SunTrust Reports Fourth Quarter 2009 Results

ATLANTA, Jan. 22 /PRNewswire-FirstCall/ -- SunTrust Banks, Inc. (NYSE: STI) today reported a net loss available to common shareholders for the fourth quarter of 2009 of $316.4 million, or $0.64 per average common share, compared to a net loss available to common shareholders of $374.9 million, or $1.07 per average common share for the fourth quarter of 2008.  The Company's results for these periods were adversely impacted by credit-related charges and cyclical expenses that reflected recessionary pressures; however, improvement in both of those areas during the fourth quarter of 2009 equated to a smaller earnings impact as compared to the same quarter last year and the prior quarter.    

For the year ended December 31, 2009, the net loss available to common shareholders was $1,733.4 million, or $3.98 per average common share, compared to net income of $741.0 million, or $2.12 per average common share in 2008.  During the first quarter of 2009, SunTrust recorded a non-cash, after-tax charge of $714.8 million, or $1.64 per share, related to the impairment of goodwill. Excluding the impairment charge, the full year loss was $2.34 per average common share.  In addition, key items affecting full year 2009 results included increased loan loss provision expense, decreased noninterest income, and the full year impact of preferred dividends paid to the U.S. Treasury.

"Our results clearly continue to be affected by recessionary pressures as evidenced by soft revenue and weak loan demand from consumer and commercial borrowers," said James M. Wells III, SunTrust chairman and chief executive officer. "At the same time, we are encouraged by some positive operating results and improved credit trends."    

Mr. Wells noted that fourth quarter earnings fundamentals remain essentially unchanged from the prior quarter and that, with strong capital and excellent liquidity, SunTrust continues to operate from a position of strength in what appears to be an improving, yet still uncertain, economic environment.  Further, he remarked, "our focus remains on the things we can control – client-focused execution, risk mitigation, and expense management – which will position SunTrust to deliver improving financial performance as the economy moves beyond this cycle."  

Fourth Quarter 2009 Highlights

• A net loss per share of $0.64 reflected the continued challenging economic and credit environment.

• Revenue growth remained soft but with continued signs of improvement in certain operating units.

• Stable net interest income was due to a significantly improved net interest margin that was offset by a reduction in average earning assets.

• Margin expansion was due to lower rates paid for funds as client deposits increased, the mix of deposits improved, and higher cost sources of funding were reduced.

• Provision expense increased only slightly as the impact of increased charge-offs was largely offset by lower additions to the allowance for loan losses.

• Noninterest income was up slightly, primarily due to lower market-related losses being largely offset by lower mortgage production income due to higher estimated losses related to the potential repurchase of mortgage loans.

• Credit-related expenses decreased substantially while core expenses remained well controlled.

• Average loans declined, as sluggish economic activity and improved capital markets conditions have reduced client demand for credit.  

• Consumer and commercial deposits grew predominantly in lower cost products.

• The capital position increased primarily due to second quarter capital actions and remains solid with an estimated Tier 1 common equity ratio of 7.65% and Tier 1 capital ratio of 12.90%.

• Asset quality deteriorated significantly compared to last year; however, charge-offs and early stage delinquencies improved from the prior quarter.

Revenue

Fully taxable-equivalent total revenue was $1,949.1 million for the fourth quarter of 2009, an increase of $22.7 million, or 1.2%, compared to the fourth quarter of 2008.  Net interest income was flat, and noninterest income increased slightly, primarily due to lower market-related losses during the current quarter offset by lower mortgage production income due to higher estimated losses related to the potential repurchase of mortgage loans that were previously sold to third parties.  Fee-based core revenues were generally flat.

For the year ended December 31, 2009, fully taxable-equivalent total revenue was $8,299.3 million, a decrease of $911.4 million, or 9.9%, from 2008.  Excluding net securities gains and losses, total revenue increased slightly due to lower market-related losses and higher mortgage-related income offset by lower net interest income in 2009 and net gains from the disposition of certain businesses and assets in 2008.

