SunTrust Reports Third Quarter 2007 Earnings

ATLANTA, Oct. 18 /PRNewswire-FirstCall/ -- SunTrust Banks, Inc. today reported net income available to common shareholders for the third quarter of 2007 of $412.6 million compared to $535.6 million in the third quarter of 2006. Net income per average common diluted share was $1.18 compared to $1.47 in the third quarter of 2006. The results included approximately $161 million in net valuation losses, or $0.28 per diluted common share after tax, and $45 million in severance expenses, or $0.08 per diluted common share after tax.

"It's disappointing that the positive impact of continuing progress in our broad-based program to drive enhanced shareholder value was overshadowed by the difficult market conditions that affected our industry in the third quarter and that, obviously, took a significant toll on our results," said James M. Wells III, President and Chief Executive Officer of SunTrust.

Specifically, Mr. Wells noted that the positive impact of continued expense discipline and continued net interest margin expansion was, as anticipated, offset by a decline in market value of certain financial assets held by SunTrust and severance expense related to a previously announced efficiency initiative. Third quarter results also reflected a higher provision for loan losses attributable to the deterioration in the credit environment.

"Clearly, we are not immune to the deterioration in the housing market and related turmoil in the capital markets and change in the credit cycle," Mr. Wells observed. "That said, we remain encouraged by the underlying strength in key product areas and by the progress of our ongoing drive to enhance productivity and efficiency across the Company."

During the quarter, the Company recognized approximately $161 million in net valuation losses. The net losses pertained primarily to mark-to-market valuations on loan warehouses and trading assets and liabilities carried at fair value. Most of the losses are unrealized, and the Company continues to evaluate alternatives in order to maximize the economic value of these assets. The after-tax earnings impact of the $161 million in net valuation losses was $0.28 per diluted common share.

The Company also incurred $45 million in severance costs during the quarter. The severance costs are for employees impacted by the elimination of 2,400 jobs during 2007 and 2008. Approximately 1,000 employees were notified of position eliminations in late August. These positions were eliminated as part of the organization review aspect of the Company's broad-based E2 Efficiency and Productivity Program.

Third Quarter 2007 Consolidated Highlights: 3rd 3rd Quarter Quarter % 2007 2006 Change Income Statement (Dollars in millions, except per share data) Net income available to common shareholders $412.6 $535.6 (23)% Net income available to common shareholders excluding severance charge 440.5 535.6 (18)% Net income per average common diluted share 1.18 1.47 (20)% Net income per average common diluted share excluding severance charge 1.26 1.47 (14)% Revenue - fully taxable-equivalent 2,038.4 2,032.8 - % Provision for loan losses 147.0 61.6 139 % Noninterest income 819.1 858.9 (5)% Noninterest expense 1,291.2 1,205.5 7 % Noninterest expense excluding severance charge 1,246.2 1,205.5 3 % Net interest margin 3.18 % 2.93 % Efficiency ratio 63.35 % 59.30 % Efficiency ratio excluding severance charge 61.14 % 59.30 % Balance Sheet (Dollars in billions) Average loans $119.6 $120.7 (1)% Average consumer and commercial deposits 96.7 97.6 (1)% Capital Tier 1 capital ratio (1) 7.45 % 7.70 % Total average shareholders' equity to total average assets 10.05 % 9.78 % Tangible equity to tangible assets 6.32 % 6.42 % Asset Quality Net charge-offs to average loans (annualized) 0.34 % 0.12 % Nonperforming loans to total loans 0.83 % 0.48 % (1) Current period Tier 1 capital ratio is estimated as of the earnings release date. -- Net income available to common shareholders decreased 23% and net income per average common diluted share decreased 20% from the third quarter of 2006 due to lower noninterest income related to net valuation losses recognized primarily on loan warehouses and trading assets carried at fair value and higher provision for loan losses. -- Fully taxable-equivalent revenue was flat compared to the third quarter of 2006, as net interest income growth was offset by the decline in noninterest income. -- Fully taxable-equivalent net interest income increased 4% from the third quarter of 2006. Net interest margin for the third quarter of 2007 was 3.18%, a 25 basis point improvement from the third quarter of 2006. The increase in net interest margin was largely the result of balance sheet management strategies executed in the first and second quarters of 2007. -- Noninterest income declined 5% from the third quarter of 2006, driven primarily by the mark-to-market losses on loan warehouses and trading assets carried at fair value. The impact of these unrealized valuation losses was partially offset by growth in service charges on deposit accounts, retail investment services, and mortgage servicing income. -- Noninterest expense increased 7% from the third quarter of 2006, driven by $49.5 million in net initial implementation costs associated with the E2 initiatives, approximately $32 million resulting from the Company's election to record at fair value certain newly-originated mortgage loans held for sale, a $33.6 million decrease in the accrued liability associated with a capital instrument that the Company intends to call and replace in the fourth quarter, and a $9.8 million charge resulting from the early extinguishment of debt. Excluding the impact of these third quarter of 2007 items, noninterest expense grew approximately 2.6%, driven primarily by increased operating losses. -- Total average loans and total average consumer and commercial deposits decreased 1% from the third quarter of 2006. The decline in average loans was due to loan sales associated with specific balance sheet management strategies that began in the second quarter of 2006 and were accelerated in the first half of 2007. The decline in average consumer

