SunTrust without resorting to the broad-based job eliminations seen elsewhere in our markets that can impact employee morale and customer service. Throughout 2000, we focused with increased diligence on bringing the combined purchasing power of our organization to bear on the price we pay for the vast array of goods and services used in running our business. The establishment of corporate purchasing and expense guidelines -- coupled with the renegotiation of contracts for things like ATM maintenance, overnight mail delivery, security equipment and collection services -- has already yielded substantial savings while contributing to a standardized organizational experience. By centralizing management of SunTrust's real estate assets -- our multi- state network of banking facilities, office buildings and operations-related space -- we realized considerable savings in 2000, with the prospect of even more savings as we integrate space planning with business planning on a structured basis. In one example of how this works, a highly detailed review of ______________ The Greater Washington, D.C. market, with its affluent population base and expanding high-tech sector, holds considerable opportunity for SunTrust. SunTrust Banks, Inc. 7 "...providing an environment in which the aspirations of excellent people can be satisfied is one of our highest institutional priorities." our space requirements in the Atlanta market alone resulted in the identification of some 250,000 square feet of excess space which resulted in a projected savings of $6 million. As our efficiency-related initiatives take hold, resources are made available for new investments in technology -- and in people -- to grow our five revenue-generating lines of business: Retail Banking, Commercial Banking, Corporate and Investment Banking, Mortgage, and Personal Client Services, through which we provide trust and investment-related services. Talent Management This letter would be incomplete without noting that, in the end, SunTrust's most significant competitive advantage is the talent, energy and expertise of our employees. Accordingly, providing an environment in which the aspirations of excellent people can be satisfied is one of our highest institutional priorities. We also are working to ensure that SunTrust's work environment is supportive and responsive to our increasingly diverse client and employee base. Encouraging and valuing our employees' unique perspectives promote teamwork and innovation -- qualities that will help us achieve our business and financial performance goals well into the future. * * * In closing I would like simply to say, "thank you": To our customers, for choosing SunTrust as your financial services provider; To our employees, for your commitment and extra effort during a year that wasn't always easy; To the members of our regional boards, whose advice and counsel are invaluable as we seek to meet the needs of local markets; To our Corporate Board of Directors, for your support and direction. In particular, I extend special appreciation for their service to two directors who retired from the Board in 2000: Scott L. Probasco, Jr., former Chairman of the Executive Committee of SunTrust Bank, Chattanooga, and Richard G. Tilghman, former Vice Chairman and Executive Vice President of SunTrust Banks, Inc. and Chairman of SunTrust Bank, Mid-Atlantic. In addition, it is with sadness that I report the death of SunTrust Board Member Frank E. McCarthy, President of the National Automobile Dealers Association. A director since 1998, Mr. McCarthy brought a unique combination of grace and wisdom to our deliberations. He will be missed. And finally, to our shareholders, thank you for your continuing interest in SunTrust, your investment in our Company...and your confidence in our future. /s/ L. Phillip Humann L. Phillip Humann Chairman, President and Chief Executive Officer March 1, 2001 8 2000 Annual Report SELECTED FINANCIAL DATA. - --------------------------------------------------------------------------------
Year Ended December 31 (In millions except per share and other data) 2000 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------------- Summary of Operations Interest and dividend income $ 6,845.4 $ 5,960.2 $ 5,675.9 $ 5,238.2 $ 4,818.5 $ 4,528.7 Interest expense 3,736.9 2,814.7 2,746.8 2,453.5 2,158.8 2,027.3 - ---------------------------------------------------------------------------------------------------------------------------------- Net interest income 3,108.5 3,145.5 2,929.1 2,784.7 2,659.7 2,501.4 Provision for loan losses 134.0 170.4 214.6 225.1 171.8 143.4 - ---------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 2,974.5 2,975.1 2,714.5 2,559.6 2,487.9 2,358.0 Noninterest income/1/ 1,773.6 1,625.9 1,653.9 1,329.2 1,146.1 1,010.7 Noninterest expense/2/ 2,828.5 2,905.3 2,870.1 2,389.2 2,368.0 2,157.2 - ---------------------------------------------------------------------------------------------------------------------------------- Income before provision for income taxes and extraordinary gain 1,919.6 1,695.7 1,498.3 1,499.6 1,266.0 1,211.5 Provision for income taxes 625.5 571.7 527.3 523.7 407.0 408.7 - ---------------------------------------------------------------------------------------------------------------------------------- Income before extraordinary gain 1,294.1 1,124.0 971.0 975.9 859.0 802.8 Extraordinary gain, net of taxes/3/ -- 202.6 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 1,294.1 $ 1,326.6 $ 971.0 $ 975.9 $ 859.0 $ 802.8 ================================================================================================================================== Net interest income (taxable-equivalent) $ 3,148.4 $ 3,188.0 $ 2,973.5 $ 2,832.6 $ 2,709.7 $ 2,562.1 Per Common Share Diluted Income before extraordinary gain $ 4.30 $ 3.50 $ 3.04 $ 3.04 $ 2.59 $ 2.38 Extraordinary gain -- 0.63 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Net income 4.30 4.13 3.04 3.04 2.59 2.38 Basic Income before extraordinary gain 4.35 3.54 3.08 3.08 2.63 2.41 Extraordinary gain -- 0.64 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Net income 4.35 4.18 3.08 3.08 2.63 2.41 Dividends declared 1.48 1.38 1.00 0.925 0.825 0.74 Market price: High 68.06 79.81 87.75 75.25 52.50 35.44 Low 41.63 60.44 54.00 44.13 32.00 23.63 Close 63.00 68.81 76.50 71.38 49.25 34.25 Selected Average Balances Total assets $ 98,397.8 $ 92,820.8 $ 85,536.9 $ 76,017.3 $ 69,252.0 $ 63,532.0 Earning assets 88,609.0 82,255.7 74,880.9 66,944.0 61,644.4 56,994.4 Loans 70,044.3 62,749.4 57,590.5 51,788.1 46,338.4 43,331.6 Deposits 66,691.9 57,842.1 53,725.3 51,673.7 50,317.6 47,240.3 Realized shareholders' equity 6,031.6 6,368.3 5,641.4 5,116.7 5,101.3 4,783.0 Total shareholders' equity 7,501.9 8,190.7 7,853.6 6,953.4 6,434.3 5,635.9 At December 31 Total assets $103,496.4 $ 95,390.0 $ 93,169.9 $ 82,840.8 $ 75,264.2 $ 68,799.8 Earning assets 91,983.8 85,193.4 81,295.1 72,258.9 65,921.8 60,555.6 Loans 72,239.8 66,002.8 61,540.6 55,476.4 49,301.4 45,284.9 Allowance for loan losses 874.5 871.3 944.6 933.5 897.0 915.8 Deposits 69,533.3 60,100.5 59,033.3 54,580.8 52,577.1 49,543.6 Long-term debt 8,945.4 6,017.3 5,807.9 4,010.4 2,427.7 1,675.6 Realized shareholders' equity 6,296.4 6,064.0 6,090.4 5,263.9 5,133.1 4,913.4 Total shareholders' equity 8,239.2 7,626.9 8,178.6 7,312.1 6,713.6 6,085.2 Ratios and Other Data ROA 1.35% 1.48% 1.18% 1.34% 1.28% 1.29% ROE 21.46 20.83 17.21 19.07 16.84 16.78 Net interest margin 3.55 3.88 3.97 4.23 4.40 4.50 Efficiency ratio 57.47 60.35 62.02 57.41 61.41 60.38 Total shareholders' equity to assets 7.96 8.00 8.78 8.83 8.92 8.84 Allowance to year-end loans 1.21 1.32 1.53 1.68 1.82 2.02 Nonperforming assets to total loans plus other real estate owned 0.59 0.42 0.39 0.43 0.74 0.94 Common dividend payout ratio 34.3 33.4 32.9 30.4 31.9 31.1 Full-service banking offices 1,129 1,114 1,079 1,072 1,073 1,039 ATMs 1,991 1,968 1,839 1,691 1,394 1,191 Full-time equivalent employees 28,268 30,222 30,452 29,442 29,583 27,902 Average common shares - diluted (thousands) 300,956 321,174 319,711 320,932 331,042 337,479 Average common shares - basic (thousands) 297,834 317,079 314,908 316,436 326,502 333,212 ==================================================================================================================================
/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 $42.4 million in 2000, $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. SunTrust Banks, Inc. 9 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 income 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 2000 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 34 of this annual report. Earnings Overview SunTrust's net income for 2000 totaled $1,294.1 million, or $4.30 per diluted share, compared with net income before extraordinary gain of $1,124.0 million, or $3.50 per diluted share, for 1999. Results included the following unusual items: . Merger related charges, net of tax, of $27.6 million, or $0.09 per diluted share, for 2000, $32.2 million, or $0.10 per diluted share, for 1999 and $117.1 million, or $0.37 per diluted share, for 1998 related to the acquisition of Crestar in 1998 (see Note 2 to the Consolidated Financial Statements). . 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. . 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. Operating results for 2000 were impacted by rising interest rates, moderate fee income growth and reduced expenses including a $36.4 million decrease in the provision for loan losses. Net interest income declined $39.6 million to $3,148.4 million and the net interest margin declined 33 basis points in 2000. These decreases were primarily the result of the sale of the consumer credit card portfolio in the fourth quarter of 1999, funding costs for the repurchase of approximately 12.9 million shares of the Company's common stock, rising rates on purchased liabilities and increased reliance on purchased liabilities to fund growth. Positively affecting net interest income and net interest margin were the repositioning of the securities portfolio in the fourth quarter of 1999 and 11.6% growth in average loans. The 2000 loan loss provision of $134.0 million was 21.4% lower than the $170.4 million recorded in 1999 primarily due 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 $1,767.0 million, a 1.8% increase compared to 1999. The increase was driven by a $43.5 million, or 64.2%, increase in corporate and institutional investment services income, a $21.6 million, or 4.9%, increase in service charges on deposit accounts and an $18.3 million, or 16.0% increase in other income. Negatively impacting noninterest income was a $63.0 million, or 41.2%, decrease in mortgage production related income and a $22.1 million, or 31.3% decrease in credit card fees, excluding debit card interchange income. Due to realization of merger related efficiencies as well as the Company's continued focus on expense management, noninterest expense, excluding merger- related expenses, decreased $73.6 million for 2000, or Net Income Before Extraordinary Gain ($ in millions) '95 802.8 '96 859.0 '97 975.9 '98 971.0 '99 1,124.0 '00 1,294.1 Return On Average Realized Equity '95 16.78 '96 16.84 '97 19.07 '98 17.21 '99 20.83 '00 21.46 10 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- 2.6% compared to 1999. Contributing to the decline was a $54.4 million, or 3.2%, decrease in personnel expense and an $18.8 million, or 12.0% decrease in other expenses. The lower personnel costs reflect a reduction of 1,954 positions across the Company. Partially offsetting these declines was a $22.0 million, or 14.6%, increase in outside processing and software expense. Table 1 Analysis of Changes in Net Interest Income/1/
2000 Compared to 1999 1999 Compared to 1998 (In millions on a Increase (Decrease) Due to Increase (Decrease) Due to ---------------------------- ----------------------------- taxable-equivalent basis) Volume Rate Net Volume Rate Net - ---------------------------------------------------------------------------------------------------- Interest Income Loans Taxable $ 579.2 $ 282.0 $ 861.2 $ 395.1 $(203.5) $ 191.6 Tax-exempt/2/ (1.9) 4.8 2.9 3.7 (5.5) (1.8) Securities available for sale Taxable (8.6) 62.4 53.8 133.8 (25.9) 107.9 Tax-exempt/2/ (6.8) (2.4) (9.2) (6.1) (1.5) (7.6) Funds sold 5.9 13.5 19.4 1.8 -- 1.8 Loans held for sale (83.2) 21.6 (61.6) 11.7 (19.9) (8.2) Other short-term investments/2/ 14.8 1.3 16.1 (0.6) (0.7) (1.3) - -------------------------------------------------------------------------------------------------- Total interest income 499.4 383.2 882.6 539.4 (257.0) 282.4 - -------------------------------------------------------------------------------------------------- Interest Expense NOW/Money market accounts 5.4 102.0 107.4 46.1 (43.6) 2.5 Savings deposits (14.9) 39.6 24.7 8.5 (21.6) (13.1) Consumer time deposits 5.3 54.6 59.9 (28.3) (37.5) (65.8) Brokered deposits 215.4 0.1 215.5 (20.4) (0.8) (21.2) Foreign deposits 341.7 55.9 397.6 113.1 (3.5) 109.6 Other time deposits (9.9) 31.6 21.7 (7.9) (22.2) (30.1) Funds purchased (248.9) 150.5 (98.4) 152.3 (36.8) 115.5 Other short-term borrowings (7.0) 25.4 18.4 (34.5) (13.8) (48.3) Long-term debt 142.8 32.6 175.4 30.3 (11.5) 18.8 - ---------------------------------------------------------------------------------------------------- Total interest expense 429.9 492.3 922.2 259.2 (191.3) 67.9 - -------------------------------------------------------------------------------------------------- Net change in net interest income $ 69.5 $(109.1) $ (39.6) $ 280.2 $ (65.7) $ 214.5 ==================================================================================================
/1/ 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
At December 31 (In millions) 2000 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Commercial $ 30,781.1 $ 26,933.5 $ 24,589.6 $ 19,043.7 $ 15,761.4 $ 14,073.4 Real estate Construction 2,966.1 2,457.1 2,085.0 1,809.8 1,686.6 1,615.1 Residential mortgages 19,953.0 19,619.3 16,880.9 17,297.2 15,629.5 14,205.7 Other 8,121.4 7,794.9 8,254.3 7,457.6 6,455.0 6,347.1 Credit card 76.8 77.4 1,563.5 2,195.6 2,367.4 2,479.6 Other consumer loans 10,341.4 9,120.6 8,167.3 7,672.5 7,401.5 6,564.0 - ---------------------------------------------------------------------------------------------------------- Total loans $ 72,239.8 $ 66,002.8 $ 61,540.6 $ 55,476.4 $ 49,301.4 $ 45,284.9 ==========================================================================================================
SunTrust Banks, Inc. 11 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 3 Consolidated Daily Average Balances, Income/Expense and Average Yields Earned and Rates Paid
2000 1999 1998 ------------------------------- ----------------------------- ------------------------------- (Dollars in millions; yields Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/ on taxable-equivalent basis) Balances Expense Rates Balances Expense Rates Balances Expense Rates - --------------------------------------------------------------------------------------------------------------------------------- Assets Loans:/1/ Taxable $ 68,968.8 $ 5,552.4 8.05% $ 61,648.3 $4,691.2 7.61% $56,537.1 $ 4,499.6 7.96% Tax-exempt/2/ 1,075.5 83.0 7.72 1,101.1 80.1 7.27 1,053.4 81.9 7.78 - ------------------------------------------------------------------------------------------------------------------------------ Total loans 70,044.3 5,635.4 8.05 62,749.4 4,771.3 7.60 57,590.5 4,581.5 7.96 Securities available for sale Taxable 14,593.7 981.4 6.73 14,728.7 927.6 6.30 12,618.9 819.7 6.50 Tax-exempt/2/ 469.7 35.4 7.54 558.2 44.6 7.99 633.8 52.2 8.23 - ------------------------------------------------------------------------------------------------------------------------------ Total securities available for sale 15,063.4 1,016.8 6.75 15,286.9 972.2 6.36 13,252.7 871.9 6.58 Funds sold 1,439.8 92.8 6.44 1,338.0 73.4 5.48 1,306.2 71.6 5.48 Loans held for sale 1,451.1 110.6 7.62 2,577.1 172.2 6.68 2,414.7 180.4 7.47 Other short-term investments/2/ 610.4 29.7 4.87 304.3 13.6 4.48 316.8 14.9 4.70 - ------------------------------------------------------------------------------------------------------------------------------ Total earning assets 88,609.0 6,885.3 7.77 82,255.7 6,002.7 7.30 74,880.9 5,720.3 7.64 Allowance for loan losses (869.0) (942.1) (940.5) Cash and due from banks 3,316.4 3,630.3 3,306.9 Premises and equipment 1,625.4 1,596.3 1,486.6 Other assets 3,362.2 3,332.5 3,219.1 Unrealized gains on securities available for sale 2,353.8 2,948.1 3,583.9 - ----------------------------------------------------------------------------------------------------------------------------- Total assets $ 98,397.8 $ 92,820.8 $85,536.9 ============================================================================================================================= Liabilities and Shareholders' Equity Interest-bearing deposits NOW/Money market accounts $ 20,129.0 $ 634.3 3.15% $19,926.0 $ 527.0 2.64% $18,253.6 $ 524.5 2.87% Savings 6,434.2 228.5 3.55 6,918.8 203.8 2.95 6,645.9 216.9 3.26 Consumer time 9,935.5 528.5 5.32 9,824.3 468.6 4.77 10,390.4 534.4 5.14 Brokered Deposits 3,308.7 215.9 6.52 7.0 0.4 5.27 394.0 21.6 5.47 Foreign Deposits 9,621.7 609.7 6.34 4,087.8 212.0 5.19 1,906.2 102.4 5.37 Other time 4,085.3 236.0 5.78 4,275.0 214.3 5.01 4,423.9 244.4 5.53 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing deposits 53,514.4 2,452.9 4.58 45,038.9 1,626.1 3.61 42,014.0 1,644.2 3.91 Funds purchased 10,754.4 651.2 6.06 15,220.8 749.6 4.92 12,164.9 634.1 5.21 Other short-term borrowings 1,550.6 97.9 6.31 1,689.9 79.5 4.71 2,391.8 127.8 5.34 Long-term debt 8,034.6 534.9 6.66 5,858.6 359.5 6.14 5,368.0 340.7 6.35 Total interest-bearing liabilities 73,854.0 3,736.9 5.06 67,808.2 2,814.7 4.15 61,938.7 2,746.8 4.43 Noninterest-bearing deposits 13,177.5 12,803.2 11,711.3 Other liabilities 3,864.4 4,018.7 4,033.3 Realized shareholders' equity 6,031.6 6,368.3 5,641.4 Accumulated other comprehensive income 1,470.3 1,822.4 2,212.2 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 98,397.8 $92,820.8 $85,536.9 ============================================================================================================================== Interest Rate Spread 2.71% 3.15% 3.21% - ------------------------------------------------------------------------------------------------------------------------------ Net Interest Income $ 3,148.4 $3,188.0 $ 2,973.5 - ------------------------------------------------------------------------------------------------------------------------------ Net Interest Margin/3/ 3.55% 3.88% 3.97% ==============================================================================================================================
/1/ Interest income includes loan fees of $135.6, $142.3, $118.4, $108.5, $102.1, and $94.8 million in the six years ended December 31, 2000. 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 $39.9, $42.5, $44.4, $47.9, $50.0, and $60.7 million in the six years ended December 31, 2000. 12 2000 Annual Report MANAGEMENT'S DISCUSSION ---------------------------------------------------------------------------
Compounded Growth Rate in Average Balances 1997 1996 1995 One Year Five Year - -------------------------------------- ------------------------------- ----------------------------- ------------------ Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/ 2000- 2000- Balances Expense Rates Balances Expense Rates Balances Expense Rates 1999 1995 - -------------------------------------------------------------------------------------------------------------------------------- $ 50,813.7 $ 4,198.8 8.26% $ 45,472.0 $ 3,798.5 8.35% $ 42,438.4 $ 3,629.9 8.55% 11.9% 10.2% 974.4 79.2 8.13 866.4 74.0 8.54 893.2 84.9 9.50 (2.3) (3.8) - -------------------------------------------------------------------------------------------------------------------------------- 51,788.1 4,278.0 8.26 46,338.4 3,872.5 8.36 43,331.6 3,714.8 8.57 11.6 10.1 11,882.4 779.9 6.56 12,297.7 778.8 6.33 11,387.7 692.0 6.08 (0.9) 5.1 749.8 64.0 8.53 850.9 75.8 8.90 873.7 91.9 10.51 (15.9) (11.7) - -------------------------------------------------------------------------------------------------------------------------------- 12,632.2 843.9 6.68 13,148.6 854.6 6.50 12,261.4 783.9 6.39 (1.5) 4.2 1,378.5 80.4 5.83 1,044.0 56.5 5.41 886.9 53.9 6.08 7.6 10.2 865.4 70.0 8.09 984.4 77.9 7.91 417.2 31.8 7.63 (43.7) 28.3 279.8 13.8 4.94 129.0 7.0 5.44 97.3 5.0 5.18 100.6 44.4 - -------------------------------------------------------------------------------------------------------------------------------- 66,944.0 5,286.1 7.90 61,644.4 4,868.5 7.90 56,994.4 4,589.4 8.05 7.7 9.2 (913.3) (923.8) (913.0) (7.8) (1.0) 3,156.7 3,186.2 3,058.8 (8.6) 1.6 1,395.1 1,164.7 1,134.9 1.8 7.4 2,459.3 2,025.1 1,877.9 0.9 12.4 2,975.5 2,155.4 1,379.0 (20.2) 11.3 - -------------------------------------------------------------------------------------------------------------------------------- $ 76,017.3 $ 69,252.0 $ 63,532.0 6.0 9.1 ================================================================================================================================ $ 16,360.5 $ 462.2 2.82% $ 16,110.3 $ 457.4 2.84% $ 15,115.6 $ 437.5 2.89% 1.0% 5.9% 6,810.1 227.5 3.34 7,065.7 240.5 3.40 5,483.0 146.7 2.68 (7.0) 3.3 11,032.1 562.4 5.10 12,049.4 625.4 5.19 12,824.2 645.3 5.03 1.1 (5.0) 108.1 6.1 5.64 71.5 3.7 5.18 -- -- -- -- 160.8 2,574.7 141.7 5.50 1,670.5 90.0 5.39 1,588.5 96.3 6.06 135.4 43.4 4,082.2 227.6 5.57 3,080.1 168.7 5.48 2,462.2 155.6 6.32 (4.4) 10.7 - -------------------------------------------------------------------------------------------------------------------------------- 40,967.7 1,627.5 3.97 40,047.5 1,585.7 3.96 37,473.5 1,481.4 3.95 18.8 7.4 8,641.9 461.7 5.34 6,965.8 356.9 5.12 5,533.5 336.4 6.08 (29.3) 14.2 2,591.9 133.8 5.16 1,501.4 81.7 5.44 1,940.7 91.3 4.70 (8.2) (4.4) 3,275.4 230.5 7.04 1,961.8 134.5 6.86 1,655.8 118.2 7.14 37.1 37.1 - -------------------------------------------------------------------------------------------------------------------------------- 55,476.9 2,453.5 4.42 50,476.5 2,158.8 4.28 46,603.5 2,027.3 4.35 8.9 9.6 10,706.0 10,270.1 9,766.8 2.9 6.2 2,881.0 2,071.1 1,525.8 (3.8) 20.4 5,116.7 5,101.3 4,783.0 (5.3) 4.7 1,836.7 1,333.0 852.9 (19.3) 11.5 - -------------------------------------------------------------------------------------------------------------------------------- $ 76,017.3 $ 69,252.0 $ 63,532.0 6.0 9.1 - -------------------------------------------------------------------------------------------------------------------------------- 3.48% 3.62% 3.70% - -------------------------------------------------------------------------------------------------------------------------------- $ 2,832.6 $ 2,709.7 $ 2,562.1 - -------------------------------------------------------------------------------------------------------------------------------- 4.23% 4.40% 4.50% ================================================================================================================================
