SunTrust 2005 Annual Report Download - page 33

SUNTRUST  ANNUAL REPORT 31
overall gross charge-offs. Recoveries and charge-offs for  were favor-
ably affected primarily by improvements in the consumer segments of the
portfolio.
The ratio of the allowance to nonperforming loans increased to
.% as of December ,  from .% as of December , .
The improvement in this ratio was due to the decrease in nonperforming
loans.
In addition to the ALLL, the Company had . million and . mil-
lion in other liabilities as of December ,  and December , ,
respectively, that represents a reserve for certain unfunded commitments.
The Company’s charge-off policy meets or exceeds regulatory mini-
mums. Losses on unsecured consumer loans are recognized at  days past
due compared to the regulatory loss criteria of  days. Secured con-
sumer loans are typically charged-off between  and  days, depend-
ing on the collateral type, in compliance with Federal Financial Institutions
Examination Council’s guidelines. Commercial loans and real estate loans
are typically placed on nonaccrual when principal or interest is past due for
 days or more unless the loan is both secured by collateral having realiz-
able value sufficient to discharge the debt in-full and the loan is in the legal
process of collection. Accordingly, secured loans may be charged-down to
the estimated value of the collateral with previously accrued unpaid inter-
est reversed. Subsequent charge-offs may be required as a result of changes
in the market value of collateral or other repayment prospects.
PROVISION FOR LOAN LOSSES
The provision for loan losses is the result of a detailed analysis estimating
an appropriate and adequate allowance for loan and lease losses (“ALLL”).
The analysis includes the evaluation of impaired loans as prescribed
under Statement of Financial Accounting Standards (“SFAS”) Nos. 
“Accounting by Creditors for Impairment of a Loan” and  “Accounting by
Creditors for Impairment of a Loan – Income Recognition and Disclosures,”
and pooled loans and leases as prescribed under SFAS No. , “Accounting
for Contingencies.” For the year ended December , , the provision
for loan losses was . million, an increase of . million, or .%,
compared to . The increase in provision expense was primarily due to
loan growth.
For the year ended December ,  total net charge-offs were
. million, a decrease of . million, or .%, from . For the year
ended December , , provision for loan losses was . million less
than net charge-offs. This was, in part, due to the . million charge-off
of a leverage lease for aircraft to Delta Air Lines, Inc., which had been fully
reserved in the ALLL as of December , . In addition, the Company
continued to experience improved credit quality across its loan portfolios,
sustained economic improvement within the Company’s footprint, and a
shift in the composition of the loan portfolio to include a higher percent-
age of loans secured by residential real estate, all of which had a downward
influence on the ALLL. However, significant growth in the commercial loan
portfolio in  had an upward influence on the ALLL. For the year ended
December , , provision for loan losses was . million less than
net charge-offs. The net charge-offs for  were primarily due to the
Company realizing losses within its commercial loan portfolio. However,
due to improved credit quality and other factors mentioned above that car-
ried into , the ALLL process did not indicate the need to maintain at the
same level or to increase the ALLL.
NONPERFORMING ASSETS
Nonperforming assets, which consist of nonaccrual loans, restructured
loans, other real estate owned (“OREO”) and other repossessed assets
totaled . million at December , , a decrease of . million,
or .%, from December , . The decrease was attributable to a
. million, or .%, decline in nonperforming loans and resulted in a
decline in the ratio of nonperforming assets to total loans plus OREO and
TABLE  • Nonperforming Assets And Accruing Loans Past Due  Days or More
As of December 
(Dollars in millions)      
Nonperforming Assets
Nonaccrual loans
Commercial . . . . . .
Real estate
Construction . . . . . .
Residential mortgages . . . . . .
Other . . . . . .
Consumer loans . . . . . .
Total nonaccrual loans . . . . . .
Restructured loans . . . — — —
Total nonperforming loans . . . . . .
Other real estate owned . . . . . .
Other repossessed assets . . . . . .
Total nonperforming assets . . . . . .
Ratios
Nonperforming loans to total loans .% .% .% .% .% .%
Nonperforming assets to total loans
plus OREO and other repossessed assets . . . . . .
Accruing Loans Past Due  Days or More . . . . . .