and commercial deposits was driven mainly by declines in demand deposit,

money market, and savings account balances. -- The estimated Tier 1 capital, total average shareholders' equity to total average assets, and tangible equity to tangible asset ratios were 7.45%, 10.05%, and 6.32%, respectively. The Company maintains a Tier 1 capital ratio target of 7.5%. -- Given the flexibility gained through the capital restructuring program and balance sheet management strategies executed in the first half of 2007, the Company repurchased 10.2 million shares of common stock for approximately $850 million through an accelerated share repurchase agreement and open-market purchases year-to-date. -- Annualized net charge-offs were 0.34% of average loans for the third quarter of 2007, up from 0.12% of average loans in the third quarter of 2006 and 0.30% of average loans in the second quarter of 2007. The increase reflects the change in the credit cycle from the historically low net charge-offs experienced in the first nine months of 2006 and the negative impact from deterioration in certain segments of the consumer and residential real estate market. The increase in net charge-offs from the third quarter of 2006 was most pronounced in the home equity, residential mortgage, and commercial categories, though the increase in commercial was primarily related to a single borrower. -- Nonperforming loans to total loans increased to 0.83% as of September 30, 2007, from 0.48% as of September 30, 2006, due mainly to an increase in residential mortgage and real estate construction nonperforming loans. The increase in residential mortgage nonperforming loans was driven by the maturation of this portfolio and the deterioration of credit quality in Alt-A mortgage loans and home equity lines, of which the majority are well-collateralized or insured. The increase in real estate construction nonperforming loans is reflective of the overall weakening of the housing market. CONSOLIDATED FINANCIAL PERFORMANCE Revenue

Fully taxable-equivalent revenue was $2,038.4 million for the third quarter of 2007, which was flat compared to the third quarter of 2006, driven by net interest income growth that offset the decline in noninterest income. On a sequential annualized basis, fully taxable-equivalent revenue decreased 57% from the second quarter of 2007. Excluding securities gains and losses including the sale of The Coca-Cola Company stock in May 2007, fully taxable- equivalent revenue decreased 19% from the second quarter of 2007 on a sequential annualized basis primarily due to approximately $161 million of net valuation losses incurred in the third quarter of 2007.

For the nine months ended September 30, 2007, fully taxable-equivalent revenue was $6,480.1 million, up 5% from the same period in 2006. Excluding securities gains and losses and the net gain on sale of the Bond Trustee business, fully taxable-equivalent revenue was up 2% from the nine months ended September 30, 2006, due to modest growth in both net interest income and noninterest income.

Net Interest Income

Fully taxable-equivalent net interest income was $1,219.2 million in the third quarter of 2007, an increase of 4% from the third quarter of 2006. Net interest margin for the third quarter of 2007 was 3.18%, a 25 basis point improvement from the third quarter of 2006. On a sequential annualized basis, fully taxable-equivalent net interest income was flat compared to the second quarter of 2007. However, net interest margin increased 8 basis points from the second quarter of 2007, marking the third consecutive 8 basis point sequential quarter improvement. The continued improvement in net interest margin was driven mainly by balance sheet management strategies executed in the first half of this year, which has resulted in improved yields on earning assets, as well as de-leveraging the balance sheet and reducing the level of higher-cost wholesale funding. Average earning asset yields increased 8 basis points compared to the second quarter of 2007, while average interest bearing liability costs declined 1 basis point resulting in a 9 basis point increase in the interest rate spread.

For the nine months ended September 30, 2007, fully taxable-equivalent net interest income was $3,627.5 million, up 2% from the same period in 2006. Net interest margin for the nine months ended September 30, 2007 was 3.10%, an 8 basis point improvement over the same period in 2006. The improvement in fully taxable-equivalent net interest income and net interest margin over this period is mainly attributable to balance sheet management strategies executed this year.

Noninterest Income

Total noninterest income was $819.1 million for the third quarter of 2007, down 5% from the third quarter of 2006. The third quarter of 2006 included a $112.8 million gain, net of related expenses, on the sale of the Bond Trustee business, as well as $91.8 million in net securities losses resulting from the restructuring of a portion of the securities portfolio. The net impact of these transactions was a positive $21.0 million to total noninterest income in the third quarter of 2006. The other significant driver of the decline in noninterest income was the market value losses recognized on loan warehouses and trading assets carried at fair value. Specifically, in the third quarter of 2007, the Company incurred a net negative mark-to-market adjustment of approximately $161 million driven by market value declines in securitization warehouses, trading assets, and mortgage loans held for sale, as well as a positive mark on long-term corporate debt carried at fair value. The net impact of these adjustments caused a decline in trading account profits and commissions compared to the third quarter of 2006. However, trading account profits and commissions was positively impacted by stronger customer related trading activities, primarily derivatives. The negative market value losses recognized on mortgage loans held for sale was the key driver of the 74% decline in mortgage production income. The decline in mortgage production income was partially offset by the Company's second quarter of 2007 election to record at fair value certain newly-originated mortgage loans held for sale, resulting in loan fees being recognized at time of origination rather than deferred and recognized as part of the gain/loss on sale.

Partially offsetting these reductions to noninterest income was growth in several areas, including trust and investment management income, service charges on deposit accounts, retail investment services, other charges and fees, card fees, and mortgage servicing-related income. Trust and investment management income grew 1% compared to the third quarter of 2006; however, this growth rate was negatively impacted by the merger of Lighthouse Partners into Lighthouse Investment Partners in the first quarter of 2007 and the sale of the Bond Trustee business in the third quarter of 2006. Growth in retail investment services income of 28% was driven by strong annuity sales. Growth in card fees of 9% was due to higher interchange fees. Growth in mortgage servicing income of 56% was primarily due to a larger servicing portfolio.

For the nine months ended September 30, 2007, noninterest income was $2,852.7 million, an increase of 10% from the same period in 2006. Excluding securities gains and losses and the net gain on sale of the Bond Trustee business, noninterest income increased 2% compared to the nine months ended September 30, 2006. The factors contributing to the growth were similar to those noted for the growth over the same quarter of last year.

