SunTrust 2011 Annual Report Download - page 107
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Twelve Months Ended December 31, 2010 vs. 2009
Retail Banking
Retail Banking's net income for the twelve months ended December 31, 2010 was $73 million, an increase of $276 million,
compared to a net loss of $203 million in the same period 2009. The increase in net income is predominantly due to higher net
interest income, lower provision for credit losses, and lower expenses due to the recognition of a non-cash goodwill impairment
charge in the first quarter of 2009.
Net interest income was $2.5 billion, an increase of $205 million, or 9%, predominantly due to increased loan and deposit spreads,
as well as higher deposit balances. Average loan balances increased $0.4 billion with increases in indirect auto loans partly due
to the purchase of a $741 million high-quality consumer auto loan portfolio in the third quarter and $934 million in the fourth
quarter of 2010 and growth in guaranteed student loans. Additionally, we have seen an increase in organic consumer loan production
as consumer spending has modestly increased. Partially offsetting those increases were decreases in home equity lines, residential
mortgages, and business banking loans. Loan-related net interest income increased $83 million, or 10%, compared with the prior
year driven by increased loan spreads. Average deposit balances increased $2.4 billion, or 3%, resulting in an increase in deposit-
related net interest income of $115 million, or 7%, as a result of both the increase in overall average deposit balances and higher
deposit spreads. Favorable mix trends continued as relatively low cost demand, NOW, money market and savings balances increased
a combined $6.9 billion, or 15%. These increases were partially offset by a $4.6 billion, or 18%, decline in average time deposits.
Provision for credit losses was $992 million, a decrease of $244 million, or 20%, predominantly driven by a decrease in home
equity line, indirect installment loan and commercial loan net charge-offs.
Total noninterest income was $1.1 billion, a decrease of $23 million, or 2%, predominantly due to a decrease in service charges
on deposits of $76 million, or 12%, partially offset by an increase in interchange and ATM card fees which increased a combined
$54 million, or 14%. The decline in service charges on deposits was driven by lower NSF/overdraft fees from Regulation E changes
requiring clients to opt in to certain account transaction services that went into effect in August 2010 and the revised overdraft fee
structure that went into effect in July 2010.
Total noninterest expense was $2.5 billion, a decrease of $10 million, or less than 1%, over the same period in 2009. The decline
was predominantly driven by a $173 million reduction in non-cash charges taken in the first quarter of 2009 related to the impairment
of goodwill. Total expenses excluding the 2009 impairment of goodwill increased $163 million, or 7%, driven by increases of
$77 million in operations expense, $28 million in indirect support costs, $19 million in corporate expenses, primarily technology
expenses, $16 million in outside processing cost, and $16 million in other expense.
Diversified Commercial Banking
Diversified Commercial Banking reported net income of $203 million for the twelve months ended December 31, 2010, an increase
of $46 million, or 29%, compared to the same period 2009. The increase in net income was predominantly due to higher net interest
income driven by increased loan spreads and higher average deposit balances.
Net interest income was $657 million, a $78 million, or 13%, increase from the same period in 2009. Average loan balances
declined $1.8 billion, or 7%, with decreases in leasing, commercial loans domestic, and commercial real estate loans, partially
offset by increases in tax-exempt loans, and dealer floor plan loans. Loan-related net interest income increased $41 million compared
to the prior year as increased loan spreads more than offset decreased average loan balances. Average deposits increased $0.9
billion, or 5%, from the same period in 2009. Low cost commercial demand deposits increased $0.8 billion, while NOW and
money market accounts also increased $0.3 billion and $0.6 billion, respectively. These increases were partially offset by a $0.8
billion decrease in time deposits. Deposit-related net interest income increased $26 million, or 9%, due to the increase in deposit
balances and an increase in overall deposit spreads.
Provision for credit losses was $127 million, an increase of $15 million, or 13% from the same period in 2009. Increases in
commercial loan net charge-offs were partially offset by a decline in lease financing net charge-offs.
Total noninterest income was $235 million, a decrease of $12 million, or 5%, from the same period in 2009. Service charges on
deposits decreased $4 million driven by lower commercial deposit analysis fees while letters of credit fees decreased $5 million.
Additional decreases in deposit sweep fees and leasing revenue were partially offset by an increase in loan fees and sales and
referral credits.
Total noninterest expense was $448 million, down $19 million, or 4%, over the same period in 2009, predominantly due to decreases
in allocated credit and technology costs. Total staff expense decreased $2 million.