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what we see...SUNTRUST BANKS, INC. 2005 ANNUAL REPORTSUN

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SUNTRUST BANKS, INC. 303 PEACHTREE STREET ATLANTA, GA 30308

SHAREHOLDER INFORMATION

SunTrust Banks, Inc.

CORPORATE HEADQUARTERS

SunTrust Banks, Inc. 303 Peachtree Street, NE Atlanta, GA 30308 404.588.7711

CORPORATE MAILING ADDRESS

SunTrust Banks, Inc. P.O. Box 4418 Center 645 Atlanta, GA 30302-4418

NOTICE OF ANNUAL MEETING

The Annual Meeting of Shareholders will be held on Tuesday, April 18, 2006 at 9:30 a.m. in Suite 105 on the first floor ofSunTrust Plaza Garden Offices, 303 Peachtree Center Avenue,Atlanta, Georgia.

STOCK TRADING

SunTrust Banks, Inc. common stock is traded on the New YorkStock Exchange under the symbol “STI.”

QUARTERLY COMMON STOCK PRICES AND DIVIDENDS

The quarterly high, low and close prices of SunTrust’s commonstock for each quarter of 2005 and 2004 and the dividends paidper share are shown below.

Quarter Market Price Dividends Ended High Low Close Paid

2005 December 31 $75.46 $65.32 $72.76 $0.55September 30 75.77 68.85 69.45 0.55June 30 75.00 69.60 72.24 0.55March 31 74.18 69.00 72.07 0.552004 December 31 $74.38 $67.03 $73.88 $0.50September 30 70.69 63.50 70.41 0.50June 30 71.10 61.27 64.99 0.50March 31 76.65 68.04 69.71 0.50

DEBT RATINGS

Ratings as of December 31, 2005.

Moody’s Standard Investors & Poor’s Fitch DBRS

Corporate Ratings Long Term Debt Ratings

Senior Debt Aa3 A+ A+ A(high)Subordinated Debt A1 A A A

Short Term Commercial Paper P-1 A-1 F1 R-1

(middle)

Bank Ratings Long Term Debt Ratings

Senior Debt Aa2 AA- A+ AA(low)Subordinated Debt Aa3 A+ A A(high)

Short Term P-1 A-1+ F1+ R-1(middle)

NUMBER OF SHAREHOLDERS

As of December 31, 2005, 39,992 Registered Shareholders (Shareholders of Record) Approximately 80,000 Street Name Shareholders Approximately 38,000 Employee Shareholders There could be overlapping shareholders among the three shareholder groups.

SHAREHOLDER SERVICES

Shareholders who wish to change the name, address or ownershipof stock, to report lost certificates, or to consolidate accountsshould contact the Transfer Agent:

Stock Transfer Department SunTrust Bank P.O. Box 4625Atlanta, GA 30302-4625800.568.3476

FINANCIAL INFORMATION

To obtain information on SunTrust, contact: Greg KetronDirector of Investor Relations404.827.6714

For information online, visit suntrust.com: • 2005 Annual Report

(including select information translated in Spanish)• Quarterly earnings releases • Press releases

WEB SITE ACCESS TO UNITED STATES SECURITIES AND

EXCHANGE COMMISSION FILINGS

All reports filed electronically by SunTrust Banks, Inc. with theUnited States Securities and Exchange Commission, including theannual report on Form 10-K, quarterly reports on Form 10-Q, and current event reports on Form 8-K, and amendments tothose reports filed or furnished pursuant to Section 13(a) or 15(d)of the Exchange Act are accessible as soon as reasonably practi-cable at no cost in the Investor Relations section of the corporate Web site at suntrust.com.

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CONTENTS: 10 SUNTRUST AT A GLANCE 13 SHAREHOLDER LETTER 19 MANAGEMENT’S DISCUSSION 63 FINANCIAL STATEMENTS

At SunTrust, we see beyond money. We strive to understand the

people behind each account number. We see individuals with

great hopes and big dreams for their personal and professional

lives. We see businesses, large and small, driving commerce and

creating prosperity for their employees, stakeholders, and clients.

In our view, all of our clients—from the trading desk to the

sales floor, the corner office to the living room—deserve more

than business as usual. They deserve our very best. At SunTrust,

we see beyond, and go beyond, what’s expected. We actively

pursue the best —for our clients, shareholders, employees,

and communities.

Seeing beyond moneysm…is more than what we say. It’s what we do.

See what we see.

2 SUNTRUST 2005 ANNUAL REPORT

we see beyond your financial plan

We see SunTrust clients as individuals: real people withimmediate needs and long-term goals. And we see whythey plan and invest for the future: a first home … arelaxed retirement … a bright ninth-grader with dreams ofcollege. Our clients and their families are as diverse and ascontinually evolving as the growing communities weserve. Yet every SunTrust success story has the same foun-dation: personal interest, in-depth understanding, andresponsive service. People like the ease of online bankingand ATMs—but they also value face-to-face contact. Sodoes SunTrust. We listen first, which allows us to learnwhat our clients need for today and want for tomorrow.

Listening also guides us in applying SunTrust resourcesand expertise to help our clients achieve their goals. We cre-ate customized solutions that are efficient and effective —and convenient. In 2005, SunTrust opened new branchesand mortgage offices, improved online banking capabili-ties, and updated ATMs. We improved accessibility byextending branch hours. We enhanced our call center capa-bilities for consumer and small business clients. In part-nership with retailers like Wal-Mart, Kroger, Publix, andSafeway, we provided added convenience for clients intheir favorite places to shop. SunTrust is working to be ourclients’ bank for life.

to the reasons why you plan.


we see beyond the balance sheet

Looking across the business landscape today, we seeSunTrust clients at the center: as vital businesses withdynamic needs and plans for growth. As one of the largestbanks in the United States — with a footprint that includeshigh-growth, business-friendly states —SunTrust has thecapital and expertise to support and advance the goals ofour clients. SunTrust is really about relationships. We offerthe best of both worlds to our business and institutionalclients: that means “big bank” capabilities combined withlocal responsiveness, knowledge, and service. We focus notonly on meeting today’s needs, but seeing tomorrow’s

possibilities. And what it will take to make them a reality.We take a long-term view, getting to know our clients,their industry, and what drives their business. Then, weapply the right SunTrust resources to deliver solutions thatcreate value for their company and for them as individuals.From capital raising and cash management to risk man-agement, advisory services, and investment strategies, ourclients see the difference in the way we work — and reapthe benefits of our approach. We’re in the solution business. And we’re committed to building long-term relationships.

to what your growing business needs.


we see beyond office walls

Take a peek inside SunTrust and you will see thousands of reasons why our clients prefer working with us: ouremployees. The employees of SunTrust are the front-linefulfillment of our promise, “Seeing beyond money.” Theirmission is to discover and deliver what matters most in ourclients’ lives, dreams, and financial plans. Supported by thephilosophy of local decision-making, the close relationshipsour employees develop with clients are critical to their success. And to ours. We don’t think about our business only in terms of organizational units, or products, or services.

We take a holistic, team approach toward meeting eachclient’s needs — giving them access to the multiple areas ofexpertise that reside within SunTrust. In 2005, independentagencies that evaluate and measure performance and servicerecognized the efforts of SunTrust employees. Both as aservice provider and employer, SunTrust was viewed as anexceptional place to work. And that helps us all. The valueswe live by at SunTrust benefit our clients, our employees,and our company. SunTrust employees see to it that wecontinue to go the extra mile. Every day.

to help wherever and whenever you need us.


we see beyond charitable contributions

When we look out into our communities, we see friendsand neighbors, good works and great needs : opportunitiesto develop a better future. SunTrust has a long-standingrecord of community involvement. This not only reflects ourcorporate values —it suggests an enlightened self-interest. A fundamental belief of our company is that as we help buildour community, we build the bank. It’s a promise that weactively work to fulfill at every level of the organization.Delivering on this commitment requires leadership and theongoing support of both human and financial resources.During 2005, visible disasters such as Hurricanes Katrinaand Wilma brought out the best in the people of SunTrust.Our employees answered the call, donating money andtime to help communities get back on their feet. Beyond

meeting those immediate crises, SunTrust continued toadvance important outreach initiatives all over our foot-print. Whether rebuilding after a storm or helping to nur-ture an emerging community, SunTrust is planting seedsfor growth in the communities where we live and work.

When we look at our clients, we see more than revenuepotential. We see energy, aspirations , creativity , and ideasthat keep our economy working and growing. When welook at our company, we see more than financial assets.We see experience … talent … knowledge … people whohave a sincere desire to add value to our clients’ livesthrough financial services. At SunTrust, we’re doing ourbest to make this vision real. We are eager to partner withour clients as we endeavor to see beyond.

to ongoing investments in brighter futures.


SunTrust at a glance

SunTrust Banks, Inc., with year-end 2005 assets of $179.7billion, is one of the nation’s largest and strongest financialholding companies.

Through its flagship subsidiary, SunTrust Bank, theCompany provides deposit, credit, and trust and investmentservices. Additional subsidiaries provide mortgage banking,insurance, asset management, equipment leasing, brokerageand capital market services. SunTrust’s client base encompassesa broad range of individuals and families, high-net-worthclients, businesses, and institutions.

SunTrust enjoys strong market positions in some of the highest-growth markets in the United States and also servesclients in selected markets nationally. The Company’s prioritiesinclude consistency in financial performance, quality in customer

service, and a strong commitment to all segments of the communities it serves.

SunTrust’s 1,694 retail and specialized service branches and2,782 ATMs are located primarily in Florida, Georgia, Maryland,North Carolina, South Carolina, Tennessee, Virginia, and theDistrict of Columbia. In addition, SunTrust provides clients witha selection of technology-based banking channels includingInternet, PC and Telephone Banking. Our internet address iswww.suntrust.com.

As of December 31, 2005, SunTrust had total assets underadvisement of $242.5 billion. This includes $209.1 billion intrust assets as well as $33.4 billion in retail brokerage assets.SunTrust’s mortgage servicing portfolio grew to $105.6 billionat year end.

SunTrust’s five key lines of business are:

• Retail Banking, which provides loan, deposit and other servicesto consumers and business clients with up to $10 million in sales.

• Commercial Banking, which offers enterprises a full array offinancial products and services including commercial lend-ing, treasury management, financial risk management, andcorporate bankcard.

• Corporate and Investment Banking, which focuses oncompanies with sales in excess of $250 million, is com-prised of the following businesses: corporate banking,investment banking, capital markets, commercial leasing,and merchant banking.

• Mortgage Banking, which offers residential mortgage productsnationally through its retail, broker, and correspondentchannels.

• Wealth and Investment Management, which provides a fullarray of wealth management products and professionalservices to both individual and institutional clients.

Our mission is to help people and institutions prosper by providing financial services that meet the needs, exceed the

expectations, and enhance the lives of our colleagues, clients,communities, and ultimately our shareholders.

Our Businesses

Our Company

Our Mission

Financial Highlights Year Ended December 31

(Dollars in millions, except per share data) 2005 2004 2003For the YearNet income $1,987.2 $1,572.9 $1,332.3Total revenue1 7,809.5 6,348.0 5,668.3Common dividends paid 795.0 603.3 505.4Per Common ShareNet income – diluted $5.47 $ 5.19 $4.73Dividends declared 2.20 2.00 1.80Common stock closing price 72.76 73.88 71.50Book value 46.65 44.30 34.52Financial RatiosReturn on average total assets 1.18% 1.18% 1.09%Return on average assets less net unrealized securities gains2 1.17 1.19 1.01Return on average total shareholders’ equity 12.02 13.71 14.67Return on average realized shareholders’ equity2 12.70 15.65 15.98Net interest margin3 3.16 3.15 3.08Efficiency ratio3 60.06 61.39 59.99Tier 1 capital ratio 7.01 7.16 7.85Total capital ratio 10.57 10.36 11.75Selected Average BalancesTotal assets $168,088.8 $133,754.3 $122,325.4Earning assets 147,435.3 118,905.6 109,257.4Loans 108,742.0 86,214.5 76,137.9Deposits 110,406.5 87,132.9 80,039.0Total shareholders’ equity 16,526.3 11,469.5 9,083.0Common shares – diluted (thousands) 363,454 303,309 281,434As of December 31Total assets $179,712.8 $158,869.8 $125,250.5Earning assets 157,661.5 138,726.6 112,376.9Loans 114,554.9 101,426.2 80,732.3Allowance for loan and lease losses 1,028.1 1,050.0 941.9Deposits 122,053.2 103,361.3 81,189.5Total shareholders’ equity 16,887.4 15,986.9 9,731.2Common shares outstanding (thousands) 361,984 360,840 281,923Market value of investment in common stock

of The Coca-Cola Company (48,266,496 shares) $1,946 $2,004 $2,450

1 Total revenue is comprised of fully taxable-equivalent (“FTE”) net interest income and noninterest income.2 In this report, SunTrust presents a return on average assets less net unrealized securities gains and return on average realized shareholders’ equity which exclude realized and unrealized

securities gains/losses and dividends from The Coca-Cola Company. The foregoing numbers primarily reflect adjustments to remove the effects of the ownership by the Company of48.3 million shares of The Coca-Cola Company. The Company uses this information internally to gauge its actual performance in the industry. The Company believes that the return on average assets less the net unrealized gains on the securities portfolio is more indicative of the Company’s return on assets because it more accurately reflects the return on the assetsthat are related to the Company’s core businesses. The Company also believes that the return on average realized shareholders’ equity is more indicative of the Company’s return onequity because the excluded equity relates primarily to a long term holding of a specific security. The Company provides reconcilements on pages 53 and 54 for all non-GAAP measures.

3 The net interest margin and efficiency ratios are presented on a FTE basis. The FTE basis adjusts for the tax-favored status of income from certain loans and investments. The Companybelieves this measure to be the preferred industry measurement of net interest income and provides relative comparison between taxable and non-taxable amounts.

how we’ve performed

SUNTRUST 2005 ANNUAL REPORT 11

L. Phillip HumannChairman and Chief Executive Officer

James M. Wells IIIPresident and Chief Operating Officer

In 2005 our hard work paid off. Net income was $2.0 billion, or$5.47 per share, up from $1.6 billion, or $5.19 per share, in 2004.Once again, the men and women of SunTrust did a great job of serv-ing the needs of our clients while running our business efficiently.Once again, they translated the earnings potential of our Companyinto strong year-over-year performance.

During 2005, we also built our underlying capacity to continue todeliver strong results in a highly competitive industry. We did this by“Seeing beyond money,” in a manner of speaking. We invested in ourfranchise. We enhanced our product line. We developed our talent. We sharpened our focus on expense control. And we placed additionalemphasis on identifying — and managing — the risks inherent in our business. This is a priority for all financial services providers as we operatein an uncertain economy and a demanding regulatory environment.

2005 was a year generally characterized by the continuation ofpositive performance trends despite some challenging market conditions.

We saw steady growth in our biggest earnings component, netinterest income, which was driven almost entirely by solid loan anddeposit growth. At the same time, we generated strong fee-basedincome that in turn contributed to a handsome gain in total revenues.With revenues growing at a faster rate than expenses, we achieved“positive operating leverage” for the year, a good indication of ourability to keep expenses in line. Finally, credit trends were positive in2005; indeed, they were among the strongest we’ve seen in sometime and set a positive tone in this critical area as 2006 began.

To place 2005 progress in context, shareholders may recall thatwe engineered a significant and multi-dimensional transformationat SunTrust in recent years. As we navigated through a succession ofindustry challenges and market crosscurrents, we built our businesses,expanded our franchise, refined our operating model, modernized

our infrastructure, and placed an increased emphasis on efficiency.Most recently, and very visibly, we developed a world-class sales and service organization committed to retaining clients and buildinglong-term relationships.

What it all adds up to is that we have established a solid foundationfor SunTrust’s future success. Of course our performance to somedegree will always reflect industry trends, national and regional economic conditions, the ups and downs of the business cycle andvarious market dynamics. That being said, we believe we are as wellpositioned as ever to leverage the growth opportunities offered byour demographically attractive geographic footprint — perhaps the best footprint in U.S. banking —and demonstrated capabilities in our key lines of business: Retail Banking, Commercial Banking,Corporate and Investment Banking, Mortgage Banking, and Wealthand Investment Management.

Looking ahead, our goal is to continue to deliver business-drivenearnings growth that compares favorably with that of our peers over a multi-year timeframe. As we see it, this longer-term financial orientation, balanced with our focus on near-term earnings progress,positively differentiates SunTrust as an investment opportunity.

We are pleased to report that in February 2006 the Board ofDirectors approved an increase of 11 percent in the annual dividendon SunTrust common stock, another indication of how strong, steadyperformance pays off.

The Management’s Discussion and Analysis section of this reportprovides a comprehensive review of our 2005 results. For purposesof this letter, we invite your attention to some highlights of the year—financial and non-financial—that not only illustrate SunTrust’scurrent performance focus, but also help explain why we are opti-mistic about our prospects as we look to 2006 and beyond.


to our shareholders

In the preceding pages of this annual report we have sought to convey how we’re bringing

to life SunTrust’s distinctive client promise—“Seeing beyond money.” From a shareholder

perspective, the idea of “Seeing beyond money” might at first blush seem incongruous.

After all, the point of investing in SunTrust is very much about money: at the end of the

day, shareholders are looking to us to deliver steady, sustainable earnings growth. All of

us at SunTrust are very conscious of that expectation. And we work hard to meet it.


Business HighlightsWe further institutionalized our Company-wide sales culture.Today, the key components of a world-class sales organization arevery much in place at SunTrust. This includes frequent sales meet-ings in all geographic banking regions and all business lines with spe-cific sales and referral goals, tracking and measurement mecha-nisms, and most importantly, incentives that align employee, client,and shareholder interests. Our sales people increasingly take a “360degree view” of each client’s needs and look across business lines todeliver the full range of SunTrust products and services. A visibleresult of this focus is significantly higher levels of referrals and cross-sales. One example of this: an emphasis on cross-selling home equity,deposit and other consumer products to mortgage clients resulted inover 100,000 of these products being sold to those clients, a substantial increase over 2004.

We are seeing the benefits of our merger with the formerNational Commerce Financial Corporation (“NCF”) in significantnew business opportunities as well as operating efficiencies thatexceeded our initial projections by almost a third. The merger waslegally completed in late 2004 with the highly visible conversion of customer accounts and launch of the SunTrust brand into formerNCF markets taking place in April 2005. By any standard, the con-version was smooth and successful, providing the latest example ofSunTrust’s skill at merger integration.

To increase our market reach, we announced plans to expandinto the demographically attractive Charleston, South Carolina area,where over the next three years we’ll open 16 traditional and in-store branches to complement our presence in other parts of thestate.

In early 2006, we signed a new strategic banking agreement withWal-Mart that provides for enhancement of our partnership over thenext three years. We also announced plans to acquire 11 in-storebranches in Florida Wal-Mart Supercenter stores in a move that bolsters the highly successful partnership we have with Wal-Martthroughout our footprint.

We accelerated implementation of performance initiativeswithin our five key lines of business. Some examples include:

• In Retail Banking, in addition to enhancing our branch presence,we upgraded our online banking capabilities for small businessclients, streamlined our deposit products, and improved turn-around times for home equity loans through a combination oftechnology and process improvements while lowering the costper closed loan.

• In Commercial Banking, expanded use of sales managementtechnology plus an increased emphasis on cross-sales resulted insolid growth in the Commercial and Industrial, and Real Estateloan portfolios and points to the success of our relationship management approach. Targeted investments in TreasuryManagement technology and commercial card products, coupledwith a sales strategy focused on a wider range of payment solu-tions, resulted in increased sales volumes while also enhancing ourcompetitive position in this high-potential core business segment.

• In Corporate and Investment Banking, we stepped-up cross-sell-ing of capital markets products to the Corporate, Commercial,and Wealth and Investment Management client bases andenhanced our capital markets capabilities by investing in bothnew and existing products.

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05$0.00

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5.47

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4.13

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EPS per Generally Accepted Accounting Principles (GAAP) Reduction in EPS due to merger expense

BOTTOM LINE MOMENTUMThe rate of growth in SunTrust’s earnings per share (“EPS”)1 in recent years compares favorably with the long-term historical trend in the EPS compound annual growth rate (“CAGR”)2. This is a good indication of solid momentum in bottom line earnings over time.

1EPS as originally reported and adjusted for stock splits. 2CAGR based on GAAP EPS excluding merger expense.

• In Wealth and Investment Management, we introduced anew client management operating model in Private WealthManagement and consolidated our brokerage and investmentunits under one broker/dealer, SunTrust Investment Services, toimprove efficiency and build on our demonstrated competencies.In the same vein, we streamlined administrative, recordkeepingand investment capabilities for institutional customers. AssetManagement Advisors, SunTrust’s family office, added a locationin Tampa and, late in the year, announced several key executiveappointments to help position SunTrust for national leadershipin this high-potential business.

• In Mortgage Banking, underscoring our national reach in thisbusiness line, we opened 51 new mortgage offices and increasedthe size of the sales force by almost 24 percent, moves that willallow us to grow market share and purchase-loan originationsfaster than our peers. We are proud that in 2005, the well-respected J.D. Power and Associates ranked SunTrust Mortgage“Highest in Customer Satisfaction among Mortgage ServicingCompanies” and number two in overall customer satisfaction inthe 2005 primary mortgage origination study.

We intensified our focus on talent management, a structuredprocess that takes traditional succession planning to a higher level by explicitly aligning talent development with business strategies.Specifically, the capabilities of more than 5,600 key managers acrossthe Company have been assessed in the context of defined leadershipcompetencies, future potential and performance. The result is notonly “bench strength” for top positions throughout the organizationtoday, but meaningful development plans for an upcoming leader-ship generation. More broadly, our disciplined approach to talentmanagement is reflected in an unusually high degree of success inhiring, retaining, and rewarding strong candidates in all areas of ourorganization — including the critical and evolving risk and compliance-related fields.

Financial HighlightsA quick look at some key components of our 2005 earnings com-pared with prior periods suggests the business line momentum thatcontributed to the strong bottom line earnings growth we reportedlast year. Since 2005 financial results reflect our acquisition of theformer NCF, we have estimated historical results in examples thatfollow as if NCF and SunTrust results had been combined in the ear-lier periods as well. This permits meaningful comparisons while alsoproviding a more accurate picture of our underlying earnings power.

• Loans – Loan growth was robust in most segments of theportfolio — up 13% from 2004—and particularly strong in homeequity loans and mortgages. While the mortgage industry waschallenged by a drop-off in refinancing activity as a result of

rising interest rates, SunTrust grew mortgages over the prior year end and achieved record production volume. We believe a significant portion of this growth was achieved by taking marketshare from our competitors, reflecting investments in new businessgeneration capacity. We also grew commercial and constructionlending. SunTrust ranks first or second in primary banking relationships among “middle market” companies — those with$5 million to $250 million in revenue — in 60 percent of our geographic markets, which provides a platform for continuedgrowth in this key segment. Furthermore, larger corporate lend-ing rebounded in 2005.

• Deposits – The benefit of our emphasis on sales and retention isperhaps most evident in deposit growth, where we place a priorityon attracting and expanding relationship-based accounts thatcan lead to the sales of additional products and services. Overallaverage commercial and consumer deposit growth was up ahealthy seven percent over 2004. As interest rates rose duringthe year, customer preference predictably shifted to higher-paying deposit accounts such as money market and CD products.We moved to capitalize on this trend by launching several high-ly successful targeted sales campaigns throughout 2005 that significantly boosted CD and money market accounts. We alsobenefit from non-traditional deposit sources: for example, newdeposit accounts booked by our SunTrust Online call centerswere up 61 percent in 2005. Initiatives such as our in-store relationships and our continued focus on sales and retention willset the tone for deposit generation efforts in 2006.


13%

7%

Total Average Loan Growth in 2005

Total Average Consumer & Commercial Deposit Growth in 2005

SALES FOCUS PAYS OFFGrowth in average loans and consumer and commercial depositsreflects the positive impact of SunTrust’s focus on sales and retention.


• Revenue Growth – As noted earlier, strong loan and depositgrowth contributed to a healthy gain in net interest income, upseven percent over 2004. The net interest margin for 2005 wasrelatively stable — no small achievement in a challengingrate environment.

Our sales efforts also produced good noninterest incomegrowth - up six percent over 2004. Once again, mortgage pro-duction was a key factor, along with ATM/debit cards and trustand investment product-related fee income. It all added up tototal core revenue of $7.8 billion, up six percent.

• Expense Discipline – Our strong revenue growth, balanced withsuccess in holding core expense growth to a reasonable four percent over 2004, resulted in positive operating leverage in2005, which in turn led to an improvement in our efficiency ratioof 146 basis points, or 2.4 percent, over last year. As pleased aswe are with that achievement — and we want to be more efficient in the future — we would note that there is a limit to howlow this ratio can go at SunTrust. That’s because our business mixis different from that of our peers in that it emphasizes some higher-efficiency ratio businesses like Wealth and InvestmentManagement and Mortgage. We believe operating leverage is atrue barometer of how we are performing in terms of expense dis-cipline, and our progress in that regard bodes well for the future.

Finally, any discussion of earnings drivers would be incompletewithout reference to credit quality, traditionally an area in whichSunTrust is recognized as an industry leader. Although bank creditquality tends to mirror the economy, SunTrust is typically “best inclass” in virtually all key measures of credit quality regardless of thepoint in the economic cycle. That was surely the case in 2005 as our

loan mix shifted toward lower risk categories such as residential realestate and home equity loans. Net charge-offs declined for the thirdconsecutive year and, although there can always be surprises in thisarea, credit quality measures for both consumer and commercialloans looked good as 2006 began.

Seeing Beyond Money In our view what it all boils down to, at the mid-way point of a turbulent decade for our industry, is this: SunTrust enjoys a particularlyenviable position among large U.S. banking organizations.

We are concentrated in the most attractive banking markets in the United States. We are in the right businesses, with provengrowth strategies. We have the financial resources, product scopeand technology platform we need to compete effectively. And, notincidentally, we have some of the most talented, most motivatedpeople in the business.

We also, as demonstrated again in 2005, can point to a trackrecord of performance that shows how it all comes together.

We are committed to building on our success and deliveringresults that further validate the merits of “Seeing beyond money” aswe serve the interests of our clients, our communities, our employeesand, of course, our shareholders.

Thank you for your interest in SunTrust.

L. Phillip Humann Chairman and Chief Executive Officer

James M. Wells IIIPresident and Chief Operating Officer

6% Core Revenue

Growth1

4% Core Expense

Growth2

IMPROVING EFFICIENCYA concerted effort to improve operating leverage shows results as2005 revenues grew at a faster rate than expenses.

1 SunTrust presents total revenue excluding realized securities gains/lossesand the net gain on sale of factoring assets for 2005.

2 Core expense growth excludes merger related expenses, amortization ofintangibles and impairment charge on Affordable Housing Properties.

4Q03

0.00%

0.30%

0.60%

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05

SunTrust Peer Average1

1 Peers include AmSouth, Bank of America, BB&T, Comerica, Fifth Third,First Horizon, Keycorp, M&T Bank, Mellon, National City, Northern Trust,PNC, Regions, US Bancorp, Wachovia and Wells Fargo. Source: SNLFinancial

STRONG CREDIT QUALITYNet charge-offs as a percentage of loans at SunTrust continue tocompare favorably to peers

2005financialreport

18 selectedfinancialdata

19 management’sdiscussionandanalysis

66 consolidatedstatementsofincome

67 consolidatedbalancesheets

68 consolidatedstatementsofshareholders’equity

69 consolidatedstatementsofcashflow

70 notestoconsolidatedfinancialstatements

112 boardofdirectors

ibc generalinformation

suntrust2005annualreport18

selectedfinancialdata

twelveMonthsendedDecember31(dollarsinmillions,exceptpershareandotherdata) 2005 2004 2003 2002 2001 2000Summaryofoperationsinterestanddividendincome $7,731.3 $5,218.4 $4,768.8 $5,135.2 $6,279.6 $6,845.4interestexpense 3,152.3 1,533.2 1,448.5 1,891.5 3,027.0 3,736.9netinterestincome 4,579.0 3,685.2 3,320.3 3,243.7 3,252.6 3,108.5provisionforloanlosses 176.9 135.6 313.6 469.8 275.2 134.0netinterestincomeafterprovisionforloanlosses 4,402.1 3,549.6 3,006.7 2,773.9 2,977.4 2,974.5noninterestincome 3,155.0 2,604.4 2,303.0 2,268.8 2,051.9 1,773.6noninterestexpense 4,690.7 3,897.0 3,400.6 3,219.4 2,999.9 2,828.5incomebeforeprovisionforincometaxes 2,866.4 2,257.0 1,909.1 1,823.3 2,029.4 1,919.6provisionforincometaxes 879.2 684.1 576.8 491.5 653.9 625.5netincome $1,987.2 $1,572.9 $1,332.3 $1,331.8 $1,375.5 $1,294.1netinterestincome-fte $4,654.5 $3,743.6 $3,365.3 $3,283.2 $3,293.4 $3,148.4totalrevenue 7,809.5 6,348.0 5,668.3 5,552.0 5,345.3 4,922.0percommonSharediluted $5.47 $5.19 $4.73 $4.66 $4.72 $4.30basic 5.53 5.25 4.79 4.71 4.78 4.35dividendsdeclared 2.20 2.00 1.80 1.72 1.60 1.48marketprice: high 75.77 76.65 71.73 70.20 72.35 68.06 low 65.32 61.27 51.44 51.48 57.29 41.63 close 72.76 73.88 71.50 56.92 62.70 63.00SelectedaverageBalancestotalassets $168,088.8 $133,754.3 $122,325.4 $108,516.1 $102,884.2 $98,397.8earningassets 147,435.3 118,905.6 109,257.4 96,370.8 92,034.1 88,609.0loans 108,742.0 86,214.5 76,137.9 71,270.4 70,023.0 70,044.3deposits 110,406.5 87,132.9 80,039.0 71,157.2 64,568.7 66,691.9totalshareholders’equity 16,526.3 11,469.5 9,083.0 8,725.7 8,073.8 7,501.9asofDecember31totalassets $179,712.8 $158,869.8 $125,250.5 $117,322.5 $104,740.6 $103,660.4earningassets 157,661.5 138,726.6 112,376.9 104,759.6 93,327.5 92,147.8loans 114,554.9 101,426.2 80,732.3 73,167.9 68,959.2 72,239.8allowanceforloanandleaselosses 1,028.1 1,050.0 941.9 930.1 867.1 874.5deposits 122,053.2 103,361.3 81,189.5 79,706.6 67,536.4 69,533.3long-termdebt 20,779.2 22,127.2 15,313.9 11,879.8 12,660.6 8,945.4totalshareholders’equity 16,887.4 15,986.9 9,731.2 8,769.5 8,359.6 8,239.2ratiosandotherDatareturnonaveragetotalassets 1.18% 1.18% 1.09% 1.23% 1.34% 1.32%returnonaveragetotalassetslessnet unrealizedsecuritiesgains 1.17 1.19 1.01 1.10 1.24 1.31returnonaveragetotalshareholders’equity 12.02 13.71 14.67 15.26 17.04 17.25returnonaveragerealizedshareholders’equity 12.70 15.65 15.98 16.67 19.68 20.90netinterestmargin 3.16 3.15 3.08 3.41 3.58 3.55efficiencyratio 60.06 61.39 59.99 57.99 56.12 57.47totalaverageshareholders’equitytototal averageassets 9.83 8.58 7.43 8.04 7.85 7.62allowancetoyearendloans 0.90 1.04 1.17 1.27 1.26 1.21nonperformingassetstototalloansplus oreoandotherrepossessedassets 0.29 0.40 0.47 0.74 0.87 0.61commondividendpayoutratio 40.0 38.4 37.9 36.8 33.7 34.3full-servicebankingoffices 1,657 1,676 1,183 1,184 1,128 1,129atms 2,782 2,804 2,225 2,286 1,944 1,991full-timeequivalentemployees 33,406 33,156 27,578 27,622 28,391 28,268averagecommonshares–diluted(thousands) 363,454 303,309 281,434 286,052 291,584 300,956averagecommonshares–basic(thousands) 359,066 299,375 278,295 282,495 287,702 297,834

suntrust2005annualreport 19

thisnarrativewillassistreadersintheiranalysisoftheaccompanyingconsolidatedfinancialstatementsandsupplementalfinancialinfor-mation.itshouldbereadinconjunctionwiththeconsolidatedfinancialstatementsandnotesonpages66through105.

effectiveoctober1,2004,nationalcommercefinancialcorporation(“ncf”)mergedwithsuntrustbanks,inc.(“suntrust”or“company”).theresultsofoperationsforncfwereincludedwithsuntrust’sresultsbegin-ningoctober1,2004.priorperiodsdonotreflecttheimpactofthemerger.

subsequenttothereleaseofthecompany’searningsonJanuary18,2006,thecompanyidentifiedimmaterialaccountingerrorsrelatedtocer-tainderivativetransactionsaccountedforunderhedgeaccounting.thecumulativeimpactofcorrectingtheseerrorswasrecordedasofdecember31,2005.pleaseseefourthquarter2005resultsforadditionaldiscussion.

inmanagement’sdiscussionandanalysis,netinterestincome,netinterestmarginandtheefficiencyratioarepresentedonaftebasisandtheratiosarepresentedonanannualizedbasis.theftebasisadjustsforthetax-favoredstatusofincomefromcertainloansandinvestments.thecompanybelievesthismeasuretobethepreferredindustrymeasurementofnetinterestincomeandprovidesrelevantcomparisonbetweentaxableandnon-taxableamounts.thecompanyalsopresentsdilutedearningspershareexcludingmergerexpenseandanefficiencyratioexcludingmergerexpensethatexcludemergerexpensein2005and2004relatedtothencfacquisition.thecompanybelievestheexclusionofthemergerexpense,whichrepresentsincrementalcoststointegratencf’soperations,ismorereflectiveofnormalizedoperations.additionally,thecompanypresentsareturnonaveragerealizedshareholders’equity,aswellasareturnonaver-agetotalshareholders’equity(“roe”).thecompanyalsopresentsareturnonaverageassetslessnetunrealizedsecuritiesgainsandareturnonaver-agetotalassets(“roa”).duetoitsownershipofapproximately48millionsharesofcommonstockofthecoca-colacompany,resultinginanunreal-izednetgainof$1.9billionasofdecember31,2005,thecompanybelievesroaandroeexcludingtheseimpactsfromthecompany’ssecuritiesport-folioisthemorecomparativeperformancemeasurewhenbeingevaluatedagainstothercompanies.thecompanyprovidesreconcilementsonpages53and54forallnongenerallyacceptedaccountingprinciplesintheunitedstates(“usgaap”)measures.certainreclassificationshavebeenmadetopriorperiodfinancialstatementsandrelatedinformationtoconformthemtothe2005presentation.

introDuctionsuntrust,headquarteredinatlanta,georgia,operatesprimarilywithinflorida,georgia,maryland,northcarolina,southcarolina,tennessee,Virginia,andthedistrictofcolumbia.withinthegeographicfootprint,suntruststrategicallyoperatesunderfivefunctionalbusinesssegments.thesebusinesssegmentsare:retail,commercial,corporateandinvestmentbanking(“cib”),wealthandinvestmentmanagement,andmortgage.

oneofthetopcompanyprioritiesfor2005wasthecontinuedsuccess-fulintegrationofncf,whichwasacquiredonoctober1,2004.theintegra-tionprocessfocusedonrevenuegeneration,clientandemployeeretention,andtheachievementofthefinancialgoalsestablishedfortheacquisition.oneofthemainhurdlesoftheintegrationprocesswascompletedinapril2005whenallmajorncfsystemswereconvertedtosuntrustsystems.theresultsoftheconversionwereexceptionalandfulfilledthecompany’sfocusofcontinuingtomaketheintegrationseamlesstoclients.atthetimeoftheacquisition,thecompanyanticipatedapproximately$125millionofpretax

expensesavingstoberecognizedbytheendof2006withapproximately$76millionexpectedtoberealizedin2005.theseestimateswereexceededastotalpretaxexpensesavingsfor2005wereapproximately$98million,exceedingtheoriginalestimateof$76millionbyover28%.thesesavingswereachievedthroughtheconsolidationandeliminationofduplicatefunc-tions,procurementsavingsandbranchclosings.thecompanyhasalsoreal-izedconsiderablerevenuebenefitsthroughsynchronizedpricingstrategiesandtheintroductionofthefullarrayofsuntrustproductstoncfclients.

forthesecondyearinarow,thecompanyachievedrecordearnings.netincometotaled$2.0billion,or$5.47perdilutedsharefor2005,up26.3%and5.4%,respectively,from2004.thefollowingaresomeofthekeydriversofthecompany’s2005financialperformance:• totalrevenueincreased$1.5billion,or23.0%,comparedto2004.the

acquisitionofncf,successfulimplementationofsalesinitiativesandintensesalesfocusdroveincreasesinbothnetinterestincomeandnon-interestincome.

• netinterestincomeincreased$910.9million,or24.3%,andthenetinterestmarginimprovedonebasispointto3.16%for2005.thiswasdrivenbystrongloananddepositgrowthaswellastheacquisitionofncf.loangrowthwasdrivenbyhigherhomeequityline,residentialrealestate,constructionandcommercialvolumes,anddepositsweredrivenbysolidgrowthamongmostcategories.

• theaverageearningassetyieldincreased86basispointscomparedto2004whiletheaverageinterestbearingliabilitycostincreased101basispoints.thisreductionininterestratespreadwasprimarilyduetoincreasesinshorttermfundingratesandtheflatteningyieldcurvethroughout2005.

• noninterestincomeimproved$550.6million,or21.1%,comparedto2004.theincreasewasdrivenbytheacquisitionofncf,highertransactionvolumes,recordmortgageproduction,growthintrustandinvestmentmanagementincome,anda$23.4millionnetgainonthesaleofreceivablescapitalmanagement(“rcm”).

• noninterestexpenseincreased$793.7million,or20.4%,comparedto2004.theincreasewasdrivenbytheacquisitionofncfincludinga$70.2millionincreaseinmergerexpensetointegratetheoperationsofncf,whichconsistedprimarilyofconsultingfeesforsystemsandotherinte-grationinitiatives,employee-relatedcharges,andmarketingexpendi-tures.additionallyimpactingnoninterestexpensewerehigherpersonnelcostsduetoincreasedheadcount,meritincreases,andincreasedincen-tivecostsassociatedwithhigherbusinessvolumes.

• creditqualitycontinuedtoimprovethroughout2005.nonperformingassetsdeclined$76.5million,or18.6%,comparedtodecember31,2004andnetcharge-offsasapercentageofaverageloansdeclinedfivebasispointscomparedto2004,to0.18%.

thefollowinganalysiswillprovidefurtherdetailandinsightonsuntrust’s2005performance.

BuSineSSSegMentSthecompanyhasfiveprimaryfunctionallinesofbusiness(“lobs”):retail,commercial,corporateandinvestmentbanking,wealthandinvestmentmanagement,andmortgage.inthissection,thecompanydiscussestheperformanceandfinancialresultsofitsbusinesssegments.formorefinan-cialdetailsonbusinesssegmentdisclosures,pleaseseenote22,businesssegmentreporting,totheconsolidatedfinancialstatements.

management’sdiscussionandanalysis


retailtheretaillineofbusinessincludesloans,deposits,andotherfee-basedser-vicesforconsumersandbusinessclientswithlessthan$5millioninsales(upto$10millioninsalesinlargermetropolitanmarkets).retailservesclientsthroughanextensivenetworkoftraditionalandin-storebranches,atms,theinternet(www.suntrust.com)andthetelephone(1-800-suntrust).inadditiontoservingtheretailmarket,theretaillineofbusinessservesasanentrypointforotherlinesofbusiness.whenclientneedschangeandexpand,retailrefersclientstosuntrust’swealthandinvestmentmanagement,mortgageandcommerciallinesofbusiness.

coMMercialthecommerciallineofbusinessprovidesenterpriseswithafullarrayoffinancialproductsandservicesincludingcommerciallending,treasurymanagement,financialriskmanagement,andcorporatebankcard.theprimaryclientsegmentsservedbythislineofbusinessinclude“diversifiedcommercial”($5millionto$50millioninannualrevenue),“middlemarket”($50millionto$250millioninannualrevenue),“commercialrealestate”(entitiesthatspecializeincommercialrealestateactivities),and“government/not-for-profit”entities.alsoincludedinthisgrouparespe-cialtygroupsthatoperatebothinsideandoutsideofthesuntrustfootprint,suchaspremiumassignmentcorporation,whichprovidesinsurancepre-miumfinancing,andaffordablehousinggroup(“ahg”),whichmanagescommunitydevelopmentprojectsthatgeneratetaxcredits.

corporateanDinveStMentBankingcibiscomprisedofthefollowingbusinesses:corporatebanking,invest-mentbanking,capitalmarkets,commercialleasing,andmerchantbanking.thecorporatebankingstrategyisfocusedoncompanieswithsalesinexcessof$250millionandisorganizedalongindustryspecialtyandgeographiclines.corporatebankingprovidesafullarrayoftraditionalbankservices,capitalmarketscapabilities,andinvestmentbanking.theinvestmentbank-ingstrategyisfocusedonsmall-capandmid-capgrowthcompaniesandisorganizedalongindustryspecialtylines,raisingpublicandprivateequity,andprovidingmergerandacquisitionadvisoryservices.thedebtandequitycapitalmarketsbusinessessupportcorporatebanking,investmentbankingcommercialclients,whoaremanagedbythecommerciallineofbusiness,andwealthyindividuals,whoareservedbyourwealthandinvestmentmanagementlineofbusiness.commercialleasingprovidesequipmentleasingandfinancingtovariousentities.merchantbankingistheprivateequityandmezzanineinvestingarmofsuntrust.