Noninterest Expense

Total noninterest expense in the third quarter of 2007 was $1,291.2 million, up 7% from the third quarter of 2006. The third quarter of 2007 expense level was impacted by the following items:

-- $49.5 million increase resulting from initial implementation costs associated with the E2 initiatives incurred in the third quarter of 2007, of which $45.0 million was due to severance charges associated with the organizational review component of the Company's E2 Efficiency and Productivity Program. These initiatives generated $59.5 million of cost saves in the third quarter of 2007 and $140.1 million of cost saves thus far in 2007. -- Approximately $32 million increase in compensation expense related to the Company's election to record at fair value certain newly-originated mortgage loans held for sale. Under this election, costs associated with the origination of mortgage loans held for sale are recognized as a component of compensation expense when the loan is originated. Prior to the fair value election, these costs were deferred and recognized as part of the gain/loss on sale of the loan. -- $33.6 million decrease in the accrued liability associated with a capital instrument that the Company intends to call and replace in the fourth quarter. -- $9.8 million increase in other expense for the loss on early retirement of fixed rate debt that was carried at cost. The debt was not part of the Company's fair value election as the interest on the debt was not being hedged.

Excluding the impact of the above items, expense growth was approximately 2.6% in the third quarter of 2007 relative to the same quarter last year, demonstrating the impact the E2 initiatives had on controlling expense growth. This incremental expense growth was driven by a $42.2 million increase in operating losses primarily related to application fraud associated with mortgage loans.

For the nine months ended September 30, 2007, noninterest expense was $3,778.4 million, an increase of 4% compared to the same period in 2006. The factors impacting noninterest expense were similar to those noted for the growth over the same quarter of last year. Please refer to the Third Quarter 2007 Earnings Presentation for further information on year-to-date expense growth.

Balance Sheet

As of September 30, 2007, SunTrust had total assets of $175.9 billion. Shareholders' equity of $17.9 billion as of September 30, 2007, represented 10% of total assets. Book value per common share was $50.01 as of September 30, 2007.

Loans

Average loans for the third quarter of 2007 were $119.6 billion, down $1.2 billion, or 1%, from the third quarter of 2006. The decline was due to balance sheet management strategies implemented since the second quarter of 2006 and accelerated in the first half of 2007. The strategies resulted in the sale of nearly $10 billion in loans over the past year, primarily comprised of mortgage, student, and corporate loans. Taking into account these loan sales, the Company had underlying loan growth across most categories. Compared to the second quarter of 2007, average loans were up $1.4 billion, or 5% on a sequential annualized basis, primarily driven by commercial loan growth.

Deposits

Average consumer and commercial deposits for the third quarter of 2007 were $96.7 billion, down 1% from the third quarter of 2006. The decrease in deposits was driven by declines in demand deposit, money market, and savings account balances. Given the higher-rate environment as compared to 2006, customer preference has been for higher-yielding products. This demand has driven the continuation of the deposit mix shift away from lower-rate products, such as demand deposits, toward higher-rate products, such as time deposits, the Company's Signature Advantage deposit product, or other alternative investment products with higher rates. The alternative investment products include securities sold under agreements to repurchase and off- balance sheet products, such as STI Classic money market mutual funds. Total brokered and foreign deposits declined 24% from the third quarter of 2006, as the Company strategically reduced the size of its loan and securities portfolios thereby reducing reliance on these higher cost funding sources.

On a sequential annualized basis, average consumer and commercial deposits decreased 5% from the second quarter of 2007, driven by a 17% sequential annualized decrease in demand deposits. The third quarter is typically the weakest growth quarter of the year due to seasonality. The Company continues to aggressively pursue deposit growth initiatives.

Capital

The estimated Tier 1 capital and tangible equity to tangible asset ratios at September 30, 2007 were 7.45% and 6.32%, a decline of 25 and 10 basis points, respectively, compared to September 30, 2006. In the second half of 2006, the Company executed a capital restructuring program and established a Tier 1 capital ratio target of 7.5%. Given the flexibility gained through the capital restructuring program and balance sheet management strategies, the Company repurchased 8.7 million shares of common stock for approximately $850 million through an accelerated share repurchase agreement and open-market purchases during the second quarter of 2007. Upon expiration of the accelerated share repurchase agreement, which resulted in the repurchase of 8.0 million shares in the second quarter, the Company received, without additional payment, an additional 1.5 million shares in the third quarter. As a result, year-to-date the Company has repurchased approximately 10.2 million shares.

Asset Quality

Annualized net charge-offs in the third quarter of 2007 were 0.34% of average loans, up from 0.12% in the third quarter of 2006 and 0.30% in the second quarter of 2007. Net charge-offs were $103.7 million in the third quarter of 2007, as compared to $36.1 million in the third quarter of 2006 and $88.3 million in the second quarter of 2007. The increase in net charge-offs over the third quarter of 2006 reflects the change in the credit cycle from historically low net charge-offs experienced in the first nine months of 2006 and the negative impact from deterioration in certain segments of the consumer and residential real estate market. The increase in net charge-offs from the third quarter of 2006 was most pronounced in the home equity, residential mortgage, and commercial categories, though the increase in commercial was primarily related to a single borrower. The increase compared to the second quarter of 2007 was most pronounced in the home equity and indirect consumer categories.

Nonperforming loans were $1,003.8 million, or 0.83% of total loans as of September 30, 2007, compared to $585.4 million, or 0.48% of total loans as of September 30, 2006 and $764.6 million, or 0.64% of total loans as of June 30, 2007. The increase in nonperforming loans compared to both periods was mainly due to an increase in residential mortgage and real estate construction nonperforming loans. The increase in residential mortgage nonperforming loans was driven by the maturation of this portfolio and the deterioration of credit quality in Alt-A mortgage loans and home equity lines, of which the majority is well-collateralized or insured. The increase in real estate construction nonperforming loans is reflective of the overall weakening of the housing market.

