SunTrust 2009 Annual Report Download - page 37

personnel, and if these individuals leave or change their roles without effective replacements, operations may suffer; we may not
be able to hire or retain additional qualified personnel and recruiting and compensation costs may increase as a result of
turnover, both of which may increase costs and reduce profitability and may adversely impact our ability to implement our
business strategy; our accounting policies and processes are critical to how we report our financial condition and results of
operations, and require management to make estimates about matters that are uncertain; changes in our accounting policies or in
accounting standards could materially affect how we report our financial results and condition; our stock price can be volatile;
our disclosure controls and procedures may not prevent or detect all errors or acts of fraud; our financial instruments carried at
fair value expose us to certain market risks; our revenues derived from our investment securities may be volatile and subject to a
variety of risks; and we may enter into transactions with off-balance sheet affiliates or our subsidiaries.
This narrative will assist readers in their analysis of the accompanying consolidated financial statements and supplemental
financial information. It should be read in conjunction with the Consolidated Financial Statements and Notes. When we refer
to “SunTrust,” “the Company,” “we,” “our” and “us” in this narrative, we mean SunTrust Banks, Inc. and Subsidiaries
(consolidated). Effective May 1, 2008, we acquired GB&T and the results of operations for GB&T were included with our
results beginning on that date. Periods prior to the acquisition date do not reflect the impact of the merger.
In the MD&A, net interest income, net interest margin, and the efficiency ratio are presented on an FTE basis and the
quarterly ratios are presented on an annualized basis. The FTE basis adjusts for the tax-favored status of income from certain
loans and investments. We believe this measure to be the preferred industry measurement of net interest income and it
enhances comparability of net interest income arising from taxable and tax-exempt sources. We also present diluted earnings
per common share excluding goodwill and intangible impairment charges. We believe the exclusion of the impairment
charges is more reflective of normalized operations and allows better comparability with peers throughout the industry.
Additionally, we present a return on average realized common shareholders’ equity, as well as an ROE. We also present a
ROA less net realized and unrealized securities gains/losses and an ROA. The return on average realized common
shareholders’ equity and ROA less net realized and unrealized securities gains/losses exclude realized securities gains and
losses and the Coke dividend, from the numerator, and net unrealized securities gains from the denominator. We present a
tangible efficiency ratio and a tangible equity to tangible assets ratio, which excludes the effect of intangible assets costs. We
believe these measures are useful to investors because, by removing the effect of intangible asset costs (the level of which
may vary from company to company), it allows investors to more easily compare our efficiency and capital adequacy to
other companies in the industry. We also present a tangible book value per common share ratio which excludes the after-tax
impact of purchase accounting intangible assets. These measures are utilized by management to assess our financial
performance and capital adequacy. We provide reconcilements in Tables 21 and 22 in the MD&A for all non-U.S. GAAP
measures. Certain reclassifications may be made to prior period financial statements and related information to conform them
to the 2009 presentation.
INTRODUCTION
We are one of the nation’s largest commercial banking organizations and our headquarters are located in Atlanta, Georgia.
Our principal banking subsidiary, SunTrust Bank, offers a full line of financial services for consumers and businesses
through its branches located primarily in Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia,
and the District of Columbia. Within our geographic footprint, we operate under four business segments: Retail and
Commercial, Corporate and Investment Banking, Household Lending, and Wealth and Investment Management, with the
remainder in Corporate Other and Treasury. In addition to traditional deposit, credit, and trust and investment services
offered by SunTrust Bank, our other subsidiaries provide mortgage banking, credit-related insurance, asset management,
securities brokerage, and capital market services.
EXECUTIVE OVERVIEW
While many economists have declared the recession to be over or at least abating by the end of 2009, the economic
environment during 2009 adversely impacted our financial performance and will likely continue to impact our performance
into 2010, particularly related to credit which tends to lag economic cycles. We recognize that the beginning of a recovery is
just that, a beginning, and history tells us that, looking over the long-term, it will take time before economic stabilization
meaningfully translates into bottom line results for traditional banks. Asset quality, revenues and ultimately earnings
improvement will need time to gain traction and the timing will be largely dependent upon the strength and sustainability of
the economic recovery, both of which remain uncertain at the end of 2009. Regardless of when economists determine the end
of the recession, the economy remains weak, as evidenced by many key economic indicators. Notably, the national
unemployment rate rose steadily during the year to finish at 10.0% as of December 31, which is up from a high of 7.4% at
the end of 2008. More specifically, the unemployment rate exceeds 10% within many of our markets. Furthermore, it is
believed that the national unemployment rate will remain elevated during much of 2010. Additionally, home prices remain
depressed and continued to decline throughout the year in some of our more significant markets.
21