Net Interest Income

For the fourth quarter of 2009, fully taxable-equivalent net interest income was $1,206.8 million, essentially flat compared to the prior year, but up $38.6 million, or 3.3%, compared to the third quarter of 2009.  Net interest income growth over the sequential quarter was due to a favorable change in mix of deposits resulting in lower funding costs.  Net interest margin for the fourth quarter of 2009 was 3.27%, an increase of 17 basis points and 13 basis points over the third quarter of 2009 and fourth quarter of 2008, respectively.  Rates paid on interest-bearing liabilities declined 101 basis points while yields on earning assets declined 75 basis points compared to the prior year quarter.  The lack of loan demand and growth in deposits resulted in a $6.6 billion, or 4.3%, decline in average earning assets and an $11.3 billion, or 32.8%, decline in average non-deposit interest bearing funding.

For the year ended December 31, 2009, fully taxable-equivalent net interest income was $4,589.0 million, down $148.2 million, or 3.1%, compared to 2008.  Net interest margin was 3.04% compared to 3.10% in 2008.  The margin decline was driven primarily by increased nonperforming assets partially offset by a reduction in higher cost funding sources.

Noninterest Income

Total noninterest income was $742.3 million for the fourth quarter of 2009, which was $24.6 million, or 3.4%, above prior year.  Income generation from both consumer and commercial clients resulted in relatively stable performance despite the overall weak business environment.  Mortgage production related income declined $40.2 million due to higher mortgage loan repurchase costs partially offset by lower market valuation losses and a 17% increase in loan production during the current quarter.  The fourth quarter of 2009 results include $220.2 million in estimated losses related to the potential repurchase of mortgage loans that were previously sold to third parties compared to $60.4 million recognized in the fourth quarter of 2008.  Certain mortgage loans are sold to Agencies in which the Company provides standard representations and warranties.  If it is later determined that such representations have been breached, the Agency will request the Company to bear the loss on such loan.  The volume of repurchase requests from the Agencies increased each quarter during 2009.   Each quarter the Company updates its loss estimate to reflect recent experience, and as a result the reserve for the repurchase of mortgage loans was increased by $77.2 million to $199.9 million as of December 31, 2009.  The volume of repurchase requests shifted during the course of the year from 2006 and earlier vintages towards 2007 and later vintages.  SunTrust believes its ultimate losses on newer vintages, particularly 2008 and later, may be lower than older vintages due to lower loss severities, a lower risk product mix, and enhanced underwriting guidelines and operating procedures.

Mortgage servicing income increased $382.8 million compared to the fourth quarter of 2008, as a result of the $370.0 million temporary impairment recognized in the fourth quarter of 2008 related to mortgage servicing rights that were carried at the lower of cost or market compared to a recovery of $10.5 million recognized during the current quarter. The mortgage servicing portfolio was $178.9 billion as of December 31, 2009, up from $162.0 billion as of December 31, 2008.  Effective January 1, 2010, the Company elected to transfer the remaining portion of the mortgage servicing rights carried at the lower of cost or market to fair value resulting in a $145 million increase in mortgage servicing rights and a $90 million increase in shareholders' equity.  The fourth quarter of 2008 included $411.1 million of net gains from the sale of available for sale securities that were realized in conjunction with risk management strategies associated with hedging the value of mortgage servicing rights.  During the fourth quarter of 2009, the Company recorded $72.8 million of net gains from the sale of available for sale securities related to repositioning the investment portfolio, net of $3.9 million in other-than-temporary impairment on private mortgage-backed securities.

Trading account profits and commissions increased $30.7 million compared to the prior year quarter as market-related valuation losses on illiquid securities and other instruments carried at fair value improved and valuation losses on the Company's public debt and related hedges carried at fair value were $38.1 million, a reduction of $6.2 million compared to the fourth quarter of 2008.  On a sequential quarter basis, valuation losses related to the public debt and related hedges carried at fair value declined $93.2 million.  Trust and investment management income increased $8.2 million, or 6.5%, on increased performance based fees; however, retail investment income decreased $15.9 million, or 22.7%, due to lower transaction volume and client asset balances.  