/3/ Derivative instruments used to help balance the Company's interest- sensitivity position decreased net income by $0.5 million in 2000, increased net interest income by $16.3 million and $0.7 million in 1999 and 1998, decreased net interest income by $7.7 million in 1997 and increased net interest income by $0.1 million and $3.6 million in 1996 and 1995, respectively. Without these derivative instruments, the net interest margin would have been 3.55% in 2000, 3.86% in 1999, 3.97% in 1998, 4.24% in 1997, 4.40% in 1996 and 4.49% in 1995. SunTrust Banks, Inc. 13 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Net Interest Income/Margin Net interest income for 2000 was $3,148.4 million or 1.2% lower than the prior year. Three significant events caused the decrease in net interest income: 1) the consumer credit card portfolio was sold in November 1999; 2) the stock buyback began in the second half of 1999 and continued in 2000; and 3) interest rates continued to increase throughout 2000. Average earning assets were up 7.7%, average loans increased 11.6% and the net interest margin was 3.55% in 2000 compared to 3.88% in 1999. The average rate on earning assets increased 47 basis points to 7.77% and the average rate on interest-bearing liabilities increased 91 basis points to 5.06% primarily due to the rising rates on purchased liabilities and increased reliance on purchased liabilities to fund loan growth. As part of its on-going balance sheet management, the Company is taking steps to obtain alternative lower cost funding sources such as developing initiatives to grow retail deposits to maximize net interest income in 2001. Interest income that the Company was unable to recognize on nonperforming loans had a negative impact of two and one basis points on the net interest margin for 2000 and 1999, 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 2000 loan loss provision of $134.0 million was 21.4% lower than the $170.4 million recorded in 1999. The reduction in the provision for loan losses was primarily due to the sale of the Company's consumer credit card portfolio in November 1999 along with lower credit losses in large corporate loans. The consumer credit card portfolio accounted for $67.0 million in net charge-offs in 1999. Large corporate charge-offs totaled $93.7 million in 1999, compared to $58.2 million in 2000. Partially offsetting the overall reduction in provision expense were additional provisions for other segments of the loan portfolio due to credit quality concerns as evidenced by increased nonperforming assets. 14 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Average Earnings Assets Mix ($ in millions) [CHART APPEARS HERE] Average Earning Asset Mix (in millions) Average for 2000 % of Total ---------------- ---------- Interest Bearing Deposits in Other Banks 39.9 0.05% Trading Account 570.5 0.64% Securities Available for sale 15,063.4 17.00% Funds Sold 1,439.8 1.62% Loans Held For Sale 1,451.1 1.64% Loans 70,044.3 79.05% ------------ -------- 88,609.0 100.00% ============ ======== Loans Loan demand was strong in 2000 as average loans increased 11.6% over the prior year. The Company's portfolio of commercial loans grew 14.3%, real estate loans grew 3.9% and consumer loans grew 13.3%. The loan portfolio continues to be well-diversified from both a product and industry concentration standpoint. The product mix remained relatively constant from year end 1999 to 2000, with real estate loans accounting for the largest loan segment (43% of total loans). Residential real estate represented 28% of total loans at year end, including $17.7 billion in home mortgages and $2.2 billion in home equity loans. During the fourth quarter of 2000, in order to improve liquidity, the Company securitized $925.4 million in residential mortgages that are now carried on the balance sheet as "Securities available for sale." As a part of its on-going balance sheet management, the Company expects to securitize additional residential mortgages during 2001. Commercial loans and consumer loans comprised 43% and 14% of the total loans at year end, respectively. From an industry concentration perspective, the Manufacturing and Financial Services sectors are the only areas that represent more than 5% of year-end loans outstanding. Loan Mix ($ in millions) [CHART APPEARS HERE] Loan Mix (in millions) Commercial 30,781.9 42.61% Construction 2,966.1 4.11% Residential mortgage 19,953.0 27.62% Other real estate 8,121.4 11.24% Credit Card 76.8 0.11% Other consumer loans 10,341.4 14.31% ------------ -------- 72,239.8 100.00% ============ ======== Although the healthcare industry was a primary area of credit concern in 1999, SunTrust experienced lower losses in this industry during 2000 and exited a number of problem loans. Healthcare credits accounted for only 8% of the Company's year-end nonperforming assets and approximately $25 million in net charge-offs in 2000, compared to 20% and $75 million in 1999. During the second half of 2000, other industry groups received increased management attention as several high profile companies filed for bankruptcy protection. These industries included movie theaters and those that have direct or contingent liabilities related to asbestos litigation. Outstanding loans and related exposure to these industries totaled $103.6 million at December 31, 2000 and were placed on nonaccrual even though the related business entities continue to operate. The Company will continue to monitor performance in the above mentioned industries and other segments deemed to have increasing risk profiles. SunTrust Banks, Inc. 15 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 1995. Noninterest income, excluding securities gains and losses, was $1,767.0 million in 2000, an increase of $32.0 million or 1.8 % compared to 1999. Trust income, SunTrust's largest source of noninterest income, decreased $1.7 million or 0.3% compared to 1999. The lower equity markets and rising interest rate environment during 2000 adversely impacted the market value of trust assets under management and the amount of trust fee income recognized in 2000. The market value of discretionary trust assets under management was $92.6 billion as of December 31, 2000 up from $89.3 billion as of December 31, 1999. Net new trust business grew at a lesser rate in 2000 compared to 1999; however, management anticipates that the improved investment performance of SunTrust's proprietary investment products and new product offerings will cause the Company's net new business results to improve throughout 2001, resulting in moderate growth in trust income. Service charges on deposit accounts rose $21.6 million or 4.9%. Other charges and fees were up $10.7 million or 5.4% as a result of increased loan demand and increased loan commitment fee income. Corporate and institutional investment services income increased $43.5 million or 64.2%, led by strong growth in loan syndication income and other corporate finance advisory income. SunTrust significantly increased its market share in the number of loan syndication deals it led or was an agent/co-agent, successfully implementing its strategy of up-tiering to a lead position with targeted clients. Mortgage production related income decreased by 41.2%, or $63.0 million, due primarily to a drop in refinancing activities resulting from the rising rate environment for residential mortgages. Included in credit card fees is debit card interchange income of $47.3 million for 2000 compared to $35.7 million for 1999. The sale of the credit card portfolio in the fourth quarter of 1999 caused the overall decline in this category. The Company incurred net security gains during 2000 of $6.6 million compared to a net loss of $109.1 million in the previous year. The majority of the loss in 1999 was incurred during the fourth quarter as a result of the portfolio repositioning program undertaken by the Company to improve future income. Other income in 2000 includes $11.4 million in net gains on the sale of mortgage and student loans. 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. 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. Table 4 Noninterest Income
Year Ended December 31 (In millions) 2000 1999 1998 1997 1996 1995 - ----------------------------------------------------------------------------------------------------- Trust income $ 493.9 $ 495.6 $ 453.4 $ 387.3 $ 339.4 $ 319.5 Service charges on deposit accounts 459.7 438.1 401.1 374.1 346.9 321.9 Other charges and fees 210.8 200.1 191.0 166.9 143.4 120.6 Corporate and institutional investment services 111.3 67.8 55.8 16.8 12.2 6.9 Trading account profits and commissions 31.7 35.1 44.6 22.7 18.2 14.9 Retail investment services 108.2 97.4 64.6 51.5 37.7 27.7 Credit card and other fees 95.7 106.2 87.3 81.1 59.3 56.1 Mortgage production related income 90.0 153.0 238.3 97.0 70.5 36.0 Mortgage servicing related income 32.8 27.1 2.8 20.8 25.7 25.6 Securities gains (losses) 6.6 (109.1) 8.2 6.9 17.6 (8.7) Other income 132.9 114.6 106.8 104.1 75.2 90.2 - ----------------------------------------------------------------------------------------------------- Total noninterest income $1,773.6 $1,625.9 $1,653.9 $1,329.2 $1,146.1 $1,010.7 =====================================================================================================
Noninterest Expense Noninterest expense decreased 2.6% in 2000. During 2000, due to the reduction of 1,954 positions, total personnel expenses decreased 3.2% or $54.4 million. The 14.6% increase in outside processing and software is primarily due to an increase in software amortization and expense of $14.3 million compared to 1999. The efficiency ratio for 2000 was 57.5%, an improvement from 60.4% for 1999. For 2000, merger-related expenses were primarily related to accelerated depreciation and miscellaneous integration costs. In 1999, merger-related costs included additional severance, accelerated depreciation and system conversion costs. (See Note 2 to the Consolidated Financial Statements.) 16 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 5 Noninterest Expense
Year Ended December 31 (In millions) 2000 1999 1998 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------- Salaries $ 1,139.9 $ 1,174.5 $ 1,095.5 $ 977.9 $ 924.1 $ 857.0 Other compensation 329.1 348.1 338.2 218.1 198.5 155.2 Employee benefits 175.0 175.8 181.8 176.9 169.5 166.7 - ----------------------------------------------------------------------------------------------------------------------- Total personnel expense 1,644.0 1,698.4 1,615.5 1,372.9 1,292.1 1,178.9 Net occupancy expense 202.6 197.4 192.2 187.2 203.0 193.6 Equipment expense 193.7 198.5 178.8 167.7 158.6 147.9 Outside processing and software 172.3 150.3 138.4 112.7 103.8 87.4 Marketing and customer development 106.2 105.4 107.1 95.4 104.6 72.1 Postage and delivery 63.3 68.1 64.4 64.1 63.3 57.5 Communications 59.8 66.3 62.1 52.7 50.7 43.3 Consulting and legal 59.6 62.5 67.5 51.7 55.0 41.0 Credit and collection services 56.9 68.7 70.4 59.5 54.1 40.2 Operating supplies 47.3 51.9 54.0 50.0 52.9 47.2 Merger-related expenses 42.4 45.6 119.4 -- -- -- Amortization of intangible assets 35.5 32.8 43.1 38.5 37.4 33.2 FDIC premiums 11.2 7.9 8.4 8.5 59.3 61.2 Other real estate (income) expense (3.8) (4.8) (9.8) (8.6) 8.2 (13.8) Other expense 137.5 156.3 158.6 136.9 125.0 167.5 - ----------------------------------------------------------------------------------------------------------------------- Total noninterest expense $ 2,828.5 $ 2,905.3 $ 2,870.1 $ 2,389.2 $ 2,368.0 $ 2,157.2 ======================================================================================================================= Efficiency ratio 57.47% 60.35% 62.02% 57.41% 61.41% 60.38% =======================================================================================================================
Provision For Income Taxes The provision for income taxes covers federal and state income taxes. In 2000, the provision was $625.5 million, compared to $571.7 million in 1999. The effective tax rate for 2000 was 32.6% compared to 33.7% for 1999. The decrease was due primarily to the tax benefit realized from the issuance of bank regulatory capital (preferred stock of SunTrust Real Estate Investment Corporation). In addition to the regular 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 problem loans and to a conservative allowance. The Company believes the current allowance is adequate to cover such inherent losses. 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. At year-end 2000, the Company's total allowance was $874.5 million, which represented 1.21% of period-end loans. 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. 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 $0.5 million or greater. The specific allowance established for these classified loans is based on a careful analysis of probable and potential sources of repayment, including cash flow, collateral value 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, examines loss experience in relation to internal loan grades. An annual SunTrust Banks, Inc. 17 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- charge-off trend analysis is completed for homogeneous loan categories (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 category. 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 risk factors are carefully reviewed by management and are revised as conditions indicate. 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 supported by the same type of collateral. SunTrust has a significant concentration of credit in loans secured by residential real estate. At December 31, 2000, the Company had $20.0 billion in loans secured by residential real estate, representing 27.6% of total loans, down slightly from 29.7% at December 31, 1999. 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 movie theater sector, which experienced a high level of bankruptcies in the second half of 2000. At year-end 2000, the Company had outstanding loans of $59.6 million to two industry leaders, both of which were on nonaccrual status. Accordingly, allowance levels reflect the higher risk profile that currently exists for this industry sector. SunTrust engages in limited international banking activities. The Company's total cross border outstandings are $623.0 million and no significant changes in trends occurred in that portfolio during 2000. Only minor exposure exists in areas of concern in Latin America or Asia. The Company prepares a comprehensive analysis of its allowance for loan losses and conducts a peer review of allowance levels of large banks on a quarterly basis. In addition, the SunTrust Allowance for Loan Losses Review Committee has the responsibility of affirming the allowance methodology and assessing the general and specific allowance factors in relation to estimated and actual net charge-off trends. This committee meets at least quarterly and is also responsible for assessing the appropriateness of the allowance for loan losses for each loan category for the Company. Nonperforming assets increased from $275.7 million at December 31, 1999 to $428.3 million at December 31, 2000 (See "Nonperforming Assets" and Table 9 for further discussion). Many of the non-performing 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 of the allowance for loan losses to total nonperforming loans (excluding other real estate owned) decreased from 350.0% at December 31, 1999 to 215.8% at December 31, 2000. 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 past due for 90 18 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- 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 the market value of collateral or other repayment prospects. The Company's provision for loan losses in 2000 was $134.0 million, which was $3.2 million more than net charge-offs of $130.8 million. The comparable provision and net charge-off amounts for 1999 were $170.4 million and $230.4 million, respectively. Provision expense declined from 1999 to 2000 due to the sale of the Company's consumer credit card portfolio in November 1999 and lower losses experienced in large corporate credits. Net charge-offs for 2000 represented .19% of average loans, compared to .37% of average loans for 1999. Although actual recoveries in 2000 were slightly lower than in 1999, the ratio of recoveries to total charge-offs increased to 31.1% from 22.2% due to lower net losses. Table 6 Loans by Industry At December 31, 2000 (Dollars in Millions) Loans % of Total Loans - ------------------------------------------------------------------ Manufacturing $ 5,639.1 7.8 Financial Services 4,984.6 6.9 Business Services 3,427.4 4.7 Construction/Contractors 2,964.5 4.1 Transportation 2,912.9 4.0 Real Estate Investors 2,562.6 3.5 Wholesale Trade 2,345.2 3.2 Healthcare 2,088.1 2.9 Hospitality/Entertainment 1,728.6 2.4 Telecommunications 1,422.1 2.0 Retail Trade 1,379.0 1.9 Textiles 1,313.8 1.8 ================================================================== Table 7 Allowance for Loan Losses
At December 31 (Dollars in Millions) 2000 1999 1998 1997 1996 1995 Allocation by Loan Type Commercial $ 389.0 $ 286.7 $ 251.4 $ 247.8 $ 229.9 $ 211.2 Real Estate 190.2 208.0 229.8 229.3 262.8 325.5 Consumer Loans 252.3 339.3 420.9 406.9 350.5 327.1 Unallocated 43.0 37.3 42.5 49.5 53.8 52.0 - ------------------------------------------------------------------------------------------------------------------ Total $ 874.5 $ 871.3 $ 944.6 $ 933.5 $ 897.0 $ 915.8 =================================================================================================================== Allocation as a Percent of Total Allowance Commercial 44.5% 32.9% 26.6% 26.5% 25.6% 23.1% Real Estate 21.7 23.9 24.3 24.6 29.3 35.5 Consumer Loans 28.9 38.9 44.6 43.6 39.1 35.7 Unallocated 4.9 4.3 4.5 5.3 6.0 5.7 - ------------------------------------------------------------------------------------------------------------------- Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% =================================================================================================================== Year-end Loan Types as a Percent of Total Loans Commercial 42.6% 40.8% 40.0% 34.3% 32.0% 31.1% Real Estate 43.0 45.3 44.2 47.9 48.2 49.0 Consumer Loans 14.4 13.9 15.8 17.8 19.8 19.9 - ------------------------------------------------------------------------------------------------------------------- Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% ===================================================================================================================
SunTrust Banks, Inc. 19 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 8 Summary of Loan Loss Experience
Year Ended December 31 (Dollars in millions) 2000 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Allowance for Loan Losses Balance - beginning of year $ 871.3 $ 944.6 $ 933.5 $ 897.0 $ 915.8 $ 887.2 Allowance from acquisitions and other activity - net -- (13.3) (10.0) 2.2 0.3 14.7 Provision for loan losses 134.0 170.4 214.6 225.1 171.8 143.4 Charge-offs Commercial (115.6) (142.0) (49.0) (30.0) (44.5) (37.8) Real estate Construction (0.2) (2.2) (3.2) (4.0) (4.0) (1.5) Residential mortgages (7.8) (15.0) (13.8) (11.8) (10.1) (8.4) Other (3.3) (5.2) (5.2) (6.9) (11.3) (21.9) Credit card (5.4) (78.9) (129.5) (143.2) (129.6) (85.3) Other consumer loans (57.5) (52.8) (63.6) (79.3) (74.8) (60.1) - -------------------------------------------------------------------------------------------------------------------------------- Total charge-offs (189.8) (296.1) (264.3) (275.2) (274.3) (215.0) Recoveries Commercial 22.7 15.5 14.8 22.0 24.2 29.6 Real estate Construction 0.3 0.7 0.3 2.5 2.3 4.3 Residential mortgages 3.3 3.4 2.7 2.8 2.3 2.1 Other 3.9 6.1 8.4 8.9 12.7 10.9 Credit card 3.1 11.9 14.9 17.7 13.5 12.2 Other consumer loans 25.7 28.1 29.7 30.5 28.4 26.4 - -------------------------------------------------------------------------------------------------------------------------------- Total recoveries 59.0 65.7 70.8 84.4 83.4 85.5 - -------------------------------------------------------------------------------------------------------------------------------- Net charge-offs (130.8) (230.4) (193.5) (190.8) (190.9) (129.5) - -------------------------------------------------------------------------------------------------------------------------------- Balance - end of year $ 874.5 $ 871.3 $ 944.6 $ 933.5 $ 897.0 $ 915.8 ================================================================================================================================ Total loans outstanding at year end $ 72,239.8 $ 66,002.8 $ 61,540.6 $ 55,476.4 $ 49,301.4 $ 45,284.9 - -------------------------------------------------------------------------------------------------------------------------------- Average loans $ 70,044.3 $ 62,749.4 $ 57,590.5 $ 51,788.1 $ 46,338.4 $ 43,331.6 Ratios Allowance to year-end loans 1.21% 1.32% 1.53% 1.68% 1.82% 2.02% Allowance to nonperforming loans 215.8 350.0 456.0 494.6 305.5 279.3 Net charge-offs to average loans 0.19 0.37 0.34 0.37 0.41 0.30 Provision to average loans 0.19 0.27 0.37 0.43 0.37 0.33 Recoveries to total charge-offs 31.1 22.2 26.8 30.7 30.4 39.8 ================================================================================================================================