The allowance for loan and lease losses increased $43.3 million from June 30, 2007 to $1,093.7 million as of September 30, 2007. The increase in the allowance for loan and lease losses was attributable to a $2.0 billion increase in period-end loans compared to June 30, 2007 and the deterioration in certain segments of the consumer and residential real estate market, and resulted in a $42.3 million increase in provision for loan losses compared to the second quarter of 2007. The allowance for loan and lease losses as of September 30, 2007 represented 0.91% of period-end loans compared to 0.88% as of June 30, 2007. The allowance for loan and lease losses as of September 30, 2007 represented 109% of period-end nonperforming loans.

LINE OF BUSINESS FINANCIAL PERFORMANCE

The following discussion details results for SunTrust's five business lines: Retail, Commercial, Corporate and Investment Banking, Mortgage, and Wealth and Investment Management. All revenue 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 expense 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 expense 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 expense compared to net charge-offs, as well as equity and its related impact.

Retail preliminary data 3rd Quarter 3rd Quarter % (in millions) 2007 2006 Change Net income $153.0 $180.9 (15) % Revenue - fully taxable- equivalent 856.8 852.2 1 Average total loans 32,065.8 30,834.6 4 Average total deposits 67,401.6 69,660.0 (3) Three Months Ended September 30, 2007 vs. 2006

Retail's net income for the third quarter of 2007 was $153.0 million, a decrease of $27.9 million, or 15%, compared to the third quarter of 2006. This decrease was primarily the result of higher provision expense and lower net interest income, partially offset by higher noninterest income.

Net interest income declined $10.5 million, or 2%, driven by a $2.3 billion, or 3%, decline in average deposits. Deposit spreads improved slightly despite the continued trend in customer preference towards higher-yielding deposit products. Specifically, increases in higher-cost NOW account products were offset by declines in lower-cost money market and demand deposit products. Total average loans increased $1.2 billion, or 4%, driven by growth in home equity, business banking, and newly-originated student loans. Retail continued to decrease its exposure to relatively low spread student consolidation loans where loans held for sale average balances declined $304 million, or 40%.

Provision for loan losses increased $45.3 million reflecting normalization of the credit cycle from historically low levels, as well as additional negative impact from the current deterioration in certain segments of the consumer portfolio, primarily related to the residential real estate market. The provision increase was most pronounced in the home equity and indirect auto products but also increased for commercial loans.

Total noninterest income increased $15.2 million, or 6%, from the third quarter of 2006. This increase was driven primarily by an 11% increase in service charges on deposit accounts from both consumer and business clients. Interchange and ATM fees also grew. Partially offsetting the fee income growth was a decrease in gains on sales of student loans.

Total noninterest expense increased $4.0 million, or less than 1%, from the third quarter of 2006. Increases in personnel expense related to investments in the branch distribution network and business banking were offset by a decrease in shared corporate expense allocations.

Nine Months Ended September 30, 2007 vs. 2006

Retail's net income for the nine months ended September 30, 2007 was $475.6 million, a decrease of $63.5 million, or 12%, compared to the same period in 2006. The decrease was primarily the result of higher provision expense and lower net interest income, partially offset by higher noninterest income.

Net interest income decreased $21.1 million, or 1%, driven by the continued shift in deposit mix to higher-rate deposit products resulting in compressed spreads. Average deposits decreased $342.9 million, less than 1%, as increases in higher-cost time deposits and certain NOW account products were offset by declines in lower-cost money market and demand deposit balances. Net interest income from deposits decreased only 2% despite the shift to higher cost deposit products. Net interest income was also negatively impacted by a $768 million, or 55%, decrease in average loans held for sale, as Retail has decreased its exposure to relatively low spread student consolidation loans. Positively impacting net interest income was a $791 million, or 3%, increase in average loans driven by growth in home equity loans and business banking loans. These increases were partially offset by a decrease in indirect auto loans, direct installment, and newly-originated student loans.

Provision for loan losses increased $100.3 million reflecting normalization of the credit cycle from historically low levels and deterioration in certain segments of the consumer portfolio, primarily related to the residential real estate market. The increase was most pronounced in home equity and indirect auto products.

Total noninterest income increased $18.6 million, or 2%. The increase was due to growth in service charges on deposit accounts driven by higher consumer and business client fees. Interchange income also grew driven by higher transaction volumes. These increases were partially offset by a decrease in gains on sales of student loans.

Total noninterest expense was flat compared to the same period in 2006. Decreases in amortization of core deposit intangibles and new loan production expense were partially offset by an increase in personnel expense related to investments in the branch distribution network and business banking.

Commercial preliminary data 3rd Quarter 3rd Quarter % (in millions) 2007 2006 Change Net income $105.0 $109.1 (4) % Revenue - fully taxable- equivalent 302.4 312.1 (3) Average total loans 33,016.6 32,985.9 - Average total deposits 14,031.7 13,601.1 3 Three Months Ended September 30, 2007 vs. 2006

Commercial's net income for the third quarter of 2007 was $105.0 million, a decrease of $4.1 million, or 4%. The decrease was primarily the result of lower net interest income partially offset by higher noninterest income.