Mortgagethemortgagelineofbusinessoffersresidentialmortgageproductsnation-allythroughitsretail,brokerandcorrespondentchannels.theseproductsareeithersoldinthesecondarymarketprimarilywithservicingrightsretainedorheldaswholeloansinthecompany’sresidentialloanportfolio.thelineofbusinessservicesloansforitsownresidentialmortgageportfolioaswellasforothers.additionally,thelineofbusinessgeneratesrevenuethroughitstaxservicesubsidiary(Valutreerealestateservices,llc)anditscaptivereinsurancesubsidiary(cherokeeinsurancecompany).

wealthanDinveStMentManageMentwealthandinvestmentmanagementprovidesafullarrayofwealthman-agementproductsandprofessionalservicestobothindividualandinsti-tutionalclients.wealthandinvestmentmanagement’sprimarysegmentsincludeprivatewealthmanagement(“pwm”)(brokerageandindividual

wealthmanagement),andinstitutionalinvestmentmanagementandadministration.

thepwmgroupoffersprofessionalinvestmentmanagementandtrustservicestoclientsseekingactivemanagementoftheirfinancialresources.inaddition,theprivatebankingunitwithinsuntrustwasconsolidatedintopwminthefirstquarterof2005,whichenablesthegrouptoofferafullarrayofloananddepositproductstoclients.pwmincludessuntrustinvestmentservices,whichoperatesacrossthecompany’sfootprintandoffersdiscount/onlineandfullservicebrokerageservicestoindividualcli-ents.suntrustinvestmentserviceswasformedinJulyof2005whentheexistingunitofsuntrustsecuritiescombinedwithalexanderKey(asepa-ratedivisionofferingfullservicebrokeragetoaffluentandwealthyclientswhogenerallydonothaveapre-existingrelationshipwiththecompany).theultrahighnetworthsegmentofthepwmclientsisservicedbyassetmanagementadvisors(“ama”).amaprovides“familyoffice”servicestoultrahighnetworthclients.actinginthiscapacity,amainvestmentpro-fessionalsutilizesophisticatedfinancialproductsandwealthmanage-menttoolstoprovideaholisticapproachtomulti-generationalwealthmanagement.

institutionalinvestmentmanagementandadministrationiscom-prisedoftruscocapitalmanagement,inc.(“trusco”),retirementservices,endowmentandfoundationservices,andcorporatetrust.truscoisaninvestmentadvisorregisteredwiththesecuritiesandexchangecommissionwhichservesasinvestmentmanagerforthesticlassicfundsandmanyofwealthandinvestmentmanagement’sclients.seixinvestmentadvisors(“seix”),afixedincomedivisionoftrusco,wasformedfollowingtheacqui-sitionofseixinvestmentadvisors,inc.inthesecondquarterof2004.Zevenbergencapitalinvestmentsllc(“Zci”)isa55%ownedsubsidiaryoftruscoandwasconsolidatedinthefourthquarterof2004.retirementser-vicesprovidesadministrationandcustodyservicesfordefinedbenefitanddefinedcontributionplansaswellasadministrationservicesfornon-quali-fiedplans.endowmentandfoundationservicesprovidesadministrationandcustodyservicestonon-profitorganizations,includinggovernmentagencies,collegesanduniversities,communitycharitiesandfoundations,andhospitals.corporatetrusttargetsissuersoftax-exemptandcorporatedebt,andasset-basedsecurities,aswellascorporationsandattorneysrequiringescrowandcustodialservices.

corporate/othercorporate/other(“other”)includestheinvestmentsecuritiesportfolio,long-termdebt,capital,derivativeinstrumentsusedbytreasurytomanageinterestrateriskandduration,short-termliquidityandfundingactivities,balancesheetriskmanagement,officepremises,certainsupportactivitiesnotcurrentlyallocatedtotheaforementionedlinesofbusinessandtheincrementalcoststointegratencf’soperations(i.e.,mergerexpense).themajorcomponentsofotherincludeenterpriseinformationservices,whichistheprimarydataprocessingandoperationsgroup;corporaterealestate,whichmanagesthecompany’sfacilities;marketing,whichhandlesadver-tising,productmanagementandclientinformationfunctions;bankcard,whichhandlescreditcardissuanceandmerchantdiscountrelationships;suntrustonline,whichhandlesclientphoneinquiriesandphonesalesandmanagestheinternetbankingfunction;humanresources,whichincludestherecruiting,trainingandemployeebenefitadministrationfunctions;finance,whichincludesaccounting,managementinformation,planning,tax,andtreasury.otherfunctionsincludedinotherareenterpriseriskmanagement,creditriskmanagement,creditreview,audit,internalcon-trol,legalandcompliance,branchoperations,corporatestrategiesdevel-

management’sdiscussionandanalysis continued


opment,procurement,andexecutivemanagement.finally,otheralsoincludesspecialtybusinessessuchastransplatinum,whichhandlesfleetonefuelcardsandusialliancecorporation,whichprovidesservicesforsafety,securityandcrimepreventiontoseniorhousingfacilities.

reconcilingiteMSreconcilingitemsincludeadjustmentsnecessarytoreconcilemanage-mentaccountingmethodologieswithusgaapconsolidatedfinancialstatements.someexamplesoftheseitemsaretheresidualoffsetsderivedfrommatched-maturityfundstransferpricing,theoffsetforfteadjust-ments,andthevariancebetweenprovisionforloanlossesandlobsnetcharge-offs.

BuSineSSSegMentreSultSthefollowinganalysisdetailstheoperatingresultsforeachlineofbusinessfortheyearsendeddecember31,2005and2004.priorperiodshavebeenrestatedtoconformtothecurrentperiod’spresentation.inthediscussionnetcharge-offsrepresenttheallocatedprovisionforloanlossesforthelinesofbusiness.corporate/other’sprovisionforloanlossesrepresentsthedif-ferencebetweenconsolidatedprovisionforloanlossesandtheaforemen-tionedallocations.

retailretail’stotalincomebeforetaxesforthetwelvemonthsendeddecember31,2005was$1.7billion,anincreaseof$321.3million,or24.2%,com-paredtothesameperiodin2004.thisincreasewasattributabletothencf

acquisition,highernetinterestincomeandhighernoninterestincomepar-tiallyoffsetbyhighernoninterestexpense.

netinterestincomeincreased$396.7million,or22.1%.thencfacquisitioncontributedapproximately$136millionoftheincrease.theremainderoftheincreasewasattributabletoloananddepositgrowthandwideningdepositspreadsduetodepositrateincreasesthathavebeenslowerrelativetomarketrateincreases.averageloansincreased$6.0bil-lion,or24.8%,whileaveragedepositsincreased$12.1billion,or22.8%.thencfacquisitionwastheprimarydriveroftheseincreases,contributingapproximately$5billioninloansandapproximately$11billionindeposits.theremainingloangrowthwasdrivenprimarilybyequitylinesandstu-dentlendingwhiletheremainingdepositgrowthwasdrivenbydemanddeposits(“dda”),nowaccounts,andcertificatesofdeposit.netcharge-offsdecreased$3.8million,or2.6%,primarilyduetoadeclineinconsumerindirectnetcharge-offs.

noninterestincomeincreased$195.5million,or23.1%.theaddi-tionofncfcontributedapproximately$134millionofthisincrease.theremainingincreasewasdrivenprimarilybyinterchangeincomeduetoincreaseddebitandcreditcardtransactionvolumes.

noninterestexpenseincreased$274.7million,or23.4%.theaddi-tionofncfcontributedapproximately$205millionoftheincrease.theremainingincreasewasprimarilydrivenbypersonnelexpenseduetomeritincreasesandheadcountincreasesdrivenbybranchexpansion.

coMMercialcommercial’stotalincomebeforetaxesforthetwelvemonthsendeddecember31,2005was$801.6million,anincreaseof$171.7million,or

thefollowingtableforsuntrust’sreportablesegmentscomparestotalincomebeforetaxesforthetwelvemonthsendeddecember31,2005tothesameperiodlastyear:

taBle1•netincomeBeforetaxes twelveMonthsendedDecember31(dollarsinmillions) 2005 2004retail $1,651.0 $1,329.7commercial 801.6 629.9corporateandinvestmentbanking 576.2 539.5mortgage 306.1 263.7wealthandinvestmentmanagement 485.4 379.7corporate/other (1,263.1) (1,146.2)reconcilingitems 384.7 319.0

thefollowingtableforsuntrust’sreportablebusinesssegmentscomparesaverageloansandaveragedepositsforthetwelvemonthsendeddecember31,2005tothesameperiodinthelasttwoyears:

taBle2•averageloansandDeposits twelveMonthsendedDecember31 averageloans averagedeposits(dollarsinmillions) 2005 2004 2003 2005 2004 2003retail $30,413 $24,376 $20,776 $65,187 $53,091 $49,105commercial 30,529 23,719 20,938 13,391 11,355 9,471corporateandinvestmentbanking 15,286 13,670 16,027 3,289 3,265 2,930mortgage 24,381 18,004 13,221 1,654 1,382 1,634wealthandinvestmentmanagement 7,866 6,244 5,040 9,598 7,934 6,317


27.3%,comparedtothesameperiodin2004.ncfaccountedforapproxi-mately$87millionoftheincrease.theremainingincreasewasduetoimprovementinnetinterestincomeandhighernoninterestincome,par-tiallyoffsetbyhighernoninterestexpense.

netinterestincomeincreased$202.3million,or29.5%.netinterestincomegrowthwasdrivenbyloananddepositgrowthandhigherdepositspreads.averageloansincreased$6.8billion,or28.7%,andaveragedepos-itsincreased$2.0billion,or17.9%.ncfaccountedforapproximately$113millionofthenetinterestincomegrowth,approximately$5billionoftheloangrowthandapproximately$1billionofthedepositgrowth.theremainingloangrowthwasdrivenbystrongerdemandforcommercialloansandcommercialrealestate.theremainingdepositgrowthwasattributabletoincreasedclientliquidity.netcharge-offswereflatwhencomparedtothesameperiodin2004,despiteapproximatelya$7millionincreasefromncfanda$3.2millionincreasefromahg.

noninterest income increased $45.8 million, or 14.3%. ncfaccountedforapproximately$12millionoftheincrease.ahgcontributed$25.8millionoftheincrease,drivenbyhighertaxcreditsfromnewproper-tiesandinvestments,aswellashigherpartnershiprevenue.alsocontribut-ingtotheincreasewereinternalcrosslineofbusinesssalescredits,loanfees,anddepositsweepincome.partiallyoffsettingtheseincreases,servicechargesondepositsdecreased$11.0million,or12.0%,drivenbyhighercompensatingbalancesandincreasedclientearningscreditrates.

noninterest expense increased $76.3 million,or 21.7%. ncfaccountedforapproximately$32millionoftheincrease.anadditional$30.2millionoftheincreasewasattributabletoahgactivities,primarilyimpairmentandotherchargesrelatedtoaffordablehousingproperties.theremainingincreasewasprimarilyinsalariesandperformancebasedincentives.

corporateanDinveStMentBankingcib’stotalincomebeforetaxesforthetwelvemonthsendeddecember31,2005was$576.2million,anincreaseof$36.7million,or6.8%,com-paredtothesameperiodin2004.improvementsinnetinterestincomeandinvestmentbankingincomedrovetheincrease.

netinterestincomeincreased$24.0million,or9.3%.averageloansincreased$1.6billion,or11.8%,andaveragedepositsincreased$24.3mil-lion,or0.7%.corecommercialloanandleasegrowthwasduetoincreasedcorporatedemandandincreasedmergerandacquisitionactivity.netcharge-offsdecreased$1.6million,or9.7%.

noninterest incomeincreased$8.2million,or1.3%,drivenbyincreasedtradingandadvisoryfeesininvestmentgradebondissuances,mergerandacquisition,leasing,andfixedincome/equityderivatives.thiswaspartiallyoffsetbyreducedactivityinequityofferings,securitization,andcredittrading.

noninterestexpensedecreased$2.8million,or0.8%.thisdecreasewasdrivenbya$18.8milliondeclineinotherexpensesprimarilyduetolowerleveragedleaseexpense.thiswaspartiallyoffsetbyincreasedper-sonnelexpenseof$12.9millionduetohighervariablecompensationasso-ciatedwithincreasedfeeincome.

Mortgagemortgage’stotal incomebeforetaxesforthetwelvemonthsendeddecember31,2005was$306.1million,anincreaseof$42.4million,or16.1%,comparedtothesameperiodin2004.incomefromrecordloanproduction,netinterestincomefromloangrowth,andhigherfeesdrove

theincrease.thiswaspartiallyoffsetbyhighervolumeandgrowth-relatedexpenses.

netinterestincomeincreased$65.2million,or13.3%.averageloans,principallyresidentialmortgageloans,increased$6.4billion,or35.4%.loanrelatednetinterestincomeincreased$72.0million,or26.2%,duetothehighervolumesatcompressedspreads.averagedepositsincreased$272.2million,or19.7%,contributing$62.7milliontonetinterestincome,anincreaseof$18.6million.averagemortgageloansheldforsalewereup$2.7billion.however,risingshort-terminterestratesdrovecompressedspreads,resultinginadeclineinnetinterestincomeof$14.9million.higherinternalfundingcostsforotherassets,principallygoodwill,reducednetinterestincome$10.7million.netcharge-offsincreased$1.2million.

noninterestincomeincreased$123.0million,or105.7%,primarilyduetohigherloanoriginationandservicingincome.recordproductionof$47.7billion,higherloansales,andtheadditionofncfresultedinanincreaseinloanproductionincomeof$86.2million.servicingincomewasup$30.2millionprimarilyduetohigherservicingfees,andtoalesserdegree,adeclineinmortgageservicingrights(“msrs”)amortization.asofdecember31,2005,theservicingportfoliowas$105.6billioncomparedto$79.9billionatdecember31,2004.othernoninterestincomeincreased$6.6millionprincipallyduetovolume-relatedfees.

noninterestexpenseincreased$144.5million,or42.7%,duetohigherpersonnelexpenseandothervolumeandgrowthrelatedexpenses.thehigherpersonnelexpenseresultedfromgrowthinthesalesforce,highervolume-relatedcommissions,andhigherbenefitcosts.

wealthanDinveStMentManageMentwealthandinvestmentmanagement’stotalincomebeforetaxesforthetwelvemonthsendeddecember31,2005was$485.4million,anincreaseof$105.7million,or27.8%,comparedtothesameperiodin2004.ncfrepresentedapproximately$19millionoftheincreasewhileseixandZcirepresentedapproximately$9millionoftheincrease.theremainderofthegrowthwasprimarilydrivenbyincreasednetinterestincomeandnoninter-estincome,partiallyoffsetbyhigherpersonnelexpenseandamortizationofintangibles.

netinterestincomeincreased$101.7million,or41.7%.ncfcon-tributedapproximately$26million.averageloansincreased$1.6billion,or26.0%,includingapproximately$796millionattributabletoncf.averagedepositsincreased$1.7billion,or21.0%,including$497millionattribut-abletoncf.netcharge-offsincreased$6.0million,primarilyduetoncf.

noninterest income increased$122.9million,or15.0%.ncfaccountedforapproximately$59millionoftheincreasewhileseixandZciaccountedforapproximately$30million.assetsundermanagementincreasedapproximately$8.9billion,or7.0%,duetonewbusinessandanincreaseinequitymarkets.asofdecember31,2005,assetsundermanage-mentwereapproximately$135.3billioncomparedto$126.4billionasofdecember31,2004.assetsundermanagementincludeindividuallyman-agedassets,thesticlassicfunds,institutionalassetsmanagedbytrusco,andparticipant-directedretirementaccounts.suntrust’stotalassetsunderadvisementwereapproximately$242.5billion,whichincludetheafore-mentionedassetsundermanagement,$45.5billioninnon-managedtrustassets,$33.4billioninretailbrokerageassets,and$28.3billioninnon-managedcorporatetrustassets.

noninterestexpenseincreased$113.0million,or16.6%.ncfcon-tributedapproximately$60millionoftheincreaseandseixandZcicon-tributedapproximately$21million.thebalanceoftheincreasewasdriven



byhigherpersonnelexpenseduetomeritincreasesandselectivehiring,andhigherexpenseforamortizationofintangibles.

corporate/othercorporate/other’stotallossbeforetaxesforthetwelvemonthsendeddecember31,2005was$1.3billion,adeclineinprofitabilityof$116.9mil-lion,or10.2%,fromthesameperiodin2004.thedeclineinprofitabilitywasprimarilyduetoa$74.8millionincreaseinmergerexpenserepresent-ingcoststointegratetheoperationsofncf.

netinterestincomeincreased$19.0million,or211.5%.ncfrep-resentedapproximately$10millionoftheincrease.additionally,netinternalfundingcreditsonotherliabilitiesandsecuritiesavailableforsaleincreasedacombined$30.3millionandwaspartiallyoffsetbya$20.4mil-liondecreaseinincomeoninterestrateswapsaccountedforascashflowhedgesoffloatingratecommercialloans.totalassetsincreased$2.2bil-lion,or7.2%,andtotalliabilitiesincreased$12.1billion,or29.4%.ncfaddedapproximately$4billioninassetswhichwaspartiallyoffsetbyareductionintheinvestmentportfolio.theincreaseinliabilitieswasmainlyduetogrowthinbrokeredandforeigndepositsof$6.9billion,long-termdebtof$3.4billionandshort-termborrowingsof$1.6billion.netcharge-

offsincreased$3.8million,or136.6%,duetotheacquisitionofncfandanincreaseincharge-offsatbankcard.

noninterestincomeincreased$62.9million.ncfaddedapproxi-mately$36millioninnoninterestincome.additionally,smallerrealizedsecuritieslossesof$33.9millionwerepartiallyoffsetbya$17.0millionincreaseinintercompanycreditstothevariouslinesofbusiness.

noninterestexpenseincreased$195.0million,or18.3%.ncfaddedapproximately$127millionofnoninterestexpenseinadditiontothe$74.8millionincreaseinmergerexpenserepresentingcoststointegratetheoper-ationsofncf.

conSoliDateDreSultS

netintereStincoMe/Marginnetinterestincomefor2005was$4,654.5million,anincreaseof$910.9million,or24.3%,from2004.approximatelytwo-thirdsoftheincreasewasattributabletoncf.netinterestincomealsobenefitedfromstrongearn-ingassetandlow-costretaildepositgrowth.

thenetinterestmarginimprovedonebasispointto3.16%in2005.theearningassetyieldfortheyearincreased86basispointsfrom2004.loanyieldincreased91basispointsandsecuritiesavailableforsaleyield

taBle3•analysisofchangesinnetinterestincome1

2005comparedto2004 2004comparedto2003 increase(Decrease)Dueto increase(decrease)dueto(dollarsinmillionsonataxable-equivalentbasis) volume rate net Volume rate netinterestincomeloans: taxable $1,150.4 $852.8 $2,003.2 $454.6 ($106.8) $347.8 tax-exempt2 9.6 13.0 22.6 14.6 (0.8) 13.8securitiesavailableforsale: taxable 87.2 132.7 219.9 84.6 156.3 240.9 tax-exempt2 15.0 (1.0) 14.0 15.0 (1.4) 13.6fundssoldandsecuritiespurchased underagreementstoresell 0.4 24.2 24.6 (0.1) 3.0 2.9loansheldforsale 170.7 33.7 204.4 (163.6) (3.4) (167.0)interest-bearingdeposits 0.1 0.6 0.7 0.1 (0.1) —tradingassets 10.7 29.9 40.6 0.6 10.3 10.9 totalinterestincome 1,444.1 1,085.9 2,530.0 405.8 57.1 462.9interestexpensenowaccounts 21.5 76.3 97.8 9.3 11.0 20.3moneymarketaccounts 26.1 213.9 240.0 6.1 (10.7) (4.6)savingsdeposits (7.3) 8.9 1.6 7.5 1.3 8.8consumertimedeposits 108.5 64.3 172.8 8.9 (28.5) (19.6)othertimedeposits 107.1 38.8 145.9 9.0 3.9 12.9brokereddeposits 177.9 88.7 266.6 16.5 (39.9) (23.4)foreigndeposits 17.4 124.6 142.0 (14.3) 14.5 0.2fundspurchasedandsecuritiessold underagreementstorepurchase 6.3 197.3 203.6 (18.7) 21.1 2.4othershort-termborrowings 22.9 41.9 64.8 (8.3) 5.0 (3.3)long-termdebt 140.0 144.0 284.0 199.8 (108.7) 91.1 totalinterestexpense 620.4 998.7 1,619.1 215.8 (131.0) 84.8 netchangeinnetinterestincome $823.7 $87.2 $910.9 $190.0 $188.1 $378.11changesinnetinterestincomeareattributedtoeitherchangesinaveragebalances(volumechange)orchangesinaveragerates(ratechange)forearningassetsandsourcesoffundsonwhichinterestisreceivedorpaid.Volumechangeiscalculatedaschangeinvolumetimesthepreviousrate,whileratechangeischangeinratetimesthepreviousvolume.therate/volumechange,changeinratetimeschangeinvolume,isallocatedbetweenvolumechangeandratechangeattheratioeachcomponentbearstotheabsolutevalueoftheirtotal.

2interestincomeincludestheeffectsoftaxable-equivalentadjustments(reducedbythenondeductibleportionofinterestexpense)usingafederalincometaxrateof35%and,whereapplicable,stateincometaxestoincreasetax-exemptinterestincometoataxable-equivalentbasis.


taBle4•consolidatedDailyaverageBalances,income/expenseandaverageYieldsearnedandratespaid 2005 2004 2003 2002 2001 2000

(dollarsinmillions;yieldson average income/ Yields/ average income/ yields/ average income/ yields/ average income/ yields/ average income/ yields/ average income/ yields/taxable-equivalentbasis) Balances expense rates balances expense rates balances expense rates balances expense rates balances expense rates balances expense ratesassetsloans:1

taxable $106,575.8 $5,904.1 5.54% $84,241.0 $3,901.0 4.63% $74,476.7 $3,553.1 4.77% $69,981.0 $3,920.9 5.60% $68,892.8 $4,862.7 7.06% $68,968.8 $5,552.4 8.05% tax-exempt2 2,166.2 115.8 5.34 1,973.5 93.1 4.72 1,661.2 79.3 4.77 1,289.4 70.8 5.49 1,130.2 78.4 6.94 1,075.5 83.0 7.72 totalloans 108,742.0 6,019.9 5.54 86,214.5 3,994.1 4.63 76,137.9 3,632.4 4.77 71,270.4 3,991.7 5.60 70,023.0 4,941.1 7.06 70,044.3 5,635.4 8.05securitiesavailableforsale: taxable 25,557.9 1,137.0 4.45 23,429.8 917.1 3.91 20,994.4 676.2 3.22 16,890.3 818.6 4.85 15,904.8 1,033.9 6.50 14,593.7 981.4 6.73 tax-exempt2 868.7 51.7 5.95 617.1 37.7 6.11 374.1 24.1 6.46 408.3 28.0 6.85 448.7 35.7 7.95 469.7 35.4 7.54 totalsecuritiesavailableforsale 26,426.6 1,188.7 4.50 24,046.9 954.8 3.97 21,368.5 700.3 3.28 17,298.6 846.6 4.89 16,353.5 1,069.6 6.54 15,063.4 1,016.8 6.75fundssoldandsecuritiespurchased underagreementstoresell 1,404.8 43.2 3.08 1,376.9 18.6 1.35 1,387.0 15.7 1.13 1,390.4 24.5 1.76 1,250.3 51.2 4.09 1,439.8 92.8 6.44loansheldforsale 8,447.8 485.7 5.75 5,427.1 281.3 5.18 8,587.7 448.3 5.22 4,410.8 280.4 6.36 2,949.9 211.5 7.17 1,451.1 110.6 7.62interest-bearingdeposits 25.0 0.9 3.47 18.1 0.2 0.98 10.5 0.1 1.39 404.7 7.0 1.73 167.6 5.8 3.43 39.9 0.9 2.17tradingassets 2,389.1 68.4 2.86 1,822.1 27.8 1.53 1,765.8 17.0 0.96 1,595.9 24.5 1.54 1,289.8 41.3 3.20 570.5 28.8 5.06 totalearningassets 147,435.3 7,806.8 5.30 118,905.6 5,276.8 4.44 109,257.4 4,813.8 4.41 96,370.8 5,174.7 5.37 92,034.1 6,320.5 6.87 88,609.0 6,885.3 7.77allowanceforloanandleaselosses (1,041.8) (989.5) (950.8) (924.3) (876.3) (869.0)cashandduefrombanks 4,313.4 3,732.9 3,432.1 3,343.2 3,383.4 3,316.4premisesandequipment 1,846.6 1,672.7 1,588.7 1,621.2 1,599.7 1,625.4otherassets 13,585.9 8,060.4 6,655.0 5,373.4 4,043.3 3,362.2unrealizedgainsonsecurities availableforsale 1,949.4 2,372.2 2,343.0 2,731.8 2,700.0 2,353.8 totalassets $168,088.8 $133,754.3 $122,325.4 $108,516.1 $102,884.2 $98,397.8liabilitiesandShareholders’equityinterest-bearingdeposits: nowaccounts $17,213.7 $168.9 0.98% $13,777.5 $71.0 0.52% $11,702.0 $50.7 0.43% $10,315.4 $74.5 0.72% $8,471.3 $101.2 1.20% $8,035.4 $107.4 1.34% moneymarketaccounts 25,589.2 438.9 1.72 22,864.7 198.9 0.87 22,218.5 203.5 0.92 20,470.9 326.8 1.60 15,830.1 527.6 3.33 12,093.6 526.9 4.36 savings 6,320.0 57.1 0.90 7,225.4 55.5 0.77 6,259.3 46.7 0.75 6,310.0 85.1 1.35 6,066.6 171.5 2.83 6,434.2 228.5 3.55 consumertime 12,526.4 354.8 2.83 8,333.5 182.0 2.18 7,975.4 201.7 2.53 9,342.4 347.1 3.72 9,092.6 468.8 5.16 9,935.5 528.5 5.32 othertime 7,390.7 238.7 3.23 3,843.3 92.8 2.42 3,461.6 80.0 2.31 3,722.8 102.1 2.74 3,823.9 200.6 5.25 4,085.3 236.0 5.78 totalinterest-bearingconsumer andcommercialdeposits 69,040.0 1,258.4 1.82 56,044.4 600.2 1.07 51,616.8 582.6 1.13 50,161.5 935.6 1.87 43,284.5 1,469.7 3.40 40,584.0 1,627.3 4.01 brokereddeposits 10,182.2 354.5 3.48 4,273.5 87.9 2.06 3,662.0 111.2 3.04 2,537.2 130.1 5.13 2,617.7 115.3 4.40 3,308.7 215.9 6.52 foreigndeposits 6,869.3 220.1 3.20 5,767.9 78.1 1.35 6,933.3 77.8 1.12 3,190.4 51.6 1.62 5,175.4 227.5 4.39 9,621.7 609.7 6.34 totalinterest-bearingdeposits 86,091.5 1,833.0 2.13 66,085.8 766.2 1.16 62,212.1 771.6 1.24 55,889.1 1,117.3 2.00 51,077.6 1,812.5 3.55 53,514.4 2,452.9 4.58fundspurchasedandsecuritiessold underagreementstorepurchase 10,331.3 312.2 3.02 9,796.7 108.6 1.11 11,666.9 106.2 0.91 10,376.2 140.5 1.35 11,283.6 412.2 3.65 10,754.4 651.2 6.06othershort-termborrowings 2,663.5 94.9 3.57 1,709.9 30.2 1.77 2,211.7 33.5 1.52 924.8 14.1 1.52 1,593.8 63.4 3.98 1,550.6 97.9 6.31long-termdebt 21,713.9 912.2 4.20 18,075.4 628.2 3.48 12,657.1 537.2 4.24 11,960.0 619.6 5.18 12,497.2 739.0 5.91 8,034.6 534.9 6.66 totalinterest-bearingliabilities 120,800.2 3,152.3 2.61 95,667.8 1,533.2 1.60 88,747.8 1,448.5 1.63 79,150.1 1,891.5 2.39 76,452.2 3,027.1 3.96 73,854.0 3,736.9 5.06noninterest-bearingdeposits 24,315.0 21,047.1 17,826.9 15,268.1 13,491.1 13,177.5otherliabilities 6,447.3 5,569.9 6,667.7 5,372.2 4,867.1 3,864.4shareholders’equity 16,526.3 11,469.5 9,083.0 8,725.7 8,073.8 7,501.9 totalliabilitiesand shareholders’equity $168,088.8 $133,754.3 $122,325.4 $108,516.1 $102,884.2 $98,397.8interestrateSpread 2.69% 2.84% 2.78% 2.98% 2.91% 2.71%netinterestincome3 $4,654.5 $3,743.6 $3,365.3 $3,283.2 $3,293.4 $3,148.4netinterestMargin 3.16% 3.15% 3.08% 3.41% 3.58% 3.55%1interestincomeincludesloanfeesof$123.6million,$121.6million,$123.8million,$122.6million,$148.7million,and$135.6millioninthesixyearsendeddecember31,2005,respectively.nonaccrualloansareincludedinaveragebalancesandincomeonsuchloans,ifrecognized,isrecordedonacashbasis.

2interestincomeincludestheeffectsoftaxable-equivalentadjustmentsusingafederalincometaxrateof35%forallyearsreportedandwhereapplicable,stateincometaxes,toincreasetax-exemptinterestincometoataxable-equivalentbasis.thenettaxable-equivalentadjustmentamountsincludedintheabovetablewere$75.5million,$58.4million,$45.0million,$39.5million,$40.8million,and$39.9millioninthesixyearsendeddecember31,2005,respectively.

3derivativeinstrumentsusedtohelpbalancethecompany’sinterest-sensitivitypositionincreasednetinterestincome$104.4millionin2005,$151.5millionin2004,$64.0millionin2003,anddecreasednetinterestincome$50.4millionin2002,$37.4millionin2001,and$0.5millionin2000.



increased53basispointsfromtheprioryear.theincreaseinloanyieldwasdueinparttotheincreaseinyieldonfloating-rateloanswhichbenefitedfromtheincreaseinshort-termmarketinterestrates.inaddition,theyieldonnewfixedrateloanproductionincreasedaslongterminterestrateswerealsohigherin2005.theincreaseinsecuritiesavailableforsaleyieldwasduetoreinvestmentoflower-yieldinginvestmentcashflowsintohigher-yield-inginvestmentsduring2005.in2005,thetotalinterest-bearingliabilitycostincreased101basispointsfrom2004.growthinnoninterest-bearingddaof$3.3billion,or15.5%,mitigatedtheimpactofthesehigherfundingcostsonthemargin.

therelativelyflatmarginwasduemorespecificallytoanumberoffactors.thecompany’sbalancesheetwaspositionedtobenefitfromhigherratesandasteeperyieldcurve.during2005,whilebothshort-andlong-terminterestratesincreased,theyieldcurveflattenedconsiderably.whileone-monthliborincreased190basispointsonaveragein2005,thefive-yearswaprateonlyincreased64basispoints.thecompany’sprimerateaveraged6.19%for2005,anincreaseofapproximately185basispointsfrom2004.thefederalreservebankfedfundsrateaveraged3.22%for2005,approximately187basispointsoverthe2004average.theimprovementinmargincomparedto2004wasmitigatedbyanincreaseinthesizeoftheloansheldforsaleportfolio,whosespreaddecreasedcommensuratewiththeflatteningoftheyieldcurve.afactorsupportingthenetinterestmarginwasthesignificantgrowthinlowercostdeposits,mainlyddaandnowaccounts.averageddaandnowaccountsincreased$6.7billion,or19.3%,comparedto2004.thencfmergeraccountedforslightlymorethanone-halfoftheincrease.thegrowthinddaandnowaccountsreplacedmoreexpensivewholesalefunding,helpingmaintainthemarginin2005.themarginalsobenefitedfromtheimprovementininvestmentport-folioyield.thereasonsfortheimprovementarecoveredinthesecuritiesavailableforsalediscussionbeginningonpage32.

averageearningassetsincreased$28.5billion,or24.0%,andaver-ageinterest-bearingliabilitiesincreased$25.1billion,or26.3%,versus2004.averageloansrose$22.5billion,averagesecuritiesavailableforsaleincreased$2.4billion,andaverageloansheldforsaleincreased$3.0billionin2005.loansheldforsaleincreasedduelargelytoanincreaseinmortgageproduction.

thecompanycontinuedtotakestepstoobtainalternativelowercostfundingsources,suchasdevelopinginitiativestogrowclientdeposits.campaignstoattractclientdepositswereimplementedin2004and2005.

interestincomethatthecompanywasunabletorecognizeonnon-accrualloanshadanegativeimpactofonebasispointonthenetinterestmarginin2005andnoimpactin2004.

nonintereStincoMenoninterestincomefor2005was$3,155.0million,anincreaseof$550.6million,or21.1%,comparedto2004.approximately$286millionoftheincreasewasattributabletoncf.positivelyimpactingnoninterestincomewereincreasesinservicechargesondeposits,wealthmanagementincome(thecombinationoftrustandinvestmentmanagementincomeandretailinvestmentservices),otherchargesandfees,cardfees,andmortgagerelatedincome(classifiedinothernoninterestincome).additionally,netsecuritieslossesdecreased$34.5million,or82.8%,comparedto2004,andthecompanyrealizedanetgainof$23.4milliononthesaleofrcmassetsin2005.onmarch31,2005,suntrustsoldsubstantiallyallofthefactoringassetsofrcmtocitgroup,inc.thesaleofapproximately$238millioninnetassetsresultedinagainthatwaspartiallyoffsetbyexpensesprimarilyrelatedtotheseveranceofrcmemployeesandthewrite-offofobsoletefinancialsystems.

servicechargesondepositaccountsincreased$72.5million,or10.4%,comparedto2004.ncfaccountedforapproximately$90millionoftheincrease.theimpactofncfwasoffsetbyadecreaseinaccountanal-ysisservicechargesoncommercialaccounts,duetohigherclientcompen-satingbalancesandincreasedclientearningscreditrates,drivenbyrisingshort-terminterestratesin2005.

trustandinvestmentmanagementincomeincreased$86.9million,or14.8%,comparedto2004.ncfcontributedapproximately$30millionoftheincrease.anoverallincreaseinassetsundermanagementresultedinhigherincome,aswellastheacquisitionofseixinmayof2004.retailinvestmentservicesincomeincreased$20.5million,or10.6%,comparedtotheprioryear.approximately$10millionoftheincreasewasattributabletoncf,andtheremainingincreasewasduetocontinuedsalesmomentuminthewealthandinvestmentmanagementsegment.

taBle5•noninterestincome twelveMonthsendedDecember31(dollarsinmillions) 2005 2004 2003 2002 2001 2000servicechargesondepositaccounts $772.5 $700.0 $643.1 $612.9 $510.2 $459.7trustandinvestmentmanagementincome 673.7 586.8 502.4 504.5 486.1 493.9retailinvestmentservices 213.3 192.8 161.8 136.7 107.8 108.2otherchargesandfees 456.5 390.5 326.3 296.9 240.3 210.8investmentbankingincome 216.5 206.7 192.5 177.0 108.5 111.3tradingaccountprofitsandcommissions 145.1 127.8 109.9 103.2 95.7 31.7cardfees 210.8 153.4 119.6 120.0 113.6 95.7netgainonsaleofrcmassets 23.4 — — — — —othernoninterestincome 450.4 288.1 123.5 113.1 236.6 255.7totalnoninterestincomebeforesecurities (losses)/gains 3,162.2 2,646.1 2,179.1 2,064.3 1,898.8 1,767.0securities(losses)/gains (7.2) (41.7) 123.9 204.5 153.1 6.6totalnoninterestincome $3,155.0 $2,604.4 $2,303.0 $2,268.8 $2,051.9 $1,773.6year-over-yeargrowthrateinnoninterest incomebeforesecurities(losses)/gains 19.5% 21.4% 5.6% 8.7% 7.5%



otherchargesandfeesincreased$66.0million,or16.9%,comparedto2004.approximately$38millionoftheincreasewasattributabletoncf.alsocontributingtotheincreasewasanincreaseinatmfeesduetohighervolumes.cardfees,whichincludecreditanddebitcardsfees,increased$57.4million,or37.4%,comparedto2004.approximately$21millionoftheincreasewasduetotheacquisitionofncf.theremainderoftheincreasewasprimarilyduetohigherinterchangeincomeduetoincreasedtransactionvolume.

combinedinvestmentbankingincomeandtradingaccountprofitsandcommissions,suntrust’scapitalmarketsrevenuesources,increased$27.1million,or8.1%,comparedtotheprioryear.theacquisitionofncfcontributedapproximately$12milliontotheincrease.theremainderoftheincreasewasprimarilydrivenbystrongercapitalmarketfees,associ-atedwithtradingandadvisoryfeesrelatedtoderivatives,mergerandacquisition,andpublicdebt.

othernoninterestincomeincreased$162.3million,or56.3%,com-paredto2004.combinedmortgageproductionandservicingincomeincreased$117.8million,or170.9%,comparedto2004.mortgageservic-ingrelatedincomeincreased$30.8millioncomparedto2004primarilyduetoanincreaseinservicingfees,asthemortgageservicingportfolioreachedrecordlevels.mortgageproductionincomeincreased$87.0million,or150.5%,comparedto2004.thegrowthwasduetoa54.9%increaseinproductionvolumecomparedto2004.

nonintereStexpenSenoninterestexpenseincreased$793.7million,or20.4%,comparedto2004.approximately$505millionoftheincreasewasattributedtotheacquisitionofncf,including$70.2millionofmergerexpenseforopera-

tionsandsystemsintegration.comparedto2004,totalpersonnelexpenseincreased$366.0million,or16.9%.approximately$201millionoftheincreasewasduetotheacquisitionofncf.theremainderoftheincreasewasprimarilyduetoincreasedheadcount,meritincreases,andincreasedincentivecosts.headcountincreasedfrom33,156asofdecember31,2004,to33,406atdecember31,2005.theincreaseinincentiveswaspri-marilyduetoanincreaseincommissionandperformancebasedincentivesduetostrongbusinessvolumesinalllinesofbusiness.

netoccupancyexpenseincreased$43.9million,or16.3%comparedtodecember31,2004.thencfacquisitionrepresentedanincreaseofapproximately$33million.theremainderoftheincreasewasdrivenbyhigherleaseholdimprovementandutilitycosts.

noninterestexpensewasfurtherimpactedbya$71.1million,or24.8%,increaseinoutsideprocessingandsoftwareexpensesprimarilyduetohigherprocessingcostsassociatedwithhighertransactionalvolumesandhighersoftwareamortizationandmaintenanceexpense.theincreaseinoutsideprocessingandsoftwareexpensesincludedapproximately$16mil-lionrelatedtothencfacquisition.marketingandcustomerdevelopmentexpenseincreased$28.4million,or22.2%,primarilyduetothecompany’smarketingcampaignsthatranthroughout2005focusingonretailloananddepositproducts,Visa®giftcards,andonlinebankingservices.ncfrepre-sentedapproximately$8millionoftheoverallincreaseinmarketingandcustomerdevelopment.

consultingandlegalexpenseincreased$31.6million,or39.0%,andwasprimarilyattributedtoinitiativesundertakentoenhancethecompany’sriskmanagementprocessesandtoimprovetheefficiencyoforigination,processing,anddistributioneffortsinthemortgagelineofbusi-ness.amortizationofintangibleassetsincreased$41.4million,or53.3%,

taBle6•noninterestexpense twelveMonthsendedDecember31(dollarsinmillions) 2005 2004 2003 2002 2001 2000employeecompensation $2,117.2 $1,804.9 $1,585.9 $1,512.1 $1,484.5 $1,469.0employeebenefits 417.1 363.4 358.6 306.4 193.0 175.0 totalpersonnelexpense 2,534.3 2,168.3 1,944.5 1,818.5 1,677.5 1,644.0netoccupancyexpense 312.1 268.2 237.3 229.3 210.4 202.6outsideprocessingandsoftware 357.4 286.3 246.7 225.2 199.1 172.3equipmentexpense 204.0 184.9 178.4 174.8 189.8 193.7marketingandcustomerdevelopment 156.7 128.3 100.3 80.0 104.0 106.2amortizationofintangibleassets 119.0 77.6 64.5 58.9 46.3 35.5consultingandlegal 112.6 81.0 57.4 91.1 87.7 59.6otherstaffexpense 90.1 66.0 60.4 52.0 58.5 51.5postageanddelivery 85.4 69.8 69.0 69.4 64.0 63.3creditandcollectionservices 84.9 66.7 70.3 64.6 74.6 56.9communications 79.2 67.2 61.3 64.8 59.2 59.8operatingsupplies 53.2 46.8 39.8 46.8 48.3 47.3mergerexpense 98.6 28.4 — 16.0 — 42.4fdicpremiums 23.1 19.5 18.0 17.4 16.0 13.5otherrealestateincome (1.2) (1.8) (2.0) (0.1) (4.2) (3.8)othernoninterestexpense 381.3 339.8 254.7 210.7 168.7 83.7 totalnoninterestexpense $4,690.7 $3,897.0 $3,400.6 $3,219.4 $2,999.9 $2,828.5year-over-yeargrowthrate 20.4% 14.6% 5.6% 7.3% 6.1% (2.6)%year-over-yeargrowthrateexcludingmergerexpense 18.7 13.8 6.2 6.8 7.7 (2.6)efficiencyratio 60.1 61.4 60.0 58.0 56.1 57.5efficiencyratioexcludingmergerexpense 58.8 60.9 60.0 57.7 56.1 56.6


primarilyduetorecordingafullyearofamortizationforncfintangibleassets(primarilycoredepositintangible)versusonlyonequarterofamor-tizationin2004.

thecompanyincurredmergerexpensetotaling$98.6million,com-paredto$28.4millionasofdecember31,2004.thesechargesrepresentedcoststointegratetheoperationsofncfandconsistprimarilyofconsultingfeesforsystemsandotherintegrationinitiatives,employee-relatedchargesandmarketingexpenditures.effectiveapril22,2005,substantiallyallofthesystemsofnationalbankofcommercewereconvertedtosuntrust’ssystems.asofdecember31,2005,thecompanyhasrecognizedallmergerexpenserelatedtothencfintegrationprocess.thetotalmergerexpenseforthencfintegrationwas$127.0million,slightlyabovethecompany’soriginalestimateof$125million.

othernoninterestexpenseincreased$41.5million,or12.2%,com-paredto2004.theincreasewasprimarilyduetoimpairmentchargesforcertainaffordablehousingproperties,whichareevaluatedonaquarterlybasisforimpairment.inaddition,managementevaluateditsstrategicintentinthisbusiness,anddeterminedinthethirdquarterof2005thatthe

companywouldlikelypursuesellingsomeofitsholdings.suntrustesti-matedthefairvalueofthesepropertiesusingamarketvaluationbasedontheproperties’estimatedfuturecashflows,debtstructures,andtaxcredits,alongwiththeproposedsalesprice.thisanalysisindicatedthatthecarry-ingvalueofsomeofthepropertiesexceededtheestimatedfairvalue.forthetwelvemonthsendeddecember31,2005,thesechargestotaled$33.7million,comparedto$9.0millionforthesameperiodlastyear.

theefficiencyratioimprovedto60.1%in2005comparedto61.4%in2004.theefficiencyratioexcludingmergerexpensewas58.8%in2005comparedto60.9%in2004.

proviSionforincoMetaxeStheprovisionforincometaxesincludesbothfederalandstateincometaxes.in2005,theprovisionwas$879.2million,comparedto$684.1mil-lionin2004.theprovisionrepresentsaneffectivetaxrateof30.7%for2005comparedto30.3%for2004.

taBle7•loanportfoliobytypesofloans asofDecember31(dollarsinmillions) 2005 2004 2003 2002 2001 2000commercial $33,764.2 $31,823.8 $30,681.9 $28,693.6 $28,945.9 $30,781.1realestate: homeequity 13,635.7 11,519.2 6,965.3 5,194.8 2,776.7 2,332.8 construction 11,046.9 7,845.4 4,479.8 4,002.4 3,627.3 2,966.1 residentialmortgages 29,877.3 24,553.5 17,208.1 14,248.6 14,520.4 17,620.2 other 12,516.0 12,083.8 9,330.1 9,101.8 8,152.0 8,121.4creditcard 264.5 175.3 133.0 111.3 92.0 76.8consumerloans 13,450.3 13,425.2 11,934.1 11,815.4 10,844.9 10,341.4 totalloans $114,554.9 $101,426.2 $80,732.3 $73,167.9 $68,959.2 $72,239.8loansheldforsale $13,695.6 $6,580.2 $5,552.1 $7,747.8 $4,319.6 $1,759.3

taBle8•commercialloansbySelectedindustries1

asofDecember31,2005 asofdecember31,20042

%oftotal %oftotal(dollarsinmillions) loans loans loans loansconstruction $6,591.8 5.8% $5,930.8 5.8%realestate 5,890.4 5.1 5,084.5 5.0retailtrade 4,551.0 4.0 4,047.1 4.0businessservicesandnonprofits 4,545.3 4.0 5,005.6 4.9manufacturing 4,150.9 3.6 3,516.4 3.5wholesaletrade 2,845.8 2.5 2,628.0 2.6healthandsocialassistance 2,835.1 2.5 2,768.6 2.7financeandinsurance 2,795.4 2.4 3,482.5 3.4professional,scientificandtechnicalservices 2,123.5 1.9 1,726.9 1.7publicadministration 1,831.8 1.6 1,893.7 1.9information 1,583.7 1.4 1,288.9 1.3transportationandwarehousing 1,360.4 1.2 1,209.7 1.2accomodationandfoodservices 1,339.6 1.2 1,467.7 1.4arts,entertainmentandrecreation 1,177.1 1.0 1,034.3 1.0administrativeandsupport 1,011.7 0.9 772.2 0.81industrygroupingsareloansinaggregategreaterthan$1billionasofdecember31,2005basedonthenorthamericanindustryclassificationsystem(“naics”).

