SunTrust 2007 Annual Report Download - page 81

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Total noninterest expense increased $85.3 million, or 16.5%. Increased volume and investments in production and servicing
capabilities were the primary drivers.
Wealth and Investment Management
Wealth and Investment Management’s net income for the twelve months ended December 31, 2006 was $289.2 million, an
increase of $70.8 million, or 32.4%, compared to the same period in 2005. The growth was driven primarily by the $69.9
million after-tax gain on the sale of the Bond Trustee business as well as increases in both net interest income and noninterest
income, partially offset by higher expenses.
Fully taxable equivalent net interest income increased $19.2 million, or 5.5%, attributable to wider deposit spreads. Average
deposits decreased $0.1 billion, or 0.5%, due to declines in demand deposits and money market accounts, partially offset by
increases in consumer time deposits. Deposit spreads widened due to deposit rate increases that were slower relative to
market rate increases as well as the increased value of lower-cost deposits in a higher rate environment. Average loans
increased $0.3 billion, or 4.2%, with most growth coming from commercial real estate and commercial loans.
Provision for loan losses, which represents net charge-offs for the lines of business decreased $5.2 million, or 58.4%.
Total noninterest income increased $153.6 million, or 16.3%, primarily due to the $112.8 million pre-tax gain on the sale of
the Bond Trustee business. The remainder of the increase was largely driven by growth in retail investment income and trust
income. Retail investment income increased due to growth in variable annuities, managed accounts, and new business
revenue. Trust income increased due to growth in assets under management from improved sales and market conditions. End
of period assets under management were approximately $141.3 billion compared to $135.3 billion in the same period last
year. 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 $246.1
billion, which includes $141.3 billion in assets under management, $57.7 billion in non-managed trust assets, $39.3 billion in
retail brokerage assets, and $7.8 billion in non-managed corporate trust assets. Approximately $21.2 billion in corporate trust
non-managed assets were transferred as part of the Bond Trustee transaction.
Total noninterest expense increased $69.0 million, or 7.4%. Growth was primarily driven by higher structural, staff and
operations expenses.
Corporate Other and Treasury
Corporate Other and Treasury’s net income for the twelve months ended December 31, 2006 was $23.9 million, a decrease of
$43.6 million compared to the same period in 2005 mainly driven by a decline in fully taxable-equivalent net interest income
and increased securities losses partially offset by a decrease in merger expenses.
Net interest income decreased $144.3 million. The main drivers were a decrease in income on receive fixed/pay floating
interest rate swaps used to extend the duration of the commercial loan portfolio resulting from narrower spreads between the
receive fixed/pay floating rates, a $1.9 billion decrease in average securities available for sale, an increase in short-term
borrowing costs due to an increase in the size of these borrowings needed to fund earning asset growth, as well as a
significant rise in short-term interest rates over the past year.
Total assets decreased $2.1 billion, or 6.5%, mainly due to a $1.9 billion reduction in the size of the investment portfolio that
resulted from the investment portfolio restructuring in the second half of 2006. Total average deposits increased $9.2 billion,
or 52.6%, mainly due to growth in brokered and foreign deposits of $9.3 billion.
Provision for loan losses, which represents net charge-offs for the lines of business, decreased $1.7 million, or 29.7%.
Total noninterest income decreased $60.5 million, or 78.7%. This was mainly due to an increase in net securities losses of
$44.8 million related to the portfolio restructuring in 2006 and a $19.1 million decrease in derivative income on economic
hedges.
Total noninterest expense decreased $111.1 million mainly due to a reduction in merger expenses.
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