SunTrust 2006 Annual Report Download - page 117
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SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
based on the number of additional shares and the market value of the shares on date of delivery with an
offset to additional paid in capital. Since, under the terms of the contract SunTrust will not issue
additional common shares, there will be no additional impact on diluted shares until the transaction is
settled in March 2007.
Note 15 - Income Taxes
The components of income tax expense included in the Consolidated Statements of Income were as
follows:
Twelve months ended December 31
(Dollars in thousands) 2006 2005 2004
Current income tax expense
Federal $753,523 $654,389 $517,508
State 7,481 46,449 21,629
Total $761,004 $700,838 $539,137
Deferred income tax expense
Federal $105,906 $162,628 $123,883
State 2,060 15,690 21,105
Total $107,966 $178,318 $144,988
Total income tax expense $868,970 $879,156 $684,125
The Company’s income from international operations, before provision for income taxes, was not
significant. Additionally, the tax effect of unrealized gains and losses on securities available for sale,
unrealized gains and losses on certain derivative financial instruments, and other comprehensive income
related to certain employee benefit plans were recorded in other comprehensive income and had no
effect on income tax expense (see Note 23 “Accumulated Other Comprehensive Income,” to the
Consolidated Financial Statements.)
A reconciliation of the expected income tax expense at the statutory federal income tax rate of 35% to
the Company’s actual income tax expense and effective tax rate for the past three years is as follows:
2006 2005 2004
(Dollars in thousands) Amount
Percent of
Pre-Tax
Income Amount
Percent of
Pre-Tax
Income Amount
Percent of
Pre-Tax
Income
Income tax expense at federal statutory rate $1,045,254 35.0% $1,003,238 35.0% $789,959 35.0%
Increase (decrease) resulting from:
Tax-exempt interest (62,113) (2.1%) (51,016) (1.8%) (38,610) (1.7%)
Income tax credits, net (68,646) (2.3%) (67,130) (2.3%) (51,264) (2.3%)
State income taxes, net of federal benefit 6,201 0.2% 40,387 1.4% 27,777 1.2%
Dividends on subsidiary preferred stock (21,779) (0.7%) (22,456) (0.8%) (23,037) (1.0%)
Other (29,947) (1.0%) (23,867) (0.8%) (20,700) (0.9%)
Total income tax expense and rate $868,970 29.1% $879,156 30.7% $684,125 30.3%
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