SunTrust 2003 Annual Report Download - page 88

86 SunTrust Banks, Inc. Annual Report 2003
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
NOTE 22 BUSINESS SEGMENT REPORTING
Unlike financial accounting, there is no comprehensive authori-
tative body of guidance for management accounting practices
equivalent to generally accepted accounting principles.
Therefore, the disclosure of business segment performance is
not necessarily comparable with similar information presented
by any other financial institution.
The Company utilizes a matched maturity funds transfer
pricing methodology to transfer interest rate risk of all assets and
liabilities to the Corporate Treasury area which manages the
interest rate risk of the Company. Differences in the aggregate
amounts of transfer priced funds charges and credits are reflected
in the Corporate/Other line of business segment. A system of
internal credit transfers is utilized to recognize supportive busi-
ness services across lines of business. The net results of these
credits are reflected in each line of business segment. The cost of
operating office premises is charged to the lines of business by
use of an internal cost transfer process. Allocations of certain
administrative support expenses and customer transaction process-
ing expenses are also reflected in each line of business segment.
The offset to these expense allocations, as well as the amount of
any unallocated expenses, is reported in the Corporate/Other line
of business segment.
The Company also utilizes an internal credit risk transfer
methodology (the credit risk premium) which creates a current
period financial charge against interest income to each line of
business based on the estimated credit risk-adjusted return on
loans. The offset to the aggregate credit risk premium charges is
matched against the Company’s current provision for loan losses
with any difference reported in the Corporate/Other line of busi-
ness segment. The provision for income taxes is also reported in
the Corporate/Other line of business segment.
The Company continues to enhance and refine its internal
management reporting system. Future enhancements of items
reported for each line of business segment are expected to
include: assets, liabilities and attributed economic capital;
matched maturity funds transfer priced net interest revenue, net
of credit risk premiums; direct noninterest income; internal
credit transfers between lines of business for supportive business
services; and fully absorbed expenses. The internal management
reporting system and the business segment disclosures for each
line of business do not currently include attributed economic
capital, nor fully absorbed expenses. Any amounts not currently
reported in each line of business segment are reported in the
Corporate/Other line of business segment. The implementation
of these enhancements to the internal management reporting
system is expected to materially affect the net income disclosed
for each segment. Whenever significant changes to management
reporting methodologies take place, the impact of these
changes is quantified and prior period information is restated
when possible.
The tables on pages 86 and 87 disclose selected financial
information for SunTrust’s reportable business segments for the
twelve months ended December 31, 2003, 2002, and 2001.
December 31, 2003
Corporate & Private
Investment Client Corporate/
(Dollars in thousands) Retail Commercial Banking Mortgage Services Other Consolidated
Average total assets $25,682,775 $23,395,794 $22,386,327 $22,494,200 $2,183,274 $26,182,991 $122,325,361
Average total liabilities 52,981,839 10,827,735 9,081,569 1,800,908 1,530,188 37,020,096 113,242,335
Average total equity —————9,083,026 9,083,026
Net interest
income (FTE)11,334,281 585,574 279,911 545,847 43,755 575,949 3,365,317
Provision for
loan losses2152,570 41,828 107,303 6,855 1,977 3,017 313,550
Net interest income
after provision for
loan losses 1,181,711 543,746 172,608 538,992 41,778 572,932 3,051,767
Noninterest income 738,354 306,638 547,590 14,702 660,118 35,599 2,303,001
Noninterest expense 1,277,990 358,618 368,441 307,415 513,762 574,390 3,400,616
Total contribution
before taxes 642,075 491,766 351,757 246,279 188,134 34,141 1,954,152
Provision for
income taxes3—————621,855 621,855
Net income $642,075 $ 491,766 $ 351,757 $ 246,279 $ 188,134 $ (587,714) $ 1,332,297
1Net interest income is fully taxable equivalent and is presented on a matched maturity funds transfer price basis for the lines of business.
2Provision for loan losses includes a credit risk premium charge for the lines of business.
3Includes regular income tax provision and taxable-equivalent income adjustment reversal of $45,014 for the twelve months ended December 31, 2003.