2ncfloansystemsutilizedstandardindustrialclassificiation(“sic”)codes,whichweremappedtonaicscodesforthe2004presentation.



loanSonapril22,2005,ncf’ssystemapplicationswereconvertedtosuntrust’ssystemapplications.insomecases,ncfclassifiedloansdifferentlyforfinancialreportingpurposescomparedtothesuntrustmethodology.whilepriortotheconversionncfloanaccountsweremappedascloselyaspos-sibletosuntrust’sclassifications,itwasanticipatedthatadditionalreclas-sificationscouldoccuroncethesystemsconversionswerecompleted.thecompanydeemeditimpracticaltorestatepriorperiodsforshiftswithinloananddepositcategoriesresultingfromthesystemsapplicationconver-sions.however,thecompanyhasestimatedtheapproximateimpactofthereclassificationsoncertainloancategoriesasdescribedbelow.

thecompany’sloanportfolioincreased$13.1billion,or12.9%,fromdecember31,2004todecember31,2005.commercialloansincreased$1.9billion,or6.1%,comparedtodecember31,2004duetogrowthinlargecorporateloansandcontinuedgrowthinthesmalltomid-sizedcom-mercialportfolios.thecompanyestimatedtherewereapproximately$3billionofcommercialrealestateloansthatwereclassifiedascommercialloansasofdecember31,2004.consideringtheimpactofthesystemscon-versions,theestimatedcommercialloangrowthratewasestimatedtobeinthelowdoubledigitrangeandcommercialrealestatewasestimatedtobedownslightlycomparedtodecember31,2004.residentialmortgagesincreased$5.3billion,or21.7%,comparedtodecember31,2004.thisgrowthwasduetocontinueddemandforportfolioproducts.thecompanyestimatedtherewasapproximately$2billionofresidentialmortgageswhichwereincludedintheconstructionandconsumercategoriesasofdecember31,2004.consideringtheimpactofthesystemsconversions,theestimatedresidentialmortgagegrowthratewasestimatedtobeinlowdoubledigitrangecomparedtodecember31,2004.homeequityloansincreased$2.1billion,or18.4%,comparedtodecember31,2004,primar-ilyduetoanincreasedsalesfocusthroughtheretailnetwork.thecompanyestimatesthesystemsconversionshadminimalimpactonthehomeequitycategory.

loansheldforsale,whichpredominantlyconsistsofwarehousedmortgageloans,were$13.7billion,anincreaseof$7.1billion,or108.1%,fromdecember31,2004.theincreasewasduetocontinuedstrongmort-gageproductionresultingfromthecompany’sfocusongrowingitsmort-gagebusiness.

allowanceforloananDleaSeloSSeSsuntrustcontinuouslymonitorsthequalityofitsloanportfolioandmain-tainsanalllsufficienttoabsorbprobablelossesinherentinitstotalloanportfolio.thecompanyiscommittedtotheearlyrecognitionofproblemloansandtoanappropriateandadequatelevelofallowance.atyearend2005,thecompany’stotalallowancewas$1.0billion,whichrepresented0.90%ofyearendloans.

inadditiontothereviewofcreditqualitythroughtheongoingcreditreviewprocesses,thecompanyemploysavarietyofmodelingandestima-tiontoolsformeasuringcreditriskthatareusedtoconstructanappropriateallowanceforcreditlosses.thecompany’sallowanceframeworkhasthreebasicelements:aformula-basedcomponentforpoolsofhomogeneousloans;specificallowancesforloansreviewedforindividualimpairment;andanon-pool-specificallowancebasedonotherinherentriskfactorsandimprecisionassociatedwithmodelingandestimationprocesses.thisframeworkenablesthecompanytobetteralignlossestimationpracticeswiththedifferenttypesofcreditriskinherentintheloanportfolio.

thefirstelement—thegeneralallowanceforhomogeneousloanpools—isdeterminedbyapplyingallowancefactorstopoolsofloanswithintheportfoliothathavesimilarcharacteristicsintermsoflineofbusi-nessandproducttype.thegeneralallowancefactorsaredeterminedusingabaselinefactorthatisdevelopedfromananalysisofhistoricalcharge-offexperienceandexpectedlosses,whichareinturnbasedonestimatedprob-abilitiesofdefaultandlossesgivendefaultderivedfromaninternalriskrat-ingprocess.thesebaselinefactorsaredevelopedandappliedtothevariousloanpools.adjustmentsaremadetothebaselinefactorforspecificloanpoolsbasedonanassessmentofinternalandexternalinfluencesoncreditqualitythathavenotyetbeenreflectedinthehistoricallossorrisk-rat-ingdata.theseinfluencesmayincludeelementssuchaschangesincreditunderwritingorrecentobservableassetqualitytrends.finally,thebaselinefactorsareadjustedusinganumberofmodelswhichareintendedtocom-pensateforinternalandexternalportfolioandeconomicinfluencesthatmaynotbecapturedintheadjustedbaselinefactors.thecompanycontin-uallyevaluatesitsallowancemethodologyseekingtorefineandenhancethisprocessasappropriate,anditislikelythatthemethodologywillevolveovertime.asofdecember31,2005and2004,thegeneralallowancecalcu-lationstotaled$929.3millionand$920.8million,respectively.theincrease

taBle9•allowanceforloanandleaselosses asofDecember31(dollarsinmillions) 20051 20041 20032 2002 2001 2000allocationbyloantypecommercial $439.6 $433.0 $369.3 $408.5 $435.8 $389.0realestate 394.1 369.7 159.3 150.8 145.5 190.2consumerloans 109.4 159.6 344.3 332.8 251.3 252.3non-poolspecificelement 85.0 87.7 69.0 38.0 34.5 43.0 total $1,028.1 $1,050.0 $941.9 $930.1 $867.1 $874.5Yearendloantypesasapercentoftotalloanscommercial 29.2% 31.6% 38.2% 39.4% 42.0% 42.6%realestate 58.7 55.2 47.0 44.5 42.3 43.0consumerloans 12.1 13.2 14.8 16.1 15.7 14.4 total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%1the2005and2004allocationreflectstheimplementationofanewalllmethodologythatismoregranularthaninpriorperiods.thenewmethodologysegregatestheportfoliointo17sub-portfoliosandincorporatesaweightedaverageofexpectedlossderivedfromaninternalriskratingsystem.the2005and2004allocationalsoincludestheacquiredportfolioofncf.

2in2003andpriorperiods,theallocationreflectedanapportionmentofthealllthathadbeencategorizedas“environmentalfactors,”whichisnowincludedinthecompany’shomeogeneousloanpoolestimates.


wasprimarilyduetogrowthincommercialandrealestateloans,partiallyoffsetbyimprovedcreditqualityintheindirectautomobileportfolio.

thesecondelementofthealllanalysisinvolvestheestimationofallowancesspecifictoindividualimpairedloans.inthisprocess,specificallowancesareestablishedforcommercialandresidentialloansgreaterthan$0.5millionbasedonathoroughanalysisofthemostprobablesourcesofrepayment,includingdiscountedfuturecashflows,liquidationofcollateral,orthemarketvalueoftheloanitself.asofdecember31,2005and2004,thespecificallowancerelatedtoimpairedloanstotaled$13.8millionand$41.5million,respectively.thedeclinewasprimarilyduetoa$17.4millioncharge-offofdeltaairlines,inc.leaseexposure,whichwasfullyreservedasofdecember31,2004.

thethirdelementoftheallowanceisthenon-pool-specificele-mentwhichaddressesinherentlossesthatarenototherwisecapturedinthefirsttwoelements.thequalitativefactorsofthisthirdallowanceele-mentaresubjectiveandrequireahighdegreeofmanagementjudgment.thesefactorsincludetheinherentimprecisionsinmathematicalmodels,recenteconomicuncertainty,lossesincurredfromrecentevents,andlag-gingorincompletedata.asofdecember31,2005and2004,theallowanceestimatedinthethirdelementtotaled$85.0millionand$87.7million,respectively.

beginningin2004,thecompany’sallowanceframeworkutilizedatwodimensionalriskratingapproachtoestimateexpectedlossattheinstru-mentlevel,aggregatedbygeneralallowanceloanpool.thisriskratingstructure,withdimensionsforprobabilityofdefaultandlossgivendefault,derivesatotalof114distinctexpectedlossfactorsavailabletoeachpool.thepriormethodologyutilizedariskratingsystemwithonlyeightgrades.throughtheuseofthismoreprecisegradingsystem,thecompanyderiveditsestimationoflosstothemostgranularlevel(i.e.,theindividualloanlevel),therebygeneratingamorepreciseestimationofeachloanpool’sexpectedloss.themoregranularprocessenabledustoidentifyincurredlossesatamorespecificleveltherebyallowingustomorepreciselyallocateourallowanceforloanlossesbyloantype.

thecompany’sprovisionforloanlossesin2005was$176.9million,whichwas$21.9millionlessthannetcharge-offsof$198.8million.thecomparableprovisionandnetcharge-offamountsfor2004were$135.5millionand$201.2million,respectively.provisionexpenseincreasedfrom2004to2005dueprimarilytoloangrowth.netcharge-offsfor2005represented0.18%ofaverageloans,comparedto0.23%ofaverageloansfor2004.loanrecoveriesfor2005were$116.4million,or$1.6millionhigherthanin2004.theratioofrecoveriestototalcharge-offsincreasedto36.9%from36.3%duetoanincreaseinconsumerrecoveriesalongwithlower

taBle10•Summaryofloanandleaselossesexperience twelveMonthsendedDecember31(dollarsinmillions) 2005 2004 2003 2002 2001 2000allowanceforloanandleaselossesbalance–beginningofperiod $1,050.0 $941.9 $930.1 $867.1 $874.5 $871.3allowancefromacquisitionsandotheractivity–net — 173.8 9.3 15.5 (10.2) —provisionforloanlosses 176.9 135.5 313.6 469.8 275.2 134.0charge-offs commercial (112.0) (114.6) (197.7) (297.0) (220.0) (121.0) realestate: construction (6.0) (4.1) (0.8) (0.8) (0.3) (0.2) residentialmortgages (47.3) (32.8) (22.1) (16.7) (10.8) (7.8) other (3.1) (5.5) (5.6) (17.8) (5.9) (3.3) consumerloans (146.8) (159.0) (168.1) (157.8) (89.0) (57.5) totalcharge-offs (315.2) (316.0) (394.3) (490.1) (326.0) (189.8)recoveries commercial 36.3 49.9 39.8 28.8 25.4 25.8 realestate: construction 0.8 0.1 0.4 0.4 0.4 0.3 residentialmortgages 14.3 9.7 5.0 3.7 2.2 3.3 other 2.6 1.4 1.4 3.9 1.8 3.9 consumerloans 62.4 53.7 36.6 31.0 23.8 25.7 totalrecoveries 116.4 114.8 83.2 67.8 53.6 59.0

netcharge-offs (198.8) (201.2) (311.1) (422.3) (272.4) (130.8)balance–endofperiod $1,028.1 $1,050.0 $941.9 $930.1 $867.1 $874.5averageloans $108,742.0 $86,214.5 $76,137.9 $71,270.4 $70,023.0 $70,044.3yearendloansoutstanding 114,554.9 101,426.2 80,732.3 73,167.9 68,959.2 72,239.8ratios:allowancetoyearendloans 0.90% 1.04% 1.17% 1.27% 1.26% 1.21%allowancetononperformingloans 346.9 281.3 268.1 182.0 155.4 215.8netcharge-offstoaverageloans 0.18 0.23 0.41 0.59 0.39 0.19provisiontoaverageloans 0.16 0.16 0.41 0.66 0.39 0.19recoveriestototalcharge-offs 36.9 36.3 21.1 13.8 16.4 31.1



overallgrosscharge-offs.recoveriesandcharge-offsfor2005werefavor-ablyaffectedprimarilybyimprovementsintheconsumersegmentsoftheportfolio.

theratiooftheallowancetononperformingloansincreasedto346.9%asofdecember31,2005from281.3%asofdecember31,2004.theimprovementinthisratiowasduetothedecreaseinnonperformingloans.

inadditiontothealll,thecompanyhad$3.6millionand$7.8mil-lioninotherliabilitiesasofdecember31,2005anddecember31,2004,respectively,thatrepresentsareserveforcertainunfundedcommitments.

thecompany’scharge-offpolicymeetsorexceedsregulatorymini-mums.lossesonunsecuredconsumerloansarerecognizedat90dayspastduecomparedtotheregulatorylosscriteriaof120days.securedcon-sumerloansaretypicallycharged-offbetween120and180days,depend-ingonthecollateraltype,incompliancewithfederalfinancialinstitutionsexaminationcouncil’sguidelines.commercialloansandrealestateloansaretypicallyplacedonnonaccrualwhenprincipalorinterestispastduefor90daysormoreunlesstheloanisbothsecuredbycollateralhavingrealiz-ablevaluesufficienttodischargethedebtin-fullandtheloanisinthelegalprocessofcollection.accordingly,securedloansmaybecharged-downtotheestimatedvalueofthecollateralwithpreviouslyaccruedunpaidinter-estreversed.subsequentcharge-offsmayberequiredasaresultofchangesinthemarketvalueofcollateralorotherrepaymentprospects.

proviSionforloanloSSeStheprovisionforloanlossesistheresultofadetailedanalysisestimatinganappropriateandadequateallowanceforloanandleaselosses(“alll”).theanalysisincludestheevaluationofimpairedloansasprescribedunderstatementoffinancialaccountingstandards(“sfas”)nos.114“accountingbycreditorsforimpairmentofaloan”and118“accountingbycreditorsforimpairmentofaloan–incomerecognitionanddisclosures,”

andpooledloansandleasesasprescribedundersfasno.5,“accountingforcontingencies.”fortheyearendeddecember31,2005,theprovisionforloanlosseswas$176.9million,anincreaseof$41.4million,or30.5%,comparedto2004.theincreaseinprovisionexpensewasprimarilyduetoloangrowth.

fortheyearendeddecember31,2005totalnetcharge-offswere$198.8million,adecreaseof$2.4million,or1.2%,from2004.fortheyearendeddecember31,2005,provisionforloanlosseswas$21.9millionlessthannetcharge-offs.thiswas,inpart,duetothe$17.4millioncharge-offofaleverageleaseforaircrafttodeltaairlines,inc.,whichhadbeenfullyreservedinthealllasofdecember31,2004.inaddition,thecompanycontinuedtoexperienceimprovedcreditqualityacrossitsloanportfolios,sustainedeconomicimprovementwithinthecompany’sfootprint,andashiftinthecompositionoftheloanportfoliotoincludeahigherpercent-ageofloanssecuredbyresidentialrealestate,allofwhichhadadownwardinfluenceonthealll.however,significantgrowthinthecommercialloanportfolioin2005hadanupwardinfluenceonthealll.fortheyearendeddecember31,2004,provisionforloanlosseswas$65.7millionlessthannetcharge-offs.thenetcharge-offsfor2004wereprimarilyduetothecompanyrealizinglosseswithinitscommercialloanportfolio.however,duetoimprovedcreditqualityandotherfactorsmentionedabovethatcar-riedinto2005,thealllprocessdidnotindicatetheneedtomaintainatthesamelevelortoincreasethealll.

nonperforMingaSSetSnonperformingassets,whichconsistofnonaccrualloans,restructuredloans,otherrealestateowned(“oreo”)andotherrepossessedassetstotaled$334.2millionatdecember31,2005,adecreaseof$76.5million,or18.6%,fromdecember31,2004.thedecreasewasattributabletoa$77.0million,or20.6%,declineinnonperformingloansandresultedinadeclineintheratioofnonperformingassetstototalloansplusoreoand

taBle11•nonperformingassetsandaccruingloanspastDue90DaysorMore

asofDecember31(dollarsinmillions) 2005 2004 2003 2002 2001 2000nonperformingassetsnonaccrualloans commercial $70.9 $130.9 $165.9 $351.3 $377.6 $273.6 realestate construction 24.4 32.8 4.4 10.0 4.0 2.2 residentialmortgages 103.3 104.5 85.4 82.5 79.9 81.8 other 44.6 36.7 48.6 38.0 62.8 29.0 consumerloans 28.7 49.3 32.2 29.2 33.8 18.7 totalnonaccrualloans 271.9 354.2 336.5 511.0 558.1 405.3 restructuredloans 24.4 19.1 14.8 — — — totalnonperformingloans 296.3 373.3 351.3 511.0 558.1 405.3 otherrealestateowned 30.7 28.6 16.5 18.0 20.7 23.0 otherrepossessedassets 7.2 8.8 10.3 13.0 21.0 10.3 totalnonperformingassets $334.2 $410.7 $378.1 $542.0 $599.8 $438.6ratios nonperformingloanstototalloans 0.26% 0.37% 0.44% 0.70% 0.81% 0.56% nonperformingassetstototalloans plusoreoandotherrepossessedassets 0.29 0.40 0.47 0.74 0.87 0.61accruingloanspastDue90DaysorMore $241.8 $214.3 $196.4 $177.9 $185.5 $181.2


taBle12•SecuritiesavailableforSale asofDecember31 amortized unrealized unrealized fair(dollarsinmillions) cost gains losses valueu.s.treasuryandotheru.s.government agenciesandcorporations2005 $2,593.8 $0.6 $47.4 $2,547.02004 2,543.9 7.2 13.0 2,538.12003 2,286.4 14.0 7.9 2,292.5statesandpoliticalsubdivisions2005 $914.1 $15.5 $3.9 $925.72004 841.6 25.1 1.1 865.62003 363.0 17.8 0.3 380.5asset-backedsecurities2005 $1,630.8 $8.2 $26.3 $1,612.72004 2,590.0 7.6 19.1 2,578.52003 5,417.9 36.2 26.1 5,428.0mortgage-backedsecurities2005 $17,354.5 $11.6 $343.5 $17,022.62004 18,367.0 58.2 99.9 18,325.32003 12,181.1 119.3 26.9 12,273.5corporatebonds2005 $1,090.6 $2.6 $22.8 $1,070.42004 1,667.1 19.7 7.5 1,679.32003 2,097.2 44.0 29.5 2,111.7othersecurities1

2005 $1,370.0 $1,977.4 — $3,347.42004 921.3 2,032.9 — 2,954.22003 646.8 2,473.9 — 3,120.7totalsecuritiesavailableforsale2005 $24,953.8 $2,015.9 $443.9 $26,525.82004 26,930.9 2,150.7 140.6 28,941.02003 22,992.4 2,705.2 90.7 25,606.91includesthecompany’sinvestmentin48,266,496sharesofcommonstockofthecoca-colacompany.

otherrepossessedassetsto0.29%atdecember31,2005from0.40%atdecember31,2004.nonperformingloansatdecember31,2005included$271.9millionofnonaccrualloansand$24.4millionofrestructuredloans,thelatterofwhichrepresentsagroupofconsumerworkoutloans.

nonaccrualloansdecreased$82.3million,or23.2%,comparedto2004,withamajorityofthedeclineinthecommercialloancategory.thisdeclineresultedfromareductioninnewadditionstolargecorporatenon-accrualloans,loansalesactivity,charge-offs,improvementincreditqualityandclientrepayment.

whenaloanisplacedonnonaccrual,unpaidinterestisreversedagainstinterestincome.interestincomeonnonaccrualloans,ifrecognized,iseitherrecordedusingthecashbasismethodofaccountingorrecog-nizedattheendoftheloanaftertheprincipalhasbeenreducedtozero,dependingonthetypeofloan.ifandwhenanonaccrualloanisreturnedtoaccruingstatus,theaccruedinterestatthedatetheloanisplacedonnonaccrualstatus,andforegoneinterestduringthenonaccrualperiod,arerecordedasinterestincomeonlyafterallprincipalhasbeencollectedforcommercialloans.forconsumerloansandresidentialmortgageloans,theaccruedinterestatthedatetheloanisplacedonnonaccrualstatus,andforegoneinterestduringthenonaccrualperiod,arerecordedasinter-

estincomeasofthedatetheloannolongermeetsthe90and120dayspastduecriteria,respectively.duringthetwelvemonthsendeddecember31,2005,2004and2003,cashbasisinterestincomefornonaccrualloansamountedto$13.2million,$19.0millionand$14.1million,respectively.asofdecember31,2005,2004and2003,estimatedinterestincomeof$28.3million,$21.6millionand$33.7million,respectively,wouldhavebeenrecordedifallsuchloanshadbeenaccruinginterestaccordingtotheiroriginalcontractterms.

accruingloanspastdueninetydaysormoreincreased$27.5mil-lion,or12.8%,fromdecember31,2004to$241.8millionasofdecember31,2005.theincreaseprimarilyrelatestotheinclusionofpreviouslysolddelinquentgovernmentnationalmortgageassociationloans,whichthecompanyhasanoptiontorepurchase.

SecuritieSavailaBleforSaletheinvestmentportfolioismanagedaspartoftheoverallassetandliabilitymanagementprocesstooptimizeincomeandmarketperformanceoveranentireinterestratecyclewhilemitigatingrisk.thecompanymanagedtheportfolioin2005withthegoalofcontinuingtoimproveyieldwhilereduc-ingthesizetopartiallyfundrobustloangrowth.theaverageyieldfor2005



taBle13•compositionofaverageDeposits YearendedDecember31 percentoftotal(dollarsinmillions) 2005 2004 2003 2005 2004 2003noninterestbearing $24,315.0 $21,047.1 $17,826.9 22.0% 24.2% 22.3%nowaccounts 17,213.7 13,777.5 11,702.0 15.6 15.8 14.6moneymarketaccounts 25,589.2 22,864.7 22,218.5 23.2 26.2 27.8savings 6,320.0 7,225.4 6,259.3 5.7 8.3 7.8consumertime 12,526.4 8,333.5 7,975.4 11.4 9.6 10.0othertime 7,390.7 3,843.3 3,461.6 6.7 4.4 4.3 totalconsumerandcommercialdeposits 93,355.0 77,091.5 69,443.7 84.6 88.5 86.8brokereddeposits 10,182.2 4,273.5 3,662.0 9.2 4.9 4.6foreigndeposits 6,869.3 5,767.9 6,933.3 6.2 6.6 8.6 totaldeposits $110,406.5 $87,132.9 $80,039.0 100.0% 100.0% 100.0%

improvedto4.50%comparedto3.97%for2004.theaverageyieldcontin-uedtoimproveto4.61%forthefourthquarterof2005.givenarelativelyflatyieldcurveandlimitedmarketopportunities,weshortenedtheesti-matedaveragelifeoftheportfolioto3.3yearsatdecember31,2005from3.7yearsatdecember31,2004.likewise,theportfolio’saveragedurationshortenedto2.8asofdecember31,2005from3.0asofdecember31,2004.durationisameasureoftheestimatedpricesensitivityofabondportfoliotoanimmediatechangeininterestrates.adurationof2.8sug-gestsanexpectedpricechangeof2.8%foraonepercentchangeininter-estrates,withoutconsideringanyembeddedcallorprepaymentoptions.thesizeofthesecuritiesportfoliodecreased$2.4billion,or8.3%,to$26.5billion,or14.8%,oftotalassetsatdecember31,2005,downfrom$28.9billion,or18.2%,oftotalassetsatdecember31,2004.consistentwithasset/liabilitymanagementcommittee(“alco”)objectives,netsecuri-tieslossesof$7.2millionwererealizedduring2005,primarilyinthefirstquarter,toimprovefutureincomebysellingshorterdurationsecuritieswithloweryieldsandreinvestinginlongerdurationsecuritieswithhigheryields.netsecuritieslossesrealizedfortheyearendeddecember31,2004were$41.7million.thecurrentmixofsecuritiesasofdecember31,2005isshownintable12,securitiesavailableforsale.

thecarryingvalueoftheinvestmentportfolio,allofwhichisclassi-fiedassecuritiesavailableforsale,reflected$1.6billioninnetunrealizedgainsatdecember31,2005,includinga$1.9billionunrealizedgainonthecompany’sinvestmentincommonstockofthecoca-colacompany.thenetchangeinunrealizedgainofthiscommonstockinvestmentdecreased$58.3million,whilethechangeinthenetunrealizedgainontheremainderoftheportfoliodecreased$379.8millioncomparedtodecember31,2004,reflectingtheincreaseinmarketinterestratesduring2005.thesechangesinmarketvaluedidnotaffectthenetincomeofsuntrust,butwereincludedinothercomprehensiveincome.thecompanyreviewsallofitssecuritieswithunrealizedlossesforotherthantemporaryimpairmentatleastquar-terly.aspartofthesereviewsin2004,thecompanydeterminedthataparticularasset-backedsecuritywasimpairedforother-than-temporaryreasonsandrecognizedasecuritylossof$15.3million.thecompanyhasdeterminedthattherewerenoadditionalother-than-temporaryimpair-mentsassociatedwithsecuritiesasofdecember31,2005.

DepoSitSaverageconsumerandcommercialdepositsincreased$16.3billion,or21.1%,in2005andcomprised84.6%,88.5%,and86.8%ofaveragetotaldepositsin2005,2004,and2003,respectively.thegrowthwasprimarily

duetotheacquisitionofncfandinitiativestogrowretaildeposits.timedepositgrowthbenefitedfromamarketingcampaignthatbeganinthefirstquarterof2005andcontinuedthroughthethirdquarter.additionally,onaverage,noninterest-bearingdepositsgrew$3.3billion,or15.5%,nowaccountsincreased$3.4billion,or24.9%,consumertimegrew$4.2bil-lion,or50.3%,andmoneymarketaccountsgrew$2.7billion,or11.9%,comparedto2004.theonlydepositcategorytodeclinewassavings,whichdeclined$905.4million,or12.5%,asconsumerstookadvantageofotheropportunitiesduetotheriseinshort-terminterestrates.

averagebrokereddepositsincreased$5.9billion,or138.3%,andaver-ageforeigndepositsincreased$1.1billion,or19.1%.theincreasereflectsthefundingrequiredforearningassetgrowththatwasinexcessofthecon-sumerandcommercialdepositgrowth.

capitalreSourceSthecompany’sprimaryregulator,thefederalreserve,measurescapitaladequacywithinaframeworkthatmakescapitalrequirementssensitivetotheriskprofilesofindividualbankingcompanies.theguidelinesweightassetsandoffbalancesheetriskexposures(riskweightedassets)accordingtopredefinedclassifications,creatingabasefromwhichtocomparecapi-tallevels.tier1capitalprimarilyincludesrealizedequityandqualifiedpre-ferredinstruments,lesspurchaseaccountingintangiblessuchasgoodwillandcoredepositintangibles.totalcapitalconsistsoftier1capitalandtier2capital,whichincludesqualifyingportionsofsubordinateddebt,allow-anceforloanlossesuptoamaximumof1.25%ofriskweightedassets,and45%oftheunrealizedgainonequitysecurities.

thecompanyandsuntrustbank(the“bank”)aresubjecttominimumtier1risk-basedcapitalandtotalcapitalratiosof4%and8%,respec-tively,ofriskweightedassets.tobeconsidered“well-capitalized,”ratiosof6%and10%,respectively,areneeded.additionally,thecompanyandthebankaresubjecttotier1leverageratiorequirements,whichmeasurestier1capitalagainstaverageassets.theminimumandwell-capitalizedratiosare3%and5%,respectively.asofdecember31,2005,thecompanyhadtier1,totalcapital,andtier1leverageratiosof7.01%,10.57%and6.65%,respectively.thiscomparestoratiosasofdecember31,2004of7.16%,10.36%,and6.64%,respectively.suntrustiscommittedtoremain-ingwell-capitalized.

in2004,thecompanyissuedapproximately76.4millionsharesofsuntrustcommonstockwithanaggregatevalueofapproximately$5.4billionforthepurchaseofncf.theremaining$1.8billionofthepurchase


pricewasfundedwithcashgeneratedbyacombinationof$800millionofwholesalecdsissuedinmayof2004and$1billionofseniordebtissuedinaugustof2004.

suntrustmanagescapitalthroughdividendsandsharerepurchasesauthorizedbythecompany’sboardofdirectors.managementassessescapitalneedsbasedonexpectedgrowthandthecurrenteconomicclimate.in2005,thecompanyrepurchased2,775,000sharesfor$196.4millioncomparedto200,000sharesfor$14.1millionrepurchasedin2004.asofdecember31,2005,thecompanywasauthorizedtopurchaseuptoanadditional3.3millionsharesundercurrentboardauthorization.

thecompanydeclaredcommondividendstotaling$795.0millionduring2005,or$2.20pershare,onnetincomeof$1,987.2million.thedividendpayoutratiowas40.0%in2005versus38.4%in2004.

onemeasureofcapitaladequacyisthetangibleequityratio,whichiscalculatedusingtotalshareholders’equitylesspurchaseaccountingintan-gibles,includinggoodwill,dividedbytotalassetslesspurchaseaccountingintangibles.thisratiowas5.56%asofdecember31,2005versus5.67%asofdecember31,2004.managementanalyzesthecompany’scapitalposi-tionwithandwithouttheimpactofthestockofthecoca-colacompany.asofdecember31,2005,theamountintotalshareholders’equityrelatedtothissecurityholdingwas$1.2billioncomparedto$1.3billionasofdecember31,2004.thisdeclineaccountedfortwobasispointsofthe11basispointsdeclineinthetangibleequityratio.theremainderofthedeclinewasattributedtostrongearningassetgrowth.

enterpriSeriSkManageMentinthenormalcourseofbusiness,suntrustisexposedtovariousrisks.tomanagethemajorrisksthatareinherenttothecompanyandtoprovidereasonableassurancethatkeybusinessobjectiveswillbeachieved,thecompanyhasestablishedanenterpriseriskgovernanceprocessandformedthesuntrustenterpriseriskprogram(“serp”).moreover,thecompanyhaspoliciesandvariousriskmanagementprocessesdesignedtoeffectivelyidentify,monitor,andmanagerisk.

managementcontinuallyrefinesandenhancesitsriskmanagementpolicies,processes,andprocedurestomaintaineffectiveriskmanage-mentandgovernance,includingidentification,measurement,monitor-ing,control,mitigation,andreportingofallmaterialrisks.overthelastfewyears,thecompanyhasenhancedriskmeasurementapplicationsandsystemscapabilitiesthatprovidemanagementinformationonwhetherthecompanyisbeingappropriatelycompensatedfortheriskprofileithasadopted.thecompanybalancesitsstrategicgoals,includingrevenueandprofitabilityobjectives,withtherisksassociatedwithachievingitsgoals.

effectiveriskmanagementisanimportantelementsupportingbusinessdecisionmakingatsuntrust.

enterpriseriskmanagement’sfocusisonsynthesizing,assessing,reportingandmitigatingthefullsetofrisksattheenterpriselevel,providingseniormanagementwithaholisticpictureoftheorganization’sriskprofile.thecompanyimplementedanenterpriseriskmanagementframeworkthatwillimprovethecompany’sabilitytomanageitsaggregateriskprofile.atthecoreoftheframeworkaresuntrust’sriskvisionandmission.

Risk Vision: To deliver sophisticated risk management capabilities con-sistent with those of top-tier financial institutions that support the needs of the business, enable risk-enlightened management and the optimal alloca-tion of capital.

Risk Mission: To promote a strong risk management culture which facili-tates accountability, risk-informed decisions consistent with the Company’s strategic objectives and the creation of shareholder value.

thecompany’schiefriskofficer(“cro”)reportstothechiefexecutiveofficerandisresponsiblefortheoversightoftheriskmanage-mentorganizationaswellasriskgovernanceprocesses.thecroprovidesoverallleadership,vision,anddirectionforthecompany’senterpriseriskmanagementframework.

organizationally,thecompanymeasuresandmanagesriskaccord-ingtothreemainriskcategories:creditrisk,marketrisk(includingliquid-ityrisk),andoperationalrisk(includingcompliancerisk).thechiefcreditofficermanagesthecompany’screditriskprogram.thechieffinancialofficerandtreasurermanagethecompany’smarketriskprogram.thechiefoperationalriskofficermanagesthecompany’soperationalriskprogram.thesethreeareasofriskaremanagedonaconsolidatedbasisunderthecompany’senterpriseriskmanagementframework,whichalsotakesintoconsiderationlegalandreputationalriskfactors.

in2005,suntrustmadesignificantenhancementstoitsenter-priseriskmanagementfunction.themodelValidationandenterpriseriskmeasurementgroupswereformedtoprovidereasonableassurancethatrisksinherentinmodeldevelopmentandusageareproperlyidenti-fiedandmanagedandtooverseethecalculationofeconomiccapital.serpwascreatedtoensurethattheapproachandplansforriskmanage-mentarealignedtothevisionandmissionofenterpriseriskmanagementaswellastomanageregulatorycompliance.inaddition,serp’sgoalistoensurethecompany’sfuturecompliancewiththebaseliicapitalaccord.Keyobjectivesofserpincludeincorporatingriskmanagementprinciplesthatencompasscompanyvaluesandstandardsandaredesignedtoguiderisk-takingactivityandmaximizeperformancethroughthebalanceofriskandrewardandleveraginginitiativesdrivenbyregulatoryrequirementstodelivercapabilitiestobettermeasureandmanagerisk.

taBle14•capitalratios asofDecember31(dollarsinmillions) 2005 2004 2003 2002 2001 2000tier1capital1 $11,079.8 $9,783.7 $8,930.0 $8,106.1 $7,994.2 $6,850.6totalcapital 16,713.6 14,152.6 13,365.9 12,609.8 12,144.2 10,488.9risk-weightedassets 158,132.3 136,642.8 113,711.3 108,501.1 99,700.9 96,656.7risk-basedratios: tier1capital 7.01% 7.16% 7.85% 7.47% 8.02% 7.09% totalcapital 10.57 10.36 11.75 11.62 12.18 10.85tier1leverageratio 6.65 6.64 7.37 7.30 7.94 6.98totalshareholders’equitytoassets 9.40 10.06 7.76 7.47 7.98 7.951tier1capitalincludestrustpreferredobligationsof$1.9billionattheendof2005and2004,$1.7billionattheendof2003,2002and2001,and$1.1billionattheendof2000.



aspartofitsriskgovernanceframework,thecompanyhasalsoestab-lishedvariousriskmanagement-relatedcommittees.thesecommitteesarejointlyresponsibleforensuringadequateriskmeasurementandman-agementintheirrespectiveareasofauthority.thesecommitteesinclude:alco,corporateproductriskassessmentcommittee(“prac”),creditmanagementcommittee,operationalriskcommitteeandserpsteeringcommittee.additionally,thecompanyhasestablishedanenterpriseriskcommittee(“erc”),chairedbythecro,whichisresponsibleforsupport-ingthecroinmanagingthecompany’saggregateriskprofile.theercconsistsofvariousseniorexecutivesthroughoutthecompanyandmeetsonamonthlybasis.

theboardofdirectorsiswhollyresponsibleforoversightofthecompany’scorporateriskgovernanceprocess.in2005,thecompanyformedtheriskcommitteeoftheboard,whichassiststheboardofdirectorsinexecutingthisresponsibility.

creDitriSkManageMentcreditriskreferstothepotentialforeconomiclossarisingfromthefail-ureofsuntrustclientstomeettheircontractualagreementsonallcreditinstruments,includingon-balancesheetexposuresfromloansandleases,contingentexposuresfromunfundedcommitments,lettersofcredit,creditderivatives,andcounterpartyriskunderinterestrateandforeignexchangederivativeproducts.ascreditriskisanessentialcomponentofmanyoftheproductsandservicesprovidedbythecompanytoitsclients,theabilitytoaccuratelymeasureandmanagecreditriskisintegraltomaintainboththelong-runprofitabilityofitslinesofbusinessandcapitaladequacyoftheenterprise.

suntrustmanagesandmonitorsextensionsofcreditriskthroughinitialunderwritingprocessesandperiodicreviews.suntrustmaintainsunderwritingstandardsinaccordancewithcreditpoliciesandprocedures,andcreditriskmanagementconductsindependentriskreviewstoensureactivecompliancewithallpoliciesandprocedures.creditriskmanagementperiodicallyreviewsitslinesofbusinesstomonitorassetqualitytrendsandtheappropriatenessofcreditpolicies.inparticular,totalborrowerexposurelimitsareestablishedandconcentrationriskismonitored.suntrusthasmadeamajorcommitmenttomaintainandenhancecomprehensivecreditsystemsinordertobecompliantwithbusinessrequirementsandevolv-ingregulatorystandards.aspartofacontinuousimprovementprocess,suntrustcreditriskmanagementevaluatespotentialenhancementstoitsriskmeasurementandmanagementtools,implementingthemasappropri-atealongwithamendedcreditpoliciesandprocedures.

borrower/counterparty(obligor)riskandfacilityriskareevaluatedusingthecompany’sriskratingmethodology,whichhasbeenimplementedinthelinesofbusinessrepresentingthelargesttotalcreditexposures.suntrustusesvariousriskmodelsintheestimationofexpectedandunex-pectedlosses.thesemodelsincorporatebothinternalandexternaldefaultandlossexperience.totheextentpossible,thecompanycollectsinternaldatatoensurethevalidity,reliability,andaccuracyofitsriskmodelsusedindefaultandlossestimation.

operationalriSkManageMentsuntrustfacesongoingandemergingriskandregulatorypressurerelatedtotheactivitiesthatsurroundthedeliveryofbankingandfinancialprod-ucts.coupledwithexternalinfluencessuchasmarketconditions,fraudu-lentactivities,disasters,securityrisks,country,andlegalrisk,thepotentialforoperationalandreputationallosshasincreasedsignificantly.

suntrustbelievesthateffectivemanagementofoperationalriskplaysamajorroleinboththelevelandthestabilityoftheprofitabilityoftheinstitution.operationalriskistheriskofmonetarylossresultingfrominadequateorfailedinternalprocesses,peopleandsystems,orfromexter-nalevents.tomeetthedemandsoftoday’sbusinessriskenvironment,suntrusthasestablishedacorporateleveloperationalriskmanagementfunction,headedbythecro,toimplementa“bestinclass”operationalriskmanagementprogramthatwillreducetheriskofoperationallossesandenhanceshareholdervalue.

twocommitteeshavebeenformedtomanageoperationalriskintheorganization-theoperationalriskcommittee(“orc”)andtheoperationalriskforum(“orf”).theorciscomposedofseniormanagerswhoreviewanddiscusspotentialmaterialoperationalriskissuesfacedbythecompany.theorfoperatesasacommunicationsgroupdisseminatingoperationalriskinformationtotheriskmanagersforthelinesofbusiness/functionsofthecompany,andprovidingfeedbacktocorporateriskmanagementandexecutiveriskcommitteesonrisk-relatedstrategiesandissues.

thecorporategovernancestructurealsoincludesariskmanagerandsupportstaffembeddedwithineachlineofbusinessandcorporatefunc-tion.theseriskmanagers,whilereportingdirectlytotheirrespectivelineorfunction,facilitatecommunicationswiththecompany’sriskfunctionsandexecutetherequirementsofthecorporateframeworkandpolicy.theriskmanagerworkscloselywiththecorporateoperationalriskmanagementfunctiontoensureconsistencyandbestpractices.

akeycomponentoftheserpistheimplementationofarobustoperationalriskmanagementframeworkthatorganizationallyidentifies,assesses,controls,quantifies,monitors,andreportsonoperationalriskscompanywide.thegoalofthisframeworkistoimplementeffectiveopera-tionalrisktechniquesandstrategies,minimizeoperationallossesthroughenhancedcollectionandreportingoflosseventdata,andstrengthensuntrust’sperformancebyminimizingoperationalcapitalallocationrequirements.

MarketriSkManageMentmarketriskreferstopotentiallossesarisingfromchangesininterestrates,foreignexchangerates,equityprices,commoditypricesandotherrelevantmarketratesorprices.interestraterisk,definedastheexposureofnetinterestincomeandeconomicValueofequity(“eVe”)toadversemove-mentsininterestrates,issuntrust’sprimarymarketrisk,andmainlyarisesfromthestructureofthebalancesheet(non-tradingactivities).suntrustisalsoexposedtomarketriskinitstradingactivities,mortgageservicingrights,mortgagewarehouseandpipeline,andequityholdingsofthecoca-colacompanycommonstock.alcomeetsregularlyandisresponsibleforreviewingtheinterest-ratesensitivitypositionofthecompanyandestablishingpoliciestomonitorandlimitexposuretointerestraterisk.thepoliciesestablishedbyalcoarereviewedandapprovedbythecompany’sboardofdirectors.