For the year ended December 31, 2009, noninterest income was $3,710.3 million, which was $763.2 million, or 17.1%, below 2008.  The decline was primarily due to the 2008 gains of $1,073.3 million from the sale of available for sale securities, which were completed in conjunction with risk management strategies associated with mortgage servicing rights and the sale of a portion of The Coca-Cola Company stock.  Further, the 2008 results included aggregate net gains of $321.4 million related to the disposition of certain assets and businesses while 2009 reflected the $112.1 million gain from the sale of Class B Visa shares.  In 2009, the Company recorded $153.0 million of valuation losses on the public debt and related hedges carried at fair value compared to gains of $431.7 million in 2008, as credit spreads on SunTrust's debt tightened.  Valuation losses on illiquid securities recorded in 2008 were not significant in 2009.  Mortgage servicing income increased $541.7 million due, in part, to the $370.0 million impairment of mortgage servicing rights recognized in 2008 compared to the recovery of $199.2 million of impairment of mortgage servicing rights recognized in 2009.  Mortgage production related income increased $204.7 million in 2009 due a 37.6% increase in loan production, higher margins, and lower valuation losses partially offset by increased losses related to the repurchase of mortgage loans.  Trust and investment management fees declined 17.9% as the market value of average assets under management was lower in 2009 in addition to the sale in 2008 of certain asset management businesses.  Other fee related income declined due to recessionary pressures.

Noninterest Expense

For the fourth quarter of 2009, noninterest expense was $1,453.6 million, a decrease of $132.6 million, or 8.4%, from the fourth quarter of 2008 as a result of credit-related expenses declining significantly and controllable expenses continuing to be tightly managed.  Operating losses declined $210.2 million, or 89.0%, as fraud-related credit losses were recorded in the provision for credit losses and charge-offs during 2009.  Mortgage reinsurance losses declined $89.7 million, or 89.7%, as the Company's exposure to reinsurance losses have been limited to the funds contributed to the mortgage reinsurance trusts.  Other credit-related expenses including collection and credit costs and other real estate expense increased $58.6 million due to property valuation losses and increased loss mitigation efforts.  FDIC and regulatory expense increased $40.0 million, or 195.4%, in conjunction with the replenishment of the insurance fund through increased premiums.  In the fourth quarter, the Company prepaid three years of expected FDIC premiums in accordance with a newly-enacted regulatory requirement.  The total premium of $925 million will be amortized into expense over the next three years.  Personnel expenses increased $56.1 million, or 8.8%, due to higher pension costs and increased incentives related to improved financial performance in certain lines of business.  The fourth quarter of 2009 included $23.5 million in net losses related to the extinguishment of debt.  

For the year ended December 31, 2009, total noninterest expense was $6,562.4 million, an increase of $683.4 million, or 11.6%, over 2008 primarily driven by the $751.2 million non-cash goodwill impairment charge recognized in the first quarter of 2009.  Also included in 2008 were the $183.4 million charitable contribution expense and elevated credit-related expenses.  Included in 2009 were higher FDIC costs, including the $78.2 million special assessment, increased pension expense, and higher outside processing expenses.  Salaries and incentive expense declined in 2009 compared to 2008.

Income Taxes

For the fourth quarter, the Company recognized a tax benefit of $263.0 million compared to a tax benefit of $309.0 million recognized in the fourth quarter of 2008.  The tax benefit was due to the recognition of a pre-tax loss, as well as other permanent tax items such as tax exempt interest income, settlement of examinations by certain taxing authorities, and federal tax credits.  During the fourth quarter, the Company moved from a net deferred tax liability to a small net deferred tax asset of approximately $25 million. As of December 31, 2009, the cumulative valuation allowance associated with deferred tax assets for certain state net operating losses was approximately $53.2 million, and no valuation allowance was required against federal deferred tax assets.  

U.S. Treasury Preferred Dividends

For the fourth quarter and full year of 2009, the Company recorded $66.5 million and $265.8 million, respectively, in preferred dividends related to the $4.85 billion in preferred securities issued to the U.S. Treasury under the Capital Purchase Program during the fourth quarter of 2008.  For 2008, the fourth quarter and full year preferred dividend was $26.6 million.  The 5.5% effective yield reflects the 5.0% dividend requirement and the amortization of the discount recorded on the preferred stock at issuance.

Balance Sheet

As of December 31, 2009, SunTrust had total assets of $174.2 billion and shareholders' equity of $22.5 billion, representing 12.9% of total assets.  Book value per common share was $35.29 and tangible book value per common share was $22.59 as of December 31, 2009.

