SunTrust 2006 Annual Report Download - page 75

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Wealth and Investment Management
Wealth and Investment Management’s net income for the twelve months ended December 31, 2005 was
$187.2 million, an increase of $34.6 million, or 22.7%, compared to the same period in 2004. Organic
growth was the primary contributor to the increase, with NCF, Seix Investment Advisors (“Seix”) and
Zevenbergen Capital Investments, LLC (“ZCI”) also aiding results. Seix, a fixed income division of
Trusco, was formed following the acquisition of Seix Investment Advisors, Inc. in the second quarter of
2004. ZCI is a 55% owned subsidiary of Trusco and was consolidated in the fourth quarter of 2004. The
remainder of the growth was primarily driven by increased net interest income and noninterest income,
partially offset by higher personnel and operations expense and amortization of intangibles.
Fully taxable-equivalent net interest income increased $99.9 million, or 41.1%. NCF contributed
approximately $25 million to the increase. Average loans increased $1.6 billion, or 25.4%, including
approximately $754 million attributable to NCF. Average deposits increased $1.6 billion, or 20.6%,
including approximately $484 million attributable to NCF.
Provision for loan losses, which represents net charge-offs for the lines of business, increased $5.1
million when compared to the same period in 2004, primarily due to NCF.
Noninterest income increased $122.8 million, or 15.0%. NCF accounted for approximately $59 million
of the increase while Seix and ZCI accounted for approximately $30 million. The remainder of the
increase was primarily due to growth in recurring trust revenue and retail investment income. Assets
under management increased approximately $9.4 billion, or 7.5%, due to new business and an increase
in equity markets. As of December 31, 2005, assets under management were approximately $135.3
billion compared to $125.9 billion as of December 31, 2004. Assets under management include
individually managed assets, the STI Classic Funds, institutional assets managed by Trusco Capital
Management, and participant-directed retirement accounts. SunTrust’s total assets under advisement
were approximately $242.5 billion, which include the aforementioned assets under management, $45.5
billion in non-managed trust assets, $33.4 billion in retail brokerage assets, and $28.3 billion in
non-managed corporate trust assets.
Noninterest expense increased $150.5 million, or 18.2%. NCF, Seix and ZCI were the largest
contributors of the increase. The balance of the increase was driven by higher personnel expense due to
merit increases and selective hiring, and higher operations expense in an effort to build out the business.
Corporate Other and Treasury
Corporate Other and Treasury’s net income for the twelve months ended December 31, 2005 was $75.0
million, an increase of $50.9 million from the same period in 2004. The increase was primarily due to
the acquisition of NCF and reduced securities losses.
Fully taxable-equivalent net interest income increased $22.8 million, or 251.9%. NCF represented
approximately $10 million of the increase. Additionally, net internal funding credits on other liabilities
and other assets increased a combined $30.1 million and was partially offset by a $20.4 million decrease
in income on interest rate swaps accounted for as cash flow hedges of floating rate commercial loans.
Total average assets increased $2.2 billion, or 7.2%, and total average liabilities increased $12.1 billion,
or 29.4%. NCF added approximately $4 billion in total average assets which was partially offset by a
reduction in the investment portfolio. The increase in liabilities was mainly due to growth in brokered
and foreign deposits of $6.9 billion.
Provision for loan losses increased $3.0 million, or 107.3%, due to the acquisition of NCF and an
increase in charge-offs at BankCard.
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