Marketriskfromnon-tradingactivitiestheprimarygoalofinterestrateriskmanagementistocontrolexposuretointerestraterisk,bothwithinpolicylimitsapprovedbyalcoandtheboardandwithinnarrowerguidelinesestablishedbyalco.theselimitsandguidelinesreflectsuntrust’stoleranceforinterestrateriskoverbothshort-termandlong-termhorizons.

themajorsourcesofthecompany’snon-tradinginterestrateriskaretimingdifferencesinthematurityandrepricingcharacteristicsofassets


andliabilities,changesinrelationshipsbetweenrateindices(basisrisk),changesintheshapeoftheyieldcurve,andthepotentialexerciseofexplicitorembeddedoptions.suntrustmeasurestheserisksandtheirimpactbyidentifyingandquantifyingexposuresthroughtheuseofsophisticatedsim-ulationandvaluationmodels,aswellasdurationgapanalysis.

oneoftheprimarymethodsthatsuntrustusestoquantifyandman-ageinterestrateriskissimulationanalysis,whichisusedtomodelnetinter-estincomefromassets,liabilities,andderivativepositionsoveraspecifiedtimeperiodundervariousinterestratescenariosandbalancesheetstruc-tures.thisanalysismeasuresthesensitivityofnetinterestincomeoverarelativelyshorttimehorizon(twoyears).Keyassumptionsinthesimulationanalysis,andinthevaluationanalysisdiscussedbelow,relatetothebehav-iorofinterestratesandspreads,thechangesinproductbalancesandthebehaviorofloananddepositclientsindifferentrateenvironments.materialassumptionsincludetherepricingcharacteristicsandbalancefluctuationsofindeterminatematuritydeposits.

asthefuturepathofinterestratescannotbeknowninadvance,man-agementusessimulationanalysistoprojectnetinterestincomeundervariousinterestratescenariosincludingimpliedforwards,expected(or“mostlikely”),anddeliberatelyextremeandperhapsunlikelyscenarios.theanalysesmayincluderapidandgradualrampingofinterestrates,rateshocks,spreadnarrowingandwidening,andyieldcurvetwists.usually,eachanalysisincorporateswhatmanagementbelievestobethemostappropriateassumptionsaboutclientbehaviorinaninterestratescenario,butinsomeanalyses,assumptionsaredeliberatelychangedtotestthecompany’sexposuretoaspecifiedeventorsetofevents.specificstrategiesarealsoanalyzedtodeterminetheirimpactonnetinterestincomelevelsandsensitivities.

thefollowingtablereflectstheestimatedsensitivityofnetinterestincometochangesininterestrates.thesensitivityismeasuredasaper-centagechangeinnetinterestincomeduetogradualchangesininterestrates(25basispointsperquarter)comparedtoforecastednetinterestincomeunderstableratesforthenexttwelvemonths.estimatedchangessetforthbelowaredependentonmaterialassumptionssuchasthoseprevi-ouslydiscussed.

ratechange estimated%changein(basispoints) netinterestincomeover12months dec.31,2005 dec.31,2004+100 (0.1)% 0.3%-100 0.7% (0.1)%

asindicated,agradualdecreaseininterestrateswouldincreasenetinterestincome.agradualincreasewouldtendtoreducenetinter-estincome,butbyanamountthatiswithinthepolicylimits.thus,thecompany’sinterestratesensitivitypositionisslightlyliabilitysensitive.whilesimulationsofmorerapidchangesininterestratesindicatemoresig-nificantfluctuationsinnetinterestincome,thecompanyisstillwithinthepolicylimits.

suntrustalsoperformsvaluationanalysis,whichisusedfordiscern-inglevelsofriskpresentinthebalancesheetandderivativepositionsthatmightnotbetakenintoaccountinthenetinterestincomesimulationanal-ysis.whereasnetinterestincomesimulationhighlightsexposuresoverarelativelyshorttimehorizon,valuationanalysisincorporatesallcashflowsovertheestimatedremaininglifeofallbalancesheetandderivativeposi-tions.thevaluationofthebalancesheet,atapointintime,isdefinedasthediscountedpresentvalueofassetcashflowsandderivativecashflows

minusthediscountedpresentvalueofliabilitycashflows,thenetofwhichisreferredtoaseVe.thesensitivityofeVetochangesinthelevelofinterestratesisameasureofthelonger-termrepricingriskandoptionsriskembed-dedinthebalancesheet.incontrasttothenetinterestincomesimulation,whichassumesinterestrateswillchangeoveraperiodoftime(ramp),eVeusesinstantaneouschangesinrates(shock).eVevaluesonlythecurrentbalancesheetanddoesnotincorporatethegrowthassumptionsthatareusedinthenetinterestincomesimulationmodel.aswiththenetinterestincomesimulationmodel,assumptionsaboutthetimingandvariabilityofbalancesheetcashflowsarecriticalintheeVeanalysis.particularlyimpor-tantaretheassumptionsdrivingprepaymentsandtheexpectedchangesinbalancesandpricingoftheindeterminatematuritydeposits.

rateshock(basispoints) estimated%changeineVe dec.31,2005 dec.31,2004+100 (5.9)% (3.1)%-100 3.2% 0.6%

theestimatesaboveindicateamoderatedegreeoflong-termliabil-itysensitivity.whileaninstantaneousandsevereshiftininterestratesisusedinthisanalysistoprovideanestimateofexposureunderanextremelyadversescenario,managementbelievesthatagradualshiftininterestrateswouldhaveamuchmoremodestimpact.sinceeVemeasuresthediscountedpresentvalueofcashflowsovertheestimatedlivesofinstru-ments,thechangeineVedoesnotdirectlycorrelatetothedegreethatearningswouldbeimpactedoverashortertimehorizon;i.e.,thecurrentfiscalyear.further,eVedoesnottakeintoaccountfactorssuchasfuturebalancesheetgrowth,changesinproductmix,changesinyieldcurverela-tionships,andchangingproductspreadsthatcouldmitigatetheadverseimpactofchangesininterestrates.

thenetinterestincomesimulationandvaluationanalyses(eVe)donotnecessarilyincludecertainactionsthatmanagementmayundertaketomanagethisriskinresponsetoanticipatedchangesininterestrates.

tradingactivitiesmostofthecompany’stradingactivitiesaredesignedtosupportsecond-arytradingwithclients.productofferingstoclientsincludedebtsecurities,includingloanstradedinthesecondarymarket,equitysecurities,deriva-tivesandforeignexchangecontracts,andsimilarfinancialinstruments.othertradingactivitiesincludeparticipatinginunderwritings,andactingasamarketmakerincertainequitysecurities.typically,thecompanymain-tainsasecuritiesinventorytofacilitateclienttransactions.however,incer-tainbusinesses,suchasderivatives,itismorecommontoexecuteclienttransactionswithsimultaneousrisk-managingtransactionswithdealers.alsointhenormalcourseofbusiness,thecompanyassumesadegreeofmarketriskinarbitrage,hedging,andotherstrategies,subjecttospecifiedlimits.

thecompanyhasdevelopedpoliciesandprocedurestomanagemarketriskassociatedwithtrading,capitalmarkets,andforeignexchangeactivitiesusingavalue-at-risk(“Var”)approachthatcombinesinterestraterisk,equityrisk,foreignexchangerisk,spreadrisk,andvolatilityrisk.fortradingportfolios,Varmeasuresthemaximumfairvaluethecompanycouldloseonatradingposition,givenaspecifiedconfidencelevelandtimehorizon.Varlimitsandexposuresaremonitoreddailyforeachsignificanttradingportfolio.thecompany’sVarcalculationmeasuresthepotentiallossesinfairvalueusinga99%confidencelevel.thisequatesto2.33stan-



darddeviationsfromthemeanunderanormaldistribution.thismeansthat,onaverage,dailyprofitsandlossesareexpectedtoexceedVaroneoutofevery100overnighttradingdays.theVarmethodologyincludeshold-ingperiodsforeachpositionbaseduponanassessmentofrelativetradingmarketliquidity.fortheforeignexchange,equities,structuredtrades,andderivativesdesks,thecompanyestimatesVarbyapplyingthemontecarlosimulationplatformasdesignedbyriskmetrics™,andfortheestimateofthefixedincomeVar,thecompanyusesbloomberg™analytics.forequityderivatives,theimaginesystemisusedforVar.thecompanyusesaninter-nallydevelopedmethodologytoestimateVarforthecollateralizeddebtobligationsandloantradingdesks.

theestimatedaveragecombinedundiversifiedVar(undiversifiedVarrepresentsasimplesummationoftheVarcalculatedacrosseachdesk)was$4.1millionfor2005and$3.0millionfor2004.tradingassetsnetoftradingliabilitiesaveraged$1.4billionfor2005and$1.0billionfor2004.theestimatedcombinedperiod-endundiversifiedVarwas$4.4millionatdecember31,2005and$3.5millionatdecember31,2004.tradingassetsnetoftradingliabilitieswere$1.3billionatdecember31,2005and$1.1billionatdecember31,2004.

liquidityriskliquidityriskistheriskofbeingunabletomeetobligationsastheycomedueatareasonablefundingcost.suntrustmanagesthisriskbystructuringitsbalancesheetprudentlyandbymaintainingborrowingresourcestofundpotentialcashneeds.thecompanyassessesliquidityneedsintheformofincreasesinassets,maturingobligations,ordepositwithdrawals,consider-ingbothoperationsinthenormalcourseofbusinessandintimesofunusualevents.inaddition,thecompanyconsiderstheoff-balancesheetarrange-mentsandcommitmentsithasenteredinto,whichcouldalsoaffectthecompany’sliquidityposition.thealcoofthecompanymeasuresthisrisk,setspolicies,andreviewsadherencetothosepolicies.

thecompany’ssourcesoffundsincludealarge,stabledepositbase,securedadvancesfromthefederalhomeloanbank(“fhlb”)andaccesstothecapitalmarkets.thecompanystructuresitsbalancesheetsothatilliquidassets,suchasloans,arefundedthroughclientdeposits,long-termdebt,otherliabilitiesandcapital.clientbasedcoredeposits,thecompany’slargestandmostcost-effectivesourceoffunding,accountedfor64.3%ofthefundingbaseonaveragefor2005comparedto66.1%for2004.thedecreaseinthisratiowasduetoa$3.0billionincreaseinaverageloansheldforsalethatwasfundedprimarilywithwholesaleborrowings.averageclientbasedcoredepositsincreased$16.3billion,or21.1%,comparedto2004.approximatelytwo-thirdsoftheincreasewasduetotheacquisitionofncf.theremainderofthegrowthwastheresultofsuccessfulmarketingcampaigns,continuedgrowthfromclientactivity,andtherelativeappealofalternativeinvestments.increasesinrates,improvedeconomicactivityandconfidenceinthefinancialmarketsmayleadtodisintermediationofdeposits,whichmayneedtobereplacedwithhighercostborrowingsinthefuture.

totalwholesalefunding,includingnetshort-termunsecuredborrow-ings,netsecuredwholesaleborrowingsandlong-termdebt,totaled$56.3billionatdecember31,2005comparedto$43.3billionatdecember31,2004.theincreasereflectsthewholesalefundingrequiredforearningassetgrowthnotsupportedbycoredepositgrowth.

netshort-termunsecuredborrowings,includingwholesaledomesticandforeigndepositsandfedfunds,totaled$29.9billionatdecember31,2005comparedto$16.5billionatdecember31,2004.recordmortgageproductionvolumeincreasedthebalanceofloansheldforsale,whichhas

beenfundedusingshort-termunsecuredborrowings.mortgageproductionwas$47.7billionfor2005comparedto$30.8billionfor2004.thebalanceofloansheldforsalewas$13.7billionand$6.6billionatdecember31,2005anddecember31,2004,respectively.

thecompanymaintainsaccesstoadiversifiedbaseofwholesalefundingsources.thesesourcesincludefedfundspurchased,securitiessoldunderagreementstorepurchase,negotiablecertificatesofdeposit,off-shoredeposits,fhlbadvances,globalbanknoteissuanceandcommercialpaperissuance.asofdecember31,2005,suntrustbankhad$14.2bil-lionremainingunderitsglobalbanknoteprogram.thiscapacityreflectsa$500millionsubordinateddebtissuanceinthefirstquarterof2005,a$600millionseniordebtissuanceinthesecondquarterof2005andan$850millionsubordinateddebtissuanceinthethirdquarterof2005.theglobalbanknoteprogramwasestablishedtoexpandfundingandcapitalsourcestoincludebothdomesticandinternationalinvestors.liquidityisalsoavailablethroughunpledgedsecuritiesintheinvestmentportfolioandcapacitytosecuritizeloans,includingsingle-familymortgageloans.thecompany’screditratingsareimportanttoitsaccesstounsecuredwhole-saleborrowings.significantchangesintheseratingscouldchangethecostandavailabilityofthesesources.thecompanymanagesrelianceonshorttermunsecuredborrowingsaswellastotalwholesalefundingthroughpoli-ciesestablishedandreviewedbyalco.

thecompanyhasacontingencyfundingplanthatstressestheliquid-ityneedsthatmayarisefromcertaineventssuchasagencyratingdown-grades,rapidloangrowth,orsignificantdepositrunoff.theplanalsoprovidesforcontinualmonitoringofnetborrowedfundsdependenceandavailablesourcesofliquidity.managementbelievesthecompanyhasthefundingcapacitytomeettheliquidityneedsarisingfrompotentialevents.

liquidityforsuntrustbanks,inc.–parentcompanyonly(“parentcompany”)ismeasuredcomparingsourcesofliquidityinunpledgedsecu-ritiesandshort-terminvestmentsrelativetoitsshort-termdebt.asofdecember31,2005,theparentcompanyhad$1.4billioninsuchsourcescomparedtoshort-termdebtof$641million.theparentcompanyalsohad$1.5billionofavailabilityremainingonitscurrentshelfregistrationstatementfortheissuanceofdebtatdecember31,2005.thegeorgiadepartmentofbankingandfinancelimitsdividendsto50%ofprioryear’snetincome,withoutitspriorapproval.suntrustbankhasexceededthislim-itationsince2000andhasreceivedthenecessaryapprovalsfordividendsbeyondthisamount.additionally,banksarelimitedunderfederalregula-tionsbasedonthepriortwoyears’netretainedearningsplusthecurrentyear’snetretainedearnings.during2006,thebankcanpay$854.0million,plusthecurrentyear’searningswithoutpriorapprovalfromtheappropriateregulatoryagency.

asdetailed intable16,unfundedlendingcommitments,thecompanyhad$92.7billioninunusedlinesofcreditatdecember31,2005thatwerenotrecordedonthecompany’sbalancesheet.commitmentstoextendcreditarearrangementstolendtoaclientwhohascompliedwithpredeterminedcontractualobligations.thecompanyalsohad$13.5bil-lioninlettersofcreditasofdecember31,2005,mostofwhicharestandbylettersofcreditthatprovidethatsuntrustbankfundifcertainfutureeventsoccur.ofthis,approximately$6.2billionsupportvariable-ratedemandobligations(“Vrdos”)remarketedbysuntrustandotheragents.Vrdosaremunicipalsecuritieswhichareremarketedbytheagentonaregu-larbasis,usuallyweekly.intheeventthatthesecuritiesareunabletoberemarketed,suntrustbankwouldfundunderthelettersofcredit.

certainprovisionsoflong-termdebtagreementsandthelinesofcreditpreventthecompanyfromcreatinglienson,disposingof,orissuing


taBle15•riskManagementDerivativefinancialinstrumentsthecompanymonitorsitssensitivitytochangesininterestratesandmayusederivativeinstrumentstolimitthevolatilityofnetinterestincome.derivativeinstrumentsincreasednetinterestincomein2005and2004by$104.4millionand$151.5million,respectively,orsevenbasispointsand13basispoints,respectively.thefollowingtablessummarizethederiva-

tiveinstrumentsenteredintobythecompanyasanend-user.seenote17,derivativesandoff-balancesheetarrangements,totheconsolidatedfinancialstatementsforacompletedescriptionofthederivativeinstru-mentsandactivitiesfor2005and2004.

asofDecember31,20051

gross gross average notional unrealized unrealized Maturity(dollarsinmillions) amount gains6 losses6 equity9 inYearsassethedgescashflowhedges interestrateswaps2 $5,800 $— ($88) ($54) 1.48fairvaluehedges forwardcontracts3 14,384 — (78) — 0.08 totalassethedges $20,184 $— ($166) ($54) 0.47liabilityhedgescashflowhedges interestrateswapsandswaptions4 $5,065 $79 $— $49 1.97fairvaluehedges interestrateswaps5 7,467 10 (226) — 6.28 totalliabilityhedges $12,532 $89 ($226) $49 4.54terminated/Dedesignatedliabilityhedgescashflowhedges interestrateswaps7 $1,942 $— $— ($12) 2.42fairvaluehedges interestrateswaps8 300 16 — — 14.26 totalterminated/dedesignatedhedges $2,242 $16 $— ($12) 4.011includesonlyderivativefinancialinstrumentswhicharecurrently,orpreviouslydesignatedas,qualifyinghedgesundersfasno.133.allofthecompany’sotherderivativeinstrumentsareclassifiedastrading.allinterestrateswapshavevariablepayorreceiverateswithresetsofsixmonthsorless.

2representsinterestrateswapsdesignatedascashflowhedgesofcommercialloans.

3forwardcontractsaredesignatedasfairvaluehedgesofclosedmortgageloans,includingbothfixedandfloating,whichareheldforsale.certainotherforwardcontractswhichareeffectiveforriskmanagementpurposes,butwhicharenotindesignatedhedgingrelationshipsundersfasno.133,arenotincorporatedinthistable.

4representsinterestrateswapsandoptionsdesignatedascashflowhedgesoffloatingratecertificatesofdeposit,globalbanknotes,fhlbadvancesandothervariableratedebt.

5representsinterestrateswapsdesignatedasfairvaluehedgesoftrustpreferredsecurities,subordinatednotes,fhlbadvances,certificateandtimedepositsandotherfixedratedebt.

6representsthefairvalueofderivativefinancialinstrumentslessaccruedinterestreceivableorpayable.

7representsinterestrateswapsthathavebeenterminatedand/ordedesignatedasderivativesthatqualifiedforhedgeaccounting.theinterestrateswapsweredesignatedascashflowhedgesoffloatingratedebtandtaxexemptbonds.the$11.9millionofnetlosses,netoftaxes,recordedinaccumulatedothercomprehensiveincomewillbereclassifiedintoearningsasinterestexpenseoverthelifeoftherespectivehedgeditems.

8representsinterestrateswapsthathavebeenterminatedasderivativesthatqualifiedforhedgeaccounting.theinterestrateswapsweredesignatedasfairvaluehedgesoffixedratedebt.the$15.9millionofpre-taxnetgainsrecordedinavaluationaccountinlong-termdebtwillbereclassifiedintoearningsasayieldadjustmentofthehedgediteminthesameperiodthatthehedgedcashflowsimpactearnings.asofdecember31,2005,$1.1millionofpre-taxnetgainsareexpectedtobereclassifiedasinterestexpenseorinterestincomeduringthenexttwelvemonths.

9asofdecember31,2005,thenetunrealizedlossonderivativesincludedinaccumulatedothercomprehensiveincome,whichisacomponentofstockholders’equity,was$17.3million,netofincometaxes.ofthisnetoftaxamount,a$5.4millionlossrepresentstheeffectiveportionofthenetlossesonderivativesthatcurrentlyqualifyascashflowhedges,andan$11.9millionlossrelatestopreviousqualifyingcashflowhedgingrela-tionshipsthathavebeenterminatedordedesignated.gainsorlossesonhedgesofinterestrateriskwillbeclassifiedintointerestincomeorexpenseasayieldadjustmentofthehedgediteminthesameperiodthatthehedgedcashflowsimpactearnings.asofdecember31,2005,$16.8millionofnetlosses,netoftaxes,recordedinaccumulatedothercomprehensiveincomeareexpectedtobereclassifiedasinterestincomeorinterestexpenseduringthenexttwelvemonths.



asofdecember31,20041

gross gross average notional unrealized unrealized maturity(dollarsinmillions) amount gains7 losses7 equity9 inyearsassethedgescashflowhedges interestrateswaps2 $3,800 $1 ($20) ($13) 2.39fairvaluehedges interestrateswaps3 70 1 — — 2.88 forwardcontracts4 5,024 11 — — 0.06 totalassethedges $8,894 $13 ($20) ($13) 1.09liabilityhedgescashflowhedges interestrateswaps5 $6,015 $43 ($13) $20 2.27fairvaluehedges interestrateswaps6 7,467 67 (106) — 8.26 totalliabilityhedges $13,482 $110 ($119) $20 5.58terminated/Dedesignatedliabilityhedgescashflowhedges interestrateswaps8 $2,117 $— $— ($14) 2.58 totalterminated/dedesignatedhedges $2,117 $— $— ($14) 2.581includesonlyderivativefinancialinstrumentswhicharecurrently,orwerepreviouslydesignatedas,qualifyinghedgesundersfasno.133.allofthecompany’sotherderivativeinstrumentsareclassifiedastrading.allinterestrateswapshavevariablepayorreceiverateswithresetsofsixmonthsorless.

2representsinterestrateswapsdesignatedascashflowhedgesofcommercialloans.

3representsinterestrateswapsdesignatedasfairvaluehedgesoffixed-rateloansandreversepurchaseagreements.

4forwardcontractsaredesignatedasfairvaluehedgesofclosedmortgageloans,includingbothfixedandfloating,whichareheldforsale.certainotherforwardcontractswhichareeffectiveforriskmanagementpurposes,butwhicharenotindesignatedhedgingrelationshipsundersfasno.133,arenotincorporatedinthistable.

5representsinterestrateswapsdesignatedascashflowhedgesoffloatingratecertificatesofdeposit,globalbanknotes,fhlbadvancesandothervariableratedebt.

6representsinterestrateswapsdesignatedasfairvaluehedgesoftrustpreferredsecurities,subordinatednotes,fhlbadvancesandotherfixedratedebt.

7representsthefairvalueofderivativefinancialinstrumentslessaccruedinterestreceivableorpayable.

8representsinterestrateswapsthathavebeenterminatedand/ordedesignatedasderivativesthatqualifiedforhedgeaccounting.theinterestrateswapsweredesignatedascashflowhedgesoffloatingratedebtandtaxexemptbonds.the$13.8millionofnetlosses,netoftaxesrecordedinaccumulatedothercomprehensiveincomewillbereclassifiedintoearningsasacomponentofinterestexpenseoverthelifeoftherespectivehedgeditems.

9asofdecember31,2004,thenetunrealizedlossonderivativesincludedinaccumulatedothercomprehensiveincome,whichisacomponentofstockholders’equity,was$6.6million,netoftax,thatrepresentstheeffec-tiveportionofthenetgainsandlossesonderivativesthatqualifiedascashflowhedgingrelationships.thisincludesanunrealizedgainof$7.2milliononactivehedgesoffsetbya$13.8millionlossonterminatedordesig-natedhedges.gainsorlossesonhedgesofinterestrateriskwillbeclassifiedintointerestincomeorexpenseasayieldadjustmentofthehedgediteminthesameperiodthatthehedgedcashflowsimpactearnings.asofdecember31,2004,$12.1millionofnetgains,netoftaxesrecordedinaccumulatedothercomprehensiveincomeareexpectedtobereclassifiedasinterestincomeorinterestexpenseduringthenexttwelvemonths.

derivativehedginginstrumentactivitiesareasfollows: notionalValues1

(dollarsinmillions) assethedges liabilityhedges totalbalance,January1,2004 $25 $9,474 $9,499additions 3,870 7,226 11,096terminations — (2,000) (2,000)dedesignations — (117) (117)maturities (25) (1,101) (1,126)balance,december31,2004 3,870 13,482 17,352additions 2,300 4,223 6,523terminations (300) (300) (600)hedgeaccountingcorrection (18) (1,100) (1,118)maturities (52) (3,773) (3,825)Balance,December31,2005 $5,800 $12,532 $18,3321excludesthehedgingactivityforthecompany’smortgageloansinthewarehouse.asofdecember31,2005and2004,mortgagenotionalamountstotaled$14.4billionand$5.0billion,respectively.


thefollowingtablepresentstheexpectedmaturitiesofriskmanagementderivativefinancialinstruments:

asofDecember31,2005 1Year 1–2 2–5 5–10 after10(dollarsinmillions) orless Years Years Years Years totalcashflowassethedgesnotionalamount–swaps $300 $4,400 $600 $500 $— $5,800netunrealizedloss (4) (68) (11) (5) — (88)weightedaveragereceivefixedrate1 3.17% 3.62% 3.95% 4.22% —% 3.68%weightedaveragepayfloatingrate1 4.29 4.29 4.29 4.29 — 4.29fairvalueassethedgesnotionalamount–forwards $14,384 $— $— $— $— $14,384netunrealized(loss)/gain (78) — — — — (78)cashflowliabilityhedgesnotionalamount–swaps $1,500 $500 $3,065 $— $— $5,065netunrealizedgain 9 6 64 — — 79weightedaveragereceivefloatingrate1 4.46% 4.33% 4.30% —% —% 4.35%weightedaveragepayfixedrate1 2.31 3.94 3.87 — — 3.41fairvalueliabilityhedgesnotionalamount–swaps $250 $400 $767 $4,900 $1,150 $7,467netunrealizedgain/(loss) 1 (2) (31) (189) 5 (216)weightedaveragereceivefixedrate1 4.78% 4.48% 3.24% 4.02% 5.14% 4.16%weightedaveragepayfloatingrate1 4.15 4.05 4.29 4.21 4.38 4.231allinterestrateswapshavevariablepayorreceiverateswithresetsofsixmonthsorless.

asofdecember31,2004 1year 1–2 2–5 5–10 after10(dollarsinmillions) orless years years years years totalcashflowassethedgesnotionalamount–swaps $— $300 $3,500 $— $— $3,800netunrealizedloss — (2) (17) — — (19)weightedaveragereceivefixedrate1 —% 3.17% 3.34% —% —% 3.33%weightedaveragepayfloatingrate1 — 2.28 2.28 — — 2.28fairvalueassethedgesnotionalamount–swaps $48 $— $— $22 $— $70notionalamount–forwards 5,024 — — — — 5,024netunrealizedgain 11 — — 1 — 12weightedaveragereceivefloatingrate1 2.50% —% —% 3.14% —% 2.70%weightedaveragepayfixedrate1 2.95 — — 4.25 — 3.35cashflowliabilityhedgesnotionalamount–swaps $— $3,350 $2,665 $— $— $6,015netunrealizedgain/(loss) — 31 (1) — — 30weightedaveragereceivefloatingrate1 —% 2.32% 2.26% —% —% 2.29%weightedaveragepayfixedrate1 — 2.19 4.02 — — 2.91fairvalueliabilityhedgesnotionalamount–swaps $— $450 $867 $4,650 $1,500 $7,467netunrealizedgain/(loss) — 28 (5) (92) 30 (39)weightedaveragereceivefixedrate1 —% 7.18% 3.63% 3.92% 4.97% 4.29%weightedaveragepayfloatingrate1 — 2.09 2.20 2.12 2.15 2.131allinterestrateswapshavevariablepayorreceiverateswithresetsofsixmonthsorless.



(excepttorelatedparties)votingstockofsubsidiaries.further,therearerestrictionsonmergers,consolidations,certainleases,salesortransfersofassets,andminimumshareholders’equityratios.asofdecember31,2005,thecompanywasincompliancewithallcovenantsandprovisionsofthesedebtagreements.

otherMarketriskothersourcesofmarketriskincludetheriskassociatedwithholdingresi-dentialmortgageloanspriortosellingthemintothesecondarymortgagemarket,commitmentstoclientstomakemortgageloansthatwillbesoldtothesecondarymortgagemarket,andthecompany’sinvestmentinmsrs.thecompanymanagestherisksassociatedwiththeresidentialmortgageloansclassifiedasheldforsale(“thewarehouse”)anditsinterestratelockcommitments(“irlcs”)onresidentialloansintendedforsale.theware-houseandirlcsconsistprimarilyoffixedandadjustable-ratesinglefam-ilyresidentialrealestateloans.theriskassociatedwiththewarehouseandirlcsisthepotentialchangeininterestratesbetweenthetimetheclientlocksintherateontheanticipatedloanandthetimetheloanissoldonthesecondarymortgagemarket,whichistypically90-150days.thecompanymanagesinterestrateriskpredominatelywithforwardsaleagreements,wherethechangesinvalueoftheforwardsaleagreementssubstantiallyoff-setthechangesinvalueofthewarehouseandtheirlcs.interestrateriskonthewarehouseismanagedviaforwardsaleagreementsinadesignatedfairvaluehedgingrelationship,undersfasno.133“accountingforderivativeinstrumentsandhedgingactivities.”irlcsonresidentialmortgageloansintendedforsaleareclassifiedasfreestandingderivativefinancialinstru-mentsinaccordancewithsfasno.149“amendmentofstatement133onderivativeinstrumentsandhedgingactivities”andarenotdesignatedassfasno.133hedgeaccountingrelationships.

thevalueofthemsrsassetisdependentupontheassumedpre-paymentspeedofthemortgageservicingportfolio.msrsrepresentthediscountedpresentvalueoffuturenetcashflowsthatareexpectedtobereceivedfromthemortgageservicingportfolio.futureexpectednetcashflowsfromservicingaloaninthemortgageservicingportfoliowouldnotberealizediftheloanpaysoffearlierthananticipated.accordingly,pre-paymentrisksubjectsthemsrstoimpairmentrisk.thecompanydoesnotspecificallyhedgethemsrsassetforthepotentialimpairmentrisk;how-

ever,itdoesemployabalancedbusinessstrategyusingthenaturalcoun-ter-cyclicalityofservicingandproductiontomitigateimpairmentrisk.thefairvaluedetermination,keyeconomicassumptionsandthesensitivityofthecurrentfairvalueofthemsrsasofdecember31,2005anddecember31,2004isdiscussedingreaterdetailinnote12,securitizationactivity/mortgageservicingrights,totheconsolidatedfinancialstatements.

thecompanyisalsosubjecttoriskfromchangesinequitypricesthatarisefromowningthecoca-colacompanycommonstock.suntrustowns48,266,496sharesofcommonstockofthecoca-colacompany,whichhadacarryingvalueof$1.9billionatdecember31,2005.a10%decreaseinsharepriceofthecoca-colacompanycommonstockatdecember31,2005wouldresultinadecrease,netofdeferredtaxes,ofapproximately$121millioninothercomprehensiveincome.

off-BalanceSheetarrangeMentSinthenormalcourseofbusiness,thecompanyengagesinfinancialtrans-actionsthat,inaccordancewithusgaap,areeithernotrecordedonthecompany’sbalancesheetormayberecordedonthecompany’sbalancesheetatanamountthatdiffersfromthefullcontractornotionalamountofthetransaction.thesetransactionsarestructuredtomeetthefinancialneedsofclients,managethecompany’scredit,marketorliquidityrisks,diversifyfundingsources,oroptimizecapital.

asafinancialservicesprovider,thecompanyroutinelyentersintocommitmentstoextendcredit,including,butnotlimitedto,loancom-mitments,financialandperformancestandbylettersofcreditandfinancialguarantees.whilethesecontractualobligationscouldpotentiallyresultinmaterialcurrentorfutureeffectsonfinancialcondition,resultsofopera-tions,liquidity,capitalexpenditures,capitalresources,orsignificantcompo-nentsofrevenuesorexpenses,basedonhistoricalexperience,asignificantportionofcommitmentstoextendcreditexpirewithoutbeingdrawnupon.suchcommitmentsaresubjecttothesamecreditpoliciesandapprovalprocessesaccordedtoloansmadebythecompany.seetable16,unfundedlendingcommitments,fordetailsonunfundedlendingcommitments.

thecompanyhasundertakencertainguaranteeobligations intheordinarycourseofbusiness. infollowingtheprovisionsoffasbinterpretation(“fin”)no.45,“guarantorsaccountinganddisclosure

taBle16•unfundedlendingcommitments asofDecember31(dollarsinmillions) 2005 2004unusedlinesofcredit commercial $40,584.6 $37,316.5 mortgagecommitments1 21,216.7 14,710.5 homeequitylines 15,712.3 12,120.6 commercialrealestate 6,818.0 5,938.5 commercialpaperconduit 7,190.3 5,902.9 commercialcreditcard 1,165.7 986.6totalunusedlinesofcredit $92,687.6 $76,975.6lettersofcredit financialstandby $13,005.0 $10,560.0 performancestandby 328.1 416.0 commercial 177.3 149.1totallettersofcredit $13,510.4 $11,125.11includes$3.1billionand$3.8billionininterestratelocksaccountedforasderivativesasofdecember31,2005and2004,respectively.


requirementsforguarantees,”(“fin45”)thecompanymustconsiderguaranteesthathaveanyofthefollowingfourcharacteristics(i)contractsthatcontingentlyrequiretheguarantortomakepaymentstoaguaranteedpartybasedonchangesinanunderlyingfactorthatisrelatedtoanasset,aliability,oranequitysecurityoftheguaranteedparty;(ii)contractsthatcontingentlyrequiretheguarantortomakepaymentstoaguaranteedpartybasedonanotherentity’sfailuretoperformunderanobligatingagreement;(iii)indemnificationagreementsthatcontingentlyrequiretheindemnifyingpartytomakepaymentstoanindemnifiedpartybasedonchangesinanunderlyingfactorthatisrelatedtoanasset,aliability,oranequitysecurityoftheindemnifiedparty;and(iv)indirectguaranteesoftheindebtednessofothers.

theissuanceoftheseguaranteesimposesanobligationtostandreadytoperform,andshouldcertaintriggeringeventsoccur,italsoimposesanobligationforthecompanytomakefuturepayments.note18,guarantees,totheconsolidatedfinancialstatementsincludesdetailsregardingthecompany’sguaranteeobligationsunderfin45.

inthenormalcourseofbusiness,thecompanyutilizesvariousderiva-tiveandcredit-relatedfinancialinstrumentstomeettheneedsofclientsandtomanagethecompany’sexposuretointerestrateandothermarketrisks.thesefinancialinstrumentsinvolve,tovaryingdegrees,elementsofcreditandmarketriskinexcessoftheamountrecordedonthebalancesheetinaccordancewithusgaap.suntrustmanagesthecreditriskofitsderivativesby(i)limitingthetotalamountofarrangementsoutstandingbyanindividualcounterparty;(ii)monitoringthesizeandmaturitystruc-tureoftheportfolio;(iii)obtainingcollateralbasedonmanagement’screditassessmentofthecounterparty;(iv)applyinguniformcreditstandardsmaintainedforallactivitieswithcreditrisk;and(v)enteringintotransac-tionswithhighqualitycounterpartiesthatareperiodicallyreviewedbythecompany’screditmanagementcommittee.thecompanymanagesthemarketriskofitsderivativesbyestablishingandmonitoringlimitsonthetypesanddegreeofriskthatmaybeundertaken.thecompanycon-tinuallymeasuresmarketriskbyusingavalue-at-riskmethodology.note17,derivativesandoff-balancesheetarrangements,totheconsolidatedfinancialstatementsincludesadditionalinformationregardingderivativefinancialinstruments,andtable15,riskmanagementderivativefinancialinstruments,providesfurtherdetailswithrespecttosuntrust’sderivativepositions.

suntrustassistsinprovidingliquiditytoselectcorporateclientsbydirectingthemtoamulti-sellercommercialpaperconduit,threepillarsfundingllc(“threepillars”).threepillarsprovidesfinancingfordirectpur-chasesoffinancialassetsoriginatedandservicedbysuntrust’scorporateclients.threepillarsfinancesthisactivitybyissuinga-1/p-1ratedcommer-cialpaper.theresultisafavorablefundingarrangementfortheseclients.

threepillarshasissuedasubordinatednotetoathirdparty.theholderofthisnoteabsorbsthemajorityofthreepillars’expectedlosses.thesubordinatednoteinvestor,therefore,isthreepillars’primarybene-ficiary,andthusthecompanyisnotrequiredtoconsolidatethreepillars.asofdecember31,2005and2004,threepillarshadassetsnotincludedonthecompany’sconsolidatedbalancesheetsofapproximately$4.7bil-lionand$3.4billion,respectively,consistingofprimarilysecuredloansandmarketableasset-backedsecurities.

activitiesrelatedtothethreepillarsrelationshipgeneratednetfeerevenueforthecompanyofapproximately$25.2million,$24.2million,and$21.3millionfortheyearsendeddecember31,2005,2004,and2003,respectively.theseactivitiesinclude:clientreferralsandinvestmentrecom-

mendationstothreepillars,theissuingofaletterofcredit,whichprovidespartialcreditprotectiontothecommercialpaperholders,andprovidingamajorityofthetemporaryliquidityarrangementsthatwouldprovidefund-ingtothreepillarsintheeventitcannolongerissuecommercialpaperorincertainothercircumstances.

asofdecember31,2005,off-balancesheetliquiditycommitmentsandothercreditenhancementsmadebythecompanytothreepillars,whichrepresentthecompany’smaximumexposuretopotentialloss,totaled$7.2billionand$707.1million,respectively,comparedto$5.9billionand$548.7million,respectively,asofdecember31,2004.thecompanymanagesthecreditriskassociatedwiththesecommitmentsbysubjectingthemtothecompany’snormalcreditapprovalandmonitoringprocesses.

asofdecember31,2005,thecompanyhadcontractualrelationshipswithasecuritizationvehiclethatisconsideredavariableinterestentity(“Vie”).thecompanyistheprimarybeneficiaryoftheVieandtherefore,isrequiredtoconsolidateitsassetsandliabilities.asofdecember31,2005,theassetsofthisentity,whichserveascollateralfortheentity’sobliga-tions,totaled$317.0millionandarereflectedininterest-bearingdepos-itsinotherbanksontheconsolidatedbalancesheets.creditorsoftheViehavenorecoursetothegeneralcreditofthecompany.asofdecember31,2005,thecompany’smaximumexposuretopotentiallossforthisViewas$38.1million.

aspartofitscommunityreinvestmentinitiatives,thecompanyinvestsinmulti-familyaffordablehousingpropertiesthroughoutitsfoot-printasalimitedand/orgeneralpartner.thecompanyreceivesaffordablehousingfederalandstatetaxcreditsfortheselimitedpartnerinvest-ments.assetsinpartnershipswheresuntrustisonlyalimitedpartnerofapproximately$803.0millionand$884.2millionwerenotincludedintheconsolidatedbalancesheetsatdecember31,2005and2004,respec-tively.thecompany’smaximumexposuretolossfortheseinvestmentsatdecember31,2005totaled$166.0millionascomparedto$198.1millionatdecember31,2004,consistingofthelimitedpartnershipinvestmentsplusunfundedcommitments.

suntrustisthemanaginggeneralpartnerofanumberofnon-reg-isteredinvestmentlimitedpartnershipswhichhavebeenestablishedtoprovidealternativeinvestmentstrategiesforitsclients.inreviewingthepartnershipsforconsolidation,suntrustdeterminedthatthesewerevotinginterestentitiesandaccordinglyconsideredtheconsolidationguidancecon-tainedinemergingissuestaskforce(“eitf”)issueno.04-5,“determiningwhetherageneralpartner,orthegeneralpartnersasagroup,controlsalimitedpartnershiporsimilarentitywhenthelimitedpartnershavecertainrights.”underthetermsofsuntrust’snon-registeredinvestmentlimitedpartnerships,thelimitedpartnershipshavecertainrights,suchasthosespecificallyindicatedineitfissueno.04-5(includingtherighttoremovethegeneralpartner,or“kick-outrights”).assuch,suntrust,asthegeneralpartner,isprecludedfromconsolidatingthelimitedpartnerships.

contractualcoMMitMentSinthenormalcourseofbusiness,thecompanyentersintocertaincon-tractualobligations.suchobligationsincludeobligationstomakefuturepaymentsondebtandleasearrangements,contractualcommitmentsforcapitalexpenditures,andservicecontracts.table17,contractualcommitments,summarizesthecompany’ssignificantcontractualobliga-tionsatdecember31,2005,exceptforpensionandpostretirementbenefit



plans,includedinnote16,employeebenefitplans,totheconsolidatedfinancialstatements.additionalinformationwithrespecttotheobliga-tionsispresentedintablesincludedinnote16,employeebenefitplans,totheconsolidatedfinancialstatements.

fourthquarter2005reSultSsuntrustreportednetincomeof$518.5million,or$1.43perdilutedshareforthefourthquarterof2005comparedto$455.7million,or$1.26perdilutedshareforthefourthquarterof2004.after-taxmergerexpenseof$4.1million,or$0.01perdilutedshare,relatedtothecompany’sacquisi-tionofncfonoctober1,2004wasincurredinthefourthquarterof2005comparedto$18.5million,or$0.05perdilutedshare,inthefourthquarterof2004.

theabovementionedresultsforthefourthquarterof2005aredif-ferentfromwhatthecompanyreportedinitsJanuary18,2006earningsreleaseinwhichthecompanyreportednetincomeof$513.8million,or$1.41perdilutedshare.thedifferenceof$4.7millionequaled0.91%ofnetincomeforthefourthquarterof2005.subsequenttothereleaseofthecompany’searningsonJanuary18,2006,thecompanyidentifiedimma-terialaccountingerrorsrelatedtocertainderivativetransactions.themis-statementsrelatedtothecompany’sinterpretationandapplicationofthe“shortcut”methodofhedgeaccountingundersfasno.133,“accountingforderivativeinstrumentsandhedgingactivities.”thecompanydeter-minedthatthesehedgesdidnotqualifyforhedgeaccountingusingthe“shortcut”method.asaresult,changesinthemarketvalueofthederiva-tivesshouldhavebeenrecordedthroughnoninterestincomewithnocor-respondingoffsettothehedgeditem.thecompanyevaluatedtheimpactoftheseerrorstoallquarterlyandannualperiodssincetheinceptionofthehedges.

theannualimpactoftheseerrorstonetincomeforeachofthethreeyearsendeddecember31,2005was1.3%,1.9%,and1.3%,respectively.thecompanydoesnotbelievethattheseerrorseitherpositivelyornega-tivelyaffectthecompany’sfinancialtrends.thecompanyconcludedthattheimpactoftheseerrorswasimmaterialtoallannualandquarterlyperi-ods;however,thecompanydeterminedthatitwasappropriatetorecordanadjustmentasofdecember31,2005tocorrectthecumulativeimpactoftheseerrors.thecumulativepre-taximpactoftheseerrorsresultedinadditionalnoninterestincomeof$7.5million,whichisincludedintrad-ingaccountprofitsandcommissionsintheconsolidatedstatementofincome.

asofdecember31,2005,sevenderivativesremainedoutstandingwithatotalnotionalvalueof$1.1billion.thecompanyterminatedfourof

thederivativesinthefirstquarterof2006.twoofthederivativesweredes-ignatedinthefirstquarterof2006ashedgesusingthe“longhaul”methodundersfasno.133,andoneofthederivativeswasclassifiedasatradingposition.thehedgeditemsassociatedwiththesederivativesconsistedofanassetandliabilities.eachofthesehedgeditemscontinuestoremainoutstanding.

netinterestincomeincreased$106.2million,or9.6%.theincreaseinnetinterestincomewasmainlyduetostrongearningassetgrowth.totalaverageearningassetsincreased$17.9billion,or13.1%,fromthefourthquarterof2004drivenbystronggrowthinbothportfolioloansandloansheldforsale.coredepositgrowthhascontinuedtobenefitfrommarketingefforts.thenetinterestmargindecreased11basispointsfromthefourthquarterof2004.themajorityofthemargindecreasewasattributabletoanincreaseinloansheldforsaleatcompressedspreadsduetoflatteryieldcurve.

theprovisionforloanlossesforthefourthquarterof2005was$48.1million,adecreaseof$11.0million,or29.7%,fromthefourthquarterof2004.netcharge-offsdeclined$4.0million,or7.5%,fromthefourthquarterof2004duetoimprovedcreditqualityandsustainedeconomicimprovementinthecompany’sfootprint.thedeclineinnetcharge-offswasprimarilyrelatedtoa$15.0million,or40.3%,decreaseinconsumernetcharge-offsfromthefourthquarterof2004.

noninterestincomewas$797.9millioninthefourthquarterof2005,anincreaseof$38.9million,or5.1%,comparedtothefourthquarterof2004.theincreasewasprimarilyattributabletosecuritieslossesof$19.4millionincurredinthefourthquarterof2004comparedtosecuritiesgainsof$0.6millioninthefourthquarterof2005.alsopositivelyimpact-ingnoninterestincomewereincreasesinmortgagerelatedincome,trustandinvestmentmanagementincome,atmfees,andcardfees;partiallyoffsetbyadeclineintradingaccountprofitsandcommissions.mortgagerelatedincomeincreased$17.2million,or55.2%,fromthefourthquarterof2004duetoanincreaseinmortgageproductionandmortgageservicingfees.trustandinvestmentmanagementincomeincreased$12.4million,or7.7%,fromthefourthquarterof2004dueprimarilytogrowthinassetsundermanagement,whichincreased7.0%fromdecember31,2004.cardfeesincreased$8.4million,or17.0%,fromthefourthquarterof2004duetohigherinterchangeincomeonincreaseddebitcardtransactions.tradingaccountprofitsandcommissionsdecreased$16.6million,or37.7%,fromthefourthquarterof2004primarilyduetotradinglossesincurredinthefourthquarterof2005duetomarketconditions.

noninterestexpenseinthefourthquarterof2005was$1,206.9mil-lion,anincreaseof$57.9million,or5.0%,fromthefourthquarterof2004.personnelexpense,thelargestcomponentofnoninterestexpense,grew

taBle17•contractualcommitments asofDecember31,2005(dollarsinmillions) 1yearorless 1–3years 3–5years after5years totaltimedepositmaturities1 $36,637 $7,319 $3,075 $5 $47,036short-termborrowings1 12,312 — — — 12,312long-termdebt1 2,654 3,856 2,228 12,021 20,759operatingleaseobligations 126 218 159 354 857capitalleaseobligations1 — 1 1 18 20purchaseobligations2 62 48 135 12 257 total $51,791 $11,442 $5,598 $12,410 $81,2411amountsdonotincludeaccruedinterest.

