SunTrust 2010 Annual Report Download - page 39

funding from the capital markets; we have in the past and may in the future pursue acquisitions, which could affect costs and
from which we may not be able to realize anticipated benefits; we are subject to certain litigation, and our expenses related to
this litigation may adversely affect our results; we depend on the expertise of key 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 ROE as well as a return on average realized common shareholders’ equity. We also present ROA as
well as ROA less net realized and unrealized securities gains/losses. 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 32 and 33 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
2010 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 six business segments: Retail Banking,
Diversified Commercial Banking, CRE, CIB, Mortgage, and W&IM, with the remainder in Corporate Other and Treasury. In
addition to traditional deposit, credit, and trust and investment services offered by the Bank, our other subsidiaries provide
mortgage banking, credit-related insurance, asset management, securities brokerage, and capital market services.
EXECUTIVE OVERVIEW
Economic and regulatory
While signs of economic recovery began in 2010, the effects of the recession continued to be felt throughout the year as
economic growth was insufficient to abate elevated unemployment and to increase capital spending and consumer
consumption. While the unemployment rate eased slightly during 2010, it remains elevated. Individuals and businesses were
not the only ones affected during the year, as ongoing deterioration in the fiscal position of certain U.S. states and
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