SunTrust 2006 Annual Report Download - page 73

Fully taxable-equivalent net interest income increased $397.7 million, or 22.1%. The NCF acquisition
contributed approximately $137 million of the increase. The remainder of the increase was attributable
to loan and deposit growth and widening deposit spreads due to deposit rate increases that have been
slower relative to market rate increases. Average loans increased $6.0 billion, or 24.7%, while average
deposits increased $12.1 billion, or 22.8%. The NCF acquisition was the primary driver of these
increases, contributing approximately $5 billion in loans and approximately $11 billion in deposits. The
remaining loan growth was driven primarily by equity lines and student lending while the remaining
deposit growth was driven by demand deposits (“DDA”), NOW accounts, money market accounts and
certificates of deposit.
Provision for loan losses, which represents net charge-offs for the lines of business, decreased $3.7
million, or 2.6%, primarily due to a decline in consumer indirect auto loans net charge-offs.
Noninterest income increased $188.7 million, or 22.6%. The addition of NCF contributed approximately
$133 million of this increase. The remaining increase was driven primarily by interchange income due
to increased debit and credit card transaction volumes.
Noninterest expense increased $333.5 million, or 19.4%. This increase was driven by the addition of
NCF and personnel expense due to merit increases and headcount increases driven by branch expansion.
Commercial
Commercial’s net income for the twelve months ended December 31, 2005 was $380.9 million, an
increase of $84.1 million, or 28.3%, compared to the same period in 2004. NCF accounted for
approximately $30 million of the increase. The remaining increase was due to improvement in net
interest income and higher noninterest income, partially offset by higher noninterest expense.
Fully taxable-equivalent net interest income increased $210.2 million or 30.6%. Net interest income
growth was driven by loan and deposit growth and higher deposit spreads. Average loans increased $7.0
billion, or 29.6%, and average deposits increased $2.0 billion, or 18.0%. NCF accounted for
approximately $114 million of the net interest income growth, approximately $5 billion of the loan
growth and approximately $1 billion of the deposit growth. The remaining loan growth was driven by
stronger demand for commercial and commercial real estate loans. The remaining deposit growth was
attributable to increased client liquidity.
Provision for loan losses, which represents net charge-offs for the lines of business, increased $.92
million when compared to the same period in 2004, despite approximately a $7 million increase from
NCF and a $3.2 million increase from Affordable Housing.
Noninterest income increased $18.7 million, or 7.9%. NCF accounted for approximately $5 million of
the increase. Affordable Housing contributed $6.7 million of the increase, driven by higher tax credits
from new properties and additional investments, as well as higher partnership revenue. The remaining
increase was due to increases in capital markets activities, loan fees, and deposit sweep income. Partially
offsetting these increases, was a decrease in service charges on deposits due to higher compensating
balances and increased client earnings credit rates.
Noninterest expense increased $121.2 million, or 24.0%. NCF accounted for approximately $64 million
of the increase. An additional $34.1 million of the increase was attributable to Affordable Housing
activities, primarily impairment and other charges related to Affordable Housing properties. The
remaining increase was primarily related to personnel expenses.
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