2includescontractswithaminimumannualpaymentof$5million.


taBle18•SelectedquarterlyfinancialData threeMonthsended 2005 2004(dollarsinmillions,exceptpersharedata) Dec.31 Sept.30 June30 Mar.31 dec.31 sept.30 June30 mar.31Summaryofoperationsinterestanddividendincome $2,175.3 $1,996.7 $1,843.3 $1,716.0 $1,604.3 $1,252.1 $1,188.0 $1,173.8interestexpense 988.3 840.0 719.6 604.4 520.1 375.3 315.6 322.2netinterestincome 1,187.0 1,156.7 1,123.7 1,111.6 1,084.2 876.8 872.4 851.6provisionforloanlosses 48.1 70.4 47.8 10.6 37.1 41.8 2.8 53.8netinterestincomeafterprovision forloanlosses 1,138.9 1,086.3 1,075.9 1,101.0 1,047.1 835.0 869.6 797.8noninterestincome 797.9 832.4 770.9 753.8 759.0 627.7 622.7 595.1noninterestexpense 1,206.9 1,177.1 1,172.8 1,133.9 1,149.0 929.8 928.4 889.7incomebeforeprovisionfor incometaxes 729.9 741.6 674.0 720.9 657.1 532.9 563.9 503.2provisionforincometaxes 211.4 230.8 208.3 228.6 201.4 164.1 177.3 141.4netincome $518.5 $510.8 $465.7 $492.3 $455.7 $368.8 $386.6 $361.8netinterestincome-fte $1,207.1 $1,175.7 $1,142.4 $1,129.2 $1,100.9 $893.7 $885.1 $863.9totalrevenue 2,005.0 2,008.1 1,913.3 1,883.0 1,859.9 1,521.4 1,507.8 1,459.0percommonShare diluted $1.43 $1.40 $1.28 $1.36 $1.26 $1.30 $1.36 $1.28 basic 1.44 1.42 1.30 1.37 1.27 1.31 1.39 1.29 dividendsdeclared 0.55 0.55 0.55 0.55 0.50 0.50 0.50 0.50 bookvalue 46.65 46.28 45.96 44.59 44.30 35.79 35.58 35.75 marketprice: high 75.46 75.77 75.00 74.18 74.38 70.69 71.10 76.65 low 65.32 68.85 69.60 69.00 67.03 63.50 61.27 68.04 close 72.76 69.45 72.24 72.07 73.88 70.41 64.99 69.71SelectedaverageBalancestotalassets $175,769.1 $169,934.0 $165,253.6 $161,218.2 $156,570.1 $127,128.0 $127,287.5 $123,853.7earningassets 154,379.9 149,281.8 145,057.7 140,852.8 136,450.4 114,334.1 113,657.1 111,038.2loans 113,827.6 110,818.4 106,966.7 103,215.8 100,137.5 83,753.2 80,936.4 79,904.9consumerandcommercialdeposits 95,257.2 94,075.7 93,064.5 90,967.8 90,601.5 74,121.8 73,166.1 70,361.0brokeredandforeigndeposits 21,009.9 17,969.2 15,709.1 13,424.4 10,670.5 9,341.3 10,153.9 10,000.6totalshareholders’equity 16,875.6 16,822.9 16,275.6 16,119.4 15,819.0 9,992.9 10,194.2 9,840.3commonshares– diluted(thousands) 363,175 363,854 363,642 363,138 362,661 283,502 283,116 283,523commonshares– basic(thousands) 359,203 359,702 359,090 358,253 357,524 280,185 279,840 279,523financialratios(annualized)returnonaveragetotalassets 1.17% 1.19% 1.13% 1.24% 1.16% 1.15% 1.22% 1.18%returnonaverageassetslessnet unrealizedsecuritiesgains 1.15 1.18 1.11 1.23 1.18 1.18 1.23 1.15returnonaveragetotal shareholders’equity 12.19 12.05 11.48 12.39 11.46 14.68 15.25 14.79returnonaveragerealized shareholders’equity 12.75 12.81 12.02 13.23 12.54 16.96 18.30 17.07netinterestmargin 3.10 3.12 3.16 3.25 3.21 3.11 3.13 3.13efficiencyratio 60.20 58.62 61.30 60.22 61.78 61.12 61.58 60.98efficiencyratioexcludingmerger expense 59.87 58.01 58.46 58.85 60.25 61.12 61.58 60.98capitaladequacytier1capitalratio 7.01 7.03 7.04 7.07 7.16 8.26 8.18 8.28totalcapitalratio 10.57 10.66 10.25 10.44 10.36 11.57 11.87 12.26tier1leverageratio 6.65 6.64 6.65 6.61 6.64 7.71 7.53 7.66



taBle19•consolidatedDailyaverageBalances,income/expenseandaverageYieldsearnedandratespaid

threeMonthsendedDecember31 2005 2004 average income/ Yields/ average income/ yields/(dollarsinmillions;yieldsontaxable-equivalentbasis) Balances expense rates balances expense ratesassetsloans:1

taxable $111,705.8 $1,666.3 5.92% $98,082.1 $1,216.6 4.93% tax-exempt2 2,121.8 30.2 5.65 2,055.4 25.0 4.83 totalloans 113,827.6 1,696.5 5.91 100,137.5 1,241.6 4.93securitiesavailableforsale: taxable 24,005.4 273.8 4.56 26,389.5 275.1 4.17 tax-exempt2 908.1 13.3 5.87 848.6 13.0 6.11 totalsecuritiesavailableforsale 24,913.5 287.1 4.61 27,238.1 288.1 4.23fundssoldandsecuritiespurchased underagreementstoresell 1,068.4 10.4 3.82 1,301.2 6.0 1.82loansheldforsale 11,980.8 180.9 6.04 5,607.0 74.7 5.33interest-bearingdeposits 31.9 0.3 3.96 20.9 0.1 1.35tradingassets 2,557.7 20.2 3.13 2,145.7 10.5 1.94 totalearningassets 154,379.9 2,195.4 5.64 136,450.4 1,621.0 4.73allowanceforloanandleaselosses (1,034.8) (1,094.5)cashandduefrombanks 4,349.2 4,136.4premisesandequipment 1,833.5 1,839.9otherassets 14,370.1 13,181.2unrealizedgainsonsecurities availableforsale 1,871.2 2,056.7 totalassets $175,769.1 $156,570.1liabilitiesandShareholders’equityinterest-bearingdeposits: nowaccounts $17,011.3 $52.2 1.22% $16,940.7 $28.3 0.66% moneymarketaccounts 25,797.6 128.6 1.98 24,507.0 66.3 1.08 savings 5,472.9 13.7 0.99 8,139.3 16.8 0.82 consumertime 13,231.5 106.8 3.20 12,083.9 73.6 2.42 othertime 9,050.8 82.2 3.60 4,748.8 30.2 2.53 totalinterest-bearingconsumerand commercialdeposits 70,564.1 383.5 2.16 66,419.7 215.2 1.29 brokereddeposits 13,658.6 142.8 4.09 5,966.1 32.3 2.11 foreigndeposits 7,351.3 74.9 3.99 4,704.5 23.0 1.91 totalinterest-bearingdeposits 91,574.0 601.2 2.60 77,090.3 270.5 1.40fundspurchasedandsecuritiessold underagreementstorepurchase 11,194.4 106.0 3.71 9,407.1 40.3 1.68othershort-termborrowings 2,800.6 30.7 4.35 2,219.7 11.5 2.06long-termdebt 21,189.9 250.4 4.69 21,961.6 197.8 3.58 totalinterest-bearingliabilities 126,758.9 988.3 3.09 110,678.7 520.1 1.87noninterest-bearingdeposits 24,693.0 24,181.7otherliabilities 7,441.6 5,890.7shareholders’equity 16,875.6 15,819.0 totalliabilitiesand shareholders’equity $175,769.1 $156,570.1interestrateSpread 2.55% 2.86%netinterestincome-fte3 $1,207.1 $1,100.9netinterestMargin 3.10% 3.21%1interestincomeincludesloanfeesof$32.9millionand$36.0millioninthequartersendeddecember31,2005anddecember31,2004,respectively.nonaccrualloansareincludedinaveragebalancesandincomeonsuchloans,ifrecognized,isrecordedonacashbasis.

2interestincomeincludestheeffectsoftaxable-equivalentadjustmentsusingafederalincometaxrateof35%and,whereapplicable,stateincometaxestoincreasetax-exemptinterestincometoataxable-equivalentbasis.thenettaxable-equivalentadjustmentamountsincludedintheabovetableaggregated$20.0millionand$16.7millioninthequartersendeddecember31,2005anddecember31,2004,respectively.

3derivativeinstrumentsusedtohelpbalancethecompany’sinterest-sensitivitypositionincreasednetinterestincome$10.7millionand$40.5millioninthequartersendeddecember31,2005anddecember31,2004,respectively.


$30.9million,or5.0%,fromthefourthquarterof2004.theincreasewasprimarilyrelatedtomeritincreasesandincreasedincentivecosts.outsideprocessingandsoftwareincreased$10.9million,or13.4%,duetohigherprocessingcostsassociatedwithhighertransactionalvolumes.consultingfeesincreased$13.3million,or64.0%,mainlyduetothemortgagelineofbusiness’initiativetoenhancetheefficiencyoforigination,processinganddistributionefforts,resultinginfasterdeliveryofproductintothesecond-arymarket.alsocontributingtotheincreaseinconsultingfeeswereinitia-tivestoenhancethecompany’sriskmanagementprocesses.marketingandcustomerdevelopmentincreased$15.7million,or45.8%,duetomarket-ingcampaignsfocusedonretailloananddepositproducts,Visa®giftcards,andonlinebankingservices.

provisionforincometaxeswas$211.4millionforthefourthquarterof2005comparedto$201.4millioninthesameperiodof2004.thepro-visionrepresentsaneffectivetaxrateof29.0%forthefourthquarterof2005,comparedto30.6%forthefourthquarterof2004.thedecreaseinthefourthquarter2005effectivetaxratewasduetoahgtaxcredits,anannualtrue-upofthe2004taxexpensetothe2004taxreturnasfiled,andareviewoffederalandstatetaxreserves.

earningSanDBalanceSheetanalYSiS2004vS.2003

conSoliDateDoverviewnetincomewas$1,572.9millionin2004,up18.1%from$1,332.3millionearnedin2003.dilutedearningspersharewere$5.19in2004and$4.73in2003.in2004,thecompanyincurred$18.5million,or$0.06perdilutedshare,inafter-taxmergerexpenseassociatedwiththeacquisitionofncf.

netinterestincomeincreased$378.3million,or11.2%,to$3,743.6millionin2004,comparedto$3,365.3millionin2003.theincreasewasduetotheacquisitionofncf,healthyloangrowth,andnetinterestmarginimprovement.risinginterestratesthroughoutmostof2004resultedinaslowdownofmortgageprepayments.ncfalsocontributedtotheincreaseduetothehigheryieldonncf’searningassets.thenetinterestmarginimprovedsevenbasispointsto3.15%in2004from3.08%in2003.thencfacquisitionaccountedforthreebasispointsofthenetinterestmarginincrease.theimprovementinthemarginwasattributedtomultiplefactorsincludingthecompany’sbalancesheetmanagement,whichwaspositionedtobenefitfromhigherinterestratesandasteeperyieldcurve,significantgrowthinlowercostdeposits,ahigheryieldintheinvestmentportfolio,andadecreaseinthecostoflong-termdebt.

netcharge-offswere$201.2million,or0.23%,ofaverageloansfor2004,comparedto$311.1million,or0.41%,ofaverageloansfor2003.thecompanybenefitedfroma$93.2millionreductionincommercialnetcharge-offs.theprovisionforloanlossesdecreased$178.1million,or56.8%,from2003to2004duetocreditqualityimprovementin2004.

noninterest incomewas$2,604.4million in2004, comparedto$2,303.0millionin2003,anincreaseof$301.4million,or13.1%.approximately$100millionoftheincreasewasattributabletoncf.trustandinvestmentmanagementincomeincreased$84.4million,or16.8%,comparedto2003duetoincreasedassetsundermanagement,estatesettlementfees,anddistributionfees.retailinvestmentservicesincomeincreased$31.0million,or19.2%,duetohigherbrokerageandinsurancesales.ncfcontributedapproximately$11millionoftheincreaseintrustandinvestmentmanagementincomeandapproximately$5millionoftheincreaseinretailinvestmentservicesincome.

combinedtradingaccountprofitsandcommissionsandinvestmentbankingincome,thecompany’scapitalmarketrevenuesources,increased$32.1million,or10.6%,comparedtotheprioryear.thencfacquisitioncontributedapproximately$11millionoftheincreaseandtheremainingincreasewasduetogrowthintheequitycapitalmarketsbusiness.servicechargesondepositsincreased$56.9million,or8.9%,duetoincreasednsf/stoppaymentvolumes,increasedpricingandotherrevenueenhancementinitiatives.approximately$32millionoftheincreasewasattributabletoncf.otherchargesandfeesincreased$64.2million,or19.7%,from2003to2004asaresultofincreasedletterofcreditfeesandinsurancerevenues.approximately$13millionoftheincreasewasattributabletoncf.othernoninterestincomeincreased$164.6million,or133.3%,primarilyduetocombinedmortgageproductionandservicingrelatedincome,andthecon-solidationofcertainaffordablehousingpartnerships,whichoccurredinthethirdquarterof2003.

noninterestexpensewas$3,897.0million in2004,comparedto$3,400.6millionin2003,anincreaseof$496.4million,or14.6%.approximately$185millionoftheincreasewasattributabletothencfacquisitionincluding$28.4millionofmergerexpense.personnelexpensesincreased$223.8million,or11.5%,primarilyduetothencfacquisition,increasedheadcount,meritincreases,andincentivecosts.commissionsandperformancebasedincentivepaymentsincreasedasaresultofbusi-nessgrowth,higherproductionvolumes,andhigherrevenueinthewealthandinvestmentmanagement,retail,commercial,andciblinesofbusiness.netoccupancyexpenseincreased$30.9million,or13.0%,duetoincreasesinrent,utility,andmaintenancecosts,primarilyrelatedtoinvestmentsintheretaildistributionnetwork.outsideprocessingandsoftwareexpensesincreased$39.6million,or16.1%,duetohighersoftwareamortizationandmaintenanceexpense.alsoimpactingtheincreaseinothernoninterestexpensewastheconsolidationofcertainaffordablehousingpartnerships,whichcontributed$42.0millionoftheincrease.

averageearningassetsincreased$9.6billion,or8.8%,from2003to2004,ofwhichapproximately$5billionwasrelatedtothencfacquisition.averageloansincreased$10.1billion,or13.2%,from2003to2004.theacquisitionofncfcontributedapproximately$4billionoftheincreaseinloans.securitiesavailableforsaleincreased$2.7billion,or12.5%.averageearningassetgrowthwasoffsetbyadecreaseinaverageloansheldforsaleof$3.2billion,or36.8%,from2003to2004duetoadeclineinmortgageproduction.

averageinterest-bearingliabilitiesincreased$6.9billion,or7.8%,from2003to2004,ofwhichapproximately$4billionwasrelatedtothencfacquisition.averageconsumerandcommercialdepositsincreased$7.6billion,or11.0%,comparedto2003,primarilyduetoincreasesindda,nowaccounts,andsavings.averagedemanddepositsincreased$3.2bil-lion,or18.1%,averagenowaccountsincreased$2.1billion,or17.7%,andaveragesavingsincreased$1.0billion,or15.4%,asthecompanyben-efitedfromcampaignstogrowclientdepositsandtheoverallvolatilityinthefinancialmarkets.

BuSineSSSegMentSthefollowinganalysisdetailstheoperatingresultsforeachlineofbusinessfortheyearsendeddecember31,2004and2003.theseperiodshavebeenrestatedtoconformtothe2005presentation.



retailretail’stotalincomebeforetaxesforthetwelvemonthsendeddecember31,2004was$1.3billion,anincreaseof$132.0million,or11.0%,com-paredtothesameperiodin2003.thisincreasewasattributabletothencfacquisition,highernetinterestincome,improvedcreditqualityandhighernoninterestincomepartiallyoffsetbyhighernoninterestexpense.

netinterestincomeincreased$159.9million,or9.8%.thencfacquisitioncontributedapproximately$93millionoftheincrease.theremainderoftheincreasewasattributabletoloananddepositgrowthandwideningdepositspreads.averageloansincreased$3.4billion,or16.1%,whileaveragedepositsincreased$4.0billion,or8.1%.thencfacquisi-tioncontributedapproximately$1billiontotheloanincreaseandapproxi-mately$3billiontothedepositincrease.theremainingloangrowthwasdrivenprimarilybyequitylineswhiletheremainingdepositgrowthwasdrivenbydemanddeposits.netcharge-offsdecreased$28.0million,or16.5%,primarilyduetoadeclineinconsumerindirectnetcharge-offs.

noninterestincomeincreased$98.7million,or13.2%.theadditionofncfcontributedapproximately$47millionoftheincrease.theremain-ingincreasewasdrivenprimarilybyhigherservicechargesondepositaccounts.

noninterestexpenseincreased$154.5million,or15.2%.theadditionofncfcontributedapproximately$83millionoftheincrease.theremain-ingincreasewasdrivenprimarilybyinvestmentsintheretaildistributionnetworkandtechnology.

coMMercialcommercial’stotalincomebeforetaxesforthetwelvemonthsendeddecember31,2004was$629.9million,anincreaseof$38.0million,or6.4%,comparedtothesameperiodin2003.incomebeforetaxeswaspositivelyimpactedbytheinclusionofncfresultsinthefourthquarterof2004,andwaspartiallyoffsetbyadecreaseinahgprofitability.

netinterestincomeincreased$81.2million,or13.4%.averageloansincreased$2.8billion,or13.3%.averagedepositsincreased$1.9billion,or19.9%.loangrowthwasdrivenbytheinclusionofncfresultsinthefourthquarterof2004,andhigherdemandforcommercialandcommercialrealestateloans.thegrowthindepositswasattributabletoincreasedclientliquidity.netcharge-offsincreased$5.0million,or25.9%.

noninterestincomeincreased$41.3million,or14.8%.theincreasewaslargelyattributabletoahgrelatedtaxcreditsfromnewpropertiesandinvestments,aswellashigherpartnershiprevenue.alsocontributingtotheincreasewasinternalcrosslineofbusinesssalescredits.partiallyoffsettingtheseincreasesweredecreasesinservicechargesondepositaccountsanddepositsweepincome.thedecreaseintheincomefromdepositaccountswasanticipatedinarisingrateenvironmentasclientsearnedahighercreditontheirdeposits.

noninterestexpenseincreased$79.5million,or29.1%.theincreasewaslargelyattributabletoahgrelatedpartnershipoperatingexpensesandimpairmentandotherchargesrelatedtoaffordablehousingproperties.theremainingincreasewasdrivenbyindirectsupportcostsandpersonnelexpense.

corporateanDinveStMentBankingcib’stotalincomebeforetaxesforthetwelvemonthsendeddecember31,2004was$539.5million,anincreaseof$119.7million,or28.5%,com-paredtothesameperiodin2003.asignificantimprovementinnetcharge-offsandnoninterestincomecontributedtotheincrease.

netinterestincomedecreased$35.7million,or12.2%.averageloansdecreased$2.4billion,or14.7%.averagedepositsincreased$0.3billion,or11.4%.thedecreaseinaverageloanbalanceswasduetothedeconsolida-tionofthecompany’scommercialpaperconduitinmarch2004,weakercorporateloandemand,andlowerusageofrevolvingcreditlines.netcharge-offsdecreased$98.6million,or85.7%,asnetcharge-offsreturnedtolevelsexperiencedpriortothemostrecenteconomicdownturn.

noninterestincomeincreased$79.1million,or14.3%,whichwasdrivenbyanincreaseinrevenuesfrommerchantbankingcoupledwithanincreaseinequitycapitalmarketsrevenue.

noninterestexpenseincreased$22.3million,or7.1%,primarilyduetoanincreaseinpersonnelexpenseof$17.7million,or9.0%.theincreaseinpersonnelexpensewasdrivenbyincreasedvariablecompensationasso-ciatedwithincreasedfeeincome.

Mortgagemortgage’stotal incomebeforetaxesforthetwelvemonthsendeddecember31,2004was$263.7million,adecreaseof$13.0million,or4.7%,comparedtothesameperiodin2003.declinesinproductionincomewereonlypartiallyoffsetbyhigherearningsduetolowerservicingamorti-zationandhigherservicingfees,aswellashigherincomefromgrowthintheresidentialmortgageportfolio.

netinterestincomedecreased$84.2million,or14.7%.theprimarydriverofthisdecreasewaslowerincomefrommortgageloansheldforsalethatwasonlypartiallyoffsetbyhigherresidentialportfolioloanincome.averagemortgageloansheldforsaledecreased$3.1billion,or39.3%.thedeclineinaveragebalancescombinedwithcompressedmarginsresultedina$140.3million,or42.5%,decreaseinnetinterestincome.totalaverageportfolioloans,principallyresidentialmortgages,increased$4.8billion,or36.2%,contributing$274.3milliontonetinterestincome,anincreaseof$66.9million,or32.2%.averagedepositbalanceswerelowerby$252.6millionduetoreducedloanprepaymentsandresultedinadeclineinnetinterestincomeof$8.2million.netcharge-offsremainedatalowlevelbutincreased$1.1million,or45.8%.

noninterestincomeincreased$110.7million.theincreaseinnon-interestincomewasdrivenbyloweramortizationofmortgageservicingrightsandhigherservicingfeeincome.msrsamortizationdeclined$161.0million,or48.9%,duetoslowerloanprepayments.servicingfeesincreased$30.9million,or21.0%,principallyduetohigherservicingbalances.theservicingportfoliowas$79.9billionatdecember31,2004comparedwith$69.0billionatdecember31,2003.theincreaseinservicingincomewaspartiallyoffsetbylowerloanproductionincome,whichdeclined$88.0mil-lion,or58.3%.lowerproductionvolumesandcompressedmarginsdrovetheproductionincomedecline.

noninterestexpenseincreased$38.4million,or12.8%.higherper-sonnelexpenseandexpendituresrelatedtosalespromotionsandgrowthinitiativesweretheprimarydrivers.thehigherpersonnelexpensewasprin-cipallyaresultofsalesforcegrowthandhigherbenefitcosts.

wealthanDinveStMentManageMentwealthandinvestmentmanagement’stotalincomebeforetaxesforthetwelvemonthsendeddecember31,2004was$379.7million,anincreaseof$51.8million,or15.8%,comparedtothesameperiodin2003.ncfrepresentedapproximately$13millionwhileseixandZcirepresentedapproximately$13millionoftheincrease.theremainderofthegrowthwasprimarilydrivenbyincreasednetinterestincome,trustincome,andretail


investmentservicesincomewhichwaspartiallyoffsetbyhigherpersonnelandstructuralexpense.

netinterestincomeincreased$51.9million,or27.1%.ncfcon-tributedapproximately$11milliontotheincrease.theremainderofthegrowthwasprimarilyduetoincreasesinaverageloansof$1.2billion,or23.9%,includingapproximately$335millionattributabletoncf.additionally,averagedepositsincreased$1.6billion,or25.6%,includingapproximately$180millionattributabletoncf.netcharge-offsincreased$1.6million,or74.4%.

noninterest income increased$136.0million,or19.8%.ncfaccountedforapproximately$23millionwhileseixandZciaccountedforapproximately$28millionoftheincrease.retailinvestmentservicesincomeincreasedduetocontinuedsalesmomentum.anincreaseintrustincomecontributedtothetotalincreaseduetogrowthinassetsundermanagement.assetsundermanagementwere$126.4billionand$101.0billionasofdecember31,2004and2003,respectively,whichrepresentedanincreaseof$25.4billion,or25.1%.theacquisitionsofseixandncfcontributedapproximately$17billionand$2billion,respectively,totheincrease.theremainderoftheincreasewasdrivenbynewbusinessandanincreaseinequitymarkets.suntrust’stotalassetsunderadvisementwereapproximately$219.0billion,whichincludetheaforementionedassetsundermanagement,$41.2billioninnon-managedtrustassets,$26.5bil-lioninretailbrokerageassets,and$24.9billioninnon-managedcorporatetrustassets.

noninterestexpenseincreased$134.5million,or24.6%.ncfcon-tributedapproximately$21millionwhileseixandZcicontributedapproxi-mately$16millionoftheincrease.theremainderoftheincreasewasprimarilydrivenbyadditionalsalespersonnelandcostsassociatedwithinstallingthenewtrustaccountingsystem.

corporate/othercorporate/other’stotallossbeforetaxesforthetwelvemonthsendeddecember31,2004was$1.1billion,adeclineinprofitabilityof$184.7million,or19.2%,comparedtothesameperiodin2003.

netinterestincomeincreased$47.9millionduetoa$60.6millionspreadincreaseontheinvestmentportfolio.thiswaspartiallyoffsetbytheimpactofncfwhichrepresentedanapproximate$8milliondeclineinnetinterestincome.

totalassetsdecreased$0.3billion,or1.0%.thedeclinewasduetoa$3.7billiondeclineinintercompanyloansoffsetbyapproximately$2billionofncfassetsanda$1.4billionincreaseinthesecuritiesportfolio.totalliabilitiesincreased$3.2billion,or8.5%.theincreasewasduetoa$4.4billionincreaseinlong-termdebtandapproximately$2billionofncfliabilities,partiallyoffsetbydeclinesinshorttermfundingsourcesinclud-ingbrokeredandforeigndeposits.netcharge-offsincreased$0.8million,or38.3%.

noninterestincomedecreased$151.8million,or235.8%.theacqui-sitionofncfaddedapproximately$9millioninnoninterestincome.thedecreaseinnoninterestincomewasmainlyduetosecuritieslossesin2004versussecuritiesgainsin2003,whichreducednoninterestincome$164.1million.

noninterestexpenseincreased$80.1million,or8.1%.themaindriv-ersoftheincreaseweretheacquisitionofncf,whichaddedapproximately$67millionofnoninterestexpenseandapproximately$24millionofmergerexpense.additionally,anincreaseindirectexpensesof$67.1mil-

lionwasmorethanoffsetbyhighercostallocationstothelinesofbusinessof$82.3million.

criticalaccountingpolicieSthecompany’ssignificantaccountingpoliciesaredescribedindetailinnote1,accountingpolicies,totheconsolidatedfinancialstatementsandareintegraltounderstandingmanagement’sdiscussionandanalysisofresultsofoperationsandfinancialcondition.managementhasidentifiedcertainaccountingpoliciesasbeingcriticalbecausetheyrequiremanage-ment’sjudgmenttoascertainthevaluationofassets,liabilities,commit-mentsandcontingenciesandtheyhaveasignificantimpactonthefinancialstatements.avarietyoffactorscouldaffecttheultimatevaluethatisobtainedeitherwhenearningincome,recognizinganexpense,recover-inganasset,orreducingaliability.thecompany’saccountingandreport-ingpoliciesareinaccordancewithusgaap,andtheyconformtogeneralpracticeswithintheapplicableindustries.thecompanyhasestablisheddetailedpoliciesandcontrolproceduresthatareintendedtoensurethesecriticalaccountingestimatesarewellcontrolledandappliedconsistentlyfromperiodtoperiod.inaddition,thepoliciesandproceduresareintendedtoensurethattheprocessforchangingmethodologiesoccursinanappro-priatemanner.thefollowingisadescriptionofthecompany’scurrentaccountingpoliciesthatareconsideredtoinvolvesignificantmanagementvaluationjudgments.

allowanceforloananDleaSeloSSeSthealllrepresentsthealllcommittee’sestimateofprobablelossesinherentintheexistingloanportfolio.thealllisincreasedbytheprovisionforloanlosseschargedtoexpenseandreducedbyloanschargedoff,netofrecoveries.thealllisdeterminedbasedonmanagement’sassessmentofreviewsandevaluationsoflargerloansthatmeetthecompany’sdefi-nitionofimpairmentandthesizeandcurrentriskcharacteristicsofpoolsofhomogeneousloans(i.e.,loanshavingsimilarcharacteristics)withintheportfolio.

impairedloans,exceptforsmallerbalancehomogeneousloans,includeloansclassifiedasnonaccrualwhereitisprobablethatsuntrustwillbeunabletocollectthescheduledpaymentsofprincipalandinterestaccordingtothecontractualtermsoftheloanagreement.whenaloanisdeemedimpaired,theamountofspecificallowancerequiredismeasuredbyacarefulanalysisofthemostprobablesourceofrepayment,includingthepresentvalueoftheloan’sexpectedfuturecashflows,thefairvalueoftheunderlyingcollaterallesscostsofdisposition,ortheloan’sestimatedmarketvalue.inthesemeasurements,managementusesassumptionsandmethodologiesthatarerelevanttoestimatingthelevelofimpairedandunrealizedlossesintheportfolio.totheextentthatthedatasupportingsuchassumptionshaslimitations,management’sjudgmentandexperienceplayakeyroleinenhancingthealllestimates.

generalallowancesareestablishedforloansandleasesgroupedintopoolsthathavesimilarcharacteristics,includingsmallerbalancehomoge-neousloans.thealllcommitteeestimatesprobablelossesbyevaluatingseveralfactors:historicallossexperience,currentinternalriskratingsbasedonthecompany’sinternalriskratingsystem,internalportfoliotrendssuchasincreasingordecreasinglevelsofdelinquencies,concentrations,andexternalinfluencessuchaschangesineconomicorindustryconditions.

thecompany’sfinancialresultsareinfluencedbythecompany’spro-cessfordetermininganappropriatelevelforitsalll.thisprocessinvolves



management’sanalysisofcomplexinternalandexternalvariables,anditrequiresthatmanagementexercisejudgmenttoestimateanappropriatealll.asaresultoftheuncertaintyassociatedwiththissubjectivity,thecompanycannotassuretheprecisionoftheamountreserved,shoulditexperiencesizeableloanorleaselossesinanyparticularperiod.forexam-ple,changesinthefinancialconditionofindividualborrowers,economicconditions,historicallossexperience,ortheconditionofvariousmarketsinwhichcollateralmaybesoldcouldrequirethecompanytosignificantlydecreaseorincreasethelevelofthealllandtheassociatedprovisionforloanlosses.suchanadjustmentcouldmateriallyaffectnetincome.foradditionaldiscussionoftheallowanceforloanandleaselossesseepage31–provisionforloanlossesandpages29through31–allowanceforloanandleaselosses.

eStiMateSoffairvaluefairvalueisdefinedastheamountatwhichafinancialinstrumentcouldbeexchangedinatransactionbetweenwilling,unrelatedpartiesinanormalbusinesstransaction.theestimationoffairvalueissignificanttoanumberofsuntrust’sassetsandliabilities,includingloansheldforsale,investmentsecurities,msrs,oreo,otherrepossessedassets,goodwill,retirementandpostretirementbenefitobligations,aswellasassetsandliabilitiesassoci-atedwithderivativefinancialinstruments.theseareallrecordedateitherfairvalueoratthelowerofcostorfairvalue.

fairvalueisbasedonquotedmarketpricesforthesameinstrumentorforsimilarinstrumentsadjustedforanydifferencesinterms.ifmarketpricesarenotavailable,thenfairvalueisestimatedusingmodelingtech-niquessuchasdiscountedcashflowanalyses.ininstanceswhererequiredbyusgaap,thecompanyusesdiscountratesinitsdeterminationofthefairvalueofcertainassetsandliabilitiessuchasretirementandpostretirementbenefitobligationsandmsrs.thecompanyprovidesdisclosureofthekeyeconomicassumptionsusedtomeasuremsrsandasensitivityanalysistoadversechangestotheseassumptionsinnote12,securitizationactivity/mortgageservicingrights,totheconsolidatedfinancialstatements.thefairvaluesofmsrsarebasedondiscountedcashflowanalysesutilizingdealerconsensusprepaymentspeedsandmarketdiscountrates.adetaileddiscussionofkeyvariables,includingdiscountrate,usedinthedetermi-nationofretirementandpostretirementobligationsisinthepensionaccountingsection.discountratesusedarethoseconsideredtobecom-mensuratewiththerisksinvolved.achangeinthesediscountratescouldincreaseordecreasethevaluesofthoseassetsandliabilities.

fairvaluesforinvestmentsecuritiesandmostderivativefinancialinstrumentsarebasedonquotedmarketprices.ifquotedmarketpricesarenotavailable,fairvaluesarebasedonthequotedpricesofsimilarinstru-ments.thefairvaluesofloansheldforsalearebasedonobservablecur-rentmarketprices.thefairvaluesoforeoandotherrepossessedassetsaretypicallydeterminedbasedonappraisalsbythirdparties,lessestimatedsellingcosts.

estimatesoffairvaluearealsorequiredinperforminganimpairmentanalysisofgoodwill.thecompanyreviewsgoodwillforimpairmentatthereportingunitlevelonanannualbasis,ormoreoftenifeventsorcircum-stancesindicatethecarryingvaluemaynotberecoverable.thegoodwillimpairmenttestcomparesthefairvalueofthereportingunitwithitscar-ryingvalue,includinggoodwill.ifthecarryingamountofthereportingunitexceedsitsfairvalueanadditionalanalysismustbeperformedtodeterminetheamount,ifany,bywhichgoodwillisimpaired.indeterminingthefairvalueofsuntrust’sreportingunits,managementusesdiscountedcashflow

modelswhichrequireassumptionsaboutthecompany’srevenuegrowthrateandthecostofequity.

penSionaccountingseveralvariablesaffecttheannualpensioncostandtheannualvariabilityofcostforthesuntrustretirementprograms.themainvariablesare:(1)sizeandcharacteristicsoftheemployeepopulation,(2)discountrate,(3)expectedlong-termrateofreturnonplanassets,(4)recognitionofactualassetreturnsand(5)otheractuarialassumptions.belowisabriefdescrip-tionofthesevariablesandtheeffecttheyhaveonsuntrust’spensioncosts.

Sizeandcharacteristicsoftheemployeepopulationpensioncostisdirectlyrelatedtothenumberofemployeescoveredbytheplans,andotherfactorsincludingsalary,age,andyearsofemployment.thenumberofemployeeseligibleforpensionbenefitshasincreasedoverprioryears,especiallywiththeadditionofncfemployeesattheendof2004.

Discountratethediscountrateisusedtodeterminethepresentvalueoffuturebenefitobligations.thediscountrateforeachplanisdeterminedbymatchingtheexpectedcashflowsofeachplantoayieldcurvebasedonlongterm,highqualityfixedincomedebtinstrumentsavailableasofthemeasurementdate,december31.thisassumptionisupdatedeveryyearforeachplan.thediscountrateforeachplanisresetannuallyonthemeasurementdatetoreflectcurrentmarketconditionsforhighqualitybonds.

ifthecompanyweretoassumea0.25%increase/decreaseinthedis-countrateforallretirementandotherpostretirementplans,andkeepallotherassumptionsconstant,thebenefitcostwoulddecrease/increasebyapproximately$13million.

expectedlong-termrateofreturnonplanassetsbasedonaten-yearcapitalmarketprojectionofthetargetassetalloca-tionsetforthintheinvestmentpolicyforthesuntrustandncfretirementplans,thepre-taxexpectedrateofreturnonplanassetswas8.50%in2005and2004.thisexpectedrateofreturnisnotexpectedtochangesignifi-cantlyeachyear.

annualdifferences,ifany,betweenexpectedandactualreturnsareincludedintheunrecognizednetactuarialgainorlossamount.thecompanygenerallyamortizesanyunrecognizednetactuarialgainorlossinexcessofa10%corridor,asdefinedinsfasno.87,“employers’accountingforpensions,”(“sfasno.87”)innetperiodicpensionexpenseovertheaveragefutureserviceofactiveemployees,whichisapproximatelyeightyears.seenote16,employeebenefitplans,totheconsolidatedfinancialstatementsfordetailsonchangesinthepensionbenefitobligationandthefairvalueofplanassets.

ifthecompanyweretoassumea0.25%increase/decreaseintheexpectedlong-termrateofreturnfortheretirementandotherpostretire-mentplans,holdingallotheractuarialassumptionsconstant,thebenefitcostwoulddecrease/increasebyapproximately$5million.

recognitionofactualassetreturnssfasno.87allowsfortheuseofanassetvaluethatsmoothsinvestmentgainsandlossesoveraperioduptofiveyears.however,suntrusthaselectedtouseamorepreferablemethodindeterminingpensionexpense.thismethodusestheactualmarketvalueoftheplanassets,andtherefore,immediatelyrecognizespriorgainsandlosses.therefore,suntrustwill


thefollowingtableofquarterlylineofbusinessresultsfor2005and2004wasupdatedtoreflectthemanagementreportingmethodologiesineffectatdecember31,2005.

taBle20•quarterlylineofBusinessresults retail threemonthsended 2005 2004(dollarsinmillions) Dec.31 Sept.30 June30 Mar.31 dec.31 sept.30 June30 mar.31averagetotalassets $38,135.3 $37,169.0 $36,361.4 $35,791.3 $35,552.2 $24,854.2 $24,749.8 $24,003.6averagetotalliabilities 65,105.4 64,525.6 63,691.0 62,335.7 61,969.6 49,216.4 48,929.6 48,136.5netinterestincome 580.2 554.5 536.9 521.9 507.4 447.6 421.9 419.9fullytaxable-equivalent adjustment(fte) — — — — — — — —netinterestincome(fte)1 580.2 554.5 536.9 521.9 507.4 447.6 421.9 419.9provisionforloanlosses2 39.6 36.4 29.6 32.6 43.4 28.3 32.3 38.1netinterestincomeafter provisionforloanlosses 540.6 518.1 507.3 489.3 464.0 419.3 389.6 381.8noninterestincome 270.4 269.1 261.9 241.4 251.4 202.7 203.5 189.6noninterestexpense 374.1 360.8 356.5 355.7 358.0 271.5 276.4 266.3totalcontributionbeforetaxes 436.9 426.4 412.7 375.0 357.4 350.5 316.7 305.1provisionforincometaxes — — — — — — — —netincome $436.9 $426.4 $412.7 $375.0 $357.4 $350.5 $316.7 $305.1

commercial threemonthsended 2005 2004(dollarsinmillions) Dec.31 Sept.30 June30 Mar.31 dec.31 sept.30 June30 mar.31averagetotalassets $32,971.2 $32,935.7 $33,088.3 $32,024.4 $30,936.3 $23,273.3 $23,054.0 $22,442.5averagetotalliabilities 12,672.6 12,158.9 12,330.7 12,394.0 12,491.8 10,338.0 9,781.1 9,412.5netinterestincome 220.3 216.7 212.7 200.9 194.9 157.9 151.7 150.4fullytaxable-equivalent adjustment(fte) 10.0 9.7 9.5 9.0 8.3 8.7 7.3 7.2netinterestincome(fte)1 230.3 226.4 222.2 209.9 203.2 166.6 159.0 157.6provisionforloanlosses2 6.4 15.5 3.2 (0.5) 1.2 11.7 4.0 7.5netinterestincomeafter provisionforloanlosses 223.9 210.9 219.0 210.4 202.0 154.9 155.0 150.1noninterestincome 103.1 95.4 87.3 80.5 90.2 76.8 73.7 79.8noninterestexpense 118.0 114.3 98.8 97.7 100.4 93.9 79.4 78.8totalcontributionbeforetaxes 209.0 192.0 207.5 193.2 191.8 137.8 149.3 151.1provisionforincometaxes — — — — — — — —netincome $209.0 $192.0 $207.5 $193.2 $191.8 $137.8 $149.3 $151.11netinterestincomeisfullytaxableequivalentandispresentedonamatchedmaturityfundstransferpricebasisforthelineofbusiness.

2provisionforloanlossesrepresentsnetcharge-offsforthelinesofbusiness.


havemorevariabilityintheannualpensioncost,astheassetvalueswillbemorevolatilethancompanieswhoelectedto“smooth”theirinvestmentexperience.

otheractuarialassumptionstoestimatetheprojectedbenefitobligation,actuarialassumptionsarerequiredaboutfactorssuchasmortalityrate,turnoverrate,retirementrate,disabilityrateandtherateofcompensationincreases.thesefactorsdon’ttendtochangesignificantlyovertime,sotherangeofassumptions,andtheirimpactonpensioncost,isgenerallylimited.suntrustperiodi-callyreviewstheassumptionsusedbasedonhistoricalandexpectedfutureexperience.theassumptionsasofdecember31,2005reflectrelatively

minorchangestotheturnoverandretirementassumptions.themortalityassumptionwasupdatedfrom1994groupannuitymortalitytorp2000.additionally,therateofcompensationincreasewasincreasedfrom4.0%to4.5%,basedonrecentexperienceandexpectationsoffutureinflationandmeritincreases.

recentlYiSSueDanDpenDingaccountingpronounceMentSrecentlyissuedandpendingaccountingpronouncementsarediscussedinnote1,accountingpolicies,totheconsolidatedfinancialstatementsbeginningonpage70.


corporateandinvestmentbanking threemonthsended 2005 2004(dollarsinmillions) Dec.31 Sept.30 June30 Mar.31 dec.31 sept.30 June30 mar.31averagetotalassets $23,195.5 $21,695.3 $20,484.9 $19,618.2 $18,676.7 $17,805.8 $18,301.4 $19,901.1averagetotalliabilities 7,368.3 6,303.6 6,478.9 6,364.1 6,509.5 6,110.4 6,650.0 7,447.3netinterestincome 72.1 66.6 63.0 57.3 54.6 60.1 64.3 61.9fullytaxable-equivalent adjustment(fte) 6.2 5.5 5.4 4.8 4.5 4.1 3.9 3.7netinterestincome(fte)1 78.3 72.1 68.4 62.1 59.1 64.2 68.2 65.6provisionforloanlosses2 (2.4) 18.0 — (0.7) (1.3) 8.6 (0.1) 9.3netinterestincomeafter provisionforloanlosses 80.7 54.1 68.4 62.8 60.4 55.6 68.3 56.3noninterestincome 140.2 170.7 153.7 177.3 185.7 159.5 154.7 133.8noninterestexpense 77.3 88.2 78.1 88.5 98.9 76.6 83.6 75.7totalcontributionbeforetaxes 143.6 136.6 144.0 151.6 147.2 138.5 139.4 114.4provisionforincometaxes — — — — — — — —netincome $143.6 $136.6 $144.0 $151.6 $147.2 $138.5 $139.4 $114.4

mortgage threemonthsended 2005 2004(dollarsinmillions) Dec.31 Sept.30 June30 Mar.31 dec.31 sept.30 June30 mar.31averagetotalassets $38,707.9 $34,352.9 $30,618.6 $29,053.8 $27,231.0 $23,998.2 $23,069.1 $21,345.3averagetotalliabilities 1,867.5 1,952.6 1,616.5 1,338.6 1,466.7 1,391.6 1,581.7 1,297.1netinterestincome 154.4 142.0 132.7 125.4 125.0 121.3 124.8 118.2fullytaxable-equivalent adjustment(fte) — — — — — — — —netinterestincome(fte)1 154.4 142.0 132.7 125.4 125.0 121.3 124.8 118.2provisionforloanlosses2 (1.3) 2.7 2.3 1.1 0.2 0.6 0.3 2.4netinterestincomeafter provisionforloanlosses 155.7 139.3 130.4 124.3 124.8 120.7 124.5 115.8noninterestincome 60.1 83.2 51.2 44.8 43.7 28.6 23.8 20.2noninterestexpense 137.8 126.5 115.8 102.8 99.6 84.9 82.4 71.5totalcontributionbeforetaxes 78.0 96.0 65.8 66.3 68.9 64.4 65.9 64.5provisionforincometaxes — — — — — — — —netincome $78.0 $96.0 $65.8 $66.3 $68.9 $64.4 $65.9 $64.51netinterestincomeisfullytaxableequivalentandispresentedonamatchedmaturityfundstransferpricebasisforthelineofbusiness.



wealthandinvestmentmanagement threemonthsended 2005 2004(dollarsinmillions) Dec.31 Sept.30 June30 Mar.31 dec.31 sept.30 June30 mar.31averagetotalassets $8,904.9 $8,716.8 $8,496.4 $8,363.2 $8,128.3 $6,564.9 $6,225.9 $5,756.1averagetotalliabilities 9,352.4 9,509.0 9,465.9 9,294.7 9,352.8 7,870.6 7,239.2 6,773.0netinterestincome 95.8 88.3 83.6 77.8 75.4 59.6 55.1 53.8fullytaxable-equivalent adjustment(fte) — — — — — — — —netinterestincome(fte)1 95.8 88.3 83.6 77.8 75.4 59.6 55.1 53.8provisionforloanlosses2 6.5 1.9 0.9 0.4 1.0 1.1 1.0 0.6netinterestincomeafter provisionforloanlosses 89.3 86.4 82.7 77.4 74.4 58.5 54.1 53.2noninterestincome 240.4 237.4 233.7 232.7 231.2 201.4 198.2 190.7noninterestexpense 209.7 194.3 188.7 202.1 201.5 164.9 159.8 155.7totalcontributionbeforetaxes 120.0 129.5 127.7 108.0 104.1 95.0 92.5 88.2provisionforincometaxes — — — — — — — —netincome $120.0 $129.5 $127.7 $108.0 $104.1 $95.0 $92.5 $88.2

corporate/other threemonthsended 2005 2004(dollarsinmillions) Dec.31 Sept.30 June30 Mar.31 dec.31 sept.30 June30 mar.31averagetotalassets $31,146.4 $32,476.7 $33,755.5 $34,045.3 $35,634.4 $28,546.9 $29,642.6 $28,738.5averagetotalliabilities 58,071.7 54,440.0 51,205.0 49,549.9 46,962.3 39,367.6 40,037.9 38,450.4averagetotalequity 16,875.6 16,822.9 16,275.6 16,119.4 15,819.0 9,992.9 10,194.2 9,840.3netinterestincome 0.7 (0.6) (33.1) 45.8 2.8 5.9 0.5 (10.8)fullytaxable-equivalent adjustment(fte) 3.8 3.8 3.8 3.8 3.9 4.0 1.3 1.3netinterestincome(fte)1 4.5 3.2 (29.3) 49.6 6.7 9.9 1.8 (9.5)provisionforloanlosses2 1.1 2.2 1.6 1.8 1.3 0.7 0.1 0.8netinterestincomeafter provisionforloanlosses 3.4 1.0 (30.9) 47.8 5.4 9.2 1.7 (10.3)noninterestincome (2.9) (8.7) (2.6) (10.2) (29.0) (29.5) (19.6) (9.4)noninterestexpense 303.2 307.6 349.4 299.7 305.3 250.0 258.2 251.3totalcontributionbeforetaxes (302.7) (315.3) (382.9) (262.1) (328.9) (270.3) (276.1) (271.0)provisionforincometaxes — — — — — — — —netincome ($302.7) ($315.3) ($382.9) ($262.1) ($328.9) ($270.3) ($276.1) ($271.0)1netinterestincomeisfullytaxableequivalentandispresentedonamatchedmaturityfundstransferpricebasisforthelineofbusiness.




additionalsupplementalfinancialdata

taBle21•reconcilementofnon-uSgaapMeasures–annual twelveMonthsendedDecember31(dollarsinmillions,exceptpershareandotherdata) 2005 2004 2003 2002 2001 2000netincome $1,987.2 $1,572.9 $1,332.3 $1,331.8 $1,375.5 $1,294.1securitieslosses/(gains),netoftax 4.4 27.1 (80.5) (133.0) (99.5) (4.3)netincomeexcludingsecurities losses/(gains),netoftax 1,991.6 1,600.0 1,251.8 1,198.8 1,276.0 1,289.8thecoca-colacompanydividend,netoftax (48.1) (43.0) (37.8) (34.4) (30.9) (29.2)netincomeexcludingsecurities losses/(gains)andthecoca-cola companydividend,netoftax $1,943.5 $1,557.0 $1,214.0 $1,164.4 $1,245.1 $1,260.6netincome $1,987.2 $1,572.9 $1,332.3 $1,331.8 $1,375.5 $1,294.1mergerexpense,netoftax 61.1 18.5 — 39.8 — 27.6netincomeexcludingmergerexpense $2,048.3 $1,591.4 $1,332.3 $1,371.6 $1,375.5 $1,321.7noninterestexpense $4,690.7 $3,897.0 $3,400.6 $3,219.4 $2,999.9 $2,828.5mergerexpense (98.6) (28.4) — (16.0) — (42.4)noninterestexpenseexcluding mergerexpense $4,592.1 $3,868.6 $3,400.6 $3,203.4 $2,999.9 $2,786.1dilutedearningspershare $5.47 $5.19 $4.73 $4.66 $4.72 $4.30impactofexcludingmergerexpense 0.17 0.06 — 0.14 — 0.09dilutedearningspershareexcluding mergerexpense $5.64 $5.25 $4.73 $4.80 $4.72 $4.39efficiencyratio 60.06% 61.39% 59.99% 57.99% 56.12% 57.47%impactofexcludingmergerexpense (1.26) (0.45) — (0.29) — (0.86)efficiencyratioexcludingmergerexpense 58.80% 60.94% 59.99% 57.70% 56.12% 56.61%totalaverageassets $168,088.8 $133,754.3 $122,325.4 $108,516.1 $102,884.2 $98,397.8averagenetunrealizedsecuritiesgains (1,949.4) (2,372.2) (2,343.0) (2,731.8) (2,700.0) (2,353.8)averageassetslessnetunrealized securitiesgains $166,139.4 $131,382.1 $119,982.4 $105,784.3 $100,184.2 $96,044.0totalaverageequity $16,526.3 $11,469.5 $9,083.0 $8,725.7 $8,073.8 $7,501.9averageaccumulatedother comprehensiveincome (1,220.5) (1,517.2) (1,486.1) (1,741.1) (1,745.8) (1,470.3)totalaveragerealizedequity $15,305.8 $9,952.3 $7,596.9 $6,984.6 $6,328.0 $6,031.6returnonaveragetotalassets 1.18% 1.18% 1.09% 1.23% 1.34% 1.32%impactofexcludingnetrealizedand unrealizedsecuritiesgains/lossesand thecoca-colacompanydividend (0.01) 0.01 (0.08) (0.13) (0.10) (0.01)returnonaveragetotalassetslessnetrealized andunrealizedsecuritiesgains/lossesand thecoca-colacompanydividend1 1.17% 1.19% 1.01% 1.10% 1.24% 1.31%returnonaveragetotalshareholders’equity 12.02% 13.71% 14.67% 15.26% 17.04% 17.25%impactofexcludingnetrealizedand unrealizedsecuritiesgains/lossesand thecoca-colacompanydividend 0.68 1.94 1.31 1.41 2.64 3.65returnonaveragerealized shareholders’equity2 12.70% 15.65% 15.98% 16.67% 19.68% 20.90%netinterestincome $4,579.0 $3,685.2 $3,320.3 $3,243.7 $3,252.6 $3,108.5fteadjustment 75.5 58.4 45.0 39.5 40.8 39.9netinterestincome–fte 4,654.5 3,743.6 3,365.3 3,283.2 3,293.4 3,148.4noninterestincome 3,155.0 2,604.4 2,303.0 2,268.8 2,051.9 1,773.6totalrevenue 7,809.5 6,348.0 5,668.3 5,552.0 5,345.3 4,922.0securitieslosses/(gains) 7.2 41.7 (123.9) (204.5) (153.1) (6.6)totalrevenueexcludingsecuritieslosses/(gains) $7,816.7 $6,389.7 $5,544.4 $5,347.5 $5,192.2 $4,915.41computedbydividingnetincomeexcludingsecuritiesgains/lossesandthecoca-colacompanydividendafter-tax,byaverageassetslessnetunrealizedsecuritiesgains.