Loans

Average loans for the fourth quarter of 2009 were $115.0 billion, down $12.6 billion, or 9.9%, compared to the fourth quarter of 2008 and down $4.8 billion, or 4.0%, compared to third quarter of 2009.  Average commercial loans declined as a result of weak loan demand and improved access to the capital markets for funding.  Average residential real estate and construction related loans declined as the Company continued to reduce exposure to particular residential real estate loan classes.  As of December 31, 2009, total loans outstanding were $113.7 billion.  Average loans held for sale for the current quarter declined $1.2 billion, or 22.9%, compared to the third quarter of 2009, as loan deliveries outpaced production.

Deposits

Consumer and commercial deposits in the fourth quarter of 2009 averaged $117.0 billion, an increase of $14.8 billion, or 14.4%, compared to the same quarter of 2008 and an increase of $2.5 billion, or 8.8%, on a sequential quarter annualized basis.  Growth was most evident in the demand deposits, NOW and money market accounts while time deposits declined.  Deposit growth is the result of client's increased preferences for insured deposits, competitive pricing, and effective marketing.  Further, through an intense focus on improved execution, the Company has been successful in improving product offerings and client satisfaction, acquisition, and retention.  Notwithstanding these deposit generation successes, some of the deposit growth is due to seasonality and the economic environment. Deposit balances are expected to decline modestly in the first quarter related to seasonality, and further over time as the economy improves.  Total client deposits as of December 31, 2009, were $116.3 billion.  Average brokered and foreign deposits for the fourth quarter of 2009 declined a combined $7.5 billion, or 59.3%, compared to the fourth quarter of 2008, as the Company's deposit growth enabled a reduction in wholesale funding sources.

Capital and Liquidity

The estimated Tier 1 common, Tier 1 capital and tangible equity to tangible asset ratios were 7.65%, 12.90% and 9.66%, respectively, as of December 31, 2009.  The Company's estimated Tier 1 common and Tier 1 capital ratios increased in the quarter as the decline in risk weighted assets more than offset the reduction in capital due to the Company's net loss.  The Company continues to have substantial liquidity, as the inflows of deposits have been largely retained in cash and invested in high quality government-backed securities.

Asset Quality

For the fourth quarter, the provision for credit losses was $973.7 million and included $57.2 million in provision for unfunded commitments.  In the fourth quarter of 2009, the Company elected to change its financial statement presentation to include the provision for unfunded commitments in the provision for credit losses.  Previously, the unfunded commitment provision was included in noninterest expense.  The provision for loan losses was $217.4 million below the provision for loan losses recorded in the third quarter and $46.0 million below the provision for loan losses recorded in the fourth quarter of 2008.

For the fourth quarter of 2009, net charge-offs were $820.5 million, down $185.4 million, or 18.4%, from the third quarter driving a 50 basis point improvement in the ratio of annualized net charge-offs to total average loans to 2.83%.  Net charge-offs for the quarter pertained primarily to first and second lien residential mortgages and real estate construction loans.  Net charge-offs declined across most loan categories, except residential construction, as a result of continued workout activities.  Compared to the fourth quarter of 2008, net charge-offs were up $268.0 million primarily due to residential real estate loans.

As of December 31, 2009, the allowance for loan and lease losses was $3,120.0 million, up $96.0 million over September 30, 2009.  As a percentage of loans outstanding, the allowance for loan losses was 2.76%, up 15 basis points from the third quarter and 90 basis points from December 31, 2008.  The increase in the allowance for loan losses was primarily related to residential mortgages.  The $96 million increase in allowance for loan losses compares favorably to the quarterly increases of $128 million, $161 million, $384 million, and $410 million over the previous four quarters.  The reserve for unfunded commitments ended the year at $114.9 million.