Nonperforming Assets Nonperforming assets were $428.3 million at December 31, 2000, increasing 55.4% from December 31, 1999. At year end, the ratio of nonperforming assets to total loans plus other real estate owned was .59% compared to .42% at December 31, 1999. Outstanding loans to the movie theater sector, which is struggling with over-expansion and efficiency issues, accounted for $59.6 million of the increase in nonperforming assets. These pressures have caused many of the largest chains to file for bankruptcy reorganization. Bankruptcies in industries that have contingent liabilities related to asbestos claims accounted for $44.0 million of the year to year increase in non-performing assets. Problem loans in the healthcare industry declined from $55 million or 20% of nonperforming assets at December 31, 1999 to $34 million or 8% of nonperforming assets at December 31, 2000. The Company expects to see a modest increase in non-performing assets during 2001 resulting from stresses in certain sectors brought about by the slowing economy. 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 20 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- unpaid interest is recorded as interest income only after all principal has been collected. For the year 2000, the gross amount of interest income that would have been recorded on nonaccrual loans and restructured loans at December 31, 2000, if all such loans had been accruing interest at the original contractual rate, was $35.9 million. Interest payments on these loans recognized in 2000 as interest income (excluding reversals of previously accrued interest) for all such nonperforming loans at December 31, 2000, were $17.8 million. Table 9 Nonperforming Assets and Accruing Loans Past Due 90 Days or More
At December 31 (Dollars in millions) 2000 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- Nonperforming Assets Nonaccrual loans Commercial $ 273.6 $ 105.0 $ 50.1 $ 35.1 $ 68.2 $ 58.1 Real estate Construction 2.2 9.0 13.5 16.0 23.7 11.0 Residential mortgages 81.8 82.6 83.9 75.2 74.7 111.3 Other 29.0 34.9 46.6 47.6 103.7 127.6 Consumer loans 18.7 17.4 12.5 12.1 13.4 16.9 - -------------------------------------------------------------------------------------------------------------------------- Total nonaccrual loans 405.3 248.9 206.6 186.0 283.7 324.9 Restructured loans -- -- 0.6 2.7 9.9 2.9 - -------------------------------------------------------------------------------------------------------------------------- Total nonperforming loans 405.3 248.9 207.2 188.7 293.6 327.8 Other real estate owned 23.0 26.8 34.9 48.2 71.1 97.8 - -------------------------------------------------------------------------------------------------------------------------- Total nonperforming assets $ 428.3 $ 275.7 $ 242.1 $ 236.9 $ 364.7 $ 425.6 ========================================================================================================================== Ratios Nonperforming loans to total loans 0.56% 0.38% 0.34% 0.34% 0.60% 0.72% Nonperforming assets to total loans plus other real estate owned 0.59 0.42 0.39 0.43 0.74 0.94 Accruing Loans Past Due 90 Days or More $ 181.2 $ 117.4 $ 108.2 $ 109.0 $ 106.1 $ 79.8 ==========================================================================================================================
Securities Available For Sale The investment portfolio is managed to optimize yield over an entire interest rate cycle while providing liquidity and managing market risk. The portfolio yield increased from 6.36% in 1999 to 6.75% in 2000. The average yield further improved during the fourth quarter to 6.81%. Holdings of non-callable corporate bonds increased in 2000 to provide additional diversification and to improve yield. Portfolio turnover from sales totaled $1.4 billion in 2000, representing 9.0% of the average portfolio size. Certain securities were sold and other securities were purchased to take advantage of selected market opportunities, resulting in a net realized gain of $6.6 million. The average portfolio size decreased by $223.5 million for the year on an amortized cost basis. The portfolio grew in the fourth quarter of 2000, primarily due to securitizing $925.4 million of single-family mortgage loans to agency guaranteed mortgage-backed securities for funding flexibility and more favorable capital treatment. These securities were retained in the investment portfolio. The Company expects to continue to securitize single-family mortgage loans throughout 2001. The expected average life of the portfolio increased from 5.5 years at year-end 1999 to 5.6 years at year-end 2000. The carrying value of the investment portfolio, all of which is classified as "securities available for sale," reflected $3.0 billion in net unrealized gains at December 31, 2000, including a $2.9 billion unrealized gain on the Company's investment in common stock of The Coca-Cola Company. The market value of this common stock investment increased $129.7 million during 2000, which did not affect the net income of SunTrust, but was included in comprehensive income. SunTrust Banks, Inc. 21 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 10 Securities Available For Sale
At December 31 ---------------------------------------------------- Amortized Fair Unrealized Unrealized (In millions) Cost Value Gains Losses - --------------------------------------------------------------------------------------------------------------- U.S. Treasury and other U.S. government agencies and corporations 2000 $ 2,763.5 $ 2,845.3 $ 82.3 $ 0.5 1999 2,543.5 2,510.3 2.5 35.7 1998 2,208.8 2,243.9 35.3 0.2 States and political subdivisions 2000 449.3 455.6 8.0 1.7 1999 530.3 528.6 5.9 7.6 1998 599.1 617.9 19.6 0.8 Mortgage-backed and asset-backed securities 2000 9,516.5 9,567.2 86.8 36.1 1999 9,904.6 9,712.1 9.0 201.5 1998 9,860.4 9,895.1 57.5 22.8 Corporate bonds 2000 2,362.2 2,300.8 37.0 98.4 1999 1,920.2 1,848.3 -- 71.9 1998 867.2 918.1 50.9 -- Other securities/1/ 2000 670.5 3,641.4 2,970.9 -- 1999 891.0 3,718.0 2,829.4 2.4 1998 643.8 3,884.0 3,251.8 11.6 - --------------------------------------------------------------------------------------------------------------- Total securities available for sale 2000 $ 15,762.0 $ 18,810.3 $ 3,185.0 $ 136.7 1999 15,789.6 18,317.3 2,846.8 319.1 1998 14,179.3 17,559.0 3,415.1 35.4 ===============================================================================================================
/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 funding 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. 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 62% of the funding base on average for 2000 compared to 67% in 1999. Net borrowed funds, which primarily include short-term funds purchased and sold, wholesale domestic and foreign deposits, other short term borrowings and long-term debt, were $33.2 billion at December 31, 2000, compared with $27.0 billion at December 31, 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. Liquidity is strengthened by ready access to a diversified base of wholesale funding sources. These sources include fed funds purchased, securities sold under agreements to repurchase, negotiable certificates of deposit, offshore deposits, Federal Home Loan Bank advances, Global Bank Note issuance (see below), and commercial paper issuance by the Parent Company. Liquidity is also available through unpledged securities in the investment portfolio and the securitization of loans. In the fourth quarter of 2000, the Company securitized $925.4 million of single-family mortgage loans. In 2001, the Company intends to securitize single-family mortgage loans and retain them in the Company's Available for Sale securities portfolio. A $10 billion Senior and Subordinated Global Bank Note program was established in November, 2000, to expand the bank's funding and capital sources to 22 2000 Annual Report MANAGEMENT'S DISCUSSION. - -------------------------------------------------------------------------------- Average Funding Mix ($ in millions) [CHART] Average Funding Mix (in millions) Average for 2000 % of Total ---------------- ---------- Non-interest Bearing Deposits 13,177.5 15.14% Interest-bearing Deposits 53,514.4 61.49% Funds Purchased 10,754.4 12.36% Other Short-term Borrowings 1,550.6 1.78% Long-term Debt 8,034.6 9.23% -------- ------- 87,031.5 100.00% -------- ------- Average Deposit Mix ($ in million) [CHART] Average Deposit Mix (in millions) Average for 2000 % of Total ---------------- ---------- NOW/Money market accounts 20,129.0 30.18% Savings 6,434.2 9.65% Consumer Time 9,935.5 14.90% Brokered Deposits 3,308.7 4.96% Foreign Deposits 9,621.7 14.43% Other Time 4,085.3 6.12% Non-Interest Bearing Accounts 13,177.5 19.76% -------- ------- 66,691.9 100.00% ======== ======= include both domestic and international investors. This program was designed to provide structural flexibility with maturities from 7 days to 30 years, and increase the Company's ability to access a wider investor base. No issuances had occurred under the program as of December 31, 2000. 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. Deposits Average interest-bearing deposits increased 18.8% in 2000 and comprised 80.2%, 77.9% and 78.2% of average total deposits in 2000, 1999 and 1998, respectively. Average noninterest bearing deposits grew by 2.9% over 1999, average NOW/Money market accounts, a lower cost funding source, increased by 1.0% and brokered and foreign deposits increased 215.8% compared to 1999. SunTrust Banks, Inc. 23 MANAGEMENT'S DISCUSSION. - -------------------------------------------------------------------------------- Table 11 Composition of Average Deposits
Year Ended December 31 Percent of Total ---------------------------------------------- ------------------------------ (Dollars in millions) 2000 1999 1998 2000 1999 1998 - -------------------------------------------------------------------------------------------------------------------- Noninterest-bearing $ 13,177.5 $ 12,803.2 $ 11,711.3 19.8% 22.1% 21.8% NOW/Money market accounts 20,129.0 19,926.0 18,253.6 30.2 34.4 34.0 Savings 6,434.2 6,918.8 6,645.9 9.6 12.0 12.4 Consumer time 9,935.5 9,824.3 10,390.4 14.9 17.0 19.3 Brokered deposits 3,308.7 7.0 394.0 5.0 0.0 0.7 Foreign deposits 9,621.7 4,087.8 1,906.2 14.4 7.1 3.6 Other time 4,085.3 4,275.0 4,423.9 6.1 7.4 8.2 - -------------------------------------------------------------------------------------------------------------------- Total deposits $ 66,691.9 $ 57,842.1 $ 53,725.3 100.0% 100.0% 100.0% - --------------------------------------------------------------------------------------------------------------------
Funds Purchased Average funds purchased decreased $4,466.4 million or 29.3% in 2000 as the Company shifted to brokered and foreign deposits as funding sources. Table 12 Funds Purchased/1/
Maximum At December 31 Daily Average Outstanding ---------------------- --------------------- at Any (Dollars in millions) Balance Rate Balance Rate Month-End - --------------------------------------------------------------------------------------------------- 2000 $ 10,895.9 5.04% $ 10,754.4 6.06% $ 12,451.4 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 ===================================================================================================
/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 pre-tax net 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. Accordingly, the Company raised an additional $100 million of regulatory capital during 2000 through the issuance of preferred shares by a real estate investment trust subsidiary. On August 10, 1999, the Board of Directors authorized the purchase of up to 15 million shares of SunTrust common stock. In 2000, SunTrust purchased 1.2 million shares of SunTrust common stock to complete the August 10, 1999 authorization. On February 8, 2000, the Board of Directors authorized the purchase of up to 12 million shares of SunTrust common stock. As of December 31, 2000, 10.1 million shares had been purchased under this authorization. On August 8, 2000, the Board of Directors authorized the purchase of up to 10 million shares of SunTrust common stock (including 1.9 million shares still remaining unpurchased under the authorization to purchase shares of February 8, 2000). As of December 31, 2000, 1.6 million shares had been purchased under this authorization. 24 2000 Annual Report MANAGEMENT'S DISCUSSION. - -------------------------------------------------------------------------------- Table 13 Capital Ratios
At December 31 (Dollars in millions) 2000 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------ Tier 1 capital/1/ $ 6,850.6 $ 6,579.6 $ 6,586.5 $ 5,587.2 $ 4,920.6 $ 4,497.2 Total capital 10,488.9 9,939.1 10,307.9 8,608.2 6,807.9 5,712.6 Risk-weighted assets 96,656.7 87,866.1 80,586.4 69,503.3 58,112.8 53,999.5 Risk-based ratios Tier 1 capital 7.09% 7.48% 8.17% 8.04% 8.47% 8.33% Total capital 10.85 11.31 12.79 12.39 11.71 10.58 Tier 1 leverage ratio 6.98 7.17 7.68 7.70 7.12 7.09 Total shareholders' equity to assets 7.96 8.00 8.78 8.83 8.92 8.84 ==============================================================================================================================
/1/ Tier 1 capital includes trust preferred obligations of $1,050 million at the end of 2000, 1999 and 1998, respectively and $100 million of preferred shares issued by a real estate investment trust subsidiary during 2000. Table 14 Loan Maturity
At December 31, 2000 Remaining Maturities of Selected Loans ------------------------------------------------------- Within 1-5 After (In millions) Total 1 Year Years 5 Years - ----------------------------------------------------------------------------------------------------------------------------- Loan Maturity Commercial/1/ $ 28,157.3 $ 10,562.5 $ 12,546.7 $ 5,048.1 Real estate - construction 2,966.1 1,544.2 695.7 726.2 - ----------------------------------------------------------------------------------------------------------------------------- Total $ 31,123.4 $ 12,106.7 $ 13,242.4 $ 5,774.3 ============================================================================================================================= Interest Rate Sensitivity Selected loans with Predetermined interest rates $ 2,072.2 $ 2,781.5 Floating or adjustable interest rates 11,170.2 2,992.8 - ----------------------------------------------------------------------------------------------------------------------------- Total $ 13,242.4 $ 5,774.3 =============================================================================================================================
/1/ Excludes $2,623.8 million in lease financing. 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 limiting the volatility to net interest income from changes in interest rates. SunTrust uses simulation modeling 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 Company's net interest income for the next twelve months would decline 0.9% under a gradual increase in interest rates of 100 basis points, versus the projection under stable rates. Net interest income would increase 0.8% under a gradual 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, 2000 estimates a 0.9% decrease in net market value as a percent of assets compared to a 1.0% decrease at December 31, 1999. SunTrust estimates a like decrease in rates from December 31, 2000 would increase net market value 0.6% compared to an increase of 0.9% based on 1999 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 $2.9 billion at December 31, 2000. A 10% decrease in share price of The Coca-Cola Company at December 31, 2000 would result in a decrease, net of deferred taxes, of approximately $187 million in total shareholders' equity. SunTrust Banks, Inc. 25 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 15 Maturity Distribution of Securities Available for Sale
At December 31, 2000 ------------------------------------------------------------------------- Average 1 Year 1-5 5-10 After 10 Maturity (Dollars in millions) or Less Years Years Years Total in Years - -------------------------------------------------------------------------------------------------------------------------------- Amortized Cost U.S. Treasury and other U.S. government agencies and corporations $ 59.6 $ 2,317.9 $ 378.8 $ 7.2 $ 2,763.5 4.0 States and political subdivisions 78.2 195.1 111.1 64.9 449.3 5.1 Mortgage-backed and asset-backed securities/1/ 919.8 6,515.1 1,937.0 144.6 9,516.5 4.2 Corporate bonds -- 1,082.5 500.6 779.1 2,362.2 13.6 - -------------------------------------------------------------------------------------------------------------------------------- Total debt securities $ 1,057.6 $ 10,110.6 $ 2,927.5 $ 995.8 $ 15,091.5 5.6 - -------------------------------------------------------------------------------------------------------------------------------- Fair Value U.S. Treasury and other U.S. government agencies and corporations $ 59.8 $ 2,381.5 $ 396.1 $ 7.9 $ 2,845.3 States and political subdivisions 78.6 198.0 113.6 65.4 455.6 Mortgage-backed and asset-backed securities/1/ 918.8 6,557.5 1,948.4 142.5 9,567.2 Corporate bonds -- 1,090.1 489.5 721.2 2,300.8 - -------------------------------------------------------------------------------------------------------------------------------- Total debt securities $ 1,057.2 $ 10,227.1 $ 2,947.6 $ 937.0 $ 15,168.9 ================================================================================================================================ Weighted Average Yield (FTE) U.S. Treasury and other U.S. government agencies and corporations 6.11% 6.43% 7.17% 6.81% 6.53% States and political subdivisions 7.81 7.51 7.52 7.14 7.46 Mortgage-backed and asset-backed securities/1/ 5.76 6.45 6.78 6.75 6.46 Corporate bonds -- 7.04 7.23 7.74 7.31 - -------------------------------------------------------------------------------------------------------------------------------- Total debt securities 5.93 6.53 6.94 7.51 6.63 ================================================================================================================================
/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
At December 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------- Consumer Brokered Foreign Other (In millions) Time Time Time Time Total - ------------------------------------------------------------------------------------------------------------------------------- Months to maturity 3 or less $ 2,069.6 $ 2,222.6 $ 9,717.9 $ 43.7 $ 14,053.8 Over 3 through 6 865.3 706.5 -- -- 1,571.8 Over 6 through 12 833.1 50.0 -- -- 883.1 Over 12 726.0 200.0 -- -- 926.0 - ------------------------------------------------------------------------------------------------------------------------------- Total $ 4,494.0 $ 3,179.1 $ 9,717.9 $ 43.7 $ 17,434.7 ===============================================================================================================================
26 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- The Company's trading portfolio at December 31, 2000 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 derivative instruments as a service to 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 decreased net interest income by $0.5 million in 2000 and increased net interest income by $16.3 million and $0.7 million in 1999 and 1998, respectively. The Company adopted Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities," on January 1, 2001. In accordance with the transition provisions of SFAS 133, the following was the net-of-tax effect on earnings and equity in January 2001: Earnings increased $1.6 million . $ 16.6 million gain for the fair value adjustment on fair-value hedging instruments . $ 16.6 million loss for the fair value adjustment on related hedged assets and liabilities . $ 0.4 million gain for the fair value on the mortgage pipeline . $ 1.2 million gain for the derecognition of a previously deferred gain Equity (Other Comprehensive Income) . $ 10.6 million loss from cash flow hedging instruments The following table shows the derivative instruments entered into by the Company as an end-user. Table 17 Derivative Instruments
As of December 31, 2000 ------------------------------------------------------------------------------------------------ Weighted Estimated Fair Value Average Average ---------------------------------------------- Notional Maturity Received Average Carrying Unrealized Unrealized (Dollars in millions) Balance In Months Rate Pay Rate Amount/1/ Gains Losses Net - --------------------------------------------------------------------------------------------------------------------------- Forward Contracts on Mortgage Lending Commitment $ 2,193.2 1 -- -- $ -- $ 0.8 $ (27.7) $ (26.9) Foreign Currency Forward Contracts 419.5 2 -- -- -- 11.1 (4.7) 6.4 Interest Rate Swaps 2,880.2 35 6.58% 6.51% (1.1) 30.9 (23.7) 6.1 Interest Rate Caps/ Floors 750.0 21 5.23/2/ -- (0.7) 1.0 -- 0.3 Futures Contracts 1,169.0 16 -- -- -- 0.2 (1.8) (1.6) Options on Mortgage Lending Commitments 40.0 2 5.75/2/ -- -- 0.1 (0.3) (0.2) - --------------------------------------------------------------------------------------------------------------------------- Total Derivatives $ (15.9) ===========================================================================================================================