2computedbydividingnetincomeexcludingsecuritiesgains/lossesandthecoca-colacompanydividendafter-tax,byaveragerealizedshareholders’equity.


taBle22•reconcilementofnon-uSgaapMeasures–quarterly threeMonthsended 2005 2004(dollarsinmillions,exceptpershareandotherdata) Dec.31 Sept.30 June30 Mar.31 dec.31 sept.30 June30 mar.31netincome $518.5 $510.8 $465.7 $492.3 $455.7 $368.8 $386.6 $361.8securities(gains)/losses,netoftax (0.4) 1.3 — 3.5 12.6 11.8 5.9 (3.2)netincomeexcludingsecurities (gains)/losses,netoftax 518.1 512.1 465.7 495.8 468.3 380.6 392.5 358.6thecoca-colacompanydividend, netoftax (12.0) (12.0) (12.0) (12.0) (10.7) (10.7) (10.7) (10.7)netincomeexcludingnetsecurities (gains)/lossesandthecoca-cola companydividend,netoftax $506.1 $500.1 $453.7 $483.8 $457.6 $369.9 $381.8 $347.9netincome $518.5 $510.8 $465.7 $492.3 $455.7 $368.8 $386.6 $361.8mergerexpense,netoftax 4.1 7.5 33.6 16.0 18.5 — — —netincomeexcludingmergerexpense $522.6 $518.3 $499.3 $508.3 $474.2 $368.8 $386.6 $361.8noninterestexpense $1,206.9 $1,177.1 $1,172.8 $1,133.9 $1,149.0 $929.8 $928.4 $889.7mergerexpense (6.5) (12.1) (54.3) (25.7) (28.4) — — —noninterestexpenseexcluding mergerexpense $1,200.4 $1,165.0 $1,118.5 $1,108.2 $1,120.6 $929.8 $928.4 $889.7dilutedearningspershare $1.43 $1.40 $1.28 $1.36 $1.26 $1.30 $1.36 $1.28impactofexcludingmergerexpense 0.01 0.02 0.09 0.04 0.05 — — —dilutedearningspershareexcluding mergerexpense $1.44 $1.42 $1.37 $1.40 $1.31 $1.30 $1.36 $1.28efficiencyratio 60.20% 58.62% 61.30% 60.22% 61.78% 61.12% 61.58% 60.98%impactofexcludingmergerexpense (0.33) (0.61) (2.84) (1.37) (1.53) — — —efficiencyratioexcludingmergerexpense 59.87% 58.01% 58.46% 58.85% 60.25% 61.12% 61.58% 60.98%totalaverageassets $175,769.1 $169,934.0 $165,253.6 $161,218.2 $156,570.1 $127,128.0 $127,287.5 $123,853.7averagenetunrealizedsecuritiesgains (1,871.2) (2,102.2) (1,791.6) (2,032.8) (2,056.7) (2,055.0) (2,803.9) (2,580.3)averageassetslessnetunrealized securitiesgains $173,897.9 $167,831.8 $163,462.0 $159,185.4 $154,513.4 $125,073.0 $124,483.6 $121,273.4totalaverageequity $16,875.6 $16,822.9 $16,275.6 $16,119.4 $15,819.0 $9,992.9 $10,194.2 $9,840.3averageaccumulatedother comprehensiveincome (1,126.7) (1,331.1) (1,139.5) (1,285.3) (1,304.6) (1,318.3) (1,804.8) (1,645.7)totalaveragerealizedequity $15,748.9 $15,491.8 $15,136.1 $14,834.1 $14,514.4 $8,674.6 $8,389.4 $8,194.6returnonaveragetotalassets 1.17% 1.19% 1.13% 1.24% 1.16% 1.15% 1.22% 1.18%impactofexcludingnetrealizedand unrealizedsecuritiesgains/lossesand thecoca-colacompanydividend (0.02) (0.01) (0.02) (0.01) 0.02 0.03 0.01 (0.03)returnonaveragetotalassetsless netrealizedandunrealizedsecurities gains/lossesandthecoca-cola companydividend1 1.15% 1.18% 1.11% 1.23% 1.18% 1.18% 1.23% 1.15%returnonaveragetotal shareholders’equity 12.19% 12.05% 11.48% 12.39% 11.46% 14.68% 15.25% 14.79%impactofexcludingnetrealizedand unrealizedsecuritiesgains/lossesand thecoca-colacompanydividend 0.56 0.76 0.54 0.84 1.08 2.28 3.05 2.28returnonaveragerealized shareholders’equity2 12.75% 12.81% 12.02% 13.23% 12.54% 16.96% 18.30% 17.07%netinterestincome $1,187.1 $1,156.7 $1,123.7 $1,111.6 $1,084.2 $876.8 $872.4 $851.6fteadjustment 20.0 19.0 18.7 17.6 16.7 16.9 12.7 12.3netinterestincome–fte 1,207.1 1,175.7 1,142.4 1,129.2 1,100.9 893.7 885.1 863.9noninterestincome 797.9 832.4 770.9 753.8 759.0 627.7 622.7 595.1totalrevenue 2,005.0 2,008.1 1,913.3 1,883.0 1,859.9 1,521.4 1,507.8 1,459.0securitieslosses/(gains) (0.6) 2.1 — 5.7 19.4 18.2 9.0 (4.9)totalrevenueexcluding securitieslosses/(gains) $2,004.4 $2,010.2 $1,913.3 $1,888.7 $1,879.3 $1,539.6 $1,516.8 $1,454.11computedbydividingannualizednetincomeexcludingsecuritiesgains/lossesandthecoca-colacompanydividendafter-tax,byaverageassetslessnetunrealizedsecuritiesgains.

2computedbydividingannualizednetincomeexcludingsecuritiesgains/lossesandthecoca-colacompanydividendafter-tax,byaveragerealizedshareholders’equity.



taBle23•Sharerepurchasesin2005 numberofshares maximumnumberof totalnumber average purchasedaspartof sharesthatmayyetbe ofshares pricepaid publiclyannounced purchasedunderthe purchased1 pershare plansorprograms plansorprograms2

January1-31 485,000 $71.31 485,000 5,542,796february1-28 365,000 72.18 365,000 5,177,796march1-31 145,000 72.25 145,000 5,032,796april1-30 — — — 5,032,796may1-31 — — — 5,032,796June1-30 — — — 5,032,796July1-31 — — — 5,032,796august1-31 705,000 70.13 705,000 4,327,796september1-30 1,075,000 70.28 1,075,000 3,252,796october1-31 — — — 3,252,796november1-30 — — — 3,252,796december1-31 — — — 3,252,796 total 2,775,000 $70.77 2,775,0001inadditiontotheserepurchases,pursuanttosuntrust’semployeestockoptionplans,participantsmayexercisesuntruststockoptionsbysurrenderingsharesofsuntrustcommonstocktheparticipantsalreadyownaspaymentoftheoptionexerciseprice.sharessosurrenderedbyparticipantsinsuntrust’semployeestockoptionplansarerepurchasedpursuanttothetermsoftheapplicablestockoptionplanandnotpursuanttopub-liclyannouncedsharerepurchaseprograms.fortheyearendeddecember31,2005,thefollowingsharesofsuntrustcommonstockweresurrenderedbyparticipantsinsuntrust’semployeestockoptionplans:January2005–20,857sharesatanaveragepricepershareof$70.75;february2005–15,206sharesatanaveragepricepershareof$72.56;march2005–10,071sharesatanaveragepricepershareof$72.84;april2005–2,459sharesatanaveragepricepershareof$71.38;may2005–7,562sharesatanaveragepricepershareof$74.19;June2005–6,502shareatanaveragepricepershareof$72.74;July2005–146,915sharesatanaveragepricepershareof$75.60;october2005–1,423sharesatanaveragepricepershareof$69.85;november2005–10,734sharesatanaveragepricepershareof$73.99;december2005–6,067sharesatanaveragepricepershareof$74.00.therewerenosharesofcommonstocksurrenderedbyparticipantsinthecompany’semployeestockoptionplansinaugustorseptember2005.

2onnovember12,2002,theboardofdirectorsauthorizedthepurchaseof10millionsharesofsuntrustcommonstockinadditionto2,796shareswhichwereremainingfromaJune13,2001authorization.thereisnoexpirationdateforthisauthorization.thecompanyhasnotdeterminedtoterminatetheprogramandnoprogramsexpiredduringtheperiodcoveredbythetable.

taBle24•fundspurchasedandSecuritiesSoldunderagreementstorepurchase1

maximum outstanding asofdecember31 dailyaverage atany(dollarsinmillions) balance rate balance rate month-end2005 $10,374.5 3.88% $10,331.3 3.02% $12,610.52004 9,342.8 1.85 9,796.7 1.11 11,079.42003 9,505.2 0.72 11,666.9 0.91 15,089.81consistsoffederalfundspurchasedandsecuritiessoldunderagreementstorepurchasethatmatureovernightoratafixedmaturitygenerallynotexceedingthreemonths.ratesonovernightfundsreflectcurrentmarketrates.ratesonfixedmaturityborrowingsaresetatthetimeofborrowings.

taBle25•MaturityofconsumertimeandothertimeDepositsinamountsof$100,000orMore

asofDecember31,2005 consumer Brokered foreign other

(dollarsinmillions) time time time time totalMonthstomaturity:3orless $2,500.4 $6,267.2 $8,835.9 $50.7 $17,654.2over3through6 1,622.8 4,040.0 — — 5,662.8over6through12 2,051.2 1,985.0 — — 4,036.2over12 2,894.2 3,352.7 — — 6,246.9 total $9,068.6 $15,644.9 $8,835.9 $50.7 $33,600.1


taBle26•MaturityDistributionofDebtSecuritiesavailableforSale asofDecember31,2005 average 1year 1–5 5–10 after10 maturity(dollarsinmillions) orless years years years total inyearsDistributionofMaturities:amortizedcostu.s.treasuryandotheru.s.government agenciesandcorporations $223.1 $2,038.4 $332.3 $— $2,593.8 2.9statesandpoliticalsubdivisions 80.6 371.8 371.2 90.5 914.1 5.2asset-backedsecurities1 87.3 1,518.5 25.0 — 1,630.8 2.8mortgage-backedsecurities1 567.9 14,942.8 1,818.8 25.0 17,354.5 3.3corporatebonds 205.1 729.0 66.4 90.1 1,090.6 4.1 totaldebtsecurities $1,164.0 $19,600.5 $2,613.7 $205.6 $23,583.8 3.3fairvalueu.s.treasuryandotheru.s.government agenciesandcorporations $220.7 $1,996.0 $330.3 $— $2,547.0statesandpoliticalsubdivisions 80.7 376.8 376.3 91.9 925.7asset-backedsecurities1 87.3 1,500.4 25.0 — 1,612.7mortgage-backedsecurities1 571.5 14,623.7 1,802.4 25.0 17,022.6corporatebonds 203.7 713.1 65.0 88.6 1,070.4 totaldebtsecurities $1,163.9 $19,210.0 $2,599.0 $205.5 $23,178.4weightedaverageyield(fte):u.s.treasuryandotheru.s.government agenciesandcorporations 3.16% 3.71% 4.52% —% 3.77%statesandpoliticalsubdivisions 6.93 6.01 6.22 6.07 6.17asset-backedsecurities1 4.62 4.30 5.56 — 4.34mortgage-backedsecurities1 4.90 4.28 4.90 5.70 4.37corporatebonds 5.02 4.65 4.60 4.96 4.73 totaldebtsecurities 4.71% 4.28% 5.04% 5.64% 4.39%1distributionofmaturitiesisbasedontheexpectedaveragelifeoftheasset.

taBle27•loanMaturity asofDecember31,2005 remainingMaturitiesofSelectedloans within 1–5 after(dollarsinmillions) total 1Year Years 5YearsloanMaturitycommercialandcommercialrealestate1 $41,838.4 $12,992.5 $12,668.5 $16,177.4realestate–construction 11,046.9 6,054.2 2,529.3 2,463.4 total $52,885.3 $19,046.7 $15,197.8 $18,640.8interestrateSensitivityselectedloanswith: predeterminedinterestrates $2,223.6 $7,607.0 floatingoradjustableinterestrates 12,974.2 11,033.8 total $15,197.8 $18,640.81excludes$4.4billioninleasefinancing.



SuperviSionanDregulationasabankholdingcompanyandafinancialholdingcompany,thecompanyissubjecttotheregulationandsupervisionoftheboardofgovernorsofthefederalreservesystem(the“federalreserve”).suntrustbankisageorgiastatebankwhichhasbranchesingeorgia,florida,tennessee,alabama,Virginia,westVirginia,maryland,northcarolina,southcarolina,thedistrictofcolumbia,mississippiandarkansas.suntrustbankisamemberofthefederalreservesystem,andisregulatedbythefederalreserve,thefederaldepositinsurancecorporation(the“fdic”)andthegeorgiadepartmentofbankingandfinance.incertainmarkets,suntrustbankoperatesunderthename“wal-martmoneycenterbysuntrust,”andsuntrustbankalsooperatescertainbranchesunderthename“elbanco”ingeorgia.

thecompanyalsoownsa49%ownershipinterestinfirstmarket,fsb.firstmarketbank,fsbisafederalsavingsbankprimarilyregulatedbytheofficeofthriftsupervision(the“ots”).thecompanyhasenteredintoadefinitiveagreementtosellits49%interestinfirstmarket,fsb.thecompletionofthesaleissubjecttoanumberofconditionsandreceiptofrequiredregulatoryapprovals.althoughitiscurrentlyanticipatedthatthesalewilltakeplaceinthefirstquarterof2006,thecompanycannotgiveanyassuranceastowhen,orif,thesalewilloccur.

thecompany’sbankingsubsidiariesaresubjecttovariousrequire-mentsandrestrictionsunderfederalandstatelaw,includingrequire-mentstomaintainreservesagainstdeposits,restrictionsonthetypesandamountsofloansthatmaybemadeandtheinterestthatmaybechargedthereon,andlimitationsonthetypesofinvestmentsthatmaybemadeandthetypesofservicesthatmaybeoffered.Variousconsumerlawsandregu-lationsalsoaffecttheoperationsofthebankanditssubsidiaries.inadditiontotheimpactofregulation,commercialbanksareaffectedsignificantlybytheactionsofthefederalreserveasitattemptstocontrolthemoneysup-plyandcreditavailabilityinordertoinfluencetheeconomy.pursuanttotheriegle-nealinterstatebankingandbranchingefficiencyactof1994,bankholdingcompaniesfromanystatemayacquirebankslocatedinanyotherstate,subjecttocertainconditions,includingconcentrationlimits.inaddition,abankmayestablishbranchesacrossstatelinesbymergingwithabankinanotherstate,subjecttocertainrestrictions.

thereareanumberofobligationsandrestrictionsimposedonbankholdingcompaniesandtheirdepositoryinstitutionsubsidiariesbyfed-erallawandregulatorypolicythataredesignedtoreducepotentiallossexposuretothedepositorsofsuchdepositoryinstitutionsandtothefdicinsurancefundintheeventthedepositoryinstitutionbecomesindangerofdefaultorisindefault.forexample,underapolicyofthefederalreservewithrespecttobankholdingcompanyoperations,abankholdingcom-panyisrequiredtoserveasasourceoffinancialstrengthtoitssubsidiarydepositoryinstitutionsandcommitresourcestosupportsuchinstitutionsincircumstanceswhereitmightnotdosoabsentsuchpolicy.inaddition,the“cross-guarantee”provisionsoffederallawrequireinsureddepositoryinstitutionsundercommoncontroltoreimbursethefdicforanylosssuf-feredorreasonablyanticipatedasaresultofthedefaultofacommonlycontrolledinsureddepositoryinstitutionorforanyassistanceprovidedbythefdictoacommonlycontrolledinsureddepositoryinstitutionindangerofdefault.thefederalbankingagencieshavebroadpowersundercurrentfederallawtotakepromptcorrectiveactiontoresolveproblemsofinsureddepositoryinstitutions.theextentofthesepowersdependsuponwhethertheinstitutionsinquestionare“wellcapitalized,”“adequatelycapitalized,”“undercapitalized,”“significantlyundercapitalized”or“criticallyundercapi-

talized”assuchtermsaredefinedunderregulationsissuedbyeachofthefederalbankingagencies.

therearevariouslegalandregulatorylimitsontheextenttowhichthecompany’ssubsidiarybanksmaypaydividendsorotherwisesupplyfundstothecompany.inaddition,federalandstatebankregulatoryagen-ciesalsohavetheauthoritytopreventabankorbankholdingcompanyfrompayingadividendorengaginginanyotheractivitythat,intheopinionoftheagency,wouldconstituteanunsafeorunsoundpractice.

fdicregulationsrequirethatmanagementreportannuallyonitsresponsibilityforpreparingitsinstitution’sfinancialstatements,andestab-lishingandmaintaininganinternalcontrolstructure,andproceduresforfinancialreporting,andcompliancewithdesignatedlawsandregulationsconcerningsafetyandsoundness.thecompany’snonbankingsubsidiar-iesareregulatedandsupervisedbyvariousregulatorybodies.forexample,suntrustcapitalmarkets,inc.isabroker-dealerandinvestmentadviserreg-isteredwiththesecuritiesandexchangecommission(“sec”)andamem-berorganizationofthenewyorkstockexchange,inc.andthenationalassociationofsecuritiesdealers,inc.(“nasd”).suntrustinvestmentservices,inc.isalsoabroker-dealerandinvestmentadviserregisteredwiththesecandamemberofthenasd.truscoisaninvestmentadviserregis-teredwiththesec.

onnovember12,1999,financialmodernizationlegislationknownasthegramm-leach-blileyact(the“act”)wassignedintolaw.undertheact,abankholdingcompanywhichelectstobecomeafinancialholdingcompanymayengageinexpandedsecuritiesactivities,insurancesales,andunderwritingactivities,andotherfinancialactivities,andmayalsoacquiresecuritiesfirmsandinsurancecompanies,subjectineachcasetocertainconditions.thecompanyhaselectedtobecomeafinancialholdingcompanyundertheact.inadditiontotheact,therehavebeenanumberoflegislativeandregulatoryproposalsthatwouldhaveanimpactontheoperationofbank/financialholdingcompaniesandtheirbankandnonbanksubsidiaries.itisimpossibletopredictwhetherorinwhatformthesepro-posalsmaybeadoptedinthefutureand,ifadopted,whattheireffectwillbeonthecompany.

awarningaBoutforwarD-lookinginforMationthisannualreportcontainsforward-lookingstatements.thecompanymayalsomakeforward-lookingstatementsinperiodicreportstothesec,proxystatements,offeringcircularsandprospectuses,pressreleases,andotherwrittenmaterialsandoralstatementsmadebysuntrust’sofficers,directors,oremployeestothirdparties.statementsthatarenothistoricalfacts,includingstatementsaboutthecompany’sbeliefsandexpectations,areforward-lookingstatements.thesestatementsarebasedonbeliefsandassumptionsofsuntrust’smanagementandoninformationcurrentlyavail-abletosuchmanagement.theforward-lookingstatementsareintendedtobesubjecttothesafeharborprotectionprovidedbysection27aofthesecuritiesactof1933andsection21eofthesecuritiesexchangeactof1934.forward-lookingstatementsincludestatementsprecededby,fol-lowedby,orthatincludethewords“believes,”“expects,”“anticipates,”“plans,”“estimates,”orsimilarexpressionsorfutureconditionalverbssuchas“will,”“should,”“would,”and“could.”forward-lookingstatementsspeakonlyasofthedatetheyaremade,andthecompanyundertakesnoobligationtoupdatepubliclyanyoftheminlightofnewinformationorfutureevents.


forward-lookingstatementsinvolveinherentrisksanduncertain-ties.managementcautionsthereadersthatanumberofimportantfactorscouldcauseactualresultstodiffermateriallyfromthosecontainedinanyforward-lookingstatement.suchfactorsinclude,butarenotlimitedto,thefollowing:• competitivepressuresamonglocal,regional,national,andinternational

banks,thrifts,creditunionsandothernonbankfinancialinstitutionsmayincreasesignificantly;

• changesintheinterestrateenvironmentmayreducemarginsandimpactfundingsources;

• generaleconomicorbusinessconditionsinthegeographicregionsandindustriesinwhichsuntrustoperatesaswellastheriskofdomesticorinternationalmilitaryorterroristactivitiesorconflicts,mayleadtoadeteriorationincreditqualityorareduceddemandforcredit;

• legislativeorregulatorychanges,includingchangesinaccountingstan-dards,mayadverselyaffectthebusinessinwhichsuntrustisengaged;

• variousmonetaryandfiscalpoliciesandregulations,includingthosedeterminedbythefederalreserveboard,thefederaldepositinsurancecorporationandstateregulators;

• changesmayoccurinthesecuritiesmarketsthataffectsuntrust’saccesstocapital,thevalueofthecompany’sholdingsorrevenues;and

• competitorsofsuntrustmayhavegreaterfinancialresourcesanddevelopproductsthatenablesuchcompetitorstocompetemoresuccessfullythansuntrust.

otherfactorsthatmaycauseactualresultstodifferfromtheforward-lookingstatementsincludethefollowing:• thetimelydevelopmentofcompetitivenewproductsandservicesbythe

companyandtheacceptanceofsuchproductsandservicesbyclients;• changesinconsumerspendingandsavinghabits;• theeffectsofcompetitors’pricingpolicies;• thecompany’ssuccessinmanagingthecostsassociatedwiththeexpan-

sionofexistingdistributionchannelsanddevelopingnewones,andinrealizingincreasedrevenuesfromsuchdistributionchannels,includingcross-sellinginitiativesandelectroniccommerce-basedefforts;and

• theeffectofcorporaterestructurings,mergers,acquisitionsand/ordis-positionsandtheirintegrationintothecompany,theactualrestructuringandotherchargesrelatedtheretoandmanagement’sabilitytomanagetheseandotherrisks,includingachievingtheexpectedrevenuegrowthand/orexpensesavingsfromsuchcorporaterestructurings,mergers,acquisitions,and/ordispositions.

managementofsuntrustbelievestheseforward-lookingstatementsarereasonable;however,unduerelianceshouldnotbeplacedonsuchforward-lookingstatements,whicharebasedoncurrentexpectations.suntrustcautionsthattheforegoinglistofimportantfactorsisnotinclu-sive.forward-lookingstatementsarenotguaranteesofperformance.theyinvolverisks,uncertaintiesandassumptions.thefutureresultsandshare-holdervaluesofsuntrustmaydiffermateriallyfromhistoricalresultsandfromthoseexpressedintheforward-lookingstatementscontainedinthisannualreport.manyofthefactorsthatwilldeterminetheseresultsandvaluesarebeyondsuntrust’sabilitytocontrolorpredict.formoreinfor-mationontheforegoingrisksanduncertaintiesandadditionalfactorsthatcouldaffectthecompany’sresultspleaseseethe“riskfactors”sectioninthisreport.

riSkfactorS

BuSineSSriSkSasafinancialservicescompany,adversechangesingeneralbusinessoreconomicconditionscouldhaveamaterialadverseeffectonourfinan-cialconditionandresultsofoperations.

asustainedweaknessorweakeninginbusinessandeconomiccondi-tionsgenerallyorspecificallyintheprincipalmarketsinwhichwedobusi-nesscouldhaveoneormoreofthefollowingadverseimpactsonbusiness:• adecreaseinthedemandforloansandotherproductsandservices

offeredbyus;• adecreaseinthevalueofourloansheldforsale;• anincreaseordecreaseintheusageofunfundedcommitments;or• anincreaseinthenumberofclientsandcounterpartieswhobecome

delinquent,fileforprotectionunderbankruptcylawsordefaultontheirloansorotherobligationstous.anincreaseinthenumberofdelinquen-cies,bankruptciesordefaultscouldresultinahigherlevelofnonper-formingassets,netcharge-offs,provisionforloanlosses,andvaluationadjustmentsonloansheldforsale.

ourmanagementdiscussesotherbusinessandeconomicconditionsinmoredetailelsewhereinthisannualreport.

changesinmarketinterestratesorcapitalmarketscouldadverselyaffectourrevenueandexpense,thevalueofassetsandobligations,costsofcapitalorliquidity.

givenourbusinessmix,andthefactthatmostoftheassetsandlia-bilitiesarefinancialinnature,wetendtobeparticularlysensitivetomarketinterestratemovementandtheperformanceofthefinancialmarkets.inadditiontotheimpactonthegeneraleconomy,changesininterestratesorinvaluationsinthedebtorequitymarketscoulddirectlyimpactusinoneormoreofthefollowingways:• thevalueofcertainon-balancesheetandoff-balancesheetfinancial

instrumentsorthevalueofequityinvestmentsthatwehold,inparticu-lar,holdingsincommonstockofthecoca-colacompany,whichasofdecember31,2005werevaluedatapproximately$1.9billion;

• theyieldonearningassetsandratespaidoninterestbearingliabilitiesmaychangeindisproportionateways.

• thevalueofassetsforwhichweprovideprocessingservices;or• totheextentweaccesscapitalmarketstoraisefundstosupportthebusi-

ness,suchchangescouldaffectthecostofsuchfundsortheabilitytoraisesuchfunds.

thefiscalandmonetarypoliciesofthefederalgovernmentanditsagenciescouldhaveamaterialadverseeffectonourearnings.

thefederalreserveregulatesthesupplyofmoneyandcreditintheunitedstates.itspoliciesdetermineinlargepartthecostoffundsforlend-ingandinvestingandthereturnearnedonthoseloansandinvestments,bothofwhichaffectthenetinterestmargin.theyalsocanmateriallydecreasethevalueoffinancialinstrumentswehold,suchasdebtsecuri-tiesandmsrs.itspoliciesalsocanadverselyaffectborrowers,potentiallyincreasingtheriskthattheymayfailtorepaytheirloans.changesinfederalreserveboardpoliciesarebeyondourcontrolanddifficulttopredict;con-sequently,theimpactofthesechangesonouractivitiesandresultsofoper-ationsisdifficulttopredict.



adecreaseinthemarketforresidentialrealestatecouldharmourrevenuesandprofitability.

asignificantpercentageofourassetsaresecuredbyresidentialrealestatemortgages.ourfinancialresultsmaybeadverselyaffectedbychangesinprevailingeconomicconditions,particularlydecreasesinrealestatevalues.decreasesinrealestatevaluescouldadverselyaffectthevalueofpropertyusedascollateralforourloansandinvestments.ifpooreconomicconditionsresultindecreaseddemandforrealestateloans,ourprofitsmaydecreasebecauseouralternativeinvestmentsmayearnlessincomethanrealestateloans.

clientscouldpursuealternativestobankdeposits,causingustolosearelativelyinexpensivesourceoffunding.

checkingandsavingsaccountbalancesandotherformsofclientdepositscoulddecreaseifclientsperceivealternativeinvestments,suchasthestockmarket,asprovidingsuperiorexpectedreturns.whenclientsmovemoneyoutofbankdepositsinfavorofalternativeinvestments,wecanlosearelativelyinexpensivesourceoffunds,increasingthecompany’sfundingcosts.

consumersmaydecidenottousebankstocompletetheirfinancialtransactions,whichcouldaffectnetincome.

technologyandotherchangesnowallowpartiestocompletefinan-cialtransactionswithoutbanks.forexample,consumerscanpaybillsandtransferfundsdirectlywithoutbanks.thisprocesscouldresultinthelossoffeeincome,aswellasthelossofclientdepositsandtheincomegeneratedfromthosedeposits.

we have businessesotherthan bankingwhich subjectsthecompanytoavarietyofrisks.

weareadiversifiedfinancialservicescompany.thisdiversitysubjectsearningstoabroadervarietyofrisksanduncertainties.

hurricanesandothernaturaldisastersmayadverselyaffectloanportfoliosandoperationsandincreasethecostofdoingbusiness.

largescalenaturaldisastersmaysignificantlyaffectloanportfoliosbydamagingpropertiespledgedascollateralandbyimpairingtheabilityofcertainborrowerstorepaytheirloans.theultimateimpactofanaturaldisasteronfuturefinancialresultsisdifficulttopredictandwillbeaffectedbyanumberoffactors,includingtheextentofdamagetothecollateral,theextenttowhichdamagedcollateralisnotcoveredbyinsurance,theextenttowhichunemploymentandothereconomicconditionscausedbythenat-uraldisasteradverselyaffecttheabilityofborrowerstorepaytheirloans,andthecostofcollectionandforeclosuremoratoriums,loanforbearancesandotheraccommodationsgrantedtoborrowersandotherclients.

negativepublicopinioncoulddamageourreputationandadverselyimpactbusinessandrevenues.

asafinancialinstitution,ourearningsandcapitalaresubjecttorisksassociatedwithnegativepublicopinion.negativepublicopinioncouldresultfromouractualorallegedconductinanynumberofactivities,includ-inglendingpractices,corporategovernanceandacquisitions,orfromactionstakenbygovernmentregulatorsandcommunityorganizationsinresponsetothoseactivities.negativepublicopinioncanadverselyaffectourabilitytokeepandattractand/orretainclientsandcanexposeustoliti-gationandregulatoryaction.actualorallegedconductbyoneofourbusi-nessescanresultinnegativepublicopinionaboutourotherbusinesses.

werelyonothercompaniestoprovidekeycomponentsofourbusinessinfrastructure.

thirdpartiesprovidekeycomponentsofthebusinessinfrastructuresuchasinternetconnectionsandnetworkaccess.anydisruptionininternet,networkaccessorothervoiceordatacommunicationservicesprovidedbythesethirdpartiesoranyfailureofthesethirdpartiestohandlecurrentorhighervolumesofusecouldadverselyaffecttheabilitytodeliverproductsandservicestoclientsandotherwisetoconductbusiness.technologicalorfinancialdifficultiesofathirdpartyserviceprovidercouldadverselyaffectthebusinesstotheextentthosedifficultiesresultintheinterruptionordiscontinuationofservicesprovidedbythatparty.wemaynotbeinsuredagainstalltypesoflossesasaresultofthirdpartyfailuresandourinsurancecoveragemaybeinadequatetocoveralllossesresultingfromsystemfail-uresorotherdisruptions.failuresinthebusinessinfrastructurecouldinter-rupttheoperationsorincreasethecostsofdoingbusiness.

wedependontheaccuracyandcompletenessofinformationaboutclientsandcounterparties.

indecidingwhethertoextendcreditorenterintoothertransactionswithclientsandcounterparties,wemayrelyoninformationfurnishedbyoronbehalfofclientsandcounterparties,includingfinancialstatementsandotherfinancialinformation.wealsomayrelyonrepresentationsofclientsandcounterpartiesastotheaccuracyandcompletenessofthatinforma-tionand,withrespecttofinancialstatements,onreportsofindependentauditors.

inDuStrYriSkSregulationbyfederalandstateagenciescouldadverselyaffectthebusi-ness,revenueandprofitmargins.

weareheavilyregulatedbyfederalandstateagencies.thisregula-tionistoprotectdepositors,federaldepositinsurancefundandthebankingsystemasawhole.congressandstatelegislaturesandfederalandstateregulatoryagenciescontinuallyreviewbankinglaws,regulations,andpoli-ciesforpossiblechanges.changestostatutes,regulations,orregulatorypolicies,includinginterpretationorimplementationofstatutes,regula-tions,orpolicies,couldaffectusadversely,includinglimitingthetypesoffinancialservicesandproductswemayofferand/orincreasingtheabilityofnonbankstooffercompetingfinancialservicesandproducts.also,ifwedonotcomplywithlaws,regulations,orpolicies,wecouldreceiveregulatorysanctionsanddamagetoourreputation.formoreinformation,refertothe“supervisionandregulation”sectiononpage57ofthisannualreport.

competitioninthefinancialservicesindustryisintenseandcouldresultinlosingbusinessorreducingmargins.

weoperateinahighlycompetitiveindustrythatcouldbecomeevenmorecompetitiveasaresultoflegislative,regulatoryandtechnologicalchanges,andcontinuedconsolidation.wefaceaggressivecompetitionfromotherdomesticandforeignlendinginstitutionsandfromnumerousotherprovidersoffinancialservices.theabilityofnonbankingfinancialinstitutionstoprovideservicespreviouslylimitedtocommercialbankshasintensifiedcompetition.becausenonbankingfinancialinstitutionsarenotsubjecttothesameregulatoryrestrictionsasbanksandbankholdingcompanies,theycanoftenoperatewithgreaterflexibilityandlowercoststructures.securitiesfirmsandinsurancecompaniesthatelecttobecome


financialholdingcompaniesmayacquirebanksandotherfinancialinsti-tutions.thismaysignificantlychangethecompetitiveenvironmentinwhichweconductbusiness.someofourcompetitorshavegreaterfinan-cialresourcesand/orfacefewerregulatoryconstraints.asaresultofthesevarioussourcesofcompetition,wecouldlosebusinesstocompetitorsorbeforcedtopriceproductsandservicesonlessadvantageoustermstoretainorattractclients,eitherofwhichwouldadverselyaffectourprofitability.

futurelegislationcouldharmourcompetitiveposition.congressoccasionallyconsidersproposalstosubstantiallychangethe

financialinstitutionregulatorysystemandtoexpandorcontractthepowersofbankinginstitutionsandbankholdingcompanies.suchlegislationmaychangebankingstatutesandtheoperatingenvironmentinsubstantialandunpredictableways.ifenacted,suchlegislationcouldincreaseordecreasethecostofdoingbusiness,limitorexpandpermissibleactivities,oraffectthecompetitivebalanceamongbanks,savingsassociations,creditunions,andotherfinancialinstitutions.wecannotpredictwhethernewlegislationwillbeenactedand,ifenacted,theeffectthatit,oranyregulations,wouldhaveonouractivities,financialcondition,orresultsofoperations.

Maintainingorincreasingmarketsharedependsonmarketaccep-tanceandregulatoryapprovalofnewproductsandservices.

oursuccessdepends,inpart,ontheabilitytoadaptproductsandser-vicestoevolvingindustrystandards.thereisincreasingpressuretoprovideproductsandservicesatlowerprices.thiscanreducenetinterestmarginandrevenuesfromfee-basedproductsandservices.inaddition,thewide-spreadadoptionofnewtechnologiescouldrequireustomakesubstantialcapitalexpenditurestomodifyoradaptexistingproductsandservicesordevelopnewproductsandservices.wemaynotbesuccessfulinintroducingnewproductsandservicesinresponsetoindustrytrendsordevelopmentintechnology,orthosenewproductsmaynotachievemarketacceptance.asaresult,wecouldlosebusiness,beforcedtopriceproductsandservicesonlessadvantageoustermstoretainorattractclients,orbesubjecttocostincreases.

theparentcompany’sabilitytoreceivedividendsfromitssubsid-iariesaccountsformostofitsrevenueandcouldaffectitsliquidityandabilitytopaydividends.

theparentcompanyisaseparateanddistinctlegalentityfromitssubsidiaries.itreceivessubstantiallyallofitsrevenuefromdividendsfromitssubsidiaries.thesedividendsaretheprincipalsourceoffundstopaydividendsontheparentcompany’scommonstockandinterestandprin-cipalonitsdebt.Variousfederaland/orstatelawsandregulationslimittheamountofdividendsthatourbankandcertainofitsnonbanksubsidiariesmaypaytotheparentcompany.also,theparentcompany’srighttopar-ticipateinadistributionofassetsuponasubsidiary’sliquidationorreorga-nizationissubjecttothepriorclaimsofthesubsidiary’screditors.formoreinformation,refertothe“liquidityrisk”sectionbeginningonpage37andnote14,capital,totheconsolidatedfinancialstatements.limitationsontheparentcompany’sabilitytoreceivedividendsfromitssubsidiariescouldhaveamaterialadverseeffectontheparentcompany’sliquidityandabilitytopaydividendsoncommonstock.

coMpanYriSkSwehaveinthepastandmayinthefuturepursueacquisitions,whichcouldaffectcostsandfromwhichwemaynotbeabletorealizeantici-patedbenefits.

wehavehistoricallypursuedanacquisitionstrategy,andintendtocontinuetoseekadditionalacquisitionopportunities.wemaynotbeabletosuccessfullyidentifysuitablecandidates,negotiateappropriateacquisi-tionterms,completeproposedacquisitions,successfullyintegrateacquiredbusinessesintotheexistingoperations,orexpandintonewmarkets.onceintegrated,acquiredoperationsmaynotachievelevelsofrevenues,prof-itability,orproductivitycomparablewiththoseachievedbyourexistingoperations,orotherwiseperformasexpected.

acquisitionsinvolvenumerousrisks,includingdifficultiesintheintegrationoftheoperations,technologies,servicesandproductsoftheacquiredcompanies,andthediversionofmanagement’sattentionfromotherbusinessconcerns.wemaynotproperlyascertainallsuchriskspriortoanacquisitionorpriortosuchariskimpactinguswhileintegratinganacquiredcompany.asaresult,difficultiesencounteredwithacquisitionscouldhaveamaterialadverseeffectonthebusiness,financialcondition,andresultsofoperations.

furthermore,wemustgenerallyreceivefederalregulatoryapprovalbeforewecanacquireabankorbankholdingcompany.indeterminingwhethertoapproveaproposedbankacquisition,federalbankregulatorswillconsider,amongotherfactors,theeffectoftheacquisitiononcompeti-tion,financialcondition,futureprospects,includingcurrentandprojectedcapitallevels,thecompetence,experience,andintegrityofmanagement,compliancewithlawsandregulations,theconvenienceandneedsofthecommunitiestobeserved,includingtheacquiringinstitution’srecordofcomplianceunderthecommunityreinvestmentact,andtheeffective-nessoftheacquiringinstitutionincombatingmoneylaunderingactivities.inaddition,wecannotbecertainwhenorif,oronwhattermsandcondi-tions,anyrequiredregulatoryapprovalswillbegranted.consequently,wemightberequiredtosellportionsoftheacquiredinstitutionasacondi-tiontoreceivingregulatoryapprovalorwemaynotobtainregulatoryapprovalforaproposedacquisitiononacceptabletermsoratall,inwhichcasewewouldnotbeabletocompletetheacquisitiondespitethetimeandexpensesinvestedinpursuingit.

wedependontheexpertiseofkeypersonnel.iftheseindividualsleaveorchangetheirroleswithouteffectivereplacements,operationsmaysuffer.

thesuccessofourbusinesstodatehasbeen,andthecontinuingsuc-cesswillbe,dependenttoalargedegreeonthecontinuedservicesofexecu-tiveofficers,especiallythechairmanandchiefexecutiveofficer,l.philliphumann,andotherkeypersonnelwhohaveextensiveexperienceintheindustry.wedonotcarrykeypersonlifeinsuranceonanyoftheexecutiveofficersorotherkeypersonnel.ifwelosetheservicesofanyoftheseinte-gralpersonnelandfailtomanageasmoothtransitiontonewpersonnel,thebusinesscouldbeimpacted.



wemaynotbeabletohireorretainadditionalqualifiedpersonnelandrecruitingandcompensationcostsmayincreaseasaresultofturn-over,bothofwhichmayincreasecostsandreduceprofitabilityandmayadverselyimpactourabilitytoimplementthebusinessstrategy.

oursuccessdependsupontheabilitytoattractandretainhighlymotivated,well-qualifiedpersonnel.wefacesignificantcompetitionintherecruitmentofqualifiedemployees.ourabilitytoexecutethebusi-nessstrategyandprovidehighqualityservicemaysufferifweareunabletorecruitorretainasufficientnumberofqualifiedemployeesorifthecostsofemployeecompensationorbenefitsincreasesubstantially.

ouraccountingpoliciesandmethodsarekeytohowwereportfinancialconditionandresultsofoperations.theymayrequiremanage-menttomakeestimatesaboutmattersthatareuncertain.

accountingpoliciesandmethodsarefundamentaltohowwerecordandreportthefinancialconditionandresultsofoperations.managementmustexercisejudgmentinselectingandapplyingmanyoftheseaccountingpoliciesandmethodssotheycomplywithusgaap.

managementhasidentifiedcertainaccountingpoliciesasbeingcriti-calbecausetheyrequiremanagement’sjudgmenttoascertainthevalua-tionsofassets,liabilities,commitmentsandcontingencies.avarietyoffactorscouldaffecttheultimatevaluethatisobtainedeitherwhenearningincome,recognizinganexpense,recoveringanasset,orreducingaliabil-ity.wehaveestablisheddetailedpoliciesandcontrolproceduresthatareintendedtoensurethesecriticalaccountingestimatesarewellcontrolledandappliedconsistently.inaddition,thepoliciesandproceduresareintendedtoensurethattheprocessforchangingmethodologiesoccursinanappropriatemanner.becauseoftheuncertaintyofestimatesaboutthesematters,wecannotguaranteethatwewillnotberequiredtoadjustaccountingpoliciesorrestatepriorperiodfinancialstatements.

seethe“criticalaccountingpolicies”sectionbeginningonpage48andnote1,accountingpolicies,totheconsolidatedfinancialstatementsinthisreportformoreinformation.

ourstockpricecanbevolatile.ourstockpricecanfluctuatewidelyinresponsetoavarietyoffactors

including:• variationsinourquarterlyoperatingresults;• changesinmarketvaluationsofcompaniesinthefinancialservices

industry;• fluctuationsinstockmarketpricesandvolumes;• issuancesofsharesofcommonstockorothersecuritiesinthefuture;• theadditionordepartureofkeypersonnel;• seasonalfluctuations;• changesinfinancialestimatesorrecommendationsbysecuritiesanalysts

regardingsuntrustorsharesofourcommonstock;and• announcementsbyusorourcompetitorsofnewservicesortechnology,

acquisitions,orjointventures.

generalmarketfluctuations,industryfactors,andgeneraleconomicandpoliticalconditionsandevents,suchasterroristattacks,economicslowdownsorrecessions,interestratechanges,creditlosstrends,orcur-rencyfluctuations,alsocouldcauseourstockpricetodecreaseregardlessofoperatingresults.

ourdisclosurecontrolsandproceduresmaynotpreventordetectallerrorsoractsoffraud.

ourdisclosurecontrolsandproceduresaredesignedtoreasonablyassurethatinformationrequiredtobedisclosedbysuntrustinreportswefileorsubmitundertheexchangeactisaccumulatedandcommunicatedtomanagement,andrecorded,processed,summarized,andreportedwithinthetimeperiodsspecifiedinthesec’srulesandforms.webelievethatanydisclosurecontrolsandproceduresorinternalcontrolsandprocedures,nomatterhowwellconceivedandoperated,canprovideonlyreasonable,notabsolute,assurancethattheobjectivesofthecontrolsystemaremet.

theseinherentlimitationsincludetherealitiesthatjudgmentsindecision-makingcanbefaulty,andthatbreakdownscanoccurbecauseofsimpleerrorormistake.additionally,controlscanbecircumventedbytheindividualactsofsomepersons,bycollusionoftwoormorepeopleorbyanunauthorizedoverrideofthecontrols.accordingly,becauseoftheinherentlimitationsinourcontrolsystem,misstatementsduetoerrororfraudmayoccurandnotbedetected.

legalproceeDingSonJanuary11,2005,thesecissuedaformalorderofinvestigationandthesecstaffissuedsubpoenasseekingdocumentsandtestimonyrelatedtothecompany’sallowanceforloanlossesandrelatedmatters.thecompanyiscooperating,andintendstocooperatewiththesecregardingthismat-ter.inaddition,thecompanyanditssubsidiariesarepartiestonumerousclaimsandlawsuitsarisinginthecourseoftheirnormalbusinessactivities,someofwhichinvolveclaimsforsubstantialamounts.althoughtheulti-mateoutcomeofthesesuitscannotbeascertainedatthistime,itistheopinionofmanagementthatnoneofthesematters,whenresolved,willhaveamaterialeffectonthecompany’sconsolidatedresultsofoperationsorfinancialposition.

propertieSthecompany’sheadquartersare located inatlanta,georgia.asofdecember31,2005,suntrustbankowned983ofits1,657full-servicebankingofficesandleasedtheremainingbankingoffices.(seenote8,premisesandequipment,totheconsolidatedfinancialstatements).


controlSanDproceDureS

evaluationofDiScloSurecontrolSanDproceDureSthecompanyconductedanevaluation,withtheparticipationofitschiefexecutiveofficerandchieffinancialofficer,oftheeffectivenessofthecompany’sdisclosurecontrolsandproceduresasofdecember31,2005.thecompany’sdisclosurecontrolsandproceduresaredesignedtoensurethatinformationrequiredtobedisclosedbythecompanyinthereportsthatitfilesorsubmitsunderthesecuritiesexchangeactof1934isrecorded,processed,summarized,andreportedonatimelybasis.

baseduponthatevaluation,thechiefexecutiveofficerandchieffinancialofficerconcluded,asofdecember31,2005,thatthecompany’sdisclosurecontrolsandprocedureswereeffectiveinrecording,processing,summarizing,andreportinginformationrequiredtobedisclosedbythecompany,withinthetimeperiodsspecifiedinthesec’srulesandforms,andsuchinformationisaccumulatedandcommunicatedtomanagementtoallowtimelydecisionsregardingrequireddisclosures.