Net interest income decreased $14.1 million, or 6%. Although average deposits increased $430.6 million, or 3%, the continued shift in deposit mix to higher-rate deposit products decreased net interest income by $6.1 million. This compression in deposit spreads was primarily due to a decrease in demand deposits, as customers redeployed liquidity in the current rate environment to higher-yielding NOW accounts and off balance sheet sweep products. The increase in average deposits was driven by increases in institutional and government deposits, partially offset by decreases in lower-cost demand deposits and money market accounts. Average loans were relatively flat, increasing $30.8 million, while net interest income decreased $8.2 million, or 5%. While commercial domestic loan spreads were up slightly, commercial real estate spreads decreased.

Provision for loan losses was $3.0 million, an increase of $1.3 million compared to the third quarter of 2006.

Total noninterest income increased $4.5 million, or 6%, driven by increases in service charges on deposit accounts and higher referral revenues from the BankCard, equipment leasing, and capital markets products, partially offset by a decrease in business credit card income.

Total noninterest expense was relatively flat, increasing $0.8 million. Decreases in staff expense, credit and collection services, and shared corporate expense were more than offset by increased Affordable Housing- related expenses.

Nine Months Ended September 30, 2007 vs. 2006

Commercial's net income for the nine months ended September 30, 2007 was $303.9 million, a decrease of $14.8 million, or 5%. The decrease was primarily driven by a decline in net interest income and higher provision expense, partially offset by higher noninterest income and lower noninterest expense.

Net interest income decreased $32.5 million, or 5%. Although average deposits increased $527.7 million, or 4%, the continued shift in deposit mix to higher-rate deposit products decreased net interest income $26.9 million. This compression in deposit spreads was primarily due to a decrease in demand deposits, as customers redeployed liquidity in the current rate environment to higher-yielding NOW accounts and off balance sheet sweep products. The increase in average deposits was driven by increases in institutional and government deposits, partially offset by decreases in lower-cost demand deposits and money market accounts. Average loans increased $565.0 million, or 2%, while net interest income decreased $4.5 million, or 1%. While commercial loan spreads were up slightly, commercial real estate spreads decreased.

Provision for loan losses increased $6.5 million compared to the same period in 2006.

Total noninterest income increased $7.8 million, or 4%, driven by increases in service charges on deposit accounts and higher referral revenues from the BankCard and capital markets products, partially offset by a decrease in business credit card income.

Total noninterest expense decreased $3.4 million, or 1%. Decreases in credit and collection services expense, various discretionary expenses, and shared corporate expenses were partially offset by increased Affordable Housing-related expenses.

Corporate and Investment Banking preliminary data 3rd Quarter 3rd Quarter % (in millions) 2007 2006 Change Net income $(14.2) $45.1 NM % Revenue - fully taxable- equivalent 100.8 195.6 (48) Average total loans 15,959.1 16,693.4 (4) Average total deposits 3,462.2 2,885.3 20 "NM" - Not meaningful Three Months Ended September 30, 2007 vs. 2006

Corporate and Investment Banking had a net loss of $14.2 million for the third quarter of 2007, a decrease of $59.2 million compared to the prior year. The decrease was driven by write-downs and losses primarily in securitization warehouses due to capital markets volatility associated with turmoil in the mortgage industry, lack of loan liquidity, and widening credit spreads.

Net interest income was relatively flat, decreasing $0.2 million. Average loan balances decreased $734.3 million, or 4%, while the corresponding net interest income increased 1% due to a 5 basis point increase in spreads. The decline in balances was driven by a $1.9 billion structured asset sale of corporate loans in the first quarter of 2007, partially offset by growth in corporate banking loans and lease financing assets. Total average deposits were up $576.9 million, or 20%, while net interest income was down $0.2 million. This increase in balances was primarily in higher cost money market accounts.

Provision for loan losses was $13.6 million, an increase of $7.8 million from the same period in 2006.

Total noninterest income decreased $94.6 million, or 67%. The decrease was primarily driven by write-downs and losses of approximately $121 million in collateralized debt obligations, mortgage-backed securities and collateralized loan obligation warehouses carried at fair value. Partially offsetting these losses were record performances in derivatives, structured leasing, and tax-exempt underwriting revenues, up 115%, 216%, and 42%, respectively.

Total noninterest expense decreased $8.3 million, or 7%, driven primarily by lower incentive-based compensation expense tied to revenue.

Nine Months Ended September 30, 2007 vs. 2006

Corporate and Investment Banking's net income for the nine months ended September 30, 2007 was $99.0 million, a decrease of $66.6 million, or 40%. The decrease was driven by write-downs and losses primarily in securitization warehouses due to capital markets volatility created by turmoil in the mortgage industry, lack of loan liquidity, and widening credit spreads. In addition, higher provision for loan losses expense and lower net interest income contributed to the decline.

Net interest income decreased $15.2 million, or 8%. Average loan balances decreased $541.0 million, or 3%, while spreads declined 10 basis points resulting in a 13% decrease in loan related net interest income. The decline in balances was driven by a $1.9 billion structured asset sale of corporate loans in the first quarter of 2007, partially offset by growth in the corporate banking loans and lease financing assets. Total deposits were down $168.5 million, or 5%, driven by a decline in corporate demand deposit balances. Deposit related net interest income was down $3.8 million, or 8%, as deposit spreads dropped 21 basis points due to a shift to higher cost money market accounts. Partially offsetting these declines was improved net interest income on investments due to higher balances and favorable spreads.

Provision for loan losses was $30.4 million increasing from $5.0 million in the same period of 2006.

Total noninterest income decreased $65.5 million, or 14%. The decrease was primarily driven by write-downs and losses of approximately $134 million in collateralized debt obligations, mortgage-backed securities, and collateralized loan obligation warehouses carried at fair value, most of which occurred during the third quarter of 2007. Additional weakness in fixed income trading, equity offerings, loan related fees, and M&A was partially offset by strong performance in bond originations, corporate loan syndications, derivatives, and structured leasing.

