SunTrust 2010 Annual Report Download - page 97

Net interest income-FTE was $483 million, an increase of $41 million, or 9%. An increase in income from hedges employed
as part of an overall interest rate risk management strategy was mostly offset by a decrease in net earnings on the investment
portfolio. Total average assets increased $6.1 billion, or 23%, primarily due to net purchases of investment securities and an
increase in other assets due to the prepayment of FDIC assessments. Total average deposits decreased $3.3 billion, or 58%,
primarily due to decrease in brokered deposits, as we reduced our reliance on wholesale funding sources in conjunction with
solid consumer and commercial deposit growth.
Total noninterest income was $307 million, an increase of $104 million, or 51%. Trading gains increased $157 million
primarily due to reduced mark to market valuation losses on our debt instruments carried at fair value. Gains on the sale of
securities also increased $63 million compared to 2009. These increases were offset by a $112 million gain on Visa Class B
shares recorded in the second quarter of 2009.
Total noninterest expense decreased $10 million compared to the same period in 2009. The decrease in expense was
primarily due to the $78 million FDIC special assessment in 2009. This decrease was partially offset by a $31 million
increase in debt extinguishment costs.
Twelve Months Ended December 31, 2009 vs. 2008
Retail Banking
Retail Banking reported a net loss of $165 million for the twelve months ended December 31, 2009, compared to net income
of $227 million in the same period in 2008. Net income declined primarily due to a higher provision for credit losses, the
recognition of a non-cash goodwill impairment charge in the first quarter of 2009, partially offset by higher net interest
income.
Net interest income was $2.4 billion, an increase of $100 million, or 4%, from the same period in 2008 driven by improved
loan spreads as well as the impact of higher average deposit balances. Average loan balances declined $0.6 billion, or 2%,
with decreases in residential mortgages, indirect auto, consumer direct installment, and commercial loans, partially offset by
increases in student loans and home equity lines. Loan-related net interest income increased $58 million, or 8%, compared to
the prior year, as an increase in loan spreads more than offset the impact of the decline in average loan balances. Average
customer deposit balances increased $4.7 billion, or 7%, primarily in money market, NOW, and time deposits. Deposit-
related net interest income increased $45 million, or 3%, driven by the impact of the increase in average deposit balances
partially offset by a decrease in deposits spreads. The decline in deposit spreads resulted from the change in deposit mix as
well as a decrease in the relative value of demand deposits.
Provision for credit losses was $1.2 billion, an increase of $385 million, or 45%. The provision increase was primarily due to
increases in net charge-offs on home equity lines reflecting the deterioration in the residential real estate market, as well as
increases in credit card and commercial loan net charge-offs.
Total noninterest income was $1.2 billion, a decrease of $40 million, or 3%. Service charges on deposits decreased $58
million, or 8%, driven by lower consumer and commercial NSF fees. Gains related to student loans held for sale decreased
$8 million and internal sales referral credits also decreased $8 million. Partially offsetting those declines was an increase of
$33 million, or 9%, in card fees and ATM fees due to an increase in accounts and transactions.
Total noninterest expense was $2.5 billion, an increase of $287 million, or 13%. The increase was primarily driven by a $173
million non-cash goodwill impairment charge that was recognized in the first quarter of 2009 and by a $100 million increase
in FDIC expense primarily due to increased premium rates while pension expense also increased $32 million. Partially
offsetting those increases was a $31 million, or 6%, decline in employee compensation and a $23 million reduction in
operating losses, which was primarily due to a change in accounting for losses related to loan fraud.
Diversified Commercial Banking
Diversified Commercial Banking’s net income for the twelve months ended December 31, 2009 was $149 million, a decrease
of $51 million, or 26%, compared to the same period in 2008. The decrease in net income was primarily due to higher
provision for credit losses and higher credit related expense partially offset by increased net interest income.
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