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78 SUNTRUST 2004 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
(Dollars in thousands)
Assets
Cash and cash equivalents $ 765,114
Securities available for sale 6,176,983
Net loans and loans held for sale 14,585,315
Goodwill 5,635,121
Core deposit intangibles 327,000
Other intangibles 37,000
Mortgage servicing rights 5,108
Other assets 1,236,522
Total assets 28,768,163
Liabilities
Deposits 15,780,583
Long-term debt 3,364,336
Other liabilities 2,266,578
Net assets acquired $ 7,356,666
Twelve months ended December 31, 2004 (Unaudited)
National
SunTrust Commerce Pro Forma Pro Forma
(In thousands except per share data) Banks, Inc.1Financial2Adjustments3Combined
Interest and dividend income $5,218,382 $797,873 $ (5,033) $6,011,222
Interest expense 1,533,227 218,000 27,103 1,778,330
Net interest income 3,685,155 579,873 (32,136) 4,232,892
Provision for loan losses 135,537 43,977 — 179,514
Net interest income after provision for loan losses 3,549,618 535,896 (32,136) 4,053,378
Noninterest income 2,604,446 358,305 — 2,962,751
Noninterest expense 3,897,038 525,887 10,209 4,433,134
Income from continuing operations before
provision for income taxes 2,257,026 368,314 (42,345) 2,582,995
Provision for income taxes 684,125 125,342 (16,091) 793,376
Income from continuing operations $1,572,901 $242,972 $(26,254) $1,789,619
Average shares:
Diluted 303,309 — 58,772 362,081
Basic 299,375 — 57,311 356,686
Income from continuing operations per
average common share:
Diluted $ 5.19 — — $ 4.94
Basic 5.25 — — 5.02
1The reported results of SunTrust Banks, Inc. for the twelve months ended December 31, 2004 include the results of the acquired National Commerce Financial from the October 1, 2004 acquisition date.
2Represents results of National Commerce Financial from January 1,2004 through September 30, 2004.
3Pro forma adjustments include the following items: amortization of core deposit and other intangibles of $49.3 million, net of NCF’s historical amortization of $39.1 million, amortization of loan purchase
accounting adjustment of $7.0 million, accretion of securities purchase accounting adjustment of $1.9 million, accretion of deposit purchase accounting adjustment of $3.9 million, and acccretion of short-term
and long-term borrowings purchase accounting adjustments of $5.7 million.Additionally, interest expense includes $36.7 million for funding costs as though the funding for the cash component of the transac-
tion occurred January 1, 2004.
The following condensed balance sheet of NCF discloses the
amounts assigned to each major asset and liability caption at the
acquisition date.The allocation of the final purchase price is still
subject to refinement as the integration process continues and
additional information becomes available.
Based on a valuation of their estimated useful lives,the core deposit
intangibles will be amortized over a 10 year period using the sum of
the years digit method and the other intangibles will be amortized
over a weighted average of 7.3 years using the straight line method.
No goodwill related to NCF is deductible for tax purposes. The
Company incurred $28.4 million in merger-related expenses in
2004 which represent incremental costs to integrate NCF’s opera-
tions. More specifically, these represent costs related to systems
conversions, project management, conformity changes and cus-
tomer communications.
The following unaudited condensed income statements disclose
the pro forma results of the Company as though the National
Commerce Financial acquisition had occurred at the beginning of
the respective periods.