Nonaccrual loans as of December 31, 2009, totaled $5,402.6 million, down $41.7 million from September 30, 2009, and $101.3 million from June 30, 2009, primarily due to charge-offs and declines in commercial and construction nonperforming loans.  The growth in the allowance for loan losses and reduction in nonperforming loans caused the allowance to nonperforming loans ratio to increase 219 basis points to 58.86%.  As of December 31, 2009, nonperforming loans as a percent of total loans was 4.75%, up 8 basis points from the end of the third quarter and up 165 basis points from December 31, 2008.  As nonperforming loans migrate to foreclosure and ultimate disposition, other real estate owned increased $48.1 million during the fourth quarter of 2009.

Accruing restructured loans totaled $1,640.9 million as of December 31, 2009, as compared to $1,343.6 million as of September 30, 2009 and $462.6 million as of December 31, 2008.  These loans are primarily consumer loans secured by residential real estate and the increases reflect the Company's proactive steps to modify loans to borrowers who are experiencing financial difficulties and to mitigate losses.  Most of the restructured loans are performing in accordance with their modified terms.  

Total early stage delinquencies declined 15 basis points during the fourth quarter to 1.37% of total loans due primarily to improvements in commercial and commercial real estate loans.  Early stage delinquencies declined as a percentage of loans outstanding in spite of a decline of $2.8 billion in loans outstanding.  Late stage delinquencies also improved modestly from the prior quarter.

Line of Business Results

The Company has provided line of business financial tables on its web site at www.suntrust.com in the Investor Relations section located under "About SunTrust."  The Company has four lines of business used to measure business activities: Retail and Commercial, Corporate and Investment Banking, Household Lending, and Wealth and Investment Management with the remainder in Corporate Other and Treasury.  All revenue in the line of business tables is reported on a fully taxable-equivalent basis.  For the lines of business, results include net interest income, which is computed using matched-maturity funds transfer pricing.  Further, provision for loan losses is represented by net charge-offs.  SunTrust also reports results for Corporate Other and Treasury, which includes the Treasury department as well as the residual expenses associated with operational and support expense allocations.  This segment also includes differences created between internal management accounting practices and generally accepted accounting principles, certain matched-maturity funds transfer pricing credits and charges, differences in provision for loan losses compared to net charge-offs, as well as equity and its related impact.  A detailed discussion of the line of business results will be included in the Company's forthcoming report on Form 10-K.

Corresponding Financial Tables and Information

Investors are encouraged to review the foregoing summary and discussion of SunTrust's earnings and financial condition in conjunction with the detailed financial tables and information which SunTrust has also published today and SunTrust's forthcoming report on Form 10-K.  Detailed financial tables and other information are also available on the Company's Web site at www.suntrust.com in the Investor Relations section located under "About SunTrust."  This information is also included in a current report on Form 8-K furnished with the Securities and Exchange Commission today.

This news release contains certain non-U.S. GAAP financial measures to describe the Company's performance.  The reconciliation of those measures to the most directly comparable U.S. GAAP financial measures and the reasons why SunTrust believes such financial measures may be useful to investors, can be found in the financial information contained in the appendices of this news release.

Conference Call

SunTrust management will host a conference call January 22, 2010, at 8:00 a.m. (Eastern Time) to discuss the earnings results and business trends.  Individuals may call beginning at 7:45 a.m. (Eastern Time) by dialing 1-888-972-7805 (Passcode: 4Q09).  Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 4Q09).  A replay of the call will be available one hour after the call ends on January 22, 2010, and will remain available until February 12, 2010, dialing 1-866-434-5261 (domestic) or 1-203-369-1004 (international).

Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust Web site at www.suntrust.com.  The webcast will be hosted under "Investor Relations," located under "About SunTrust," or may be accessed directly from the SunTrust home page by clicking on the earnings-related link, "4th Quarter Earnings Release."  Beginning the afternoon of January 22, 2010, listeners may access an archived version of the webcast in the "Webcasts and Presentations" subsection found under "Investor Relations."  A link to the Investor Relations page is also found in the footer of the SunTrust home page.

SunTrust Banks, Inc., headquartered in Atlanta, is one of the nation's largest banking organizations, serving a broad range of consumer, commercial, corporate and institutional clients.  The Company operates an extensive branch and ATM network throughout the high-growth Southeast and Mid-Atlantic states and a full array of technology-based, 24-hour delivery channels.  The Company also serves clients in selected markets nationally.  Its primary businesses include deposit, credit, and trust and investment management services.  Through various subsidiaries, the Company provides mortgage banking, insurance, brokerage, equipment leasing, and capital markets services.  SunTrust's Internet address is www.suntrust.com.

