SunTrust 2007 Annual Report Download - page 78

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managed account fees. Trust income declined $5.1 million, or 0.7%, due to lost revenue from the Lighthouse Partners merger
and sale of the Bond Trustee business.
As of December 31, 2007, assets under management were approximately $142.8 billion compared to $141.3 billion as of
December 31, 2006. Approximately $5.3 billion in Lighthouse Partners assets were merged into Lighthouse Investment
Partners and are not included in the December 31, 2007 total. Assets under management include individually managed assets,
the STI Classic Funds, institutional assets managed by Trusco and participant-directed retirement accounts. SunTrust’s total
assets under advisement were approximately $250.0 billion, which includes $142.8 billion in assets under management,
$60.9 billion in non-managed corporate trust assets, $41.6 billion in retail brokerage assets, and $4.7 billion in non-managed
corporate trust assets.
Total noninterest expense increased $7.0 million, or 0.7%, due to a $21.2 million, or 3.9%, increase in total personnel
expense. Higher variable compensation primarily associated with strong retail investment income was partially offset by a
$16.0 million, or 5.6%, decline in salary expense. Favorably impacting noninterest expense was lower Lighthouse Partners
related expenses as a result of the sale upon merger.
Corporate Other and Treasury
Corporate Other and Treasury’s net income for the twelve months ended December 31, 2007 was $224.0 million, an increase
of $200.1 million compared to the same period in 2006. The increase was mainly driven by a $234.8 million pre-tax gain on
sale of The Coca-Cola Company stock, a gain of $118.8 million on the sale/leaseback of real estate properties, net securities
losses of $54.4 million resulting primarily from the securities portfolio repositioning in 2006, and a net market valuation gain
of $64.3 million on trading assets and long-term corporate debt carried at fair value during 2007. These factors were partially
offset by a $116.2 million market valuation write-down on securities consolidated in the third quarter of 2007 in anticipation
of closing the Private Fund.
Net interest income decreased $34.1 million mainly due a reduction in the size of the investment portfolio as a result of the
balance sheet management strategies. Total average assets decreased $6.7 billion, or 21.8%, mainly due to the reduction in
the size of the securities portfolio. Total average deposits decreased $4.8 billion, or 18.2%, mainly due to a decrease in
brokered and foreign deposits.
Provision for loan losses, which represents net charge-offs for the lines of business, increased $2.6 million.
Total noninterest income increased $482.0 million. This was mainly driven by the $234.8 million pre-tax gain on sale of the
Coca-Cola Company stock, net securities losses of $54.4 million in 2006, a gain of $118.8 million on sale/leaseback of real
estate properties, and $78.1 million increase in trading income due to net market valuation gains recorded on trading assets
and the Company’s long-term corporate debt carried at fair value. Noninterest income was also impacted by a $132.5 million
market valuation write-down on securities consolidated in the third quarter of 2007 in anticipation of closing the Private
Fund.
Total noninterest expense increased $68.6 million compared to the same period in 2006. Included in the twelve months ended
December 31, 2007, was a $76.9 million accrual for Visa litigation and $50.7 million in initial implementation costs
associated with the E² Efficiency and Productivity Program, of which $45.0 million was severance. Positively impacting
noninterest expense was a $33.6 million decrease in the accrued liability associated with a capital instrument that the
Company called in the fourth quarter of 2007. Additionally, reflected in total noninterest expenses are reductions in total staff
expense in support functions and consulting expenses.
EARNINGS AND BALANCE SHEET ANALYSIS 2006 VS. 2005
Consolidated Overview
Net income totaled $2.1 billion, or $5.82 per diluted share for 2006, up 6.2% and 6.4%, respectively, from 2005. The
following are some of the key drivers of our 2006 financial performance as compared to 2005:
• Total revenue-FTE increased $407.3 million, or 5.2%, compared to 2005. Noninterest income contributed $313.4
million, or 76.9% of the increase, led by strong mortgage production and servicing income while net interest
income-FTE contributed $93.9 million, or 23.1% of the increase.
66