SunTrust 2005 Annual Report Download - page 15

In 2005 our hard work paid off. Net income was $2.0 billion, or
$5.47 per share, up from $1.6 billion, or $5.19 per share, in 2004.
Once again, the men and women of SunTrust did a great job of serv-
ing the needs of our clients while running our business efficiently.
Once again, they translated the earnings potential of our Company
into strong year-over-year performance.
During 2005, we also built our underlying capacity to continue to
deliver strong results in a highly competitive industry. We did this by
“Seeing beyond money,” in a manner of speaking. We invested in our
franchise. We enhanced our product line. We developed our talent.
We sharpened our focus on expense control. And we placed additional
emphasis on identifying — and managing — the risks inherent in our
business. This is a priority for all financial services providers as we operate
in an uncertain economy and a demanding regulatory environment.
2005 was a year generally characterized by the continuation of
positive performance trends despite some challenging market conditions.
We saw steady growth in our biggest earnings component, net
interest income, which was driven almost entirely by solid loan and
deposit growth. At the same time, we generated strong fee-based
income that in turn contributed to a handsome gain in total revenues.
With revenues growing at a faster rate than expenses, we achieved
“positive operating leverage” for the year, a good indication of our
ability to keep expenses in line. Finally, credit trends were positive in
2005; indeed, they were among the strongest we’ve seen in some
time and set a positive tone in this critical area as 2006 began.
To place 2005 progress in context, shareholders may recall that
we engineered a significant and multi-dimensional transformation
at SunTrust in recent years. As we navigated through a succession of
industry challenges and market crosscurrents, we built our businesses,
expanded our franchise, refined our operating model, modernized
our infrastructure, and placed an increased emphasis on efficiency.
Most recently, and very visibly, we developed a world-class sales
and service organization committed to retaining clients and building
long-term relationships.
What it all adds up to is that we have established a solid foundation
for SunTrust’s future success. Of course our performance to some
degree will always reflect industry trends, national and regional
economic conditions, the ups and downs of the business cycle and
various market dynamics. That being said, we believe we are as well
positioned as ever to leverage the growth opportunities offered by
our demographically attractive geographic footprint —perhaps
the best footprint in U.S. banking —and demonstrated capabilities
in our key lines of business: Retail Banking, Commercial Banking,
Corporate and Investment Banking, Mortgage Banking, and Wealth
and Investment Management.
Looking ahead, our goal is to continue to deliver business-driven
earnings growth that compares favorably with that of our peers
over a multi-year timeframe. As we see it, this longer-term financial
orientation, balanced with our focus on near-term earnings progress,
positively differentiates SunTrust as an investment opportunity.
We are pleased to report that in February 2006 the Board of
Directors approved an increase of 11 percent in the annual dividend
on SunTrust common stock, another indication of how strong, steady
performance pays off.
The Management’s Discussion and Analysis section of this report
provides a comprehensive review of our 2005 results. For purposes
of this letter, we invite your attention to some highlights of the
year—financial and non-financial—that not only illustrate SunTrust’s
current performance focus, but also help explain why we are opti-
mistic about our prospects as we look to 2006 and beyond.
SUNTRUST 2005 ANNUAL REPORT 13
to our shareholders
In the preceding pages of this annual report we have sought to convey how we’re bringing
to life SunTrust’s distinctive client promise —“Seeing beyond money.” From a shareholder
perspective, the idea of “Seeing beyond money” might at first blush seem incongruous.
After all, the point of investing in SunTrust is very much about money: at the end of the
day, shareholders are looking to us to deliver steady, sustainable earnings growth. All of
us at SunTrust are very conscious of that expectation. And we work hard to meet it.