ManageMent’Sreportoninternalcontroloverfinancialreportingmanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreportingforthecompany.thecompany’sinternalcontroloverfinancialreportingisaprocessdesignedunderthesupervisionofthecompany’schiefexecutiveofficerandchieffinancialofficertoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationofthecompany’sfinancialstatementsforexternalpurposesinaccordancewithu.s.generallyacceptedaccountingprinciples.

becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

managementhasmadeacomprehensivereview,evaluation,andassessmentofthecompany’sinternalcontroloverfinancialreportingasofdecember31,2005.inmakingitsassessmentofinternalcontroloverfinancialreporting,managementusedthecriteriaissuedbythecommitteeofsponsoringorganizationsofthetreadwaycommissioninInternal Control–Integrated Framework.basedonthatassessment,managementconcludedthat,asofdecember31,2005,thecompany’sinternalcontroloverfinancialreportingiseffective.

management’sassessmentoftheeffectivenessofthecompany’sinternalcontroloverfinancialreportingasofdecember31,2005,hasbeenauditedbypricewaterhousecoopersllp,anindependentregisteredpublicaccountingfirm,asstatedintheirreportappearingonpages64and65,whichexpressesunqualifiedopinionsonmanagement’sassessmentandontheeffectivenessofthecompany’sinternalcontroloverfinancialreportingasofdecember31,2005.

changeSininternalcontroloverfinancialreportingmanagementofthecompanyhasevaluated,withtheparticipationofthecompany’schiefexecutiveofficerandchieffinancialofficer,changesinthecompany’sinternalcontroloverfinancialreporting(asdefinedinrules13a-15(f)and15d-15(f)oftheexchangeact)duringthefourthquarterof2005.baseduponthatevaluation,managementhasdeterminedthattherehavebeennochangestothecompany’sinternalcontroloverfinancialreportingthatoccurredsincethebeginningofthecompany’sfourthquar-terof2005thathavemateriallyaffected,orarereasonablylikelytomateri-allyaffect,thecompany’sinternalcontroloverfinancialreporting.

ceoanDcfocertificationSthecompany’schiefexecutiveofficerandchieffinancialofficerhavefiledwiththesecuritiesandexchangecommissionthecertificationsrequiredbysection302ofthesarbanes-oxleyactof2002asexhibits31.1and31.2tothecompany’s2005form10-K.inaddition,onmay6,2005thecompany’schiefexecutiveofficercertifiedtothenewyorkstockexchangethathewasnotawareofanyviolationbythecompanyofthenysecorporategovernancelistingstandardsasineffectonmay6,2005.theforegoingcertificationwasunqualified.

otherinforMationnotapplicable.



aBBreviationS

withintheconsolidatedfinancialstatementsandthenotesthereto,thefollowingreferenceswillbeused:

suntrustbanks,inc.–companyorsuntrustsuntrustbankholdingcompany–bankparentcompanynationalcommercefinancialcorporation–ncf

inDextoconSoliDateDfinancialStateMentS page

consolidatedstatementsofincome 66consolidatedbalancesheets 67consolidatedstatementsofshareholders’equity 68consolidatedstatementsofcashflow 69notestoconsolidatedfinancialstatements 70


totheBoarDofDirectorSanDShareholDerSofSuntruStBankS,inc.:

wehavecompletedintegratedauditsofsuntrustbanks,inc.’s2005and2004consolidatedfinancialstatementsandofitsinternalcontroloverfinancialreportingasofdecember31,2005,andanauditofits2003con-solidatedfinancialstatementsinaccordancewiththestandardsofthepubliccompanyaccountingoversightboard(unitedstates).ouropinions,basedonouraudits,arepresentedbelow.

conSoliDateDfinancialStateMentSinouropinion,theaccompanyingconsolidatedbalancesheetsandtherelatedconsolidatedstatementsofincome,shareholders’equityandcashflowspresentfairly,inallmaterialrespects,thefinancialpositionofsuntrustbanks,inc.anditssubsidiaries(the“company”)atdecember31,2005and2004,andtheresultsoftheiroperationsandtheircashflowsforeachofthethreeyearsintheperiodendeddecember31,2005inconfor-mitywithaccountingprinciplesgenerallyacceptedintheunitedstatesofamerica.thesefinancialstatementsaretheresponsibilityofthecompany’smanagement.ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.weconductedourauditsofthesestate-mentsinaccordancewiththestandardsofthepubliccompanyaccountingoversightboard(unitedstates).thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.anauditoffinan-cialstatementsincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements,assessingtheaccount-ingprinciplesusedandsignificantestimatesmadebymanagement,andevaluatingtheoverallfinancialstatementpresentation.webelievethatourauditsprovideareasonablebasisforouropinion.

internalcontroloverfinancialreportingalso,inouropinion,management’sassessment,includedinmanagement’sreportoninternalcontroloverfinancialreportingappearingonpage62ofthe2005annualreporttoshareholders,thatthecompanymaintainedeffectiveinternalcontroloverfinancialreportingasofdecember31,2005basedoncriteriaestablishedininternalcontrol–integratedframeworkissuedbythecommitteeofsponsoringorganizationsofthetreadwaycommission(“coso”),isfairlystated,inallmaterialrespects,basedon

thosecriteria.furthermore,inouropinion,thecompanymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofdecember31,2005,basedoncriteriaestablishedininternalcontrol-integratedframeworkissuedbythecoso.thecompany’smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreport-ingandforitsassessmentoftheeffectivenessofinternalcontroloverfinan-cialreporting.ourresponsibilityistoexpressopinionsonmanagement’sassessmentandontheeffectivenessofthecompany’sinternalcontroloverfinancialreportingbasedonouraudit.weconductedourauditofinternalcontroloverfinancialreportinginaccordancewiththestandardsofthepubliccompanyaccountingoversightboard(unitedstates).thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.anauditofinternalcontroloverfinancialreportingincludesobtaininganunderstandingofinternalcontroloverfinancialreporting,evaluatingmanagement’sassessment,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrol,andperformingsuchotherproceduresasweconsidernecessaryinthecir-cumstances.webelievethatourauditprovidesareasonablebasisforouropinions.

acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinan-cialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.acompany’sinternalcontroloverfinancialreportingincludesthosepoli-ciesandproceduresthat(i)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddisposi-tionsoftheassetsofthecompany;(ii)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecom-pany;and(iii)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.

reportofindependentregisteredpublicaccountingfirm


becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

atlanta,georgiafebruary28,2006


yearendeddecember31(dollarsinthousandsexceptpersharedata) 2005 2004 2003interestincomeinterestandfeesonloans $5,961,122 $3,947,231 $3,593,630interestandfeesonloansheldforsale 485,724 281,292 448,322interestanddividendsonsecuritiesavailableforsale taxableinterest 1,032,785 844,526 609,500 tax-exemptinterest 35,733 26,340 17,971 dividends1 104,215 72,580 66,671interestonfundssoldandsecuritiespurchasedunderagreementstoresell 43,206 18,577 15,673interestondepositsinotherbanks 867 178 146otherinterest 67,657 27,658 16,929 totalinterestincome 7,731,309 5,218,382 4,768,842interestexpenseinterestondeposits 1,832,975 766,188 771,631interestonfundspurchasedandsecuritiessoldunderagreementstorepurchase 312,193 108,591 106,174interestonothershort-termborrowings 94,965 30,195 33,511interestonlong-termdebt 912,210 628,253 537,223 totalinterestexpense 3,152,343 1,533,227 1,448,539netinterestincome 4,578,966 3,685,155 3,320,303provisionforloanlosses 176,886 135,537 313,550netinterestincomeafterprovisionforloanlosses 4,402,080 3,549,618 3,006,753noninterestincomeservicechargesondepositaccounts 772,519 700,022 643,103trustandinvestmentmanagementincome 673,720 586,783 502,409retailinvestmentservices 213,274 192,811 161,753otherchargesandfees 456,481 390,494 326,311investmentbankingincome 216,530 206,730 192,480tradingaccountprofitsandcommissions 145,120 127,799 109,878cardfees 210,779 153,439 119,585netgainonsaleofrcmassets 23,382 — —othernoninterestincome 450,394 288,059 123,606securities(losses)/gains (7,155) (41,691) 123,876 totalnoninterestincome 3,155,044 2,604,446 2,303,001noninterestexpenseemployeecompensation 2,117,156 1,804,911 1,585,919employeebenefits 417,055 363,402 358,644netoccupancyexpense 312,070 268,248 237,266outsideprocessingandsoftware 357,387 286,270 246,654equipmentexpense 204,038 184,865 178,443marketingandcustomerdevelopment 156,711 128,291 100,280amortizationofintangibleassets 118,964 77,582 64,515mergerexpense 98,642 28,401 —othernoninterestexpense 908,706 755,068 628,895 totalnoninterestexpense 4,690,729 3,897,038 3,400,616incomebeforeprovisionforincometaxes 2,866,395 2,257,026 1,909,138provisionforincometaxes 879,156 684,125 576,841 netincome $1,987,239 $1,572,901 $1,332,297netincomeperaveragecommonshare diluted $5.47 $5.19 $4.73 basic 5.53 5.25 4.79averagecommonshares–diluted 363,454 303,309 281,434averagecommonshares–basic 359,066 299,375 278,2951includesdividendson48,266,496sharesofcommonstock ofthecoca-colacompany $54,058 $48,266 $42,475seenotestoconsolidatedfinancialstatements.

consolidatedstatementsofincome


asofdecember31(dollarsinthousands) 2005 2004assetscashandduefrombanks $4,659,664 $3,876,741interest-bearingdepositsinotherbanks 332,444 15,929fundssoldandsecuritiespurchasedunderagreementstoresell 1,313,498 1,596,269tradingassets 2,811,225 2,183,645securitiesavailableforsale1 26,525,821 28,941,080loansheldforsale 13,695,613 6,580,223loans 114,554,895 101,426,172allowanceforloanandleaselosses (1,028,128) (1,050,024) netloans 113,526,767 100,376,148premisesandequipment 1,854,527 1,860,415goodwill 6,835,168 6,806,013otherintangibleassets 1,122,967 1,061,451customers’acceptanceliability 11,839 12,105otherassets 7,023,308 5,559,765 totalassets $179,712,841 $158,869,784

liabilitiesandShareholders’equitynoninterest-bearingconsumerandcommercialdeposits $26,327,663 $24,878,314interest-bearingconsumerandcommercialdeposits 71,244,719 67,231,381 totalconsumerandcommercialdeposits 97,572,382 92,109,695brokereddeposits 15,644,932 6,100,911foreigndeposits 8,835,864 5,150,645 totaldeposits 122,053,178 103,361,251fundspurchasedandsecuritiessoldunderagreementstorepurchase 10,374,533 9,342,831othershort-termborrowings 1,937,624 2,062,549long-termdebt 20,779,249 22,127,166acceptancesoutstanding 11,839 12,105tradingliabilities 1,529,325 1,098,563otherliabilities 6,139,698 4,878,420 totalliabilities 162,825,446 142,882,885

commitmentsandcontingencies–notes8,13,17,18and21

preferredstock,noparvalue;50,000,000sharesauthorized;noneissued — —commonstock,$1.00parvalue 370,578 370,578additionalpaidincapital 6,761,684 6,749,219retainedearnings 9,310,978 8,118,710treasurystock,atcost,andother (493,936) (528,558)accumulatedothercomprehensiveincome 938,091 1,276,950 totalshareholders’equity 16,887,395 15,986,899 totalliabilitiesandshareholders’equity $179,712,841 $158,869,784

commonsharesoutstanding 361,984,193 360,840,710commonsharesauthorized 750,000,000 750,000,000treasurysharesofcommonstock 8,594,205 9,737,6881includesnetunrealizedgainsonsecuritiesavailableforsale $1,572,033 $2,010,165seenotestoconsolidatedfinancialstatements.

consolidatedbalancesheets


accumulated common additional treasury other shares common paidin retained stockand comprehensive(dollarsinthousands) outstanding stock capital earnings other1 income totalBalance,January1,2003 282,505 $294,163 $1,276,110 $6,322,217 ($632,464) $1,509,470 $8,769,496netincome — — — 1,332,297 — — 1,332,297othercomprehensiveincome:changeinunrealizedgains(losses)on derivatives,netoftaxes — — — — — 29,488 29,488changeinunrealizedgains(losses)on securities,netoftaxes — — — — — 115,254 115,254changerelatedtosupplemental retirementbenefits,netoftaxes — — — — — 9,881 9,881totalcomprehensiveincome 1,486,920cashdividendsdeclared,$1.80pershare — — — (505,396) — — (505,396)exerciseofstockoptionsandstock compensationelementexpense 700 — (1,859) — 38,526 — 36,667acquisitionoftreasurystock (3,275) — — — (182,152) — (182,152)acquisitionoflighthousefinancialservices,inc. 1,152 — 11,745 — 64,144 (1) 75,888performanceandrestrictedstockactivity 99 — (572) — 572 — —amortizationofcompensationelementof performanceandrestrictedstock — — — — 5,475 — 5,475issuanceofstockforemployeebenefitplans 742 — 2,887 — 41,381 — 44,268Balance,December31,2003 281,923 $294,163 $1,288,311 $7,149,118 ($664,518) $1,664,092 $9,731,166netincome — — — 1,572,901 — — 1,572,901othercomprehensiveincome:changeinunrealizedgains(losses)on derivatives,netoftaxes — — — — — 10,661 10,661changeinunrealizedgains(losses)on securities,netoftaxes — — — — — (395,343) (395,343)changerelatedtosupplemental retirementbenefits,netoftaxes — — — — — (2,460) (2,460)totalcomprehensiveincome 1,185,759cashdividendsdeclared,$2.00pershare — — — (603,309) — — (603,309)exerciseofstockoptionsandstock compensationelementexpense 1,905 — 8,775 — 105,125 — 113,900acquisitionoftreasurystock (200) — — — (14,064) — (14,064)acquisitionofnationalcommercefinancial,inc. 76,415 76,415 5,441,136 — — — 5,517,551performanceandrestrictedstockactivity 302 — 2,099 — (2,099) — —amortizationofcompensationelementof performanceandrestrictedstock — — — — 8,515 — 8,515issuanceofstockforemployeebenefitplans 495 — 8,898 — 38,483 — 47,381Balance,December31,2004 360,840 $370,578 $6,749,219 $8,118,710 ($528,558) $1,276,950 $15,986,899netincome — — — 1,987,239 — — 1,987,239othercomprehensiveincome:changeinunrealizedgains(losses)on derivatives,netoftaxes — — — — — (10,744) (10,744)changeinunrealizedgains(losses)on securities,netoftaxes — — — — — (332,183) (332,183)changerelatedtosupplemental retirementbenefits,netoftaxes — — — — — 4,068 4,068totalcomprehensiveincome 1,648,380cashdividendsdeclared,$2.20pershare — — — (794,971) — — (794,971)exerciseofstockoptionsandstock compensationelementexpense 2,663 — 13,438 — 147,802 — 161,240acquisitionoftreasurystock (2,775) — — — (196,396) — (196,396)performanceandrestrictedstockactivity 143 — (2,907) — 9,606 — 6,699amortizationofcompensationelementof performanceandrestrictedstock — — — — 9,190 — 9,190issuanceofstockforemployeebenefitplans 1,113 — 1,795 — 64,420 — 66,215otheractivity — — 139 — — — 139Balance,December31,2005 361,984 $370,578 $6,761,684 $9,310,978 ($493,936) $938,091 $16,887,3951balanceatdecember31,2005includes$467,714fortreasurystockand$26,222forcompensationelementofperformanceandrestrictedstock.balanceatdecember31,2004includes$492,047fortreasurystockand$36,511forcompensationelementofperformanceandrestrictedstock.balanceatdecember31,2003includes$634,878fortreasurystockand$29,640forcompensationelementofperformanceandrestrictedstock.

seenotestoconsolidatedfinancialstatements.

consolidatedstatementsofshareholders’equity


yearendeddecember31(dollarsinthousands) 2005 2004 2003cashflowsfromoperatingactivities:netincome $1,987,239 $1,572,901 $1,332,297adjustmentstoreconcilenetincometonetcash (usedin)providedbyoperatingactivities: netgainonsaleofrcmassets (23,382) — — depreciation,amortizationandaccretion 783,084 667,145 881,542 originationofmortgageservicingrights (341,694) (196,118) (384,198) provisionsforloanlossesandforeclosedproperty 179,294 137,032 314,667 deferredincometaxprovision 178,318 144,988 179,905 amortizationofcompensationelementofperformance andrestrictedstock 9,190 8,515 5,475 stockoptioncompensation 26,375 17,443 8,722 securitieslosses/(gains) 7,155 41,691 (123,876) netgainonsaleofassets (4,411) (11,175) (12,596) originatedloansheldforsale (48,516,792) (30,194,087) (43,816,219) salesofloansheldforsale 41,401,402 29,516,696 46,011,952 netincreaseinotherassets (1,874,683) (616,943) (451,686) netincreaseinotherliabilities 1,470,187 91,496 168,490 netcash(usedin)providedbyoperatingactivities (4,718,718) 1,179,584 4,114,475cashflowsfrominvestingactivities:proceedsfrommaturities,callsandrepaymentsofsecurities availableforsale 4,783,789 5,083,485 10,841,607proceedsfromsalesofsecuritiesavailableforsale 4,367,480 8,875,126 7,633,468purchasesofsecuritiesavailableforsale (7,221,819) (12,264,430) (19,933,984)loanoriginationsnetofprincipalcollected (14,070,420) (9,555,401) (5,533,737)proceedsfromsaleofloans 337,902 357,785 392,412capitalexpenditures (201,650) (238,009) (157,608)proceedsfromthesaleofotherassets 42,841 37,427 39,324otherinvestingactivities 5,311 2,584 13,932netcashusedforacquisitions — (1,265,650) (34,261) netcashusedininvestingactivities (11,956,566) (8,967,083) (6,738,847)cashflowsfromfinancingactivities:netincreaseinconsumerandcommercialdeposits 5,470,301 5,254,911 2,404,052netincrease(decrease)inforeignandbrokereddeposits 13,229,240 1,135,626 (1,328,925)netincrease(decrease)infundspurchased andothershort-termborrowings 906,777 (1,439,497) (1,120,063)proceedsfromtheissuanceoflong-termdebt 1,974,987 4,728,616 3,281,676repaymentoflong-termdebt (3,233,688) (1,203,676) (189,686)proceedsfromtheexerciseofstockoptions 135,701 96,457 27,945acquisitionoftreasurystock (196,396) (14,064) (182,152)dividendspaid (794,971) (603,309) (505,396) netcashprovidedbyfinancingactivities 17,491,951 7,955,064 2,387,451netincrease(decrease)incashandcashequivalents 816,667 167,565 (236,921)cashandcashequivalentsatbeginningofperiod 5,488,939 5,321,374 5,558,295cashandcashequivalentsatendofperiod $6,305,606 $5,488,939 $5,321,374SupplementalDisclosures:interestpaid $3,027,834 $1,472,807 $1,465,030incometaxespaid 684,042 575,537 359,526incometaxesrefunded (17,593) (809) (1,136)non-cashimpactofthedeconsolidationofthreepillars — (2,563,031) —non-cashimpactoftheconsolidationofthreepillars — — 2,857,316non-cashimpactofacquisitionofnationalcommercefinancialcorporation — 5,517,551 —seenotestoconsolidatedfinancialstatements.

consolidatedstatementsofcashflow


note1•accountingpolicies

generalsuntrust,oneofthenation’slargestcommercialbankingorganizations,isafinancialservicesholdingcompanywithitsheadquartersinatlanta,georgia.suntrust’sprincipalbankingsubsidiary,suntrustbank,whichincludestheformernationalbankofcommerce,offersafulllineoffinancialservicesforconsumersandbusinessesthroughitsbrancheslocatedprimarilyinflorida,georgia,maryland,northcarolina,southcarolina,tennessee,Virginia,westVirginiaandthedistrictofcolumbia.withinitsgeographicfootprint,thecompanyoperatesunderfivebusinesssegments.thesebusinessseg-mentsare:retail,commercial,corporateandinvestmentbanking,wealthandinvestmentmanagement,andmortgage.inadditiontotraditionaldeposit,creditandtrustandinvestmentservicesofferedbysuntrustbank,othersuntrustsubsidiariesprovidemortgagebanking,credit-relatedinsur-ance,assetmanagement,securitiesbrokerageandcapitalmarketservices.

principleSofconSoliDationanDBaSiSofpreSentationtheconsolidatedfinancial statements includetheaccountsofthecompany,itsmajority-ownedsubsidiaries,andvariableinterestenti-ties(“Vies”)wherethecompanyistheprimarybeneficiary.allsignificantintercompanyaccountsandtransactionshavebeeneliminated.resultsofoperationsofcompaniespurchasedareincludedfromthedateofacquisi-tion.assetsandliabilitiesofpurchasedcompaniesarestatedatestimatedfairvaluesatthedateofacquisition.investmentsincompanieswhicharenotVies,orwheresuntrustisnottheprimarybeneficiaryinaVie,thatthecompanyownsavotinginterestof20%to50%,andforwhichitmayhavesignificantinfluenceoveroperatingandfinancingdecisions,areaccountedforusingtheequitymethodofaccounting.theseinvestmentsareincludedinotherassets,andthecompany’sproportionateshareofincomeorlossisincludedinothernoninterestincomeintheconsolidatedstatementsofincome.

thepreparationoffinancialstatementsinconformitywithaccount-ingprinciplesgenerallyacceptedintheunitedstates(“usgaap”)requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilities,thedisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpensesduringthereportingperiod.actualresultscouldvaryfromtheseestimates.certainreclassificationshavebeenmadetoprioryearamountstoconformtothe2005presentation.

caShanDcaShequivalentScashandcashequivalentsincludecashandduefrombanks,interest-bear-ingbankbalances,federalfundssoldandsecuritiespurchasedunderagree-mentstoresell.generally,cashandcashequivalentshavematuritiesofthreemonthsorless,andaccordingly,thecarryingamountoftheseinstru-mentsisdeemedtobeareasonableestimateoffairvalue.

SecuritieSanDtraDingactivitieSsecuritiesareclassifiedattradedateastradingoravailableforsalesecurities.

securitiesavailableforsaleareusedaspartoftheoverallassetandliabilitymanagementprocesstooptimizeincomeandmarketperformanceoveranentireinterestratecycle.interestincomeanddividendsonsecuri-tiesarerecognizedininterestincomeonanaccrualbasis.premiumsand

discountsondebtsecuritiesareamortizedasanadjustmenttoyieldoverthelifeofthesecurity.securitiesavailableforsalearecarriedatfairvaluewithunrealizedgainsandlosses,netofanytaxeffect,includedinaccumu-latedothercomprehensiveincomeasacomponentofshareholders’equity.realizedgainsandlossesonsecuritiesaredeterminedusingthespecificidentificationmethodandarerecognizedcurrentlyintheconsolidatedstatementsofincome.thecompanyreviewsavailableforsalesecuritiesforimpairmentonaquarterlybasis.thecompanydetermineswhetheradeclineinfairvaluebelowtheamortizedcostbasisisother-than-tempo-rary.anavailableforsalesecuritythathasbeenother-than-temporarilyimpairediswrittendowntofairvalue,andtheamountofthewritedownisaccountedforasarealizedlossintheconsolidatedstatementsofincome.

securitiesthatareboughtandheldprincipallyforthepurposeofresaleinthenearfutureareclassifiedastradinginstruments.tradingaccountassetsandliabilitiesarecarriedatmarketvalue.realizedandunrealizedgainsandlossesaredeterminedusingthespecificidentificationmethodandarerecognizedasacomponentofnoninterestincomeintheconsolidatedstatementsofincome.

nonmarketablesecuritiesincludeventurecapitalequityandmezza-ninesecuritiesthatarenotpubliclytradedaswellasequityinvestmentsacquiredforvariouspurposes.thesesecuritiesareaccountedforunderthecostorequitymethodandareincludedinotherassets.thecompanyreviewsnonmarketablesecuritiesaccountedforunderthecostmethodonaquarterlybasisandreducestheassetvaluewhendeclinesinvalueareconsideredtobeother-than-temporary.equitymethodinvestmentsarerecordedatcostadjustedtoreflectthecompany’sportionofincome,lossordividendsoftheinvestee.realizedincome,realizedlossesandestimatedlossesoncostandequitymethodinvestmentsarerecognizedinnoninter-estincomeintheconsolidatedstatementsofincome.

loanShelDforSaleloansheldforsalethatarenotdocumentedasthehedgediteminafairvaluehedgearecarriedatthelowerofcostorfairvalueatthepoollevelbasedonsimilarassetscriteria.adjustmentstoreflectmarketvalueandrealizedgainsandlossesuponultimatesaleoftheloansareclassifiedasothernoninterestincomeintheconsolidatedstatementsofincome.

loansheldforsalethataredocumentedasthehedgediteminafairvaluehedgearecarriedatfairvalue.fairvalueisbasedonanobservablecurrentmarketprice.unrealizedgainsandlossesarerecordedasacompo-nentofnoninterestincomeintheconsolidatedstatementsofincome.

thecompanytransferscertainresidentialmortgageloans,commer-cialloans,andstudentloanstoaheldforsaleclassificationatthelowerofcostormarket.atthetimeoftransfer,anylossesarerecordedthroughtheprovisionforloanlosseswithsubsequentlossesrecordedasacomponentofnoninterestexpenseintheconsolidatedstatementsofincome.

loanSthecompany’sloanbalanceiscomprisedofloansheldinportfolio,includ-ingcommercialloans,consumerloans,realestateloansandlines,factor-ingreceivables,creditcardreceivables,nonaccrualandrestructuredloans,directfinancingleases,andleveragedleases.interestincomeonalltypesofloansisaccruedbasedupontheoutstandingprincipalamounts,exceptthoseclassifiedasnonaccrualloans.thecompanytypicallyclassifiesloansasnonaccrualwhenoneofthefollowingeventsoccurs:(i)interestorprinci-palhasbeenindefault90daysormore,unlesstheloaniswell-securedand

notestoconsolidatedfinancialstatements


intheprocessofcollection;(ii)collectionofrecordedinterestorprincipalisnotanticipated;or(iii)incomefortheloanisrecognizedonacashbasisduetothedeteriorationinthefinancialconditionofthedebtor.consumerandresidentialmortgageloansaretypicallyplacedonnonaccrualwhenpay-mentshavebeenindefaultfor90and120daysormore,respectively.

whenaloanisplacedonnonaccrual,unpaidinterestisreversedagainstinterestincome.interestincomeonnonaccrualloans,ifrecognized,iseitherrecordedusingthecashbasismethodofaccountingorrecognizedattheendoftheloanaftertheprincipalhasbeenreducedtozero,depend-ingonthetypeofloan.ifandwhenborrowersdemonstratetheabilitytorepayaloaninaccordancewiththecontractualtermsofaloanclassifiedasnonaccrual,theloanmaybereturnedtoaccrualstatus.ifanonaccrualloanisreturnedtoaccruingstatus,theaccruedinterestatthedatetheloanisplacedonnonaccrualstatus,andforegoneinterestduringthenonaccrualperiod,arerecordedasinterestincomeonlyafterallprincipalhasbeencol-lectedforcommercialloans.forconsumerloansandresidentialmortgageloans,theaccruedinterestatthedatetheloanisplacedonnonaccrualstatus,andforgoneinterestduringthenonaccrualperiod,arerecordedasinterestincomeasofthedatetheloannolongermeetsthe90and120daypastduecriteria.(seeallowanceforloanandleaselossessectionofthisnoteforfurtherdiscussionofimpairedloans.)

feesandincrementaldirectcostsassociatedwiththeloanoriginationandpricingprocess,aswellaspremiumsanddiscounts,aredeferredandamortizedaslevelyieldadjustmentsovertherespectiveloanterms.feesreceivedforprovidingloancommitmentsthatresultinloansaredeferredandthenrecognizedoverthetermoftheloanasanadjustmentoftheyield.

allowanceforloananDleaSeloSSeSthecompany’sallowanceforloanandleaselossesistheamountcon-sideredadequatetoabsorbprobablelosseswithintheportfoliobasedonmanagement’sevaluationofthesizeandcurrentriskcharacteristicsoftheloanportfolio.suchevaluationconsiderspriorlossexperience,theriskrat-ingdistributionoftheportfolios,theimpactofcurrentinternalandexter-nalinfluencesoncreditlossandthelevelsofnonperformingloans.specificallowancesforloanandleaselossesareestablishedforlargeimpairedloansonanindividualbasisasrequiredperstatementoffinancialaccountingstandard(“sfas”)no.114,“accountingbycreditorsforimpairmentofaloan—anamendmentoffasbstatementsno.5and15,”andsfasno.118,“accountingbycreditorsforimpairmentofaloan-incomerecognitionanddisclosures—anamendmentoffasbstatementno.114,”andlargeimpairedleasesbasedonthecriteriasetforthinsfasno.5,“accountingforcontingencies.”thespecificallowanceestablishedfortheseloansandleasesisbasedonathoroughanalysisofthemostprobablesourceofrepayment,includingthepresentvalueoftheloan’sexpectedfuturecashflows,theloan’sestimatedmarketvalue,ortheestimatedfairvalueoftheunderlyingcollateral.generalallowancesareestablishedforloansandleasesthatcanbegroupedintopoolsbasedonsimilarcharacter-isticsasdescribedinsfasno.5.inthisprocess,generalallowancefactorsarebasedonananalysisofhistoricalcharge-offexperienceandexpectedlossesgivendefaultderivedfromthecompany’sinternalriskratingprocess.thesefactorsaredevelopedandappliedtotheportfoliointermsoflineofbusinessandloantype.adjustmentsarealsomadetotheallowanceforthepoolsafteranassessmentofinternalandexternalinfluencesoncreditqualitythathavenotyetbeenreflectedinthehistoricallossorriskrating

data.non-pool-specificallowancesrelatetoinherentlossesthatarenototherwiseevaluatedinthefirsttwoelements.thequalitativefactorsasso-ciatedwiththenon-pool-specificallowancesaresubjectiveandrequireahighdegreeofmanagementjudgement.thesefactorsincludetheinherentimprecisionsinmathematicalmodelsandcreditqualitystatistics,recenteconomicuncertainty,lossesincurredfromrecentevents,andlaggingorincompletedata.

preMiSeSanDequipMentpremisesandequipmentarecarriedatcostlessaccumulateddepreciationandamortization.depreciationiscalculatedprimarilyusingthestraight-linemethodovertheassets’estimatedusefullives.certainleasesarecapi-talizedasassetsforfinancialreportingpurposes.suchcapitalizedassetsareamortized,usingthestraight-linemethod,overthetermsoftheleases.maintenanceandrepairsarechargedtoexpense,andimprovementsarecapitalized.

gooDwillanDotherintangiBleaSSetSgoodwillrepresentstheexcessofpurchasepriceoverthefairvalueofiden-tifiablenetassetsofacquiredcompanies.undertheprovisionsofsfasno.142,“goodwillandotherintangibleassets,”goodwillisnotamortizedandinsteadissubjecttoimpairmenttestingonanannualbasis,ormoreoftenifeventsorcircumstancesindicatethattheremaybeimpairment.thegood-willimpairmenttestisperformedintwophases.thefirstphaseisusedtoidentifypotentialimpairmentandthesecondphase,ifrequired,identifiestheamountofimpairmentbycomparingthecarryingamountofgoodwilltoitsimpliedfairvalue.

identifiedintangibleassetsthathaveafinitelifeareamortizedovertheirusefullivesandareevaluatedforimpairmentwhenevereventsorchangesincircumstancesindicatethecarryingamountoftheassetsmaynotberecoverable.

MortgageServicingrightS(“MSrs”)thecompanyrecognizesasassetstherightstoservicemortgageloansforotherswhethertheservicingrightsareacquiredthroughpurchaseorloanorigination.purchasedmsrsarecapitalizedatcost.forloansoriginatedandsoldwheretheservicingrightshavebeenretained,thecompanyallo-catesthecostoftheloanandtheservicingrightsbasedontheirrelativefairmarketvaluesatthetimeofsaleoftheunderlyingmortgageloan.fairvalueisdeterminedthroughareviewofvaluationassumptionsthataresupportedbymarketandeconomicdatacollectedfromvariousoutsidesources.thecarryingvalueofmsrsismaintainedonthebalancesheetinintangibleassets.

therearetwocomponentstotheamortizationexpensethatthecompanyrecordsonmsrs.first,thecompanyfullyamortizestheremainingbalanceofallmsrassetsforloanspaidinfullinrecognitionofthetermina-tionoffuturecashflowstreams.second,amortizationonthesurvivingmsrassetsisrecordedbasedonthecurrentcashflowsasestimatedbyfuturenetservicingincome.thecurrentcashflowsarecalculatedandupdatedmonthlybyapplyingmarket-drivenassumptions,suchasinterestrateandprepaymentspeedassumptions.impairmentformsrsisdeterminedbasedonthefairvalueoftherights,stratifiedaccordingtointerestrateandtypeofrelatedloan.impairment,ifany,isrecognizedthroughavaluationallow-ancewithacorrespondingchargerecordedintheconsolidatedstatementsofincome.


loanSaleSanDSecuritizationSthecompanysellsandattimesmaysecuritizeloans.whenthecompanysecuritizesassets,itmayretainaportionofthesecuritiesissued,includingseniorinterestsandinterest-onlystrips,allofwhichareconsideredretainedinterestsinthetransferredassets.retainedinterestsinsecuritizedassets,includingdebtsecurities,areclassifiedaseithersecuritiesavailableforsaleortradingassetsandarerecordedattheirallocatedcarryingamountsbasedontherelativefairvalueoftheassetssoldandretained.retainedinterestsaresubsequentlycarriedatfairvalue,whichisbasedonquotedmarketprices,quotedmarketpricesforsimilarassets,ordiscountedcashflowanalyses.ifmarketpricesarenotavailable,fairvalueiscalculatedusingmanagement’sbestestimatesofkeyassumptions,includingcreditlosses,loanrepaymentspeedsanddiscountratescommensuratewiththerisksinvolved.gainsorlossesonsalesaswellasfutureservicingfeesarerecordedinnoninterestincomeintheconsolidatedstatementsofincome.

incoMetaxeStheprovisionforincometaxesisbasedonincomeandexpensereportedforfinancialstatementpurposesafteradjustmentforpermanentdifferencessuchastax-exemptincome.deferredincometaxassetsandliabilitiesresultfromtemporarydifferencesbetweenassetsandliabilitiesmeasureddiffer-entlyforfinancialreportingpurposesandforincometaxreturnpurposes.theseassetsandliabilitiesaremeasuredusingtheenactedtaxratesandlawsthatarecurrentlyineffect.avaluationallowanceisrecognizedforadeferredtaxassetif,basedontheweightofavailableevidence,itismorelikelythannotthatsomeportionorallofthedeferredtaxassetwillnotberealized.subsequentchangesinthetaxlawsrequireadjustmenttotheseassetsandliabilitieswiththecumulativeeffectincludedinincomefromcontinuingoperationsfortheperiodinwhichthechangewasenacted.incomputingtheincometaxprovision,thecompanyevaluatesthetechni-calmeritsandrisksofitsincometaxpositionsbasedoncurrentlegislative,judicial,andregulatoryguidance.

earningSperSharebasicearningspersharearebasedontheweighted-averagenumberofcommonsharesoutstandingduringeachperiod.dilutedearningspersharearebasedontheweighted-averagenumberofcommonsharesoutstand-ingduringeachperiod,pluscommonshareequivalentscalculatedforstockoptionsandperformancerestrictedstockoutstandingusingthetreasurystockmethod.

caShflowSforpurposesofreportingcashflows,cashandcashequivalentsincludeonlycashandduefrombanks,interest-bearingdepositsinotherbanks,federalfundssoldandsecuritiespurchasedunderagreementstoresellwithanoriginalmaturityofthreemonthsorless.

DerivativefinancialinStruMentSitisthepolicyofthecompanytorecordallderivativefinancialinstrumentsatfairvalueinthefinancialstatements.thecompanyusesderivativeinstru-mentstohedgeinterestrateexposurebymodifyingthecharacteristicsoftherelatedbalancesheetinstruments.derivativesthatdonotqualifyashedges,andthosetransactionsforwhichthecompanyhaselectednottoapplyhedgeaccounting,arecarriedattheircurrentmarketvalueonthebalancesheetandchangesintheirfairvaluearerecordedastradingincomeinthecurrentperiod.

undertheprovisionsofsfasno.133,“accountingforderivativeinstrumentsandhedgingactivities,”andsfasno.149,“amendmentofstatement133onderivativeinstrumentsandhedgingactivities,”onthedatethataderivativecontractisenteredinto,thecompanyprepareswrit-tenhedgedocumentation,identifyingtheriskmanagementobjective,anddesignatingthederivativeas(1)ahedgeofthefairvalueofarecognizedassetorliabilityorofanunrecognizedfirmcommitment(fairvaluehedge);(2)ahedgeofaforecastedtransactionorofthevariabilityofcashflowstobereceivedorpaidrelatedtoarecognizedassetorliability(cashflowhedge);(3)aforeigncurrencyfairvalueorcashflowhedge(foreigncurrencyhedge);or(4)heldfortrading(tradinginstruments).alltransactionsdesig-natedasaccountinghedgesmustfirstbedeemedeffectiveundersfasno.133byusingtheshortcutmethodasdefined,orbyperformingastatisti-calregressionanalysisthatindicatesahighcorrelationbetweentheactualderivativeanda“perfect”hypotheticalderivativethathastermsidenticaltothecriticaltermsofthehedgeditem.additionally,transactionswhichdonotqualifyfortheshortcutmethodofhedgeaccountingarereviewedquar-terlyforongoingeffectiveness.transactionswhicharenotdeemedeffec-tiveareremovedfromhedgeaccountingclassification.

changesinthefairvalueofaderivativethatishighlyeffectiveandthathasbeendesignatedandqualifiesasafairvaluehedge,alongwiththelossorgainonthehedgedassetorliabilitythatisattributabletothehedgedrisk(includinglossesorgainsonfirmcommitments),arerecordedincurrentperiodearnings.changesinthefairvalueofaderivativethatishighlyeffectiveandthatisdesignatedandqualifiesasacashflowhedgearerecordedinothercomprehensiveincome,withanyineffectiveportionrecordedincurrentperiodearnings.cashflowhedgesofforecastedtrans-actions,whicharenolongerdeemedlikelytooccur,arereclassifiedoutofothercomprehensiveincomeandintocurrentperiodinterestincomeorexpenserelatedtotheoriginallyhedgeditem.changesinthefairvalueofderivativetradinginstrumentsarereportedincurrentperiodearnings.foradditionalinformationonthecompany’sderivativeactivities,refertonote17,derivativesandoff-balancesheetarrangements,totheconsolidatedfinancialstatements.