Total noninterest expense decreased $0.1 million, driven by lower compensation expense resulting from lower revenue and lower shared corporate expenses, offset by the reversal of leveraged lease expense in the second quarter of 2006, increased salary expense, and higher outside processing expenses.

Mortgage preliminary data 3rd Quarter 3rd Quarter % (in millions) 2007 2006 Change Net income $(12.0) $64.2 NM % Revenue - fully taxable- equivalent 221.5 253.6 (13) Average total loans 30,084.2 31,619.8 (5) Average total deposits 2,322.9 1,998.8 16 "NM" - Not meaningful Three Months Ended September 30, 2007 vs 2006

Mortgage had a net loss of $12.0 million for the third quarter of 2007, a decrease in net income of $76.2 million. The decline was primarily a result of net valuation losses on the mortgage warehouse driven by mortgage spread widening and credit-related losses resulting from turmoil in the mortgage markets. Mortgage experienced approximately $88 million in losses from mortgage spread widening in the third quarter of 2007.

Net interest income decreased $23.9 million, or 15%. The decline was driven by decreases in average loans held for investment and average loans held for sale at compressed spreads, partially offset by higher investment securities balances. Average loans, primarily consumer mortgages and residential construction loans, declined $1.5 billion, or 5%, and resulted in a reduction in net interest income of $19.4 million. The decline in loans was a result of balance sheet management strategies initiated in the second half of 2006 and accelerated in the first half of 2007. Average loans held for sale declined $0.5 billion. The balance decline in conjunction with compressed spreads reduced net interest income $12.3 million. Offsetting these reductions was an increase in average investment securities of $4.0 billion which contributed $8.0 million to the change in net interest income.

Provision for loan losses increased $11.0 million to $11.7 million driven by higher consumer mortgage charge-offs.

Total noninterest income declined $8.2 million, or 8%, due to lower production income partially offset by higher servicing income. Total loan production of $12.6 billion was down $1.1 billion, or 8%, from the third quarter 2006. Production income declined $29.3 million, or 60%, due to net valuation losses caused by spread widening in mortgage markets partially offset by the recognition of loan origination fees resulting from the Company's election to record certain mortgage loans at fair value beginning in May 2007. Mortgage servicing income was up $20.5 million, or 56%, principally due to higher fee income derived from a larger servicing portfolio. At September 30, 2007, total loans serviced were $149.9 billion, up 20% from $124.8 billion at September 30, 2006.

Total noninterest expense was up $81.3 million, or 53%. The major drivers of the higher expense were a $35.0 million increase in operating losses, primarily due to loan application fraud related to customer misstatements of income and/or assets on Alt-A products originated in prior periods, and the recognition of loan origination costs resulting from the Company's election to record certain mortgage loans at fair value in May 2007. The remaining increase was driven by other credit-related and growth- related costs.

Nine Months Ended September 30, 2007 vs 2006

Mortgage's net income for the nine months ended September 30, 2007 was $37.6 million, a decline of $166.2 million, or 82%. The decline was a result of net valuation losses on the mortgage warehouse driven by mortgage spread widening and credit-related losses resulting from turmoil in the mortgage markets. Additionally, lower secondary marketing margins and higher growth and volume-related expense were partially offset by higher servicing income. Mortgage experienced approximately $88 million in losses from mortgage spread widening in the third quarter of 2007.

Net interest income declined $55.9 million, or 12%, principally due to declines in income on loans held for investment and loans held for sale at lower spreads, partially offset by increased income on deposits and investment securities. Total average loans were down $0.2 billion. The volume decline in conjunction with lower spreads resulted in a $36.5 million decline in net interest income. Loans held for sale increased $1.8 billion, however, compressed spreads resulted in a decline in net interest income of $31.8 million. Additionally, mortgage servicing rights increased $0.2 billion and combined with increased funding costs resulted in a $12.3 million decline in net interest income. Deposits were up $0.4 billion due to higher escrow balances and contributed $16.5 million to the change in net interest income. Investment securities were up $2.6 billion positively impacting the change in net interest income by $5.5 million.

Provision for loan losses was $35.0 million an increase of $29.3 million driven by higher consumer mortgage charge-offs.

Total noninterest income declined $53.5 million, or 17%, driven by lower production income that was partially offset by higher servicing income and other miscellaneous income. Total production of $45.4 billion was up $5.1 billion, or 13%, over the prior year. Production income declined $100.5 million due to narrower secondary marketing margins, as well as net valuation losses on the mortgage warehouse resulting from mortgage spread widening and credit-related charges. The decline in production income was partially offset by the recognition of loan origination fees resulting from the Company's election to record certain mortgage loans at fair value in May of 2007. Total servicing income was up $25.1 million, or 23%, principally due to higher servicing balances and lower mortgage servicing rights amortization, partially offset by lower gains on sales of mortgage servicing rights. Other income was up $21.9 million due to increases in insurance income and trading account income. At September 30, 2007, total loans serviced were $149.9 billion, up 20% from $124.8 billion at September 30, 2006.

Total noninterest expense increased $132.0 million, or 29%. The major drivers of the higher expense were a $54.4 million increase in operating losses, primarily due to loan application fraud related to customer misstatements of income and/or assets on Alt-A products originated in prior periods, and the recognition of loan origination costs resulting from the Company's election to record certain mortgage loans at fair value beginning in May 2007. The remaining increase was driven by other credit-related and growth-related costs.

