SunTrust 2006 Annual Report Download - page 3

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First, a comment on the change in format of our Annual Report.
We have moved away from colorful photos, creative themes and
costly graphics, and we use a comprehensive regulatory report
to convey details of the year’s financial results.
This fresh approach reflects feedback from shareholders as well
as our own sense of efficiency. As we see it, spending extra
money on a glossy, paper-based annual report when so many
people prefer electronically delivered information simply is not
in our shareholders’ financial interest. If you would like to know
more about SunTrust strategies, performance, products or services,
please visit our Web site (suntrust.com) or contact us directly.
FINANCIAL HIGHLIGHTS
The interest rate environment presented a real challenge for the
U.S. banking industry in 2006. At SunTrust, as at other banks,
an inverted yield curve – the difference between short-term and
long-term interest rates – brought pressure to bear on our net
interest margin. This, in turn, meant less robust growth in overall
net income than we expected when the year began or that we
believe is indicative of our true longer-term earnings potential.
Margin pressures notwithstanding, the Company posted record
net income available to common shareholders for the year of
$2.1 billion, which was up 6 percent over the prior year. Diluted
earnings per common share were $5.82, also up 6 percent over
the prior year. Reflected in this performance were gains in most
major earnings components, including:
•Total revenue was $8.2 billion in 2006, up 5 percent
from the prior year.
•Net interest income was $4.7 billion, up 2 percent
from a year earlier.
•Noninterest income was $3.5 billion, up 10 percent
from 2005.
•Noninterest expense was $4.9 billion, up 4 percent
from a year ago.
•Average loans and consumer and commercial deposits grew,
respectively, 10 percent and 4 percent over a year ago.
In the credit quality arena, net charge-offs were 0.21 percent
of average loans, a level that is better than the Company’s
historical average.
Complete 2006 financial results, including each of the above
items, are discussed in considerable detail in the Form 10-K
which follows this letter. Included is a breakdown of the financial
performance of our primary lines of business.
In February 2007, the Board of Directors approved a 20 percent
increase in the quarterly dividend on SunTrust common stock,
a move consistent with the Company’s multi-year pattern of
annual dividend increases. The current indicated annual
dividend is now $2.92 per share.
2006 WAS NOT AN EASY YEAR FOR THE U.S. BANKING INDUSTRY. SUNTRUST, LIKE OTHER LARGE
BANKS, FELT THE IMPACT OF PRESSURES THAT CAME LARGELY FROM AN UNACCOMMODATING
INTEREST RATE ENVIRONMENT. THE GOOD NEWS IS THAT THE DISTINCTIVE STRENGTHS OF OUR
INSTITUTION—NOTABLY THE COMMITMENT OF OUR PEOPLE TO HELP OUR CLIENTS—PERMITTED
US TO GROW EARNINGS WHILE CONTINUING TO INVEST FOR FUTURE GROWTH. IN THIS LETTER,
WE WILL SHARE WITH YOU SOME PERSPECTIVES ON 2006. IMPORTANTLY, WE WILL ALSO TALK
ABOUT HOW WE ARE WORKING TO ENHANCE OUR FINANCIAL PERFORMANCE AS WE LOOK AHEAD.
To Our Shareholders