Suntrust has Higher Revenues and Lower Credit Costs

SunTrust Banks, Inc. announced that stronger revenue performance and a continued decline in credit-related costs resulted in net income available to common shareholders of $84 million, or $0.17 per average common diluted share, in the third quarter of 2010. The Company reported a net loss of $377 million, or $0.76 per average common share, in the third quarter of 2009 and a net loss of $56 million, or $0.11 per average common share, in the second quarter of 2010.

"The revenue generation of our core business and continued strength of the balance sheet affirms our confidence that our client-centric strategies are gaining traction and driving better results," said James M. Wells III, chairman and chief executive officer of SunTrust Banks, Inc. "While decreasing credit costs are certainly welcomed, we are even more encouraged by the improvement in our operating results that are being driven by several of our lines of business." Mr. Wells also noted an improvement in net interest income, a result of increased earning assets and continued favorable deposit trends.

Net income available to common shareholders of $0.17 per share compared to net losses of $0.11 per share in the prior quarter and $0.76 per share in the third quarter of 2009.

Net income for the quarter before preferred dividends was $153 million, up from $12 million in the second quarter.

Total revenues increased compared to the second quarter driven by mortgage and capital markets-related revenues and higher net interest income. The results were generated despite $81 million in mark-to-market valuation losses, net of hedges, related to the Company's public debt and index-linked certificates of deposit carried at fair value.

Net interest margin increased 8 basis points to 3.41% and net interest income rose 8% on a sequential quarter basis due to a continued decline in funding costs, further improvement in deposit mix and earning asset growth.

Noninterest expenses were relatively flat on a sequential quarter basis with lower debt extinguishment costs offset primarily by higher revenue-related personnel costs and legal-related expenses.

Asset quality continued to improve in the third quarter. Nonperforming assets, nonaccrual loans and net charge-offs all declined compared to the prior quarter and the third quarter of 2009.

Provision expense declined due to lower net charge-offs and the impact of improved credit trends on the allowance for loan losses. The allowance for loan losses declined $70 million and total loans increased 2% resulting in an allowance to loan ratio of 2.69%.

Average loans grew slightly during the current quarter primarily in consumer loans and government guaranteed residential mortgage loans. Consumer loan growth included the purchase of a high-quality consumer auto loan portfolio.

Average deposits increased as growth in lower-cost deposits was partially offset by a decline in higher-cost time deposits.

Capital ratios remained strong with an estimated Tier 1 common equity ratio of 8.00% and Tier 1 capital ratio of 13.60%.


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