/1/ Carrying amount includes accrued interest receivable or payable and unamortized premiums. /2/ Average option strike price. SunTrust Banks, Inc. 27 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Earnings And Balance Sheet Analysis 1999 vs. 1998 Net income was $1,326.6 million in 1999 compared with $971.0 million in 1998, an increase of 36.6%. Diluted earnings per common share was $4.13 in 1999 and $3.04 in 1998. Excluding merger-related charges in 1999, net income was $1,358.8 million, a 24.9% increase over 1998, and diluted earnings per share were $4.23, a 24.1% increase over 1998. In addition to the merger costs, two other unusual items effected the 1999 results. An 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 was recorded during the fourth quarter of 1999. Additionally, the Company incurred 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. Operating results in 1999 reflected strong loan demand, robust noninterest income growth and continued excellent credit quality. Net interest income was $3,188.0 million in 1999, up $214.5 million from 1998. The Company's net interest margin declined from 3.97% in 1998 to 3.88% in 1999, but the impact of the decline was more than offset by an 9.8% increase in average earning assets. The provision for loan losses decreased 20.6% from $214.6 million in 1998 to $170.4 million in 1999. The allowance for loan losses as a percentage of loans decreased from 1.53% to 1.32%. Net charge-offs to average loans were 0.37% in 1999 versus 0.34% in 1998. Nonperforming assets increased 13.9% from $242.1 million at December 31, 1998 to $275.7 million at December 31, 1999. Noninterest income, excluding securities gains and losses, was $1,735.0 million, a 5.4% 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 $2,859.7 million in 1999, an increase of $109.0 million, or 4.0%, from 1998. Total personnel expense, the single largest component of noninterest expense, was up $82.9 million, or 5.1%, from the 1998 level. Loans at December 31, 1999 were $66.0 billion, an increase of 7.3%. At December 31, 1999, deposits were $60.1 billion, an increase of $1.1 billion, or 1.9%, from December 31, 1998. Fourth Quarter Results SunTrust's net income for the fourth quarter of 2000 totaled $330.4 million or $1.11 per diluted share compared with $429.8 million or $1.35 per diluted share for the fourth quarter of 1999. Results included the following unusual items: . Merger related charges of $1.5 million, net of tax, or $0.01 per diluted share for 2000 and $4.7 million, net of tax, or $0.01 per diluted share for 1999 related to the acquisition of Crestar in 1998. (See Note 2 to the Consolidated Financial Statements.) . 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. Operating results for the fourth quarter of 2000 were also impacted by the following: . Net interest income decreased $10.4 million and net interest margin decreased 30 basis points from the fourth quarter of 1999 to the fourth quarter of 2000. These reductions were primarily attributed to funding costs for the repurchase of approximately 12.9 million shares of the Company's common stock during 2000, rising rates on purchased liabilities and continued increased reliance on purchased liabilities to fund growth. Positively affecting net interest income and net interest margin was average loan growth of 10.5% from the fourth quarter of 1999 to the fourth quarter of 2000. . The 2000 fourth quarter provision for loan losses of $53.5 million was $20.4 million higher than the $33.1 million in 1999. The 1999 fourth quarter provision for loan losses included a $60 million reduction to the allowance as a result of the consumer credit card portfolio sale. Net loan charge-offs for the fourth quarter of 2000 were at $53.4 million, $55.6 million less than in the 1999 fourth quarter. . Noninterest income, excluding securities gains and losses, increased by $32.7 million in the 2000 fourth quarter compared to the fourth quarter of 1999 primarily due to increases in service charges on deposit accounts, loan fee income and letter of credit fees. . Noninterest expense, excluding merger-related charges, decreased 6.9% from the fourth quarter of 1999. Personnel expense was down $12.8 million, or 3.0%, primarily due to the reduction of 1,954 positions in 2000. . The 2000 fourth quarter provision for income taxes of $149.2 million was $68.2 million, or 84.3%, higher than the $81.0 million provision for the fourth quarter of 1999. The increase is primarily due to the securities portfolio repositioning resulting in a tax benefit of approximately $44.7 million in the fourth quarter of 1999. 28 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 18 Quarterly Financial Data
(Dollars in millions except per share data) 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------------- Summary of Operations 4 3 2 1 4 3 2 1 Interest and dividend income $ 1,798.3 $ 1,764.2 $ 1,672.0 $ 1,610.8 $ 1,559.4 $ 1,506.4 $ 1,452.5 $ 1,442.0 Interest expense 1,012.9 992.8 903.0 828.2 763.4 711.4 667.8 672.2 - ---------------------------------------------------------------------------------------------------------------------------------- Net interest income 785.4 771.4 769.0 782.6 796.0 795.0 784.7 769.8 Provision for loan losses 53.5 30.5 27.7 22.3 33.1 46.5 48.8 42.0 - ---------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 731.9 740.9 741.3 760.3 762.9 748.5 735.9 727.8 Noninterest income/1/ 445.6 447.2 444.0 436.9 299.2 446.1 452.9 427.7 Noninterest expense/2/ 697.9 706.6 719.8 704.2 753.9 691.8 735.9 723.7 - ---------------------------------------------------------------------------------------------------------------------------------- Income before provision for income taxes and extraordinary gain 479.6 481.5 465.5 493.0 308.2 502.8 452.9 431.8 Provision for income taxes 149.2 154.7 148.0 173.6 81.0 181.4 159.2 150.1 - ---------------------------------------------------------------------------------------------------------------------------------- Income before extraordinary gain 330.4 326.8 317.5 319.4 227.2 321.4 293.7 281.7 Extraordinary gain, net of taxes/3/ -- -- -- -- 202.6 -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 330.4 $ 326.8 $ 317.5 $ 319.4 $ 429.8 $ 321.4 $ 293.7 $ 281.7 ================================================================================================================================== Net interest income (taxable-equivalent) $ 796.1 $ 781.5 $ 778.7 $ 792.1 $ 806.5 $ 805.4 $ 795.4 $ 780.7 Per common share Diluted Income before extraordinary gain $ 1.11 $ 1.10 $ 1.05 $ 1.04 $ 0.71 $ 1.00 $ 0.91 $ 0.87 Extraordinary gain, net of taxes -- -- -- -- 0.64 -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Net income 1.11 1.10 1.05 1.04 1.35 1.00 0.91 0.87 Basic Income before extraordinary gain 1.13 1.11 1.06 1.05 0.72 1.01 0.92 0.89 Extraordinary gain, net of taxes -- -- -- -- 0.64 -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Net income 1.13 1.11 1.06 1.05 1.36 1.01 0.92 0.89 Dividends declared 0.37 0.37 0.37 0.37 0.345 0.345 0.345 0.345 Book value 27.81 25.85 25.10 23.51 24.73 24.50 25.47 25.32 Market Price High 64.38 54.19 66.00 68.06 76.00 70.88 73.00 79.81 Low 41.63 45.63 45.06 46.81 64.19 61.56 63.06 60.44 Close 63.00 49.88 45.69 57.75 68.81 65.75 69.44 62.25 Selected Average Balances Total assets $101,246.0 $ 99,392.2 $ 97,497.3 $ 95,413.4 $ 94,804.6 $ 92,447.7 $ 92,304.2 $ 91,696.6 Earning assets 90,679.6 89,663.7 88,200.6 85,857.5 84,447.9 82,517.2 81,329.1 80,684.8 Loans 71,774.6 71,506.9 69,830.6 67,030.0 64,941.7 62,859.8 61,973.8 61,180.0 Total deposits/4/ 67,181.9 67,158.2 66,866.4 65,550.3 58,284.0 58,423.6 57,743.7 56,895.4 Realized shareholders' equity 6,140.5 6,012.8 5,948.9 6,023.3 6,496.4 6,522.5 6,328.2 6,120.2 Total shareholders' equity 7,844.4 7,487.4 7,195.9 7,476.2 8,083.1 8,210.7 8,322.5 8,146.9 Common shares -diluted (thousands) 296,461 298,558 302,141 306,739 317,701 322,223 322,448 322,364 Common shares -basic (thousands) 293,390 295,575 298,986 303,461 313,706 318,239 318,315 318,090 Ratios (Annualized)/5/ ROA 1.33% 1.34% 1.34% 1.38% 1.85% 1.42% 1.32% 1.29% ROE 21.40 21.62 21.46 21.33 26.25 19.55 18.61 18.67 Net interest margin 3.49 3.47 3.55 3.71 3.79 3.87 3.92 3.92 ==================================================================================================================================
/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 $2.4, $8.3, $18.2 and $13.6 million for the fourth, third, second, and first quarters of 2000, respectively, and $7.1, $7.1, $17.6 and $13.8 million for the fourth, third, second, and first quarters of 1999, respectively. /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. /4/ Includes brokered and foreign deposits of $13.1, $13.5, $12.9 and $12.2 billion for the fourth, third, second, and first quarters of 2000 and $4.1, $4.5, $5.3, and $3.9 billion for the fourth, third, second, and first quarters of 1999, respectively. /5/ Calculated excluding net unrealized gains on securities available for sale because the net unrealized gains are not included in income. SunTrust Banks, Inc. 29 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 19 Consolidated Daily Average Balances, Income/Expense and Average Yields Earned and Rates Paid
Quarters Ended --------------------------------------------------------------------------------- December 31, 2000 December 31, 1999 ---------------------------------------- ---------------------------------- (Dollars in millions; Average Income/ Yields/ Average Income/ Yields/ yields on taxable-equivalent basis) Balances Expense Rates Balances Expense Rates - ---------------------------------------------------------------------------------------------------------------------------------- Assets Loans/1/ Taxable $ 70,647.7 $ 1,461.7 8.23% $ 63,884.5 $ 1,236.6 7.68% Tax-exempt/2/ 1,126.9 22.5 7.93 1,057.2 19.8 7.43 - ---------------------------------------------------------------------------------------------------------------------------------- Total loans 71,774.6 1,484.2 8.23 64,941.7 1,256.4 7.68 Securities available for sale Taxable 14,715.5 251.2 6.79 15,443.8 247.5 6.36 Tax-exempt/2/ 444.0 8.4 7.53 538.1 10.6 7.80 - ---------------------------------------------------------------------------------------------------------------------------------- Total securities available for sale 15,159.5 259.6 6.81 15,981.9 258.1 6.41 Funds sold 1,324.4 22.3 6.70 1,509.4 23.5 6.16 Loans held for sale 1,690.7 33.3 7.83 1,700.7 28.3 6.60 Other short-term investments/2/ 730.4 9.6 5.24 314.2 3.5 4.42 - ---------------------------------------------------------------------------------------------------------------------------------- Total earning assets 90,679.6 1,809.0 7.94 84,447.9 1,569.8 7.38 Allowance for loan losses (858.6) (920.7) Cash and due from banks 3,464.7 3,826.0 Premises and equipment 1,618.2 1,633.4 Other assets 3,661.1 3,251.9 Unrealized gains on securities available for sale 2,681.0 2,566.1 - ---------------------------------------------------------------------------------------------------------------------------------- Total assets $ 101,246.0 $ 94,804.6 ================================================================================================================================== Liabilities and Shareholders' Equity Interest-bearing deposits NOW/Money market accounts $ 20,023.3 $ 169.3 3.36% $ 20,369.6 $ 141.3 2.75% Savings 6,306.9 60.8 3.84 6,791.3 52.6 3.07 Consumer time 9,964.6 141.5 5.65 9,675.4 115.3 4.73 Brokered deposits 4,059.7 68.6 6.72 15.0 0.2 5.34 Foreign deposits 9,023.0 149.6 6.60 4,081.9 60.8 5.91 Other time 4,334.7 66.4 6.09 4,372.1 57.1 5.19 - ---------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 53,712.2 656.2 4.86 45,305.3 427.3 3.74 Funds purchased 11,225.2 177.5 6.29 16,417.1 219.2 5.30 Other short-term borrowings 1,885.9 31.2 6.57 1,901.3 21.0 4.40 Long-term debt 8,725.0 148.0 6.75 6,120.3 95.8 6.21 - ---------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 75,548.3 1,012.9 5.33 69,744.0 763.3 4.34 Noninterest-bearing deposits 13,469.7 12,978.7 Other liabilities 4,383.6 3,998.8 Realized shareholders' equity 6,140.5 6,496.4 Accumulated other comprehensive income 1,703.9 1,586.7 - ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 101,246.0 $ 94,804.6 ================================================================================================================================== Interest rate spread 2.61% 3.04% - ---------------------------------------------------------------------------------------------------------------------------------- Net interest income $ 796.1 $ 806.5 - ---------------------------------------------------------------------------------------------------------------------------------- Net interest margin/3/ 3.49% 3.79% ==================================================================================================================================
/1/ Interest income includes loan fees of $36.8 million and $36.3 million in the quarters ended December 31, 2000 and 1999, 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 $10.7 million and $10.5 million in the quarters ended December 31, 2000 and 1999, respectively. /3/ Derivative instruments used to help balance the Company's interest- sensitivity position increased net interest income by $0.1 million and $1.3 million in the fourth quarter of 2000 and 1999, respectively. Without these derivative instruments, the net interest margin would have been 3.49% in 2000 and 3.78% in 1999. 30 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 20 Quarterly Noninterest Income and Expense
Quarters - ---------------------------------------------------------------------------------------------------------------------------- 2000 1999 - ---------------------------------------------------------------------------------------------------------------------------- (In millions) 4 3 2 1 4 3 2 1 - ---------------------------------------------------------------------------------------------------------------------------- Noninterest Income Trust income $ 121.4 $ 120.2 $ 123.7 $ 128.6 $ 122.0 $ 124.7 $ 124.4 $ 124.4 Service charges on deposit accounts 118.9 116.9 112.6 111.3 113.3 111.6 107.1 106.1 Other charges and fees 55.1 56.3 50.4 49.1 49.9 50.7 51.2 48.4 Corporate and institutional investment services 20.3 36.0 35.3 19.7 19.6 13.2 16.3 18.7 Trading account profits (losses) and commissions 16.3 4.9 (1.4) 12.0 6.9 6.2 11.4 10.6 Retail investment services 22.8 24.0 30.5 30.8 24.0 23.9 26.0 23.5 Credit card and other fees 24.9 24.2 24.4 22.1 25.7 29.2 28.2 23.1 Mortgage production related income 27.1 23.8 20.5 18.7 25.2 26.7 47.6 53.5 Mortgage servicing related income 9.5 7.9 7.7 7.7 7.5 11.5 5.1 3.0 Securities gains (losses)/1/ (1.2) (0.6) 1.5 6.9 (114.9) 2.6 3.9 (0.7) Other income 30.5 33.6 38.8 30.0 20.0 45.8 31.7 17.1 - ----------------------------------------------------------------------------------------------------------------------------- Total noninterest income $ 445.6 $ 447.2 $ 444.0 $ 436.9 $ 299.2 $ 446.1 $ 452.9 $ 427.7 ============================================================================================================================= Noninterest Expense Salaries $ 282.0 $ 278.5 $ 292.1 $ 287.3 $ 287.1 $ 288.5 $ 300.4 $ 298.5 Other compensation 89.3 82.9 73.1 83.8 93.9 80.9 88.9 84.4 Employee benefits 37.2 39.5 41.4 56.9 40.2 39.7 41.5 54.4 - ----------------------------------------------------------------------------------------------------------------------------- Total personnel expense 408.5 400.9 406.6 428.0 421.2 409.1 430.8 437.3 Net occupancy expense 50.7 51.9 49.9 50.1 50.0 49.8 49.9 47.7 Equipment expense 44.2 47.2 50.7 51.6 55.4 48.0 49.8 45.3 Outside processing and software 43.9 42.4 44.4 41.6 39.8 37.0 38.7 34.8 Marketing and customer development 30.7 25.3 27.9 22.3 35.0 24.7 23.9 21.8 Postage and delivery 14.9 15.4 16.3 16.7 17.3 16.3 17.4 17.1 Communications 14.2 15.0 15.4 15.2 16.1 16.5 17.6 16.1 Consulting and legal 13.2 16.4 18.2 11.8 18.5 13.0 15.6 15.4 Credit and collection services 12.4 14.2 16.0 14.3 15.1 17.8 19.2 16.6 Operating supplies 11.2 11.3 12.6 12.2 13.6 10.7 14.3 13.3 Merger-related expenses 2.4 8.3 18.2 13.6 7.1 7.1 17.6 13.8 Amortization of intangible assets 8.8 8.9 8.8 9.0 6.3 8.6 9.0 8.9 FDIC premiums 2.8 2.8 2.8 2.8 2.0 1.8 2.1 2.0 Other real estate (income) expense (2.3) (0.4) (0.3) (0.8) (1.2) 0.2 (2.7) (1.1) Other expense 42.3 47.0 32.3 15.9 57.7 31.2 32.7 34.7 - ----------------------------------------------------------------------------------------------------------------------------- Total noninterest expense $ 697.9 $ 706.6 $ 719.8 $ 704.3 $ 753.9 $ 691.8 $ 735.9 $ 723.7 =============================================================================================================================
/1/ The fourth quarter of 1999 includes a pre-tax loss of $114.9 million relating to the securities portfolio repositioning. SunTrust Banks, Inc. 31 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Table 21 Summary of Loan Loss Experience, Nonperforming Assets and Accruing Loans Past Due 90 Days or More
Quarters --------------------------------------------------------------------------------------------- 2000 1999 --------------------------------------------------------------------------------------------- (Dollars in millions) 4 3 2 1 4 3 2 1 - ----------------------------------------------------------------------------------------------------------------------------------- Allowance for Loan Losses Balance - Beginning of quarter $ 874.5 $ 874.5 $ 874.0 $ 871.3 $ 947.2 $ 941.4 $ 952.6 $ 944.6 Allowance from acquisitions and other activity - net (0.1) -- -- -- -- 0.1 (13.4) -- Provision for loan losses 53.5 30.5 27.7 22.3 33.1 46.5 48.8 42.0 Charge-offs (67.1) (47.1) (40.2) (35.3) (123.8) (56.7) (63.4) (52.2) Recoveries 13.7 16.6 13.0 15.7 14.8 15.9 16.8 18.2 - ----------------------------------------------------------------------------------------------------------------------------------- Balance - End of quarter $ 874.5 $ 874.5 $ 874.5 $ 874.0 $ 871.3 $ 947.2 $ 941.4 $ 952.6 =================================================================================================================================== Ratios Allowance to quarter-end loans 1.21% 1.21% 1.22% 1.27% 1.32% 1.48% 1.50% 1.55% Allowance to nonperforming loans 215.8 229.6 309.6 306.8 350.0 398.6 392.9 481.5 Net loan charge-offs to average loans (annualized) 0.30 0.17 0.16 0.12 0.67 0.26 0.30 0.23 Provision to average loans (annualized) 0.30 0.17 0.16 0.13 0.20 0.29 0.32 0.28 Nonperforming Assets Nonaccrual loans $ 405.3 $ 380.9 $ 282.5 $ 284.9 $ 248.9 $ 237.6 $ 239.6 $ 197.8 Restructured loans -- -- -- -- -- 0.1 -- 0.1 - ----------------------------------------------------------------------------------------------------------------------------------- Total nonperforming loans 405.3 380.9 282.5 284.9 248.9 237.7 239.6 197.9 Other real estate owned 23.0 23.6 23.2 27.0 26.8 24.2 28.2 36.1 - ----------------------------------------------------------------------------------------------------------------------------------- Total nonperforming assets $ 428.3 $ 404.5 $ 305.7 $ 311.9 $ 275.7 $ 261.9 $ 267.8 $ 234.0 =================================================================================================================================== Ratios Nonperforming loans to total loans 0.56% 0.53% 0.40% 0.42% 0.38% 0.37% 0.38% 0.32% Nonperforming assets to total loans plus other real estate owned 0.59 0.56 0.43 0.45 0.42 0.41 0.43 0.38 Accruing Loans Past Due 90 Days or More $ 181.2 $ 150.8 $ 189.4 $ 160.1 $ 117.4 $ 113.1 $ 101.7 $ 103.8 ===================================================================================================================================
