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To Our Shareholders:
The 2007 Form 10-K that comprises the bulk of this
year’s annual report includes a detailed discussion of the
year’s financial performance. To learn about SunTrust
products, services, or career opportunities, as well as for
additional information of interest to investors, I invite you
to visit our Web site, www.suntrust.com. Otherwise, this
streamlined annual report permits us to meet shareholder
information needs in a format consistent with our focus
on expense discipline.
As explained in our nancial discussion, precipitous declines
in the market value of various mortgage-related securities,
along with higher housing- and consumer-related credit
costs, took a signicant toll on 2007 earnings: Net income
available to common shareholders was $1,603.7 million,
or $4.55 per average common diluted share for 2007,
compared to $2,109.7 million, or $5.82 per average common
diluted share for the previous year.
We do not believe the direct nancial impact on SunTrust
of the meltdown in the housing and credit markets was
disproportionate for an institution of our size and business
mix. In addition, the fact that other large nancial services
institutions were hurt by these same forces provides a
context within which to consider our results relative to
others. From a SunTrust share price perspective, however,
I am acutely aware that industry context does not offer
much in the way of practical comfort.
As we look ahead, it seems likely that our industry, and
thus our Company, will be operating for some time in an
environment marked by economic uncertainty at best,
continued weakness in housing, unsettled capital markets,
and a still-unfolding credit cycle. In other words, as I write
this letter in early 2008, it doesn’t look like earnings
pressures on banks will soon be receding.
Industry challenges notwithstanding, you should know that
SunTrust has the nancial and human resources necessary
to see us through tough times. We enjoy a solid balance
sheet, ample liquidity, adequate reserves, and strong capital
ratios. It is not to imply satisfaction with last year’s results
to observe that SunTrust was in fact profitable in 2007.
In addition, in February 2008 the Board of Directors
approved a ve percent increase in the quarterly dividend
on common stock, maintaining our long history of annual
dividend increases. The current indicated annual dividend
is $3.08 per share.
What is particularly disappointing to me in the current
environment is that the earnings impact of poor market
conditions understandably overshadows real and substantial
progress we are making in implementing reinvigorated
shareholder value–oriented strategies at SunTrust.
Our bottom line results for 2007 were neither as I had expected, nor
hoped, to report to you in my first year as SunTrust’s Chief Executive
Officer. The inescapable reality of 2007 was that SunTrust was not
immune to the punishing impact of the housing-related restorm that
swept through the financial services industry with increasing, and
unpredictable, intensity.
SUNTRUST 2007 ANNUAL REPORT 1