Wealth and Investment Management preliminary data 3rd Quarter 3rd Quarter % (in millions) 2007 2006 Change Net income $60.4 $123.2 (51) % Revenue - fully taxable- equivalent 343.1 447.8 (23) Average total loans 7,848.9 8,128.0 (3) Average total deposits 9,608.3 9,534.1 1 Three Months Ended September 30, 2007 vs. 2006

Wealth and Investment Management's net income for the third quarter of 2007 was $60.4 million, a decrease of $62.8 million, or 51%. The decrease was primarily due to the $69.9 million after-tax gain on sale of the Bond Trustee business in the third quarter of 2006. Excluding the gain on sale of the Bond Trustee business, net income increased $7.1 million or 13%. The increase was primarily driven by strong growth in retail investment income and lower noninterest expenses. These benefits were partially offset by the impact of the merger of Lighthouse Partners into Lighthouse Investment Partners in the first quarter of 2007, the loss of trust revenue due to the sale of the Bond Trustee business, and lower net interest income.

Net interest income decreased $7.2 million, or 8%, primarily due to a shift in deposit mix to higher cost deposits. Average deposits increased $0.1 billion, or 1%, due to an increase in higher-cost NOW accounts and time deposits, partially offset by declines in lower-cost demand and money market deposits resulting in a $4.8 million decrease in net interest income. Average loans decreased $0.3 billion, or 3%, reducing net interest income $2.2 million. The decline in average loans was driven by lower consumer mortgage and commercial lending balances, partially offset by growth in personal credit lines.

Provision for loan losses increased $1.2 million primarily due to higher home equity net charge-offs.

Total noninterest income decreased $97.4 million, or 27%, primarily driven by the $112.8 million third quarter 2006 gain on sale of the Bond Trustee business and the resulting loss in trust revenue. Despite lost trust revenue from the Lighthouse Partners merger in the first quarter of 2007 and the Bond Trustee sale, total trust income rose $1.4 million, or 1%. Retail investment income increased $15.4 million, or 28%, with particularly strong growth in annuity sales.

Total noninterest expense decreased $5.5 million, or 2%. Higher compensation expense related to retail investment sales was more than offset by decreases in discretionary expense, lower Lighthouse related expense, and a reduction in shared corporate expenses.

End of period assets under management were approximately $142.9 billion compared to $138.6 billion as of the same period last year. Approximately $5.4 billion in Lighthouse Partners assets were merged into Lighthouse Investment Partners and are not included in the September 30, 2007 total. Assets under management include individually managed assets, the STI Classic Funds, institutional assets managed by Trusco Capital Management, and participant-directed retirement accounts. SunTrust's total assets under advisement were approximately $253.0 billion, which includes $142.9 billion in assets under management, $59.3 billion in non-managed trust assets, $42.4 billion in retail brokerage assets, and $8.5 billion in non-managed corporate trust assets.

Nine Months Ended September 30, 2007 vs. 2006

Wealth and Investment Management's net income for the nine months ended September 30, 2007 was $181.5 million, a decrease of $46.5 million, or 20%. The decrease was primarily due to the $69.9 million after-tax gain on sale of the Bond Trustee business in the third quarter of 2006. Excluding the gain on sale of the Bond Trustee business, net income increased $23.4 million, or 15%, and was driven by an after-tax gain on sale upon merger of Lighthouse Partners into Lighthouse Investment Partners of $20.2 million and increased retail investment income, partially offset by lower net interest income and higher noninterest expenses.

Net interest income decreased $12.5 million, or 5%, as the continued shift in deposit mix to higher cost products compressed spreads. Average deposits increased $0.5 billion, or 5%, due to increases in higher-cost NOW account products and time deposit balances, partially offset by decreases in lower- cost demand and money market deposits which reduced deposit spreads 27 basis points and net interest income $10.0 million. Average loans decreased $0.1 billion, or 1%, resulting in a $3.2 million decline in net interest income. The decline in average loans was driven by lower consumer mortgages and commercial loans, partially offset by growth in personal credit lines.

Provision for loan losses increased $4.2 million primarily due to higher home equity and personal credit lines net charge-offs.

Total noninterest income decreased $53.3 million, or 6%, primarily driven by the $112.8 million gain on sale of the Bond Trustee business in the third quarter of 2006. Excluding this gain, noninterest income increased $59.5 million, due to a $32.3 million gain on sale upon merger of Lighthouse Partners, as well as strong growth in retail investment income which increased $37.4 million, or 23%, mainly due to increased annuity sales. Negatively impacting noninterest income was the loss of trust revenues from the Lighthouse Partners merger and sale of the Bond Trustee business.

Total noninterest expense increased $5.9 million, or 1%. Growth was primarily attributable to increases in staff and intangible amortization expenses, partially offset by a decrease in shared corporate expenses.

Corporate Other and Treasury preliminary data 3rd Quarter 3rd Quarter % (in millions) 2007 2006 Change Net income $127.9 $13.2 NM % Average securities available for sale 14,935.9 23,869.1 (37) "NM" - Not meaningful Three Months Ended September 30, 2007 vs. 2006

Corporate Other and Treasury's net income for the third quarter of 2007 was $127.9 million, an increase of $114.7 million compared to the third quarter of 2006. The increase was mainly driven by higher net interest income due to balance sheet management strategies executed in the first half of the year, an increase in noninterest income due to securities losses incurred in the third quarter of 2006, and net valuation gains recorded on securities and long-term corporate debt carried at fair value.

Net interest income increased $101.3 million mainly due to the execution of balance sheet management strategies which improved the yield on the securities portfolio and deleveraged the balance sheet reducing reliance on higher-cost wholesale funding. Total average assets decreased $9.0 billion, or 28%, mainly due to the reduction in the size of the investment portfolio. Total average deposits decreased $6.9 billion, or 25%, mainly due to a decrease in brokered and foreign deposits as the Company reduced its reliance on wholesale funding sources.