Supervision And Regulation As a bank holding company and a financial 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 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 control the money supply and credit availability in order to influence the economy. 32 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, bank holding companies from any state may acquire banks located in any other state, subject to certain conditions, including concentration limits. In addition, a bank may 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 undercapi- talized" 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. 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. is also a broker-dealer registered with the SEC and a member of the NASD. Trusco Capital Management, Inc. is an investment adviser 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 has elected to become a financial holding company under the Act, major provisions of which became effective on March 11, 2000. There have been a number of other 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. 33 MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- 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. Other factors that may cause actual results to differ from the forward- looking statements include the following: the timely development of competitive new products and services by the Company and the acceptance of such products and services by customers; changes in consumer spending and saving habits; the effects of competitors' pricing policies; the Company's success in managing the costs associated with the expansion of existing distribution channels and developing new ones, and in realizing increased revenues from such distribution channels, including cross-selling initiatives and electronic commerce-based efforts; and mergers and acquisitions and their integration into the Company and management's ability to manage these and other risks. 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 2000 was a year of change at SunTrust. On January 1, the Bank began operating under a single charter rather than having separately chartered units in each market. But while SunTrust is now one Bank, it remains committed to its community focus. "Build your community and you build your bank" has always been and remains the operating philosophy of SunTrust. The SunTrust market area is extremely diverse, ranging from major metropolitan areas to small rural communities, and SunTrust recognizes that each community has unique needs and resources. SunTrust's community reinvestment program emphasizes local control and accountability, with central coordination and direction where appropriate. In each market, SunTrust has designated a senior executive to oversee its community activities and ensure that the Bank is 34 2000 Annual Report MANAGEMENT'S DISCUSSION - -------------------------------------------------------------------------------- doing its part. This approach ensures that even as the One Bank operating model is implemented, SunTrust's traditional commitment to its local communities will continue. SunTrust provides financial support to community building efforts through its extensive corporate contributions, investments, and lending activities. In 2000, SunTrust approved 13,148 loans totaling approximately $1.2 billion to provide housing in low- to moderate-income areas. Additionally, 31,784 loans totaling $2.4 billion have been approved for families classified as low-to moderate-income to purchase or rehabilitate their homes. Businesses in these communities received 38,302 loans from SunTrust totaling more than $4 billion. More than three-quarters of these loans had an original principal balance of $100,000 or less. Also in 2000, SunTrust made 22,790 loans totaling over $1.5 billion to small businesses with annual revenues of $1 million or less. In rural markets, small farms also received support in the form of 1,456 loans totaling $102 million. Eighty percent of these loans were for $100,000 or less. In addition, SunTrust made $318 million in community development loans during 2000. Through membership in the Federal Home Loan Bank, SunTrust has provided funding for affordable housing projects under the FHLB's Affordable Housing Program and Community Reinvestment Program. SunTrust Community Development Corporation and its subsidiary, Regency Developers, Inc., have become significant developers of affordable housing for low- and moderate-income families. Since Regency became part of SunTrust, it has developed more than 2,500 units of affordable housing in communities from Virginia to Florida. Through its investments in low income housing tax credits, SunTrust has now provided equity capital for more than 10,000 affordable housing units across the Southeastern and Mid-Atlantic regions of the United States. SunTrust supports its communities through a variety of investments and contributions such as low-income housing tax credits, funding for local and regional groups engaged in providing affordable housing and promoting small business development and targeted mortgage-backed securities. The combined investment in community development projects and organizations now totals more than $200 million. By participating in the public finance efforts of state, county and municipal governments, activities such as school construction, public housing and environmental cleanup and protection programs have been financed. 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 and lower cost structures. Securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. This may significantly change the competitive environment in which the Company and its subsidiaries conduct business. Properties The Company's headquarters are located in Atlanta, Georgia. As of December 31, 2000, SunTrust Bank owned 882 of its 1,129 full-service banking offices, and leased the remaining banking offices. (See Note 7 to the Consolidated Financial Statements.) SunTrust Banks, Inc. 35 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, 2000, 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, 2000, its system of internal controls over consolidated financial reporting met those criteria. L. Phillip Humann Chairman of the Board of Directors, President and Chief Executive Officer John W. Spiegel Vice Chairman and Chief Financial Officer William P. O'Halloran Senior Vice President and Controller Abbreviations Within the consolidated financial statements and the notes thereto, the following references will be used: SunTrust Banks, Inc. - Company or SunTrust SunTrust Bank Holding Company - Bank Parent Company SunTrust Bank - Bank Crestar Financial Corporation - Crestar SunTrust Banks, Inc. Parent Company - Parent Company Index To Consolidated Financial Statements Page Consolidated Statements Of Income 38 Consolidated Balance Sheets 39 Consolidated Statements Of Shareholders' Equity 40 Consolidated Statements Of Cash Flow 41 Notes To Consolidated Financial Statements 42 36 2000 Annual Report 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, 2000 and 1999 and the related consolidated statements of income, shareholders' equity and cash flow for each of the three years in the period ended December 31, 2000. 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 auditing standards generally accepted 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, 2000 and 1999, and the results of their operations and their cash flow for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Atlanta, Georgia Arthur Andersen LLP February 13, 2001 SunTrust Banks, Inc. 37 CONSOLIDATED STATEMENTS OF INCOME - --------------------------------------------------------------------------------
Year Ended December 31 (Dollars in thousands except per share data) 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------- Interest Income Interest and fees on loans $ 5,605,320 $ 4,744,609 $ 4,555,244 Interest and fees on loans held for sale 110,563 172,153 180,383 Interest and dividends on securities available for sale Taxable interest 916,573 859,002 759,653 Tax-exempt interest 25,794 30,682 35,733 Dividends 64,885 66,906 58,531 Interest on funds sold 92,782 73,382 71,639 Interest on deposits in other banks 865 2,665 5,772 Other interest 28,637 10,809 8,945 - ------------------------------------------------------------------------------------------------------------------------- Total interest income 6,845,419 5,960,208 5,675,900 - ------------------------------------------------------------------------------------------------------------------------- Interest Expense Interest on deposits 2,452,919 1,626,132 1,644,229 Interest on funds purchased 651,235 749,561 634,086 Interest on other short-term borrowings 97,903 79,521 127,800 Interest on long-term debt 534,924 359,538 340,664 - ------------------------------------------------------------------------------------------------------------------------- Total interest expense 3,736,981 2,814,752 2,746,779 - ------------------------------------------------------------------------------------------------------------------------- Net Interest Income 3,108,438 3,145,456 2,929,121 Provision for loan losses - Note 6 133,974 170,437 214,602 - ------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 2,974,464 2,975,019 2,714,519 - ------------------------------------------------------------------------------------------------------------------------- Noninterest Income Trust income 493,929 495,613 453,328 Other charges and fees 525,920 471,486 398,760 Service charges on deposit accounts 459,653 438,107 401,095 Mortgage production related income 90,061 153,055 238,234 Mortgage servicing related income 32,832 27,056 2,828 Other noninterest income - Note 19 164,614 149,675 151,418 Securities gains (losses) - Note 4 6,616 (109,076) 8,207 - ------------------------------------------------------------------------------------------------------------------------- Total noninterest income 1,773,625 1,625,916 1,653,870 - ------------------------------------------------------------------------------------------------------------------------- Noninterest Expense Salaries and other compensation - Note 12 1,468,967 1,522,570 1,433,703 Employee benefits - Note 12 175,035 175,801 181,781 Equipment expense 193,709 198,464 178,766 Net occupancy expense 202,608 197,439 192,198 Marketing and customer development 106,215 105,429 107,092 Merger-related expenses - Note 2 42,444 45,556 119,419 Other noninterest expense - Note 20 639,555 660,019 657,124 - ------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 2,828,533 2,905,278 2,870,083 - ------------------------------------------------------------------------------------------------------------------------- Income before provision for income taxes and extraordinary gain 1,919,556 1,695,657 1,498,306 Provision for income taxes - Note 11 625,456 571,705 527,289 - ------------------------------------------------------------------------------------------------------------------------- Income before extraordinary gain 1,294,100 1,123,952 971,017 Extraordinary gain, net of taxes - Notes 3 and 11 -- 202,648 -- - ------------------------------------------------------------------------------------------------------------------------- Net Income $ 1,294,100 $ 1,326,600 $ 971,017 ========================================================================================================================= Net income per average common share - Note 10: Diluted Income before extraordinary gain $ 4.30 $ 3.50 $ 3.04 Extraordinary gain -- 0.63 -- - ------------------------------------------------------------------------------------------------------------------------- Net income $ 4.30 $ 4.13 $ 3.04 ========================================================================================================================= Basic Income before extraordinary gain $ 4.35 $ 3.54 $ 3.08 Extraordinary gain -- 0.64 -- - ------------------------------------------------------------------------------------------------------------------------- Net income $ 4.35 $ 4.18 $ 3.08 ========================================================================================================================= Dividends declared per common share $ 1.48 $ 1.38 $ 1.00 Average common shares - diluted 300,956 321,174 319,711 Average common shares - basic 297,834 317,079 314,908 Includes dividends on 48,266,496 shares of common stock of The Coca-Cola Company $ 32,821 $ 30,891 $ 28,960 =========================================================================================================================
See notes to consolidated financial statements. 38 2000 Annual Report CONSOLIDATED BALANCE SHEETS - --------------------------------------------------------------------------------
At December 31 (Dollars in thousands) 2000 1999 - -------------------------------------------------------------------------------------------------- Assets Cash and due from banks $ 4,110,489 $ 3,909,687 Interest-bearing deposits in other banks 13,835 22,237 Funds sold 1,267,028 1,587,442 Trading account 941,854 259,547 Securities available for sale - Note 4 18,810,311 18,317,297 Loans held for sale 1,759,281 1,531,787 Loans - Notes 5, 13 and 14 72,239,820 66,002,831 Allowance for loan losses - Note 6 (874,547) (871,323) - -------------------------------------------------------------------------------------------------- Net loans 71,365,273 65,131,508 Premises and equipment - Note 7 1,629,071 1,636,484 Intangible assets 810,860 804,632 Customers' acceptance liability 184,157 192,045 Other assets - Note 12 2,604,221 1,997,302 - -------------------------------------------------------------------------------------------------- Total assets $ 103,496,380 $ 95,389,968 ================================================================================================== Liabilities and Shareholders' Equity - Notes 10 and 12 Noninterest-bearing deposits $ 15,064,017 $ 14,200,522 Interest-bearing deposits 54,469,320 45,900,007 - -------------------------------------------------------------------------------------------------- Total deposits 69,533,337 60,100,529 Funds purchased 10,895,944 15,911,917 Other short-term borrowings--Note 8 1,761,985 2,259,010 Long-term debt - Note 9 7,895,430 4,967,346 Guaranteed preferred beneficial interests in debentures - Note 9 1,050,000 1,050,000 Acceptances outstanding 184,157 192,045 Other liabilities - Note 11 3,936,319 3,282,259 - -------------------------------------------------------------------------------------------------- Total liabilities 95,257,172 87,763,106 - -------------------------------------------------------------------------------------------------- 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 323,163 323,163 Additional paid in capital 1,274,416 1,293,387 Retained earnings 6,312,044 5,461,351 Treasury stock and other (1,613,189) (1,013,861) - -------------------------------------------------------------------------------------------------- Realized shareholders' equity 6,296,434 6,064,040 Accumulated other comprehensive income - Notes 4 and 18 1,942,774 1,562,822 - -------------------------------------------------------------------------------------------------- Total shareholders' equity 8,239,208 7,626,862 - -------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 103,496,380 $ 95,389,968 ================================================================================================== Common shares outstanding 296,266,329 308,353,207 Common shares authorized 750,000,000 500,000,000 Treasury shares of common stock 26,896,428 14,809,550 Includes net unrealized gains on securities available for sale $ 3,048,313 $ 2,527,705 ==================================================================================================
See notes to consolidated financial statements. SunTrust Banks, Inc. 39 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - --------------------------------------------------------------------------------
Accumulated Additional Treasury Other Com- Common Paid in Retained Stock and prehensive (In thousands) Stock Capital Earnings Other/1/ Income Total - --------------------------------------------------------------------------------------------------------------------------------- Balance, January 1, 1998 $ 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 -- 25,166 -- 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, $1.38 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 Net income -- -- 1,294,100 -- -- 1,294,100 Other comprehensive income: Change in unrealized gains (losses) on securities, net of taxes -- -- -- -- 379,952 379,952 ----------- Total comprehensive income 1,674,052 Cash dividends declared, $1.48 per share -- -- (443,407) -- -- (443,407) Exercise of stock options -- (11,767) -- 29,672 -- 17,905 Acquisition of stock -- -- -- (668,391) -- (668,391) Restricted stock activity -- (795) -- 795 -- -- Amortization of compensation element of restricted stock -- -- -- 9,408 -- 9,408 Issuance of stock for employee benefit plans -- (6,409) -- 29,188 -- 22,779 - --------------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 2000 $ 323,163 $ 1,274,416 $ 6,312,044 $(1,613,189) $ 1,942,774 $ 8,239,208 =================================================================================================================================
/1/ Balance at December 31, 2000 includes $1,568,792 thousand for treasury stock and $44,397 thousand for compensation element of restricted stock. See notes to consolidated financial statements. 40 2000 Annual Report CONSOLIDATED STATEMENTS OF CASH FLOW - --------------------------------------------------------------------------------
Year Ended December 31 (In thousands) 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------- Cash Flow from Operating Activities Net income $ 1,294,100 $ 1,326,600 $ 971,017 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 299,957 284,993 282,599 Provisions for loan losses and foreclosed property 134,353 173,789 215,225 Deferred income tax provision 190,103 183,842 39,115 Amortization of compensation element of restricted stock 9,408 15,557 12,771 Securities (gains) losses (6,616) 109,076 (8,207) Net gain on sale of noninterest earning assets (9,777) (28,887) (8,823) Net (increase) decrease in loans held for sale (227,494) 2,016,768 (2,259,825) Net increase in accrued interest receivable, prepaid expenses and other assets (1,494,731) (108,769) (897,527) Net increase (decrease) in accrued interest payable, accrued expenses and other liabilities 323,302 (164,030) 706,691 Other, net -- -- 45,735 - ------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities 512,605 3,606,291 (901,229) - ------------------------------------------------------------------------------------------------------------------- Cash Flow from Investing Activities Proceeds from maturities of securities available for sale 2,195,575 3,668,622 4,484,087 Proceeds from sales of securities available for sale 1,365,509 5,857,310 4,343,241 Purchases of securities available for sale (3,545,929) (11,249,089) (10,572,056) Net increase in loans (6,355,547) (4,454,927) (6,328,474) Capital expenditures (145,821) (257,179) (259,032) Proceeds from sale of assets 9,904 59,577 136,875 Net funds received in acquisitions -- -- 14,857 Loan recoveries 58,910 65,650 70,684 Other, net -- -- (4,611) - ------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (6,417,399) (6,310,036) (8,114,429) - ------------------------------------------------------------------------------------------------------------------- Cash Flow from Financing Activities Net increase in deposits 9,432,808 1,067,246 4,452,499 Net (decrease) increase in funds purchased and other short-term borrowings (5,512,998) 2,238,108 2,671,305 Proceeds from issuance of long-term debt 4,191,114 1,095,872 2,205,211 Repayment of long-term debt (1,263,030) (886,395) (407,700) Proceeds from the exercise of stock options 17,905 15,030 27,342 Proceeds from stock issuance 22,779 11,689 191,700 Proceeds used in acquisition and retirement of stock (668,391) (954,642) (305,608) Dividends paid (443,407) (440,631) (352,454) - ------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 5,776,780 2,146,277 8,482,295 - ------------------------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (128,014) (557,468) (533,363) Cash and cash equivalents at beginning of year 5,519,366 6,076,834 6,610,197 - ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 5,391,352 $ 5,519,366 $ 6,076,834 =================================================================================================================== Supplemental Disclosure Interest paid $ 3,618,302 $ 2,812,819 $ 2,770,872 Income taxes paid 540,212 530,786 482,621 Non-cash impact of securitizing loans 925,380 -- -- ===================================================================================================================
See notes to consolidated financial statements. SunTrust Banks, Inc. 41 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 2000 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. 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 underly- 42 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- ing 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 management and are based on knowledge of specific economic factors 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. Earnings Per Share Basic earnings per share are based on the weighted average number of common shares outstanding during each period. 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 the criteria for a hedge are carried at their current market value. Future changes in value are 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. Beginning January 1, 2001, Statement of Financial Accounting Standards ("SFAS") No. 133 standardizes the accounting for derivative instruments and hedging activities by requiring that an entity recognize those items as assets or liabilities in the financial statements and measure them at their fair value. If certain conditions are met, a derivative instrument may be specifically designated as the hedge of: (a) the exposure to SunTrust Banks, Inc. 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- changes in the fair value of a recognized asset or liability, or of an unrecognized firm commitment, (b) the exposure to variability in the cash flows of a recognized asset, liability or forecasted transaction or (c) certain foreign currency exposures. See Note 13 for additional information regarding derivative instruments. Recent Accounting Developments In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." 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. In June 2000, SFAS No. 133 was amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities -- an Amendment of SFAS No. 133." SFAS No. 138 addresses issues related to implementation difficulties. Adoption of SFAS No. 133 is effective for fiscal quarters of fiscal years beginning after June 15, 2000. SunTrust adopted SFAS No. 133 effective January 1, 2001. SFAS No. 133 did not have a material impact on the Company's financial position or results of operation. In October 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -- a replacement of SFAS No. 125." It revises criteria for accounting for securitizations, other financial-asset transfers and collateral and introduces new disclosures, but otherwise carries forward most of SFAS No. 125's provisions without amendment. This statement is effective for reporting periods beginning after March 31, 2001. However, the disclosure provisions are effective for fiscal years ending after December 15, 2000. The adoption of this statement is not expected to have a material impact on the Company's financial position or results of operations. Note 2 Acquisitions On December 31, 1998, the Company merged with Crestar Financial Corporation (Crestar). During 2000, the Company recorded $42.4 million in pre-tax merger- related charges compared to $45.6 million in 1999. These charges included $1.1 million in accelerated depreciation and amortization based upon estimates of systems integration timetables, $0.8 million in severance and $40.5 million in system integration costs. As of December 31, 2000, substantially all merger- related expenses have been incurred. During the three-year period ended December 31, 2000, 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.