Important Cautionary Statement About Forward-Looking Statements

This news release contains forward-looking statements. Statements regarding (a) future levels of required mortgage repurchase reserves, revenue, net interest margin, charge-offs, provision expense, credit quality, FDIC and other regulatory expense, loans, loans held for sale, the investment portfolio, income, job losses, loan loss severities, loan loss frequency, and residential builder nonperforming loans, (b) the expected impact of FAS 167 and consolidation; (c) expected changes in the rate or level of deposit growth, loan growth, charge-offs, loan loss frequencies, and residential nonperforming loans; and (d) expected future asset quality and the performance of the commercial and industrial and commercial real estate portfolios, are forward-looking statements. Also, any statement that does not describe historical or current facts, including statements about beliefs and expectations, is a forward-looking statement. These statements often include the words "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "initiatives," "potentially," "probably," "projects," "outlook" or similar expressions or future conditional verbs such as "may," "will," "should," "would," and "could." Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Such statements speak as of the date hereof, and we do not assume any obligation to update the statements made herein or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements can be found at Item 1A of our annual report on Form 10-K filed with the Securities and Exchange Commission (SEC), as supplemented from time to time in our other periodic reports filed with the SEC, all of which are available at the SEC's internet site (http://www.sec.gov). Those factors include: difficult market conditions have adversely affected our industry; recent levels of market volatility are unprecedented; the soundness of other financial institutions could adversely affect us; recently enacted legislation or any proposed federal programs subject us to increased regulation and may adversely affect us; we have not yet received permission to repay TARP funds; emergency measures designed to stabilize the U.S. banking system are beginning to wind down; we are subject to credit risk; weakness in the economy and in the real estate market, including specific weakness within our geographic footprint, has adversely affected us and may continue to adversely affect us; weakness in the real estate market, including the secondary residential mortgage loan markets, has adversely affected us and may continue to adversely affect us; as a financial services company, adverse changes in general business or economic conditions could have a material adverse effect on our financial condition and results of operations; changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital or liquidity; the fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our earnings; we may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could harm our liquidity, results of operations, and financial condition; we may continue to suffer increased losses in our loan portfolio despite enhancement of our underwriting policies; depressed market values for our stock may require us to write down goodwill; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; consumers may decide not to use banks to complete their financial transactions, which could affect net income; we have businesses other than banking which subject us to a variety of risks; hurricanes and other natural disasters may adversely affect loan portfolios and operations and increase the cost of doing business; negative public opinion could damage our reputation and adversely impact business and revenues; we rely on other companies to provide key components of our business infrastructure; we rely on our systems, employees, and certain counterparties, and certain failures could materially adversely affect our operations; we depend on the accuracy and completeness of information about clients and counterparties; regulation by federal and state agencies could adversely affect the business, revenue, and profit margins; competition in the financial services industry is intense and could result in losing business or reducing margins; future legislation could harm our competitive position; maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services; we may not pay dividends on your common stock; our ability to receive dividends from our subsidiaries accounts for most of our revenue and could affect our liquidity and ability to pay dividends; significant legal actions could subject us to substantial uninsured liabilities; recently declining values of real estate, increases in unemployment, and the related effects on local economies may increase our credit losses, which would negatively affect our financial results; deteriorating credit quality, particularly in real estate loans, has adversely impacted us and may continue to adversely impact us; our allowance for loan losses may not be adequate to cover our actual losses; we will realize future losses if the proceeds we receive upon liquidation of nonperforming assets are less than the fair value of such assets; disruptions in our ability to access global capital markets may negatively affect our capital resources and liquidity; ratings agencies recently downgraded our securities and the deposit ratings of SunTrust Bank. These downgrades and any subsequent downgrades could adversely impact the price and liquidity of our securities and could have an impact on our businesses and results of operations; 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 depend on the expertise of key personnel. 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. They 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; we may enter into transactions with off-balance sheet affiliates or our subsidiaries; and we are subject to market risk associated with our asset management and commercial paper conduit businesses.

SOURCE SunTrust Banks, Inc.