Provision for loan losses, which predominantly represents the difference between consolidated provision for loan losses and net charge-offs for the lines of business, increased $18.8 million. The increase is the result of the Company increasing the allowance for loan losses $43.3 million in the third quarter of 2007 compared to a $25.5 million increase in the third quarter of 2006.

Total noninterest income increased $140.8 million. This was mainly due to securities losses of $91.5 million incurred in the third quarter of 2006 and a $61.7 million increase in trading income due to net valuation gains recorded on securities and the Company's long-term corporate debt carried at fair value.

Total noninterest expense increased $13.5 million compared to the third quarter of 2006. This increase included $45 million in severance costs associated with the E2 initiative. This increase was partially offset by a $33.6 million decrease in the accrued liability associated with a capital instrument that the Company intends to call and replace in the fourth quarter. Additionally, reductions in total staff expense in support functions and consulting expenses demonstrates the continued impact the E2 Efficiency and Productivity Program had on controlling expense growth.

Nine Months Ended September 30, 2007 vs. 2006

Corporate Other and Treasury's net income for the nine months ended September 30, 2007 was $525.4 million, an increase of $369.4 million compared to the same period in 2006. The increase was mainly driven by an increase in net interest income due to balance sheet management strategies executed in the first half of this year, a $145.6 million after-tax gain on sale of The Coca- Cola Company stock, securities losses resulting from the securities portfolio repositioning in the third quarter of 2006, and a net valuation gain on securities and long-term corporate debt carried at fair value.

Net interest income increased $201.4 million mainly due to the aforementioned balance sheet management strategies which improved the yield on the securities portfolio and reduced the Company's reliance on wholesale funding sources. Total average assets decreased $6.3 billion, or 19%, primarily due to a reduction in the size of the securities portfolio. Total average deposits decreased $2.8 billion, or 11%, mainly due to a decrease in brokered and foreign deposits.

Provision for loan losses, which predominantly represents the difference between consolidated provision for loan losses and net charge-offs for the lines of business, decreased $4.4 million, or 7%.

Total noninterest income increased $412.7 million. This was mainly driven by the $234.8 million gain on sale of The Coca-Cola Company stock, securities losses resulting from the securities portfolio repositioning in the third quarter of 2006, and $114.7 million increase in trading income due to net valuation gains recorded on securities and the Company's long-term corporate debt carried at fair value.

Total noninterest expense decreased $1.2 million compared to the same period in 2006. Included in the nine months ended September 30, 2007, was $50.7 million in initial implementation costs associated with the E2 initiative, of which $45 million was severance. Positively impacting noninterest expense was a $33.6 million decrease in the accrued liability associated with a capital instrument that the Company intends to call and replace in the fourth quarter. Additionally, reductions in total staff expense in support functions and consulting expenses demonstrates the continued impact the E2 Efficiency and Productivity Program had on controlling expense growth.

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 quarterly report on Form 10-Q. Detailed financial tables and other information are available on our Web site at http://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 filed with the SEC today.

This news release contains certain non-US GAAP financial measures to describe the Company's performance. The reconciliation of those measures to the most directly comparable US 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 on October 18, 2007, at 8:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals are encouraged to call in beginning at 7:45 a.m. (Eastern Time) by dialing 1-888-972-7805 (Passcode: 3Q07). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 3Q07). A replay of the call will be available beginning October 18, 2007, and ending November 2, 2007, by dialing 1-800-391-9847 (domestic) or 1-402-220-3093 (international).

Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust Web site at http://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, "3rd Quarter Earnings Release." Beginning the afternoon of October 18, 2007, listeners may access an archived version of the webcast in the "Webcasts and Presentations" subsection found under "Investor Relations." This webcast will be archived and available for one year. 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 customers in selected markets nationally. Its primary businesses include deposit, credit, trust and investment services. Through various subsidiaries the Company provides credit cards, mortgage banking, insurance, brokerage, equipment leasing and capital markets services. SunTrust's Internet address is http://www.suntrust.com/.

Forward-Looking Statements

This news release may contain forward-looking statements. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These statements often include the words "may," "could," "will," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans," "initiatives," "targets," "potentially," "probably," "projects," "outlook" or similar expressions. Such statements are based upon the current beliefs and expectations of SunTrust's management, and on information currently available to management, and speak as of the date hereof. 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 SunTrust's results to differ materially from those described in the forward-looking statements can be found in the Company's 2006 Annual Report on Form 10-K, in the Quarterly Reports on Form 10-Q and in the Current Reports filed on Form 8-K with the Securities and Exchange Commission and available at the Securities and Exchange Commission's internet site (http://www.sec.gov/). Those factors include: changes in general business or economic conditions or the competitive banking environment; changes in market interest rates or capital markets; significant changes in legislation or regulatory requirements, or the fiscal and monetary policies of the federal government and its agencies; significant changes in securities markets or markets for residential or commercial real estate; increases in the cost of funds resulting from customers pursuing alternatives to bank deposits or shifting from demand deposits to higher-cost products; hurricanes and other natural disasters; competitive pressures among local, regional, national, and international banks, thrifts credit unions, and other financial institutions; litigation; the potential that the Company may acquire other institutions or may divest certain portions of its business; changes in accounting principles, policies, or guidelines; we carry certain financial instruments at fair value and are subject to market risk; we rely on other companies to provide key components of our business infrastructure; weakness in residential property values and mortgage loan markets could adversely affect us; and 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.

The forward-looking statements in this news release speak only as of this date, and SunTrust does not assume any obligation to update such statements or to update the reasons why actual results could differ from those contained in such statements.