Date Entity Consideration Assets Acquired - -------------------------------------------------------------------------------------------------------------- 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
44 2000 Annual Report 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:
2000 -------------------------------------------------------------- Amortized Fair Unrealized Unrealized (In thousands) Cost Value Gains Losses - ----------------------------------------------------------------------------------------------------------------- U.S. Treasury and other U.S. government agencies and corporations $ 2,763,479 $ 2,845,283 $ 82,327 $ 523 States and political subdivisions 449,268 455,640 8,025 1,653 Mortgage-backed and asset-backed securities 9,516,485 9,567,192 86,756 36,049 Corporate bonds 2,362,238 2,300,800 36,943 98,381 Common stock of The Coca-Cola Company 110 2,941,240 2,941,130 -- Other securities 670,418 700,156 29,786 48 - ----------------------------------------------------------------------------------------------------------------- Total securities available for sale $ 15,761,998 $ 18,810,311 $ 3,184,967 $ 136,654 =================================================================================================================
1999 -------------------------------------------------------------- Amortized Fair Unrealized Unrealized (In thousands) Cost Value Gains Losses - ----------------------------------------------------------------------------------------------------------------- U.S. Treasury and other U.S. government agencies and corporations $ 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 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 =================================================================================================================
The amortized cost and fair value of investments in debt securities at December 31, 2000 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.
Amortized Fair (In thousands) Cost Value - ----------------------------------------------------------------------------------------------------------------- Due in one year or less $ 137,770 $ 138,347 Due in one year through five years 3,595,486 3,669,521 Due after five years through ten years 990,503 999,225 After ten years 851,226 794,630 Mortgage-backed and asset-backed securities 9,516,485 9,567,192 - ----------------------------------------------------------------------------------------------------------------- Total $15,091,470 $15,168,915 =================================================================================================================
Proceeds from the sale of investments in debt securities were $1.4 billion, $5.9 billion and $4.3 billion in 2000, 1999, and 1998. Gross realized gains were $63.0, $10.9 and $7.9 million and gross realized losses on such sales were $56.4, $117.2 and $1.2 million in 2000, 1999 and 1998. Securities available for sale that were pledged to secure public deposits, securities sold under agreements to repurchase, trust and other funds had fair values of $12.2 and $11.7 billion at December 31, 2000 and 1999. SunTrust Banks, Inc. 45 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: (In thousands) 2000 1999 - ------------------------------------------------------------------------- Commercial $30,781,090 $26,933,477 Real estate Construction 2,966,087 2,457,095 Residential mortgages 19,953,027 19,619,353 Other 8,121,441 7,794,942 Credit card 76,747 77,364 Other consumer loans 10,341,428 9,120,600 - ------------------------------------------------------------------------- Total loans $72,239,820 $66,002,831 ========================================================================= Total nonaccrual and restructured loans at December 31, 2000 and 1999 were $405.3 and $248.9 million, respectively. The gross amounts of interest income that would have been recorded in 2000, 1999 and 1998 on nonaccrual and restructured loans at December 31 of each year, if all such loans had been accruing interest at their contractual rates, were $35.9, $25.9 and $22.8 million, while interest income actually recognized totaled $17.8, $16.5 and $8.2 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 $1,147.6 million at December 31, 2000 and $1,648.9 million at December 31, 1999. Due to the consolidation of the Company's bank charters, the number of related party directors was reduced in 2000. The December 31, 1999 balance included $535.6 million in outstanding loans to directors who are no longer considered related parties. During 2000, $3,264.3 million in related party loans were made and repayments totaled $3,230.0 million. None of these loans has been restructured, nor were any related party loans charged off during 2000 and 1999. Note 6 Allowance For Loan Losses Activity in the allowance for loan losses is summarized in the table below: (In thousands) 2000 1999 1998 - ----------------------------------------------------------------------------- Balance at beginning of year $ 871,323 $ 944,557 $ 933,533 Allowance from acquisitions and other activity - net -- (13,331) (10,000) Provision 133,974 170,437 214,602 Loan charge-offs (189,706) (295,990) (264,262) Loan recoveries 58,956 65,650 70,684 - ----------------------------------------------------------------------------- Balance at end of year $ 874,547 $ 871,323 $ 944,557 ============================================================================= It is the opinion of management that the allowance was adequate at December 31, 2000, 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 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- Note 7 Premises And Equipment Premises and equipment at December 31 were as follows: (In thousands) Useful Life 2000 1999 - -------------------------------------------------------------------------------- Land $ 344,116 $ 335,564 Buildings and improvements 5 - 40 years 1,243,640 1,221,079 Leasehold improvements 5 - 20 years 235,921 245,665 Furniture and equipment 3 - 20 years 1,089,107 1,035,086 Construction in progress 161,186 119,603 - -------------------------------------------------------------------------------- 3,073,970 2,956,997 Less accumulated depreciation and amortization 1,444,899 1,320,513 - -------------------------------------------------------------------------------- Total premises and equipment $1,629,071 $ 1,636,484 ================================================================================ The carrying amounts of premises and equipment subject to mortgage indebtedness (included in long-term debt) were not significant at December 31, 2000 and 1999. 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, 2000 were as follows: Operating Capital (In thousands) Leases Leases - ---------------------------------------------------------------------- 2001 $ 80,844 $ 3,660 2002 70,563 3,929 2003 58,496 3,912 2004 50,152 3,800 2005 35,905 3,015 Thereafter 125,587 28,027 - ---------------------------------------------------------------------- Total minimum lease payments 421,547 46,343 - ---------------------------------------------------------------------- Amounts representing interest 24,876 - ---------------------------------------------------------------------- Present value of net minimum lease payments $ 21,467 ====================================================================== Net premises and equipment include $14.5 and $15.7 million at December 31, 2000 and 1999, respectively, related to capital leases. Aggregate rent expense for all operating leases (including contingent rental expense) amounted to $90.6, $89.2 and $87.6 million for 2000, 1999 and 1998, respectively. Note 8 Other Short-Term Borrowings Other short-term borrowings at December 31 includes:
2000 1999 ------------------------- -------------------------- (In thousands) Balance Rates Balance Rates - ---------------------------------------------------------------------------------------------------------------- Commercial paper $ 545,800 6.51% - 6.57% $ 719,025 5.00% - 6.50% Federal funds purchased maturing in over one day 226,000 6.20% - 6.62% 175,260 5.00% - 5.50% Short-term borrowing facility -- -- 61,154 5.90% Master notes 357,258 5.70% 369,340 4.25% U.S. Treasury demand notes 593,425 5.16% 918,933 3.74% Other 39,502 various 15,298 various - ---------------------------------------------------------------------------------------------------------------- Total other short-term borrowings $ 1,761,985 $ 2,259,010 ================================================================================================================
SunTrust Banks, Inc. 47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- At December 31, 2000, $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, 2000, 1999 and 1998, were $1.6, $1.7 and $2.4 billion, respectively, while the maximum amount outstanding at any month-end during the years ended December 31, 2000, 1999 and 1998, were $2.0, $2.3 and $3.5 billion, respectively. Note 9 Long-Term Debt And Guaranteed Preferred Beneficial Interests In Debentures Long-term debt and guaranteed preferred beneficial interests in debentures at December 31 consisted of the following:
(In thousands) 2000 1999 - --------------------------------------------------------------------------------------------------------------------- Parent Company Payment agreement due 2001 $ 7,843 $ 15,233 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 297,250 300,000 7.75% notes due 2010 300,000 -- Floating rate note due 2019 50,563 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, due 2027, 7.9% notes 250,000 250,000 SunTrust Capital III, floating rate due 2028 250,000 250,000 6.0% notes due 2028 219,925 250,000 Capital lease obligations 3,497 4,155 - --------------------------------------------------------------------------------------------------------------------- Total Parent Company (excluding intercompany of $163,146 in 2000 and $160,000 in 1999) 2,779,078 2,519,951 - --------------------------------------------------------------------------------------------------------------------- Subsidiaries 8.25% notes due 2002 125,000 125,000 8.75% notes due 2004 149,849 149,810 7.25% notes due 2006 250,000 250,000 6.90% notes due 2007 100,000 100,000 6.5% notes due 2018 141,942 152,215 Crestar Capital Trust I, 8.16% due 2026 200,000 200,000 Capital lease obligations 17,970 19,164 FHLB advances (2000: 0.50 - 8.79%; 1999: 0.50 - 8.79%) 5,177,661 2,497,211 Other 3,930 3,995 - --------------------------------------------------------------------------------------------------------------------- Total subsidiaries 6,166,352 3,497,395 - --------------------------------------------------------------------------------------------------------------------- Total long-term debt and guaranteed preferred beneficial interests in debentures $8,945,430 $6,017,346 =====================================================================================================================
Principal amounts due for the next five years on long-term debt at December 31, 2000 are: 2001 - $1,030.9 million; 2002 - $2,829.0 million; 2003 - $748.5 million; 2004 - $1,025.4 million and 2005 - $3.2 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, 2000, the Company was in compliance with all covenants and provisions of long- term debt agreements. In both 2000 and 1999, $1,050.0 million of long-term debt qualifies as Tier 1 capital, and $1,426.9 million in 2000 and $1,232.1 million in 1999 qualifies as Tier 2 capital, as currently defined by Federal bank regulators. SunTrust has established special purpose trusts, which collectively issued $1,050.0 million in guaranteed preferred beneficial interests in debentures. The proceeds from these issuances, together with the proceeds 48 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- of the related issuances of common securities of the trusts, were invested in junior subordinated deferrable interest debentures of the Parent Company and Bank Parent Company. 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 the Bank Parent Company 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 the Bank Parent Company 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 the Bank Parent Company 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 the Bank Parent Company. The trust preferred securities may be called prior to maturity at the option of the Parent Company or the Bank Parent Company. 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, 2000, 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 subsidiary as of December 31 is as follows: 2000 1999 ---------------------------------------- (Dollars in millions) Amount Ratio Amount Ratio - ------------------------------------------------------------------------- SunTrust Banks, Inc. Tier 1 capital $ 6,851 7.09% $6,580 7.48% Total capital 10,489 10.85 9,939 11.31 Tier 1 leverage 6.98 7.17 SunTrust Bank Tier 1 capital 7,546 8.08 7,178 9.52 Total capital 9,969 10.68 9,514 12.63 Tier 1 leverage 7.85 7.97 ========================================================================= SunTrust Banks, Inc. 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- Substantially all the Company's retained earnings are undistributed earnings of the Bank, which is restricted by various regulations administered by federal and state bank regulatory authorities. Retained earnings of the Bank available for payment of cash dividends to the Bank Parent Company under these regulations totaled approximately $1,148.2 million at December 31, 2000. In the calculation of basic and diluted EPS, net income is identical. Below is a reconciliation for the three years ended December 31, 2000, of the difference between average basic common shares outstanding and average diluted common shares outstanding. (In thousands) 2000 1999 1998 - ----------------------------------------------------------------------- Average common shares - basic 297,834 317,079 314,908 Effect of dilutive securities Stock options 1,312 2,396 3,164 Performance restricted stock 1,810 1,699 1,639 - ----------------------------------------------------------------------- Average common shares - diluted 300,956 321,174 319,711 ======================================================================= Note 11 Income Taxes The provision for income taxes for the three years ended December 31, 2000 consisted of the following:
(In thousands) 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------- Provision for federal income taxes Current $ 400,679 $ 399,097 $ 452,988 Deferred 182,312 175,742 33,571 - ------------------------------------------------------------------------------------------------------------------------- Provision for federal income taxes 582,991 574,839 486,559 Provision (benefit) for state income taxes Current 34,674 (11,234) 35,186 Deferred 7,791 8,100 5,544 - ------------------------------------------------------------------------------------------------------------------------- Provision (benefit) for state income taxes 42,465 (3,134) 40,730 - ------------------------------------------------------------------------------------------------------------------------- Provision for income taxes 625,456 571,705 527,289 - ------------------------------------------------------------------------------------------------------------------------- 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 $ 625,456 $ 696,286 $ 527,289 =========================================================================================================================
The Company's income, before provision for income taxes, from international operations was not significant. 50 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- The Company's provisions for income taxes for the three years ended December 31, 2000, 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:
(In thousands) 2000 1999 1998 - ------------------------------------------------------------------------------------------------ Tax provision at federal statutory rate $ 671,845 $ 593,480 $ 524,407 Increase (decrease) resulting from Tax-exempt interest (30,087) (29,198) (30,455) Disallowed interest deduction 7,657 8,599 6,911 Income tax credits (net) (18,126) (4,341) (3,012) State income taxes, net of federal benefit 27,602 (2,037) 26,475 Dividend exclusion (9,282) (9,085) (8,707) Goodwill 8,814 8,778 11,012 Disposition of minority interest (44,613) -- -- Other 11,646 5,509 658 - ------------------------------------------------------------------------------------------------ Provision for income taxes $ 625,456 $ 571,705 $ 527,289 ================================================================================================
Temporary differences create deferred tax assets and liabilities that are detailed below as of December 31, 2000 and 1999:
Deferred Tax Assets (Liabilities) (In thousands) 2000 1999 - -------------------------------------------------------------------------------------- Allowance for loan losses $ 305,032 $ 315,812 Intangible assets 4,974 8,043 Employee benefits (83,130) (54,302) Fixed assets (17,876) (18,571) Securities (15,033) (6,595) Loans (16,963) (23,795) Mortgage (104,622) (97,190) Leasing (320,982) (236,841) Other real estate 7,174 7,035 Unrealized gains on securities available for sale (1,105,551) (964,883) Other 38,398 50,161 - -------------------------------------------------------------------------------------- Total deferred tax liability $ (1,308,579) $(1,021,126) ======================================================================================
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. SunTrust Banks, Inc. 51 NOTES TO 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. The Company provides a guaranteed match of 50% of eligible employees' pretax contributions up to 6% for all employees with one year of service who participate in the 401(k) plan. The Management Incentive Plan for key executives provides for annual cash awards, if any, based on four measures: net income performance, revenue growth, talent management goals and achievement of corporate objectives. 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 14 million shares of common stock reserved for issuance under the plan of which no more than 4 million shares may be issued as Restricted 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 is equal to the fair market value of the shares at the date of the 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 fully vested on February 10, 2000 and is no longer subject to the forfeiture condition set forth in the agreements. This early vested Performance Stock was converted into an equal number of "Phantom Stock Units" as of that date. Payment of Phantom Stock Units will be made to participants in shares of SunTrust stock upon the earlier to occur of (1) the date on which the participant would have vested in his or her Performance Stock or (2) the date of a change in control. Dividend equivalents will be paid at the same rate as the shares of Performance Stock; however, these units will not carry voting privileges. Compensation expense related to the incentive plans for the three years ended December 31 were as follows:
(In thousands) 2000 1999 1998 - ---------------------------------------------------------------------------------------------------- 401(k) Plan, Performance Bonus Plan, and Thrift Plan $ 47,184 $ 52,553 $ 49,733 Management Incentive Plan and Performance Unit Plan 13,047 31,580 27,541 Value Share Program/Performance Equity Plan/1/ -- -- 13,589 Performance Stock 9,408 15,557 12,771 ====================================================================================================
/1/ The Crestar Value Share Program was terminated upon the Company's merger with Crestar on December 31, 1998. 52 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- The following table presents information on stock options and Performance Stock:
Stock Options Performance Stock ---------------------------------------------------- ------------------ Weighted (Dollars in thousands Price Average Deferred except per share data) Shares Range Exercise Price Shares Compensation - ------------------------------------------------------------------------------------------------------------------------- Balance, January 1, 1998 6,424,194 $ 3.46 - 65.25 $ 29.33 3,228,000 $ 58,040 Granted 1,612,237 55.21 - 76.50 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 - 76.50 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 - 76.50 52.54 3,258,780 $ 56,449 Granted 2,849,425 48.56 - 56.13 51.12 18,220 1,023 Exercised/Vested (507,866) 3.46 - 58.11 24.20 (67,326) -- Cancelled/Expired/Forfeited (444,694) 46.63 - 73.06 69.34 (81,200) (3,667) Amortization of compensation for Performance Stock (9,408) - ------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 2000 10,001,653 $ 3.46 - 76.50 $ 52.83 3,128,474 $ 44,397 =========================================================================================================================
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 2000, 1999 and 1998 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: (In millions except per share amounts) 2000 1999 1998 - ------------------------------------------------------------------------------ Net income - as reported $ 1,294.1 $ 1,326.6 $ 971.0 Net income - pro forma 1,281.2 1,312.5 961.3 Diluted earnings per share - as reported 4.30 4.13 3.04 Diluted earnings per share - pro forma 4.26 4.10 3.01 Basic earnings per share - as reported 4.35 4.18 3.08 Basic earnings per share - pro forma 4.30 4.15 3.05 - ------------------------------------------------------------------------------ SunTrust Banks, Inc. 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- The weighted average fair values of options granted during 2000, 1999 and 1998 were $7.51, $13.16 and $18.00 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: 2000 1999 1998 - --------------------------------------------------------------------------- Expected dividend yield 2.90% 1.92% 1.41% Expected stock price volatility 10.52% 10.76% 11.35% Risk-free interest rate 5.76% 5.77% 4.75% Expected life of options 5 years 5 years 5 years - --------------------------------------------------------------------------- At December 31, 2000, options for 3,484,586 shares were exercisable with a weighted average exercise price of $36.42. The weighted average remaining contractual life of all options at December 31, 2000 was 7.6 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, 2000, the Plans' assets included 58,789 shares of SunTrust Banks, Inc. common stock. SunTrust also maintains nonquali- fied supplemental retirement plans that cover key executives of the Company. Although not under contractual obligation, SunTrust provides certain healthcare 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, 2000, 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:
Supplemental Other Retirement Benefits Retirement Plans Postretirement Benefits -------------------------------- -------------------------- --------------------------- (In thousands) 2000 1999 1998 2000 1999 1998 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- Service cost $ 36,243 $ 41,997 $ 39,594 $ 755 $ 710 $ 795 $ 3,795 $ 3,205 $ 2,594 Interest cost 56,156 51,954 48,451 4,396 3,779 3,667 11,146 10,905 10,729 Expected return on assets (96,845) (91,466) (69,880) -- -- -- (7,089) (7,541) (7,130) Prior service cost amortization (4,429) (2,562) (2,562) 1,462 1,431 1,429 173 163 163 Actuarial (gain)/loss -- (307) 5,270 2,522 3,020 1,691 982 875 835 Transition amount amortization (4,917) (4,940) (4,940) 417 417 417 3,963 4,603 4,603 - --------------------------------------------------------------------------------------------------------------------------------- Net periodic benefit (income) cost $(13,792) $ (5,324) $ 15,933 $ 9,552 $ 9,357 $ 7,999 $ 12,970 $ 12,210 $ 11,794 =================================================================================================================================
Assumed healthcare cost trend rates have a significant affect on the amounts reported for the healthcare plans. A one-percentage point change in assumed healthcare cost trend rates would have the following effects:
(In thousands) 1% Increase 1% Decrease - ----------------------------------------------------------------------------------------- Effect on total of service and interest cost components $ 638 $ (556) Effect on postretirement benefit obligation 8,181 (7,130) =========================================================================================
54 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- The funded status of the plans at December 31 were as follows:
Other Retirement Benefits Postretirement Benefits ---------------------------- ------------------------- (Dollars in thousands) 2000 1999 2000 1999 - --------------------------------------------------------------------------------------------------------- Change in Benefit Obligation Benefit obligation $ 702,188 $ 747,424 $ 142,142 $ 154,888 Service cost 36,243 41,997 3,795 3,205 Interest cost 56,156 51,954 11,146 10,905 Plan participants' contributions -- -- 2,899 3,721 Plan amendments (1,074) (12,260) (5,966) (6,653) Actuarial loss (gain) 31,682 (73,332) 18,546 (8,502) Benefits paid (45,160) (53,595) (20,954) (15,422) - --------------------------------------------------------------------------------------------------------- Benefit obligation $ 780,035 $ 702,188 $ 151,608 $ 142,142 - --------------------------------------------------------------------------------------------------------- Change in Plan Assets Fair value of plan assets $ 1,010,390 $ 946,223 $ 113,124 $ 117,690 Actual return on plan assets 66,171 70,417 4,779 2,598 Company contribution 41,175 47,345 35,551 -- Plan participants' contributions -- -- 2,899 2,742 Benefits paid (45,160) (53,595) (20,954) (9,906) - --------------------------------------------------------------------------------------------------------- Fair value of plan assets $ 1,072,576 $ 1,010,390 $ 135,399 $ 113,124 - --------------------------------------------------------------------------------------------------------- Funded status of plan $ 292,541 $ 308,202 $ (16,209) $ (29,018) Unrecognized actuarial loss (gain) 62,100 (255) 38,499 19,962 Unrecognized prior service cost (4,867) (8,223) -- 939 Unrecognized net transition obligation (510) (5,426) 45,706 53,531 - --------------------------------------------------------------------------------------------------------- Net amount recognized $ 349,264 $ 294,298 $ 67,996 $ 45,414 ========================================================================================================= Weighted-average assumptions: Discount rate 7.50% 7.75% 7.50% 7.75% 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% =========================================================================================================
The supplemental retirement plans cover key executives of the Company, for which the cost is accrued but may be unfunded. At December 31, 2000 and 1999, the projected benefit obligation for these plans was $60.4 million and $55.7 million. Included in other liabilities at December 31, 2000 and 1999 are $52.9 million and $47.2 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 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. SunTrust Banks, Inc. 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - --------------------------------------------------------------------------------
At December 31, 2000 At December 31, 1999 -------------------------------------- ------------------------------------- Contract or Contract or Notional Amount Notional Amount ---------------------- ---------------------- For Credit Risk For Credit Risk (In millions) End User Customers Amount End User Customers Amount - ------------------------------------------------------------------------------------------------------------------------------------ Derivatives contracts Interest rate contracts Swaps $ 2,880 $20,071 $ 176 $ 2,621 $15,954 $ 162 Futures and forwards 3,362 4,485 -- 2,008 2,604 -- Caps/Floors 750 6,079 -- 4,317 4,734 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total interest rate contracts 6,992 30,635 176 8,946 23,292 162 Foreign exchange rate contracts 420 632 36 901 297 29 Commodity and other contracts 40 32 33 -- -- 28 - ------------------------------------------------------------------------------------------------------------------------------------ Total derivatives contracts $ 7,452 $31,299 $ 245 $ 9,847 $23,589 $ 219 - ------------------------------------------------------------------------------------------------------------------------------------ Credit-related arrangements Commitments to extend credit $46,151 $46,151 $43,800 $43,800 Standby letters of credit and similar arrangements 6,727 6,727 5,721 5,721 - ------------------------------------------------------------------------------------------------------------------------------------ Total credit-related arrangements $52,878 $52,878 $49,521 $49,521 - ------------------------------------------------------------------------------------------------------------------------------------ Total credit risk amount $53,123 $49,740 ====================================================================================================================================
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 cash 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. At December 31, 2000, deferred gains on terminated hedges totaled $3.4 million; as of December 31, 1999, deferred gains totaled $11.5 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. The Company adopted SFAS No. 133 on January 1, 2001. Accordingly, all derivatives were recognized on the balance sheet at their fair value on this date. Under the provisions of SFAS No. 133, on the date that a derivative contract is entered into, the Company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment ("fair value" hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow" hedge), (3) a foreign-currency fair-value or cash-flow hedge ("foreign currency" hedge) or (4) "held for trading" ("trading instruments"). Changes in the fair value of a derivative that is highly effective 56 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- - -- and that has been designated and qualifies -- as a fair-value hedge, along with the loss or gain on the hedged asset or liability that is attributable to the hedged risk (including losses or gains on firm commitments), are recorded in current-period earnings. Changes in the fair value of a derivative that is highly effective, and that is designated and qualifies as a cash-flow hedge are recorded in either current-period earnings, if the hedged item is an over hedge, or in other comprehensive income. Changes in the fair value of derivative trading instruments are reported in current-period earnings. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair-value, cash-flow, or foreign-currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company formally assesses, both at the hedge's inception and on an ongoing quarterly basis, whether the derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge. The Company discontinues hedge accounting prospectively when (1) it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including firm commitments or forecasted transactions), (2) the derivative expires or is sold, terminated, or exercised, (3) the derivative is redesignated as a hedge instrument, because it is unlikely that a forecasted transaction will occur; (4) because a hedged firm commitment no longer meets the definition of a firm commitment; or (5) management determines that designation of the derivative as a hedge instrument is no longer appropriate. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair-value hedge, the derivative will continue to be carried on the balance sheet at its fair value, and the hedged asset or liability will no longer be adjusted for changes in fair value. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the derivative will continue to be carried on the balance sheet at its fair value, and any asset or liability that was recorded pursuant to recognition of the firm commitment will be removed from the balance sheet and recognized as a gain or loss in current-period earnings. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the derivative will continue to be carried on the balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive income will be recognized immediately in earnings. In all other situations in which hedge accounting is discontinued, the derivative will be carried at its fair value on the balance sheet, with changes in its fair value recognized in current-period earnings. By using derivative instruments, the Company is exposed to credit and market risk. If the counterparty fails to perform, credit risk is equal to extent of the fair-value gain in a derivative. When the fair value of a derivative contract is positive, this generally indicates that the counterparty owes the Company, and therefore, creates a repayment risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it has no repayment risk. The Company minimizes the credit (or repayment) risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically by the Company's credit committee. When the Company has more than one outstanding derivative transaction with a counterparty, and there exists a legally enforceable master netting agreement with the counterparty, the "net" mark-to- market exposure represents the netting of the positive and negative exposures with the same counterparty. When there is a net negative exposure, the Company considers its exposure to the counterparty to be zero. The net mark-to-market position with a particular counterparty represents a reasonable measure of credit risk when there is a legally enforceable master netting agreement (i.e., a legal right of a setoff of receivable and payable derivative contracts) between the Company and a counterparty. 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. SunTrust Banks, Inc. 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- 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 $3.4 billion. In addition to the value of the property serving as collateral, approximately $2.4 billion of the balance of these loans serviced with recourse as of December 31, 2000, 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 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, 2000, the Company had $20.0 billion in residential real estate loans and an additional $3.1 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. 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, 2000 and 1999:
2000 1999 --------------------------- ----------------------------- Carrying Fair Carrying Fair (In thousands) Amount Value Amount Value - ---------------------------------------------------------------------------------------------------------- Financial assets Cash and short-term investments $ 5,391,352 $ 5,391,352 $ 5,519,366 $ 5,519,366 Trading account 941,854 941,854 259,547 259,547 Securities available for sale 18,810,311 18,810,311 18,317,297 18,317,297 Loans held for sale 1,759,281 1,759,414 1,531,787 1,533,273 Loans 71,365,273 71,742,780 65,131,508 64,950,161 Financial liabilities Deposits 69,533,337 69,629,971 60,100,529 59,945,453 Short-term borrowings 12,657,929 12,657,929 18,170,927 18,170,927 Long-term debt and guaranteed preferred beneficial interests in debentures 8,945,430 8,929,786 6,017,346 5,863,099 Off-balance sheet financial instruments Interest rate swaps In a net gain position 30,909 31,600 In a net loss position (23,739) (7,925) Commitments to extend credit 51,025 45,389 Standby letters of credit 6,381 3,570 Other (21,901) 23,845 ==========================================================================================================
58 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- 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, 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 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. 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 Effective January 1, 2000, the Company significantly modified management's internal reporting system with the consolidation of its individual bank charters. In prior periods, the Company's reportable segments were based on legal entities that were aligned along geographic regions. With the consolidation of the bank charters, SunTrust Bank is now one legal entity with Florida, Georgia, Tennessee, Alabama and Mid-Atlantic regions (which includes Virginia, Maryland and the District of Columbia). As a result of the changes to the legal entity structure, as well as the changes made to management's internal system used to evaluate operating segment performance, prior periods have not been reported because it is not practicable to restate prior period results to conform to the current reporting methods or to present current year results based on prior period reportable segments. The Company's reportable segments as of December 31, 2000 are determined based on management's internal reporting approach. The reportable segments are comprised of the four regions of Florida, Georgia, Tennessee (which includes the branches in Alabama) and Mid-Atlantic, in addition to Corporate SunTrust Banks, Inc. 59 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- and Investment Banking and Parent/Other. Each geographic operating segment provides a wide array of banking services to consumer and commercial customers and earns interest income from loans made to customers. In addition, these geographic segments recognize certain fees related to trust, deposit, lending and other services provided to customers. The Corporate and Investment Banking segment consists of corporate banking for the large corporate and identified industry specialties, as well as SunTrust Equitable Securities and SunTrust Leasing. The Parent/Other segment consists primarily of the Company's credit card bank and non-bank subsidiaries as well as certain treasury and corporate expenses. The Treasury/Reconciling Items Segment includes the net impact of transfer pricing on loan and deposit balances, the cost of external debt, gains and losses on the investment portfolio, income taxes and other amounts necessary to reconcile the Company's internal management accounting practices described below to the consolidated financial statements. Unlike financial accounting, there is no comprehensive authoritative body of guidance for management accounting equivalent to generally accepted accounting principles. Therefore, the performance of the segments is not comparable with SunTrust's consolidated results or with similar information presented by any other financial institution. In addition, operating segment results may be restated in the future as management's structure, information needs, and reporting systems evolve.
Twelve Months Ended ------------------------------------------------------------ (In thousands) Florida Georgia Tennessee Mid-Atlantic - ---------------------------------------------------------------------------------------------------------- Net interest income $ 847,928 $ 519,378 $ 239,672 $ 710,093 Noninterest income 541,599 354,010 151,053 375,351 Noninterest expense 803,594 511,880 238,301 669,627 - ---------------------------------------------------------------------------------------------------------- Income before taxes 585,933 361,508 152,424 415,817 Income tax expense -- -- -- -- - ---------------------------------------------------------------------------------------------------------- Net income $ 585,933 $ 361,508 $ 152,424 $ 415,817 ========================================================================================================== Average total assets $21,485,502 $12,046,959 $ 6,160,430 $12,934,399 ========================================================================================================== Revenues from external customers Total net interest income $ 847,439 $ 519,142 $ 239,516 $ 710,093 Total noninterest income 441,953 292,989 121,029 314,094 - ---------------------------------------------------------------------------------------------------------- Total income $ 1,289,392 $ 812,131 $ 360,545 $ 1,024,187 ========================================================================================================== Revenues from affiliates Total net interest income $ 489 $ 236 $ 156 $ -- Total noninterest income 99,646 61,022 30,024 61,257 - ---------------------------------------------------------------------------------------------------------- Total income $ 100,135 $ 61,258 $ 30,180 $ 61,257 ==========================================================================================================
/1/ The Company's reconciliation of total segment results to consolidated results includes adjustments for funds transfer pricing credits and charges related to funds provided and funds used, credits for loan loss reserves, and credits for equity. /2/ Includes the effect of sales of securities, sales of fixed assets and other items. /3/ Includes miscellaneous corporate expenses not allocated to the operating segments. /4/ Reflects provision for income taxes that management does not include in its internal reporting system. 60 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- The Company uses a transfer pricing process to aid in assessing operating segment performance. This process involves matched maturity transfer pricing of interest rates for assets and liabilities to determine a contribution to the net interest margin on a segment basis. Currently, the Company does not allocate corporate equity to the reportable segments. As a result, the difference between the matched maturity transfer pricing and the consolidated net interest margin, as well as the net interest margin benefit provided from equity are treated as reconciling items. In addition, the Company uses a credit risk premium approach to aid in assessing operating segment performance. This approach recognizes the cost of the credit losses that SunTrust can expect over time on its loans through a charge against earnings. The premium is judgmental but based on rates derived from the Company's loss migration history for various loan categories as well as the internal credit ratings of individual loans in certain of those loan categories. The difference between the credit risk premium charged to the segments and the Company's consolidated provision for loan losses is included as a reconciling item within noninterest expense. The segment results also include certain intercompany transactions that were recorded at cost. All intercompany transactions have been eliminated to determine the consolidated balances. No transactions with a single customer contributed 10% or more to the Company's total revenue.
December 31, 2000 - --------------------------------------------------------------------------------------------- Corporate & Treasury/ Investment Reconciling Banking Parent/Other Items Eliminations Consolidated - --------------------------------------------------------------------------------------------- $ 265,851 $ (2,766) $ 528,282/1/ $ -- $ 3,108,438 130,355 1,482,858 11,903/2/ (1,273,504) 1,773,625 183,796 1,484,717 344,096/3/ (1,273,504) 2,962,507 - --------------------------------------------------------------------------------------------- 212,410 (4,625) 196,089 -- 1,919,556 -- 35,741 589,715/4/ -- 625,456 - --------------------------------------------------------------------------------------------- $ 212,410 $ (40,366) $ (393,626) $ -- $ 1,294,100 ============================================================================================= $ 16,755,298 $ 32,455,274 $ 55,971,168 $ (59,411,262) $ 98,397,768 ============================================================================================= $ 265,851 $ (1,884) $ 528,282 $ -- $ 3,108,438 125,348 466,310 11,903 -- 1,773,625 - --------------------------------------------------------------------------------------------- $ 391,199 $ 464,426 $ 540,185 $ -- $ 4,882,063 ============================================================================================= $ -- $ (881) $ -- $ -- $ -- 5,007 1,016,548 -- (1,273,504) -- - --------------------------------------------------------------------------------------------- $ 5,007 $ 1,015,667 $ -- $ (1,273,504) $ -- =============================================================================================
SunTrust Banks, Inc. 61 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, 2000, 1999, and 1998 is calculated as follows:
(In thousands) 2000 1999 1998 - --------------------------------------------------------------------------------------------------------- Unrealized gains (losses) net recognized in other comprehensive income: Before income tax $ 621,853 $ (859,877) $ 58,782 Income tax 241,901 (334,492) 18,728 - --------------------------------------------------------------------------------------------------------- Net of income tax $ 379,952 $ (525,385) $ 40,054 ========================================================================================================= Amounts reported in net income Gain (loss) on sale of securities $ 6,616 $ (109,076) $ 8,207 Net (accretion) amortization (10,413) (291) 3,524 - --------------------------------------------------------------------------------------------------------- Reclassification adjustment (3,797) (109,367) 11,731 Income tax benefit (expense) 1,477 42,544 (4,563) - --------------------------------------------------------------------------------------------------------- Reclassification adjustment, net of tax $ (2,320) $ (66,823) $ 7,168 ========================================================================================================= Amounts reported in other comprehensive income Unrealized gain (loss) arising during period, net of tax $ 377,632 $ (592,208) $ 47,222 Reclassification adjustment, net of tax 2,320 66,823 (7,168) - --------------------------------------------------------------------------------------------------------- Net unrealized gains (losses) recognized in other comprehensive income 379,952 (525,385) 40,054 Net income 1,294,100 1,326,600 971,017 - --------------------------------------------------------------------------------------------------------- Total comprehensive income $1,674,052 $ 801,215 $ 1,011,071 =========================================================================================================
Note 19 Other Noninterest Income Other noninterest income in the consolidated statements of income includes:
Year Ended December 31 (In thousands) 2000 1999 1998 - --------------------------------------------------------------------------------------------------------- Trading account profits and commissions $ 31,749 $ 35,075 $ 44,580 Other income 132,865 114,600 106,838 - --------------------------------------------------------------------------------------------------------- Total other noninterest income $ 164,614 $ 149,675 $ 151,418 =========================================================================================================
Note 20 Other Noninterest Expense Other noninterest expense in the consolidated statements of income includes:
Year Ended December 31 (In thousands) 2000 1999 1998 - --------------------------------------------------------------------------------------------------------- Outside processing and software $ 172,263 $ 150,263 $ 138,405 Credit and collection services 56,887 68,701 70,379 Postage and delivery 63,335 68,081 64,413 Communications 59,797 66,280 62,127 Amortization of intangible assets 35,452 32,755 43,090 Consulting and legal 59,560 62,544 67,456 Operating supplies 47,279 51,903 54,008 FDIC premiums 11,205 7,936 8,370 Other real estate income (3,809) (4,789) (9,775) Other expense 137,586 156,345 158,651 - --------------------------------------------------------------------------------------------------------- Total other noninterest expense $ 639,555 $ 660,019 $ 657,124 =========================================================================================================
62 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 21 SunTrust Banks, Inc. (Parent Company Only) Financial Information Statements of Income -- Parent Company Only
Year Ended December 31 (In thousands) 2000 1999 1998 - ------------------------------------------------------------------------------------------- Operating Income From subsidiaries: Dividends - substantially all from the Bank $ 1,486,922 $ 1,074,010 $ 616,263 Service fees 140,012 146,161 83,523 Interest on loans 46,766 55,909 52,219 Other income 5 11 4 Other operating income/1/ 70,531 74,736 83,045 - ------------------------------------------------------------------------------------------- Total operating income 1,744,236 1,350,827 835,054 - ------------------------------------------------------------------------------------------- Operating Expense Interest on short-term borrowings 57,361 48,498 51,308 Interest on long-term debt/2/ 183,732 162,456 161,842 Salaries and employee benefits 52,845 91,784 45,354 Amortization of intangible assets 7,644 7,644 7,644 Service fees to subsidiaries 60,887 81,467 104,806 Other operating expense/3/ 85,403 91,866 77,291 - ------------------------------------------------------------------------------------------- Total operating expense 447,872 483,715 448,245 - ------------------------------------------------------------------------------------------- Income before income taxes and equity in undistributed income of subsidiaries 1,296,364 867,112 386,809 Income tax benefit 21,010 99,087 104,916 - ------------------------------------------------------------------------------------------- Income before equity in undistributed income of subsidiaries 1,317,374 966,199 491,725 Extraordinary gain, net of taxes -- 202,648 -- Equity in undistributed income of subsidiaries, net of extraordinary gain (23,274) 157,753 479,292 - ------------------------------------------------------------------------------------------- Net Income $ 1,294,100 $ 1,326,600 $ 971,017 ===========================================================================================
/1/ Other operating income includes $63.6, $57.6 and $56.6 million in 2000, 1999 and 1998, respectively, for interest income on Company owned trust preferred securities. /2/ Interest on long-term debt includes $74.2, $73.9 and $72.9 million in 2000, 1999 and 1998, respectively, for interest expense from Company issued trust preferred securities. /3/ Other operating expense for 2000, 1999 and 1998 includes merger-related expenses of $42.4, $45.6 and $29.4 million, respectively. SunTrust Banks, Inc. 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- Balance Sheets -- Parent Company Only
December 31 (In thousands) 2000 1999 - ------------------------------------------------------------------------------------------------------------------ Assets Cash in subsidiary banks $ 9,428 $ 80,506 Interest-bearing deposits in banks 10,565 4,562 Funds sold 29,789 -- Securities available for sale 306,381 892,078 Loans to subsidiaries 846,984 924,646 Investment in capital stock of subsidiaries stated on the basis of the Company's equity in subsidiaries' capital accounts Banking subsidiaries 9,886,692 9,562,057 Nonbanking and holding company subsidiaries 1,044,412 340,105 Premises and equipment 28,555 20,099 Intangible assets 84,230 83,374 Other assets 711,735 511,398 - ------------------------------------------------------------------------------------------------------------------ Total assets $ 12,958,771 $ 12,418,825 ================================================================================================================== Liabilities and Shareholders' Equity Short-term borrowings from Subsidiaries $ 49,445 $ 627,429 Non-affiliated companies 903,031 768,315 Long-term debt - Note 9 2,942,224 2,679,951 Other liabilities 824,863 716,268 - ------------------------------------------------------------------------------------------------------------------ Total liabilities 4,719,563 4,791,963 ================================================================================================================== Preferred stock, no par value; 50,000,000 shares authorized; none issued -- -- Common stock, $1.00 par value 323,163 323,163 Additional paid in capital 1,274,416 1,293,387 Retained earnings 6,312,044 5,461,351 Treasury stock and other (1,613,189) (1,013,861) - ------------------------------------------------------------------------------------------------------------------ Realized shareholders' equity 6,296,434 6,064,040 Accumulated other comprehensive income 1,942,774 1,562,822 - ------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 8,239,208 7,626,862 - ------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 12,958,771 $ 12,418,825 ================================================================================================================== Common shares outstanding 296,266,329 308,353,207 Common shares authorized 750,000,000 500,000,000 Treasury shares of common stock 26,896,428 14,809,550 ==================================================================================================================
64 2000 Annual Report NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- Statements of Cash Flow-- Parent Company Only
Year Ended December 31 (In thousands) 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------- Cash Flow from Operating Activities: Net income $ 1,294,100 $ 1,326,600 $ 971,017 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 23,274 (157,753) (479,292) Depreciation and amortization 22,320 12,392 13,064 Securities (gains) losses (10,993) 851 (640) Deferred income tax provision 15,271 22,313 10,609 Changes in period end balances of: Prepaid expenses (82,746) (54,830) (44,384) Other assets (120,417) (50,741) (11,052) Taxes payable (3,950) (9,221) 8,481 Interest payable 11,102 4,928 5,266 Other accrued expenses 87,762 32,468 257,644 - ------------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,235,723 924,359 730,713 - ------------------------------------------------------------------------------------------------------------------------------- Cash Flow from Investing Activities: Proceeds from sales and maturities of securities available for sale 63,053 125,946 143,764 Purchase of securities available for sale (20,136) (184,930) (347,212) Net change in loans to subsidiaries 77,662 152,431 (460,048) Capital expenditures (9,103) (15,077) (8,407) Capital contributions to subsidiaries (79,250) (317,595) (63,784) Other, net (301) 11,000 17,894 - ------------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities 31,925 (228,225) (717,793) - ------------------------------------------------------------------------------------------------------------------------------- Cash Flow from Financing Activities: Net change in short-term borrowings (443,268) 546,248 (44,081) Proceeds from issuance of long-term debt 300,000 140,563 800,000 Repayment of long-term debt (65,773) (207,527) (101,577) Proceeds from the exercise of stock options 17,905 15,030 27,342 Proceeds from stock issuance -- -- 191,700 Proceeds used in acquisition and retirement of stock (668,391) (954,642) (305,608) Dividends paid (443,407) (440,631) (352,454) - ------------------------------------------------------------------------------------------------------------------------------- Net cash (used in) provided by financing activities (1,302,934) (900,959) 215,322 - ------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents (35,286) (204,825) 228,242 Cash and cash equivalents at beginning of year 85,068 289,893 61,651 - ------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 49,782 $ 85,068 $ 289,893 =============================================================================================================================== Supplemental Disclosure Income taxes received from subsidiaries $ 591,326 $ 631,626 $ 382,847 Income taxes paid by Parent Company (535,346) (520,412) (290,648) - ------------------------------------------------------------------------------------------------------------------------------- Net income taxes received by Parent Company $ 55,980 $ 111,214 $ 92,199 =============================================================================================================================== Interest paid $ 236,214 $ 206,033 207,912 ===============================================================================================================================
SunTrust Banks, Inc. 65 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. - -------------------------------------------------------------------------------- Financial Statement Filed. See Index To Consolidated Financial Statements on page 36 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 20, 2000 reporting third quarter earnings. 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 are 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. 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 13, 2001 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 13, 2001 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 President and Chief Executive Officer and Controller John W. Spiegel Vice Chairman and Chief Financial Officer All Directors of the registrant listed on pages 68 - 69. SunTrust Banks, Inc. 67 BOARD OF DIRECTORS - -------------------------------------------------------------------------------- L. Phillip Humann A. W. Dahlberg Chairman of the Board, Chairman of the Board and President and Chief Executive Officer Chief Executive Officer, The Southern Company J. Hyatt Brown Atlanta, Georgia Chairman of the Board, Patricia C. Frist President and Chief Executive Officer, Brown & Brown, Inc. Partner, Frist Capital Partners, Daytona Beach, Florida President, Frisco, Inc. and President, Patricia C. Frist and Alston D. Correll Thomas F. Frist, Jr. Foundation Nashville, Tennessee Chairman of the Board and Chief Executive Officer, David H. Hughes Georgia-Pacific Corporation Atlanta, Georgia Chairman of the Board and Chief Executive Officer, Hughes Supply, Inc. Douglas N. Daft Orlando, Florida Chairman and Chief Executive Officer, The Coca-Cola Company M. Douglas Ivester Atlanta, Georgia President, Deer Run Investments, LLC Atlanta, Georgia Pictured left to right: Larry L. Prince, Richard G. Tilghman, Frank E. McCarthy, David H. Hughes, G. Gilmer Minor, III, R. Randall Rollins, Patricia C. Frist, Douglas N. Daft, L. Phillip Humann, James B. Williams, M. Douglas Ivester, Frank S. Royal, M.D., A.W. Dahlberg, Alston D. Correll, Joseph L. Lanier, Jr., J. Hyatt Brown, Summerfield K. Johnston, Jr. [PHOTO APPEARS HERE] - -------------------------------------------------------------------------------- Summerfield K. Johnston, Jr. R. Randall Rollins Chairman of the Board and Chairman and Chief Executive Officer, Chief Executive Officer, Coca-Cola Enterprises Inc. Rollins, Inc. Atlanta, Georgia Atlanta, Georgia Joseph L. Lanier, Jr. Frank S. Royal, M.D. Chairman of the Board and President, Chief Executive Officer, Frank S. Royal, M.D., P.C. Dan River, Inc. Richmond, Virginia Danville, Virginia Richard G. Tilghman Frank E. McCarthy Vice Chairman and President, Executive Vice President, National Automobile Dealers Association SunTrust Banks, Inc. and Chairman McLean, Virginia of SunTrust Bank, Mid-Atlantic Richmond, Virginia G. Gilmer Minor, III James B. Williams Chairman of the Board and Chief Executive Officer, Chairman of the Executive Committee, Owens & Minor, Inc. SunTrust Banks, Inc. Richmond, Virginia Atlanta, Georgia Larry L. Prince Chairman of the Board and Chief Executive Officer, Genuine Parts Company Atlanta, Georgia [PHOTO APPEARS HERE] MANAGEMENT COMMITTEE - -------------------------------------------------------------------------------- L. Phillip Humann,* 55 Chairman, President and Chief Executive Officer. 32 years of service. Elected President in 1991 and to current position in 1998. John W. Clay, Jr.,* 59 Vice Chairman - Geographic Banking (Florida, Georgia, Mid-Atlantic, Tennessee/ Alabama); Corporate and Investment Banking Line of Business. 34 years of service. Elected Executive Vice President in 1997, Director of Corporate and Investment Banking in 1998, and to current position in 2000. Theodore J. Hoepner,* 59 Vice Chairman - Technology & Operations, Human Resources, Asset Quality, Legal & Regulatory Affairs, and Efficiency and Quality Initiatives. 33 years of service. Elected President, Chairman and Chief Executive Officer of SunTrust Banks of Florida, Inc. in 1995 and to current position in 2000. John W. Spiegel,* 59 Vice Chairman and Chief Financial Officer - Accounting, Funds Management, Risk Management, Strategic Finance & Taxes, Audit, Investor Relations and Treasury. 36 years of service. Elected Executive Vice President and Chief Financial Officer in 1985 and to current position in 2000. James M. Wells III,* 54 Vice Chairman - Commercial, Retail, Mortgage, Private Client Services Lines of Business, Corporate Strategy, and Marketing. 33 years of service. Elected President of Crestar Financial Corp. in 1988, Chief Executive Officer of SunTrust, Mid-Atlantic in January 2000, and to current position in August 2000. Robert H. Coords, 58 Executive Vice President - Chief Efficiency and Quality Officer. 28 years of service. Elected Chairman and Chief Executive Officer of SunTrust Bank, South Florida in 1996 and to current position in 1999. Donald S. Downing, 54 Executive Vice President - Mortgage Banking Line of Business. 33 years of service. Elected to current position in 1995. Samuel O. Franklin, III, 57 Chairman of SunTrust Bank, Nashville and SunTrust Banks of Tennessee, Inc. 36 years of service. Elected President in 1992 and to current position in 1998. C.T. Hill, 50 Chairman, President and Chief Executive Officer, SunTrust Bank, Mid-Atlantic. 31 years of service. Elected President/Capital Region of Crestar Bank in 1994, Corporate Executive Vice President and Senior Credit Officer in 1997, and to present position in 2000. Craig J. Kelly, 55 Executive Vice President - Marketing. 4 years of service. Elected Group Executive Vice President for Strategic Marketing in 1997 and to current position in 2000. George W. Koehn, 57 Chairman, President and Chief Executive Officer - SunTrust Bank, Florida. 22 years of service. Elected Chairman and Chief Executive Officer of SunTrust's Central Florida banking unit in 1995 and to current position in 2000. Robert R. Long, 63 Chief Executive Officer of SunTrust Bank, Atlanta and SunTrust Bank, Georgia. 34 years of service. Elected to current position in 1995. Carl F. Mentzer, 55 Executive Vice President - Commercial Banking Line of Business. 23 years of service. Elected Chairman and Chief Executive Officer of SunTrust Bank, Tampa Bay, in 1995 and to current position in 2000. Joy Wilder Morgan, 38 Senior Vice President - Chief Strategy Officer - Strategic Planning. 17 years of service. Elected Group Vice President in 1994 and to current position in 2000. Dennis M. Patterson, 51 Executive Vice President - Retail Banking Line of Business. 32 years of service. Elected Senior Vice President and Marketing Director in 1991 and to current position in 2000. William H. Rogers, Jr., 43 Executive Vice President - Private Client Services Line of Business. 20 years of service. Elected Executive Vice President of Corporate Banking in 1995, Executive Vice President of Georgia Community Banking in 1999, and to current position in 2000. R. Charles Shufeldt, 50 Executive Vice President - Corporate and Investment Banking Line of Business. 17 years of service. Elected Senior Vice President of Corporate & Investment Banking in 1998 and to current position in 2000. Robert C. Whitehead, 53 President and Chief Executive Officer, Enterprise Information Services. 33 years of service. Elected Executive Vice President and Manager of the Bank Operations Division of SunTrust in 1986 and to current position in 1999. E. Jenner Wood, III, 49 President, SunTrust Bank, Atlanta and SunTrust Bank, Georgia. 26 years of service. Elected Executive Vice President and head of Private Client Services Line of Business in 1994 and to current position in 2000. *Policy Committee Member 70 2000 Annual Report BANKING UNITS - ------------------------------------------------------------------------------- Name Headquarters CEO/President - ------------------------------------------------------------------------------- Florida Orlando, FL George W. Koehn Central Florida Orlando Thomas H. Yochum East Central Florida Daytona Beach William H. Davison Gulf Coast Sarasota Ray L. Sandhagen Miami Miami John P. Hashagen Mid-Florida Lakeland Charles W. McPherson Nature Coast Brooksville James H. Kimbrough North Central Florida Ocala William H. Evans North Florida Jacksonville John R. Schmitt South Florida Fort Lauderdale Thomas G. Kuntz Southwest Florida Fort Myers Charles K. Idelson Tampa Bay Tampa Daniel W. Mahurin Northwest Florida Tallahassee David B. Ramsay - ------------------------------------------------------------------------------- Georgia Atlanta, GA E. Jenner Wood, III * Atlanta Atlanta E. Jenner Wood, III * Augusta Augusta William R. Thompson Middle Georgia Macon James B. Patton Northeast Georgia Athens Robert D. Bishop Northwest Georgia Rome William H. Pridgen Savannah Savannah William B. Haile South Georgia Albany Willis D. Sims Southeast Georgia Brunswick Jack E. Hartman West Georgia Columbus Frank S. Etheridge, III - ------------------------------------------------------------------------------- Mid-Atlantic Richmond, VA C. T. Hill Central Virginia Richmond A. Dale Cannady Greater Washington Washington, DC Peter F. Nostrand Hampton Roads Norfolk William K. Butler II Maryland Baltimore, MD J. Scott Wilfong Western Virginia Roanoke Robert C. Lawson, Jr. - ------------------------------------------------------------------------------- Tennessee Nashville, TN Samuel O. Franklin, III Chattanooga Chattanooga Robert J. Sudderth, Jr. East Tennessee Knoxville R. King Purnell Nashville Nashville Samuel O. Franklin, III South Central Tennessee Pulaski W. David Jones Alabama Florence, AL Robert E. McNeilly, III *Succeeds Robert R. Long, who retires March 31, 2001. SunTrust Banks, Inc. 71 NON-BANKING SUBSIDIARIES - --------------------------------------------------------------------------------
Name Headquarters CEO/President - ---------------------------------------------------------------------------------------- STI Investment Management (Collateral) Inc. Newark, DE Peter Fulweiler STI Trust and Investment Operations, Inc. * Atlanta, GA Dennis B. Dills SunTrust BankCard, NA Orlando, FL Ronald W. Eastburn SunTrust Community Development Corporation Atlanta, GA Peter P. Walczuk SunTrust Delaware Trust Company Wilmington, DE Barbara B. O'Donnell SunTrust Equitable Securities Corporation Nashville, TN Paul S. White SunTrust Insurance Company Phoenix, AZ James A. Murphy, Jr. SunTrust International Services, Inc. * Atlanta, GA Gian Rossi Espagnet SunTrust Online, Inc. * Atlanta, GA John J. McGuire SunTrust Plaza Associates, LLC Atlanta, GA Susan C. Gallienne SunTrust Properties, Inc. Orlando, FL William P. O'Halloran SunTrust Real Estate Corporation Richmond, VA James P. Breen Trusco Capital Management, Inc. Atlanta, GA Douglas S. Phillips
*STI Trust and Investment Operations, Inc., SunTrust International Services, Inc. and SunTrust Online, Inc. all merged into SunTrust Bank, effective January 1, 2001. 72 2000 Annual Report GENERAL INFORMATION - -------------------------------------------------------------------------------- Corporate Headquarters SunTrust Banks, Inc. 303 Peachtree Street, NE Atlanta, Georgia 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 17, 2001 at 9:30 a.m. in Suite 225 of the SunTrust Garden Offices at 303 Peachtree Center Avenue in Atlanta. Stock Trading SunTrust Banks, Inc. common stock is traded on the New York Stock Exchange under the symbol "STI." Quarterly Common Stock Prices and Dividends The high, low and last prices of SunTrust's common stock for each quarter of 2000 and 1999 and the dividends paid per share are shown below. Market Price Quarter --------------------- Dividends Ended High Low Last Paid 2000 March 31 68.06 46.81 57.75 $ 0.37 June 30 66.00 45.06 45.69 0.37 September 30 54.19 45.63 49.88 0.37 December 31 64.38 41.63 63.00 0.37 - ------------------------------------------------------------- 1999 March 31 79.81 60.44 62.25 $ 0.35 June 30 73.00 63.06 69.44 0.35 September 30 70.88 61.56 65.75 0.35 December 31 76.00 64.19 68.81 0.35 - ------------------------------------------------------------- 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 39,886 shareholders of record as of December 31, 2000. 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: Gary Peacock, Jr. Senior Vice President Investor Relations and Corporate Communications 404/658-4879 To obtain information about SunTrust via the Internet, including quarterly earnings releases and press releases, visit www.suntrust.com. [LOGO] This report is printed on recycled paper. SunTrust SunTrust Banks, Inc. 303 Peachtree Street, NE Atlanta, Georgia 30308 EX-23 11 0011.txt EXHIBIT 23 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, 331-91521 and 333-43348 on Form S-8 and Registration Statement Nos. 333-46123 and 333-61583 on Form S-3. Arthur Andersen LLP Atlanta, GA March 15, 2001 -----END PRIVACY-ENHANCED MESSAGE-----