Stock-BaSeDcoMpenSationthecompanysponsorsstockoptionplansunderwhichincentiveandnon-qualifiedstockoptionsmaybegrantedperiodicallytocertainemployees.thecompany’sstockoptionstypicallyhaveanexercisepriceequaltothefairvalueofthestockonthedateofthegrantandtypicallyvestoverthreeyears.thecompanyaccountedforallawardsgrantedafterJanuary1,2002underthefairvaluerecognitionprovisionsofsfasno.123,“accountingforstock-basedcompensation.”therequireddisclosuresrelatedtothecompany’sstock-basedemployeecompensationplanareincludedinnote16,employeebenefitplans,totheconsolidatedfinancialstatements.effectiveJanuary1,2006,thecompanyadoptedsfasno.123(revised),“sharebasedpayment,”usingthemodifiedprospectiveapplicationmethod.themodifiedprospectiveapplicationmethodappliestonewawards,toanyoutstandingliabilityawards,andtoawardsmodified,repurchased,orcan-celledafterJanuary1,2006.forallawardsgrantedpriortoJanuary1,2006,compensationcosthasbeenrecognizedontheportionofawardsforwhichservicehasbeenrendered.additionally,ratherthanrecognizingforfeituresastheyoccur,thecompanywillestimatethenumberofawardsforwhichitisprobablethatservicewillberenderedandwilladjustcompensationcostaccordingly.estimatedforfeitureswillbesubsequentlyadjustedtoreflectactualforfeitures.

notestoconsolidatedfinancialstatements continued


accountingpolicieSaDopteDindecember2003,theamericaninstituteofcertifiedpublicaccountants(“aicpa”)issuedstatementofposition(“sop”)03-3,“accountingforloansorcertaindebtsecuritiesacquiredinatransfer.”thissoprequiresacquiredimpairedloansforwhichitisprobablethattheinvestorwillbeunabletocollectallcontractuallyrequiredpaymentsreceivabletoberecordedatthepresentvalueofamountsexpectedtobereceived.thesopalsoprohibitsthecarryingoverorcreationofvaluationallowancesintheinitialaccount-ingfortheseloans.thesopwaseffectiveforloansacquiredinfiscalyearsbeginningafterdecember15,2004.theadoptionofthissopdidnotmate-riallyimpactthecompany’sfinancialpositionorresultsofoperations.

indecember2004,thefasbissuedsfasno.123(revised),“share-basedpayment.”thisstatementreplacessfasno.123,“accountingforstock-basedcompensation,”andsupersedesaccountingpracticebulletin(“apb”)opinionno.25,“accountingforstockissuedtoemployees”.sfasno.123(r)clarifiesandexpandssfasno.123’sguidanceinseveralareas,includingmeasuringfairvalue,classifyinganawardasequityorasaliability,accountingfornon-substantivevestingprovisions,andattributingcompen-sationcosttoreportingperiods.undertheprovisionsofsfasno.123(r),thealternativetouseapbopinionno.25’sintrinsicvaluemethodofaccountingthatwasprovidedinsfasno.123,asoriginallyissued,iselimi-nated,andentitiesarerequiredtomeasureliabilitiesincurredtoemployeesinshare-basedpaymenttransactionsatfairvalue.effectiveJanuary1,2002,thecompanyadoptedthefairvaluerecognitionprovisionofsfasno.123,prospectively,andbeganexpensingthecostofstockoptions.thecompanyhasquantifiedtheeffectonnetincomeandearningspershareifthefairvaluebasedmethodhadbeenappliedonaretrospectivebasisinnote16totheconsolidatedfinancialstatements.

inmarch2005,thesecuritiesandexchangecommission(“sec”)releasedstaffaccountingbulletinno.107(“sabno.107”),whichaddressestheapplicationofsfasno.123(r).thecompanyadoptedsfasno.123(r)effectiveJanuary1,2006usingthemodifiedprospectiveapplicationmethod.theadoptiondidnothaveamaterialimpactonthecompany’sfinancialpositionorresultsofoperations.

inmay2005,thefasbissuedsfasno.154,“accountingchangesanderrorcorrections—areplacementofapbopinionno.20andfasbstatementno.3.”sfasno.154appliestoandchangestherequirementsforreportingandaccountingforachangeinaccountingprinciple.thisstatementrequiresretrospectiveapplicationtopriorperiods’financialstatementswithchangesinaccountingprinciple,unlessitisimpracticabletodetermineeithertheperiod-specificeffectsorthecumulativeeffectofthechange.theprovisionsofopinionno.20,“accountingchanges,”thatrelatetoreportingthecorrectionofanerrorinpreviouslyissuedfinancialstatementsandachangeinaccountingestimatearecarriedforwardinsfasno.154withoutchange.sfasno.154alsocarriesforwardthepro-visionsofsfasno.3,“reportingaccountingchangesininterimfinancialstatementsanamendmentofapbopinionno.28,”thatgovernthereport-ingofaccountingchangesininterimfinancialstatements.sfasno.154iseffectiveforaccountingchangesandcorrectionsoferrorsmadeinfiscalyearsbeginningafterdecember15,2005.thecompanyadoptedtheprovi-sionsofsfasno.154onJanuary1,2006.theadoptionofthisstatementdidnotimpactthecompany’sfinancialpositionorresultsofoperations.

recentlYiSSueDanDpenDingaccountingpronounceMentSinJuly2005,thefasbissuedaproposedfasbstaffposition(“fsp”)no.13-a,“accountingforachangeorprojectedchangeinthetimingofcashflowsrelatingtoincometaxesgeneratedbyaleveragedleasetransaction.”fsp13-aindicatesthatachangeinthetimingoftherealizationoftaxbene-fitsonaleveragedleasewillrequirerecalculationofthatlease.inJanuary2006,thefasbreachedatentativedecisionthatanentitywouldnothavetoreclassifyaleasefromleveragedleaseaccountingif,asaresultofthemostrecentrecalculation,theleasenolongerqualifiesasaleveragedlease.suntrustiscurrentlyintheprocessofevaluatingtheimpactthatthispro-posedguidance,iffinalized,wouldhaveonthecompany’sfinancialpositionandresultsofoperations.thefasbexpectstoissuethefinalfspinthefirstquarterof2006.

inJuly2005,thefasb issuedanexposuredraftofaproposedinterpretation,“accountingforuncertaintaxpositions.”thisexposuredraftclarifiesguidanceontherecognitionandmeasurementofuncertaintaxpositionsand,ifissued,mayresultincompaniesrevisingtheirthresholdforrecognizingtaxbenefitsthathavesomedegreeofuncertainty.theexpo-suredraftalsoaddressestheaccrualofanyinterestandpenaltiesrelatedtotaxuncertainties.thefasbexpectstoissuethefinalinterpretation,whichwouldincludeamendmentstosfasno.109,“accountingforincometaxes,”inthefirstquarterof2006.suntrustiscurrentlyintheprocessofevaluatingtheimpactthatthisexposuredraft,iffinalized,wouldhaveonthecompany’sfinancialpositionorresultsofoperations.

indecember2005,thefasbissuedfspno.sop94-6-1,“termsofloanproductsthatmaygiverisetoaconcentrationofcreditrisk.”fspno.sop94-6-1requiresadditionaldisclosuresforcertainloanproductsthatexposeentitiestohigherrisksthantraditionalloanproducts.thefsprequiresthecompanytodiscloseadditionalinformationsuchassignificantconcentrationsofcreditrisksresultingfromtheseproducts,quantitativeinformationaboutthemarketrisksoffinancialinstrumentsthatisconsis-tentwiththewaythecompanymanagesoradjuststhoserisks,concen-trationsinrevenuefromparticularproductsifcertainconditionsaremet,andthefactorsthatinfluencedmanagement’sjudgmentasitrelatestotheaccountingpolicyforcreditlossesanddoubtfulaccounts.thisfspiseffec-tiveforthereportingperiodendeddecember31,2005.therequireddisclo-suresrelatedtothecompany’sloanproductsthatarewithinthescopeofthisfspareincludedinnote19totheconsolidatedfinancialstatements.


twelvemonthsendeddecember31,2004(unaudited) national suntrust commerce proforma proforma(inthousandsexceptpersharedata) banks,inc.1 financial2 adjustments3 combinedinterestanddividendincome $5,218,382 $797,873 $(5,033) $6,011,222interestexpense 1,533,227 218,000 27,103 1,778,330netinterestincome 3,685,155 579,873 (32,136) 4,232,892provisionforloanlosses 135,537 43,977 — 179,514netinterestincomeafterprovisionforloanlosses 3,549,618 535,896 (32,136) 4,053,378noninterestincome 2,604,446 358,305 — 2,962,751noninterestexpense 3,897,038 525,887 10,209 4,433,134incomebeforeprovisionforincometaxes 2,257,026 368,314 (42,345) 2,582,995provisionforincometaxes 684,125 125,342 (16,091) 793,376 netincome $1,572,901 $242,972 $(26,254) $1,789,619averageshares: diluted 303,309 — 58,772 362,081 basic 299,375 — 57,311 356,686incomeperaveragecommonshare: diluted $5.19 — — $4.94 basic 5.25 — — 5.021thereportedresultsofsuntrustbanks,inc.forthetwelvemonthsendeddecember31,2004includetheresultsoftheacquirednationalcommercefinancialfromtheoctober1,2004acquisitiondate.

2representsresultsofnationalcommercefinancialfromJanuary1,2004throughseptember30,2004.

3proformaadjustmentsincludethefollowingitems:amortizationofcoredepositandotherintangiblesof$49.3million,netofncf’shistoricalamortizationof$39.1million,amortizationofloanpurchaseaccountingadjustmentof$7.0million,accretionofsecuritiespurchaseaccountingadjustmentof$1.9million,accretionofdepositpurchaseaccountingadjustmentof$3.9million,andacccretionofshort-termandlong-termbor-rowingspurchaseaccountingadjustmentsof$5.7million.additionally,interestexpenseincludes$36.7millionforfundingcostsasthoughthefundingforthecashcomponentofthetransactionoccurredJanuary1,2004.

note2•acquisitions/Dispositionsonoctober1,2004,suntrustacquirednationalcommercefinancialcorporationandsubsidiaries,amemphis-basedfinancialservicesorgani-zation.ncf’sparentcompanymergedintosuntrustinatransactionthatqualifiedasatax-freereorganization.theacquisitionwasaccountedforunderthepurchasemethodofaccountingwiththeresultsofoperationsforncfincludedinsuntrust’sresultsbeginningoctober1,2004.underthepurchasemethodofaccountingtheassetsandliabilitiesoftheformerncfwererecordedattheirrespectivefairvaluesasofoctober1,2004.

theconsiderationfortheacquisitionwasacombinationofcashandstockwithanaggregatepurchasepriceofapproximately$7.4billion.thetotalconsiderationconsistedofapproximately$1.8billionincashandapproximately76.4millionsharesofsuntrustcommonstock.

basedonavaluationoftheirestimatedusefullives,thecoredepositintangiblesarebeingamortizedovera10yearperiodusingthesumofthe

yearsdigitmethodandtheotherintangiblesarebeingamortizedoveraweightedaverageof7.3yearsusingthestraightlinemethod.nogoodwillrelatedtoncfwasdeductiblefortaxpurposes.thecompanyincurred$98.6millionand$28.4millioninmergerexpensesin2005and2004,respectively,whichrepresentincrementalcoststointegratencf’sopera-tions.morespecifically,theserepresentcostsprimarilyrelatedtoconsult-ingfeesforsystemsandotherintegrationintitiatives,employee-relatedchargesandmarketingexpenditures.

thefollowingunauditedcondensedincomestatementdisclosestheproformaresultsofthecompanyasthoughthenationalcommercefinancialacquisitionhadoccurredatthebeginningoftheperiodpresented:



ondecember31,2005,suntrustenteredintoastockpurchaseagreementwherebythecompanysoldits100%interestincarswellofcarolina,inc.,afullserviceinsuranceagencyofferingcomprehensiveinsuranceservicestoitsclients,forcashtotaling$10.9million.

onseptember19,2005,suntrustenteredintoadefinitiveagreementtosellits49%interestinfirstmarketbank,fsb.althoughitiscurrentlyanticipatedthatthesalewilltakeplaceinthefirstquarterof2006,thecompanycannotgiveanyassuranceastowhen,orif,thesalewilloccur.

duringthesecondquarterof2005,amaholdings,inc.(“holdings”),a100%subsidiaryofsuntrust,exercisedarighttocall41minoritymemberownedinterestsinama,llc(“llc”).thetransactionresultedin$3.3mil-lionofgoodwillthatwasdeductiblefortaxpurposes.asofdecember31,2005,holdingsowned792memberinterestsand209memberinterestsofllcwereownedbyemployees.theemployee-ownedinterestsmaybecalledbyholdingsatitsdiscretion,orputtoholdingsbytheholdersofthememberinterest.

onmarch31,2005,suntrustsoldsubstantiallyallofthefactoringassetsofitsdivision,receivablescapitalmanagement(“rcm”),tocitgroup,inc.thesaleofapproximately$238millioninnetassetsresultedinagainof$30.0million.thisgainwaspartiallyoffsetby$10.1millionofexpensesprimarilyrelatedtotheseveranceofrcmemployeesandthewrite-offofobsoletercmfinancialsystemsandequipment.thenetgainof$19.9millionwasrecordedintheconsolidatedstatementsofincomeasacomponentofnoninterestincome.inthethirdquarterof2005,anaddi-tionalgainof$3.5millionwasrecordedduetotheactualexpenseincurredforseveranceandthewrite-offofobsoletesystemsandequipmentbeinglessthanwhatwasestimatedinthefirstquarterof2005.asaresult,thegainrelatedtothercmfactoringassetsaletotaled$23.4millionfortheyearendeddecember31,2005.

onJanuary27,2005,suntrustpurchasedtheremaining20%minor-ityinterestoflighthousepartners,llc(“lhp”),anon-registeredlimitedliabilitycompanyestablishedtoprovidealternativeinvestmentstrategiesforclients.thetransactionresultedin$39.8millionofgoodwilland$11.1millionofotherintangibleswhichwerebothdeductiblefortaxpurposes.

onmay28,2004,suntrustacquiredsubstantiallyalloftheassetsofseixinvestmentadvisors,inc(“seix”).thecompanyacquiredapproximately$17billioninassetsundermanagement.thecompanypaid$190millionincash,resultingin$84.0millionofgoodwilland$99.2millionofotherintangibleassets,allofwhicharedeductiblefortaxpurposes.additionalpaymentsmaybemadein2007and2009,contingentonperformance.theadditionalpaymentsarecurrentlyestimatedtototalapproximately$77.8million.

onJune2,2003,suntrustcompletedtheacquisitionoflighthousefinancialservices,inc.(lighthouse)basedinhiltonheadisland,southcarolina.thecompanyacquiredapproximately$636.6millioninassets,$567.4millioninloans,and$420.9millionindeposits. inaddition,suntrustpaid$131.4millioninacombinationofcashandsuntruststock.thetransactionresultedin$98.8millionofgoodwilland$22.6millionofotherintangibleassets,whichwerenotdeductiblefortaxpurposes.

suntrust completedthe acquisitionofsunamerica mortgage(sunamerica),oneofthetopmortgagelendersinmetroatlanta,onJuly31,2003.thetransactionresultedin$10.2millionofgoodwilland$9.0millionofotherintangibles,allofwhichweredeductiblefortaxpurposes.in2005,additionalpaymentsof$4.3millionweremadetosunamericaemployeesthatwerecontingenton2004performance.

note3•fundsSoldandSecuritiespurchasedunderagreementstoresellfundssoldandsecuritiespurchasedunderagreementstoresellatdecember31wereasfollows:(dollarsinthousands) 2005 2004federalfunds $384,575 $332,725resellagreements 928,923 1,263,544 totalfundssoldandsecuritiespurchasedunderagreementstoresell $1,313,498 $1,596,269

securitiespurchasedunderagreementstoresellarecollateralizedbyu.s.governmentoragencysecuritiesandarecarriedattheamountsatwhichsecuritieswillbesubsequentlyresold.thecompanytakespossessionofallsecuritiesunderagreementstoresellandperformstheappropriatemarginevaluationontheacquisitiondatebasedonmarketvolatility,asnecessary.

thecompanyrequirescollateralbetween100%and105%oftheunderly-ingsecurities.thetotalmarketvalueofthecollateralheldwas$958.1mil-lionand$1,279.8millionatdecember31,2005and2004,ofwhich$572.5millionand$856.8millionwasrepledged,respectively.


note4•tradingassetsandliabilitiesthefairvaluesofthecomponentsoftradingaccountassetsandliabilitiesatdecember31wereasfollows:(dollarsinthousands) 2005 2004tradingassetsu.s.governmentandagencysecurities $468,056 $265,339corporateandotherdebtsecurities 662,827 565,795equitysecurities 366 105mortgage-backedsecurities 278,294 136,494derivativecontracts 1,059,311 915,422municipalsecurities 337,179 219,783commercialpaper 5,192 80,707 totaltradingassets $2,811,225 $2,183,645tradingliabilitiesu.s.governmentandagencysecurities $522,084 $445,251derivativecontracts 1,007,137 638,943other 104 14,369 totaltradingliabilities $1,529,325 $1,098,563

note5•SecuritiesavailableforSalesecuritiesavailableforsaleatdecember31wereasfollows: 2005 amortized unrealized unrealized fair(dollarsinthousands) cost gains losses valueu.s.treasuryandotheru.s.governmentagenciesandcorporations $2,593,813 $584 $47,389 $2,547,008statesandpoliticalsubdivisions 914,082 15,460 3,869 925,673asset-backedsecurities 1,630,751 8,207 26,304 1,612,654mortgage-backedsecurities 17,354,552 11,669 343,527 17,022,694corporatebonds 1,090,559 2,665 22,793 1,070,431commonstockofthecoca-colacompany 110 1,945,512 — 1,945,622othersecurities1 1,369,921 31,818 — 1,401,739 totalsecuritiesavailableforsale $24,953,788 $2,015,915 $443,882 $26,525,821

2004 amortized unrealized unrealized fair(dollarsinthousands) cost gains losses Valueu.s.treasuryandotheru.s.governmentagenciesandcorporations $2,543,917 $7,246 $13,039 $2,538,124statesandpoliticalsubdivisions 841,605 25,118 1,126 865,597asset-backedsecurities 2,590,001 7,616 19,090 2,578,527mortgage-backedsecurities 18,366,981 58,160 99,806 18,325,335corporatebonds 1,667,077 19,719 7,494 1,679,302commonstockofthecoca-colacompany 110 2,003,796 — 2,003,906othersecurities1 921,224 29,065 — 950,289 totalsecuritiesavailableforsale $26,930,915 $2,150,720 $140,555 $28,941,0801includes$860.1millionand$676.5millionatdecember31,2005anddecember31,2004,respectively,offederalhomeloanbankandfederalreservebankstockstatedatparvalue.



proceedsfromthesaleofinvestmentsindebtsecuritieswere$4.4billion,$8.9billionand$7.6billionin2005,2004and2003.grossrealizedgainswere$21.7million,$16.5million,and$124.9millionandgrossrealizedlossesonsuchsaleswere$28.8million,$58.2million,and$1.0millionin2005,2004,and2003.

securitiesavailableforsalethatwerepledgedtosecurepublicdepos-its,trustandotherfundshadfairvaluesof$18.1billion,$17.4billion,and$13.7billionatdecember31,2005,2004,and2003.

securitieswithunrealizedlossesatdecember31wereasfollows: 2005 lessthantwelvemonths twelvemonthsorlonger total fair unrealized fair unrealized fair unrealized(dollarsinthousands) value losses value losses value lossesu.s.treasuryandotheru.s.governmentagenciesandcorporations $752,954 $11,120 $1,531,278 $36,269 $2,284,232 $47,389statesandpoliticalsubdivisions 215,707 2,431 68,139 1,438 283,846 3,869asset-backedsecurities 392,960 5,082 756,999 21,222 1,149,959 26,304mortgage-backedsecurities 10,151,064 180,232 6,169,528 163,295 16,320,592 343,527corporatebonds 319,211 5,037 556,868 17,756 876,079 22,793 totalsecuritieswithunrealizedlosses $11,831,896 $203,902 $9,082,812 $239,980 $20,914,708 $443,882

2004 lessthantwelvemonths twelvemonthsorlonger total fair unrealized fair unrealized fair unrealized(dollarsinthousands) Value losses Value losses Value lossesu.s.treasuryandotheru.s.governmentagenciesandcorporations $1,731,338 ($12,866) $10,008 ($173) $1,741,346 ($13,039)statesandpoliticalsubdivisions 126,990 (1,082) 2,772 (44) 129,762 (1,126)asset-backedsecurities 1,397,935 (19,090) — — 1,397,935 (19,090)mortgage-backedsecurities 10,810,197 (90,178) 422,018 (9,628) 11,232,215 (99,806)corporatebonds 517,550 (3,262) 84,390 (4,232) 601,940 (7,494) totalsecuritieswithunrealizedlosses $14,584,010 ($126,478) $519,188 ($14,077) $15,103,198 ($140,555)

theamortizedcostandfairvalueofinvestmentsindebtsecuritiesatdecember31,2005byestimatedaveragelifeareshownbelow.actualcashflowswilldifferfromestimatedaveragelivesandcontractualmaturitiesbecauseborrowersmayhavetherighttocallorprepayobligationswithorwithoutcallorprepaymentpenalties. amortized fair(dollarsinthousands) cost Valuedueinoneyearorless $1,164,077 $1,164,070dueinoneyearthroughfiveyears 19,600,283 19,209,842dueafterfiveyearsthroughtenyears 2,613,724 2,599,096aftertenyears 205,673 205,452 total $23,583,757 $23,178,460

marketchangesininterestratesandmarketchangesincreditspreadswillresultintemporaryunrealizedlossesasanormalfluctuationinthemar-ketpriceofsecurities.securitieswithunrealizedlossestotaling$203.9millionhavebeeninanunrealizedlosspositionforlessthan12months.thesesecuritieswerepurchasedmostlyin2005andthetemporarylossesaredueprimarilytoariseinmarketinterestratesduring2005.the$240.0millioninunrealizedlosseswhichhavebeeninalosspositionformorethan12monthsareprimarilymortgage-backedsecuritiesissuedbyu.s.governmentagencieswhichwerepurchasedin2003and2004.therea-

sonforthetemporarylossisthatmarketinterestratesarehigherthanwhenthesesecuritieswereoriginallypurchased.thetotalunrealizedlossof$443.9millionrepresents2.1%ofthefairvalue.thecompanyreviewsallofitssecuritieswithunrealizedlossesforimpairmentatleastquarterly.aspartofthesereviews,thecompanydeterminedthataparticularasset-backedsecuritywasimpairedforother-than-temporaryreasonsandrecog-nizedasecuritylossof$15.3millionin2004.thecompanyhasdeterminedthattherewerenoadditionalother-than-temporaryimpairmentsassoci-atedwiththeabovesecuritiesatdecember31,2005.


totalnonaccrualloansatdecember31,2005and2004were$271.9mil-lionand$354.2million,respectively.thegrossamountsofinterestincomethatwouldhavebeenrecordedin2005,2004,and2003onnonaccrualloansatdecember31ofeachyear,ifallsuchloanshadbeenaccruinginter-estattheircontractualrates,were$28.3million,$21.6million,and$33.7million,whileinterestincomeactuallyrecognizedtotaled$13.2million,$19.0million,and$14.1million,respectively.

atdecember31,2005and2004,impairedloansamountedto$147.2millionand$208.4million,respectively.atdecember31,2005and2004,

impairedloansrequiringanallowanceforloanlosseswere$88.1millionand$167.0million,respectively.includedintheallowanceforloanandleaselosseswas$22.7millionand$42.2millionatdecember31,2005and2004,respectively,relatedtoimpairedloans.fortheyearsendeddecember31,2005,2004,and2003,theaveragerecordedinvestmentinimpairedloanswas$191.6million,$213.2million,and$359.6million,respectively;and$8.2million,$14.4million,and$10.0million,respectively,ofinterestincomewasrecognizedonloanswhiletheywereimpaired.

note6•loansthecompositionofthecompany’sloanportfolioatdecember31isshowninthefollowingtable:(dollarsinthousands) 2005 2004commercial $33,764,183 $31,823,812realestate: homeequity 13,635,705 11,519,168 construction 11,046,903 7,845,416 residentialmortgages 29,877,312 24,553,498 other 12,516,035 12,083,747creditcard 264,512 175,304consumerloans 13,450,245 13,425,227 totalloans $114,554,895 $101,426,172

note7•allowanceforloanandleaselossesactivityintheallowanceforloanandleaselossesissummarizedinthetablebelow:(dollarsinthousands) 2005 2004 2003balanceatbeginningofyear $1,050,024 $941,922 $930,114allowancefromacquisitions,dispositionsandotheractivity–net — 173,844 9,324provisionforloanlosses 176,886 135,537 313,550loancharge-offs (315,245) (316,081) (394,328)loanrecoveries 116,463 114,802 83,262balanceatendofyear $1,028,128 $1,050,024 $941,922



operating capital(dollarsinthousands) leases leases2006 $126,321 $2,3052007 116,025 2,3372008 102,325 2,3722009 86,163 2,3842010 72,251 2,496thereafter 354,340 32,903 totalminimumleasepayments 857,425 44,797amountsrepresentinginterest 23,803presentvalueofnetminimumleasepayments $20,994

thecarryingamountsofpremisesandequipmentsubjecttomortgageindebtedness(includedinlong-termdebt)werenotsignificantatdecember31,2005and2004.

Variouscompanyfacilitiesareleasedunderbothcapitalandnoncan-celableoperatingleaseswithinitialremainingtermsinexcessofoneyear.minimumpayments,byyearandinaggregate,asofdecember31,2005wereasfollows:

netpremisesandequipmentincluded$15.3millionand$16.3millionatdecember31,2005and2004,respectively,relatedtocapitalleases.

aggregaterentexpense(principallyforoffices),includingcontingentrentexpense,amountedto$153.5million,$133.8million,and$124.7

millionfor2005,2004and2003,respectively.depreciation/amortizationexpensefortheyearsendeddecember31,2005,2004and2003totaled$211.9million,$191.6millionand$183.5million,respectively.

note8•premisesandequipmentpremisesandequipmentatdecember31wereasfollows:(dollarsinthousands) usefullife 2005 2004land $468,179 $446,760buildingsandimprovements 2–40years 1,484,335 1,544,566leaseholdimprovements 1–30years 421,442 438,356furnitureandequipment 1–20years 1,160,456 1,378,395constructioninprogress 159,266 114,462 3,693,678 3,922,539lessaccumulateddepreciationandamortization 1,839,151 2,062,124 totalpremisesandequipment $1,854,527 $1,860,415


corporateand wealthand investment investment corporate/(dollarsinthousands) retail commercial banking mortgage management ncf other totalBalance,January1,2004 $736,514 $123,276 $94,852 $53,663 $69,333 $— $— $1,077,638purchasepriceadjustment 449 190 — 2,579 863 — — 4,081seixinvestmentadvisors — — — — 83,990 — — 83,990reallocation (4,975) — — — 4,975 — — —ncfacquisition — — — — — 5,635,121 — 5,635,121branchdivestiture — — — — — (2,496) — (2,496)otheracquisitions — — — — 7,679 — — 7,679Balance,December31,2004 731,988 123,466 94,852 56,242 166,840 5,632,625 — 6,806,013ncfgoodwillallocation 4,143,359 1,143,986 53,510 187,566 94,065 (5,632,625) 10,139 —ncfpurchasepriceadjustments (2,189) (6,089) (892) (172) (1,223) — (2,804) (13,369)purchaseoflhpminorityshares — — — — 39,801 — — 39,801sunamericacontingent consideration — — — 4,349 — — — 4,349purchaseofamaholdings minorityshares — — — — 3,349 — — 3,349saleofcarswellofcarolina,inc. — — — — (4,975) — — (4,975)Balance,December31,2005 $4,873,158 $1,261,363 $147,470 $247,985 $297,857 $— $7,335 $6,835,168

thechangesinthecarryingamountsofotherintangibleassetsforthetwelvemonthsendeddecember31,2004and2005areasfollows:

mortgage coredeposit servicing(dollarsinthousands) intangible rights other totalBalance,January1,2004 $165,028 $449,293 $25,298 $639,619amortization (67,072) (168,127) (10,510) (245,709)servicingrightsoriginated — 196,118 — 196,118seixacquisition — — 99,200 99,200ncfacquisition 327,000 5,108 37,000 369,108branchdivestiture (813) — — (813)other — — 3,928 3,928Balance,December31,2004 424,143 482,392 154,916 1,061,451amortization (99,400) (166,482) (19,565) (285,447)servicingrightsoriginated — 341,694 — 341,694lhpclientrelationshipsandnoncompeteagreements — — 11,119 11,119saleofcarswellofcarolina,inc. — — (5,850) (5,850)Balance,December31,2005 $324,743 $657,604 $140,620 $1,122,967

note9•intangibleassetsundertheprovisionsofsfasno.142,“goodwillandotherintangibleassets,”goodwillistestedforimpairmentonanannualbasisandaseventsoccurorcircumstanceschangethatwouldmorelikelythannotreducethefairvalueofareportingunitbelowitscarryingamount.thecompanycom-

pleteditsannualreviewasofseptember30,2005,anddeterminedtherewasnoimpairmentofgoodwillasofthisdate.thechangesinthecarryingamountofgoodwillbyreportablesegmentforthetwelvemonthsendeddecember31,2004and2005areasfollows:



note10•fundspurchasedandSecuritiesSoldunderagreementtorepurchasefundspurchasedandsecuritiessoldunderagreementtorepurchaseatdecember31wereasfollows:(dollarsinthousands) 2005 2004federalfunds $4,258,013 $3,882,342repurchaseagreements 6,116,520 5,460,489 totalfundspurchasedandsecuritiessoldunderagreementtorepurchase $10,374,533 $9,342,831

theaveragebalancesofshort-termborrowingsfortheyearsendeddecember31,2005,2004,and2003were$2.7billion,$1.7billion,and$2.2billion,respectively,whilethemaximumamountsoutstandingatany

month-endduringtheyearsendeddecember31,2005,2004,and2003were$3.5billion,$4.0billion,and$4.2billion,respectively.

note11•otherShort-termBorrowingsothershort-termborrowingsasofdecember31include: 2005 2004(dollarsinthousands) Balance rates balance ratesfederalfundspurchasedmaturinginoveroneday $725,000 4.23% $810,000 2.13%masternotes 441,112 3.45 534,220 0.87u.s.treasurydemandnotes 440,412 3.96 477,929 2.00other 331,100 various 240,400 various totalothershort-termborrowings $1,937,624 $2,062,549

theestimatedamortizationexpenseforintangibleassets,excludingamortizationofmortgageservicingrights,forthesubsequentfiveyearsisasfollows:

coredeposit(dollarsinthousands) intangible other total2006 $83,915 $18,147 $102,0622007 68,657 17,993 86,6502008 53,387 16,065 69,4522009 36,372 12,845 49,2172010 28,697 11,254 39,951thereafter 53,715 64,316 118,031 total $324,743 $140,620 $465,363


thefollowingisananalysisofcapitalizedmortgageservicingrightsincludedinintangibleassetsintheconsolidatedbalancesheets:

(dollarsinthousands) 2005 2004 2003balanceatbeginningofyear $482,392 $449,293 $383,918amortization1 (166,482) (168,127) (324,221)servicingrightsoriginated 341,694 196,118 384,198lighthouseacquisition — — 5,398ncfacquisition — 5,108 —balanceatendofyear $657,604 $482,392 $449,2931included$89.6million,$77.4million,and$158.9millionfortheyearsendeddecember31,2005,2004,and2003,respectively,onloansthathavebeenpaid-in-fullandloansthathavebeenforeclosed.

theabovesensitivitiesarehypotheticalandshouldbeusedwithcaution.astheamountsindicate,changesinfairvaluebasedonvariationsinassump-tionsgenerallycannotbeextrapolatedbecausetherelationshipofthechangeinassumptiontothechangeinfairvaluemaynotbelinear.also,

theeffectofavariationinaparticularassumptiononthefairvalueoftheretainedinterestiscalculatedwithoutchanginganyotherassumption.inreality,changesinonefactormayresultinchangesinanother,whichcouldmagnifyorcounteractthesensitivities.

2005 2004paymentrate(annual) 13.3% 14.9%weighted-averagelife(inyears) 6.8 6.2discountrate 10.0% 9.5%weighted-averagecoupon 5.8% 5.9%

(dollarsinmillions) 2005 2004fairvalueofretainedmortgageservicingrights $996.3 $631.5prepaymentrateassumption(annual) 13.3% 14.9% declineinfairvalueof10%adversechange $48.4 $35.5 declineinfairvalueof20%adversechange 92.1 67.8residualcashflowsdiscountrate(annual) 10.0% 9.5% declineinfairvalueof10%adversechange $32.7 $19.1 declineinfairvalueof20%adversechange 63.4 37.1

note12•Securitizationactivity/MortgageServicingrightsin2005,thecompanysecuritized$688.2millionofresidentialmortgageloans,receivingnetproceedstotaling$515.9million,andrecognizedapretaxlossof$1.6million.interestsof$173.3millionretainedfromtheresidentialmortgageloansecuritizationwerevaluedusingquotedmarketpricesorquotedmarketpricesofsimilarassetsandwereclassifiedastrad-ingassets.inaddition,thecompanycontinuestoperformservicingfortheresidentialmortgageloansandrecognizedaservicingassetof$5.6millionatfairvalue.thefairvaluewasderivedusingthefollowingassumptions:prepaymentspeedof18.0%,anaveragelifeof4.8years,andadiscountrateof11.0%.

asofdecember31,2005and2004,thecompanyhadretainedinter-estsof$288.4millionand$382.8million,respectively,classifiedassecuri-tiesavailableforsaleand$173.3millionclassifiedastradingassetsasofdecember31,2005.

asummaryofthekeyeconomicassumptionsusedtomeasuretotalmortgageservicingrightsandthesensitivityofthedecember31,2005and2004fairvaluestoimmediate10%and20%adversechangesinthoseassumptionsfollows.

novaluationallowanceswererequiredatdecember31,2005,2004,and2003forthecompany’smortgageservicingrights.asofdecember31,2005and2004,thetotalunpaidprinciplebalanceofmortgageloansser-

vicedwas$105.6billionand$79.9billion,respectively.includedintheseamountswere$69.3billionand$55.8billionasofdecember31,2005and2004,respectively,ofloansservicedforthirdparties.



note13•long-termDebtlong-termdebtatdecember31consistedofthefollowing:(dollarsinthousands) 2005 2004parentcompanyonlysenior floatingratenotesdue2007 $399,950 $400,000 3.625%notesdue2007 249,759 250,000 6.25%notesdue2008 294,135 294,250 4.00%notesdue2008 349,461 350,000 4.25%notesdue2009 299,078 300,000 floatingratenotesdue2019 50,563 50,563 6.00%notesdue2028 221,603 222,925 capitalleaseobligations — 166 other (9,054) 43,800 totalseniordebt–parent 1,855,495 1,911,704subordinated 7.375%notesdue2006 199,940 200,000 7.75%notesdue2010 299,324 300,000 6.00%notesdue2026 199,878 200,000 totalsubordinateddebt–parent 699,142 700,000Juniorsubordinated 7.90%notesdue20271 249,978 250,000 floatingratenotesdue20271 383,691 384,029 floatingratenotesdue20281 249,599 250,000 7.125%notesdue20311 300,000 300,000 7.05%notesdue20311 300,000 300,000 7.70%notesdue20311 200,000 200,000 totaljuniorsubordinateddebt–parent 1,683,268 1,684,029 totalparentcompany(excludingintercompanyof$189,835in2005and$193,922in2004) 4,237,905 4,295,733Subsidiariessenior floatingratenotesdue2005 — 1,850,455 floatingratenotesdue2006 1,000,000 1,000,000 2.125%notesdue2006 150,000 149,989 2.50%notesdue2006 399,976 399,553 floatingratenotesdue2008 500,000 — 2.086%notesdue2008 — 499,838 floatingratenotesdue2009 423,696 — 3.868%notesdue2009 — 4,165 4.55%notesdue2009 199,871 — 2.70%notesdue2014 9,160 9,160 floatingratenotesdue2018 283,769 — capitalleaseobligations 20,994 21,329 fhlbadvances(2005:0.00–8.79%,2004:0.00–8.79%) 9,174,864 10,893,456 directfinanceleaseobligations 267,693 207,342 other 224,069 255,844 totalseniordebt–subsidaries 12,654,092 15,291,131subordinated 7.25%notesdue2006 249,910 249,783 6.90%notesdue2007 99,947 99,820 6.50%notesdue2008 140,565 140,845 6.375%notesdue2011 1,000,692 1,000,820 5.00%notesdue2015 549,288 — floatingratenotesdue2015 500,000 — 5.45%notesdue2017 499,034 499,034 5.20%notesdue2017 349,037 350,000 5.40%notesdue2020 298,779 — totalsubordinateddebt–subsidaries 3,687,252 2,340,302Juniorsubordinated 8.16%notesdue20261 200,000 200,000 totaljuniorsubordinateddebt–subsidaries 200,000 200,000 totalsubsidiaries 16,541,344 17,831,433totallong-termdebt $20,779,249 $22,127,1661notespayabletotrustsformedtoissuetrustpreferredsecuritiestotaled$1.9billionatdecember31,2005and2004.


principalamountsdueforthenextfiveyearsonlong-termdebtare:2006–$2,654.3million;2007–$904.0million;2008–$2,952.5million;2009–$1,828.0million;2010–$400.7million;andthereafter–$12,039.8mil-lion.restrictiveprovisionsofseverallong-termdebtagreementspreventthecompanyfromcreatinglienson,disposingof,orissuing(excepttorelatedparties)votingstockofsubsidiaries.further,therearerestrictionsonmergers,consolidations,certainleases,salesortransfersofassets,mini-mumshareholders’equity,andmaximumborrowingsbythecompany.asofdecember31,2005,thecompanywasincompliancewithallcovenantsandprovisionsoflong-termdebtagreements.long-termdebtof$1,883.3mil-lionand$1,884.0millionasofdecember31,2005and2004,respectively,qualifiedastier1capital.ascurrentlydefinedbyfederalbankregulators,

long-termdebtof$3,712.2millionand$2,404.2millionasofdecember31,2005and2004,respectively,qualifiedastier2capital.

effectivedecember31,2003,asaresultoftheadoptionoffin46(r),thecompanydeconsolidatedcertainwholly-ownedtrustswhichhadbeenformedforthesolepurposeofissuingtrustpreferredsecurities.theproceedsfromthetrustpreferredsecuritiesissuanceswereinvestedinjuniorsubor-dinateddebenturesoftheparentcompanyandbankparentcompany.theobligationsofthesedebenturesconstituteafullandunconditionalguaran-teebytheparentcompanyandbankparentcompanyofthetrustpreferredsecurities.thejuniorsubordinateddebenturesheldbythetrustsincludedinthecompany’slong-termdebtwere$1,883.3millionand$1,884.0millionasofdecember31,2005and2004,respectively.

note14•capitalthecompanyissubjecttovariousregulatorycapitalrequirementswhichinvolvequantitativemeasuresofthecompany’sassets.

substantiallyallofthecompany’sretainedearningsareundistributedearn-ingsofthebank,whicharerestrictedbyvariousregulationsadministeredbyfederalandstatebankregulatoryauthorities.retainedearningsofthebankavailableforpaymentofcashdividendstothebankparentcompanyundertheseregulationstotaledapproximately$854millionand$544mil-lionatdecember31,2005and2004,respectively.thecompanyalsohasamountsofcashreservesrequiredbythefederalreserve.asofdecember31,2005and2004,thesereserverequirementstotaled$863.6millionand$708.5million,respectively.

inthecalculationofbasicanddilutedeps,netincomeisidenti-cal.sharesof0.3million,5.3million,and2.2millionfortheyearsendeddecember31,2005,2004,and2003,respectively,wereexcludedinthecomputationofaveragepotentialsharesbecausetheywouldhavebeenantidilutive.belowisareconciliationforthethreeyearsendeddecember31,2005,ofthedifferencebetweenaveragebasiccommonsharesout-standingandaveragedilutedcommonsharesoutstanding.

(sharesinthousands) 2005 2004 2003averagecommonshares–basic 359,066 299,375 278,295effectofdilutivesecurities stockoptions 2,723 2,154 1,166 performanceandrestrictedstock 1,665 1,780 1,973averagecommonshares–diluted 363,454 303,309 281,434

2005 2004(dollarsinmillions) amount ratio amount ratiosuntrustbanks,inc. tier1capital $11,080 7.01% $9,784 7.16% totalcapital 16,714 10.57 14,153 10.36 tier1leverage 6.65 6.64suntrustbank tier1capital 11,715 7.49 9,162 7.80 totalcapital 16,483 10.54 12,539 10.67 tier1leverage 7.04 7.27



(dollarsinthousands) 2005 2004Deferredtaxassetsallowanceforloanandleaselosses $379,098 $399,436accruedexpenses 130,539 98,252other 136,091 222,483 grossdeferredtaxassets $645,728 $720,171Deferredtaxliabilitiesnetunrealizedgainsinaccumulatedothercomprehensiveincome $532,466 $649,688leasing 791,429 769,630employeebenefits 181,244 248,374mortgage 233,214 146,858securities 58,418 30,878intangibleassets 39,497 77,820fixedassets 39,595 48,509loans 95,487 53,959other 105,414 67,175 grossdeferredtaxliabilities $2,076,764 $2,092,891netdeferredtaxliability $1,431,036 $1,372,720

note15•incometaxesthecomponentsofincometaxexpenseincludedintheconsolidatedstatementsofincomewereasfollows: yearendeddecember31(dollarsinthousands) 2005 2004 2003currentincometaxexpensefederal $654,389 $517,508 $381,250state 46,449 21,629 15,686 total $700,838 $539,137 $396,936Deferredincometaxexpensefederal $162,628 $123,883 $154,348state 15,690 21,105 25,557 total $178,318 $144,988 $179,905totalincometaxexpense $879,156 $684,125 $576,841

thecompany’sincomefrominternationaloperations,beforeprovisionforincometaxes,wasnotsignificant.additionally,thetaxeffectofunreal-izedgainsandlossesonsecuritiesavailableforsale,unrealizedgainsandlossesoncertainderivativefinancialinstruments,andothercomprehensiveincomerelatedtocertainretirementplanswererecordedinothercom-

prehensiveincomeandhadnoeffectonincometaxexpense(seenote23,comprehensiveincome,totheconsolidatedfinancialstatements).

areconciliationoftheexpectedincometaxexpenseatthestatutoryfederalincometaxrateof35%tothecompany’sactualincometaxexpenseandeffectivetaxrateforthepastthreeyearsisasfollows:

deferredincometaxliabilitiesandassetsresultfromtemporarydifferencesbetweenassetsandliabilitiesmeasuredforfinancialreportingpurposesandforincometaxreturnpurposes.theseassetsandliabilitiesaremeasured

usingtheenactedtaxratesandlawsthatarecurrentlyineffect.thesignifi-cantcomponentsofthenetdeferredtaxliabilityatdecember31wereasfollows:

2005 2004 2003 percentof percentof percentof pre-tax pre-tax pre-tax(dollarsinthousands) amount income amount income amount incomeincometaxexpenseatfederalstatutoryrate $1,003,238 35.0% $789,959 35.0% $668,198 35.0%increase(decrease)resultingfrom: tax-exemptinterest (51,016) (1.8%) (38,610) (1.7%) (31,951) (1.7%) incometaxcredits,net (67,130) (2.3%) (51,264) (2.3%) (39,653) (2.1%) stateincometaxes,netoffederalbenefit 40,387 1.4% 27,777 1.2% 26,807 1.4% dividendsonsubsidiarypreferredstock (22,456) (0.8%) (23,037) (1.0%) (23,567) (1.2%) other (23,867) (0.8%) (20,700) (0.9%) (22,993) (1.2%)totalincometaxexpenseandrate $879,156 30.7% $684,125 30.3% $576,841 30.2%


suntrustanditssubsidiariesfileconsolidatedincometaxreturnswherepermissibleorrequired.eachsubsidiarygenerallyremitscurrenttaxestoorreceivescurrentrefundsfromtheparentcompanybasedonwhatwouldberequiredhadthesubsidiaryfiledanincometaxreturnasaseparateentity.deferredtaxassetsresultingfromstatenetoperatinglosscarryforwardsconsistof$28.3million(netofavaluationallowanceof$2.8million)for2005and$27.8millionfor2004.thestatenetoperatinglossesexpire,ifnotutilized,invaryingamountsfrom2006to2022.

thecompany’sfederalandstateincometaxreturnsaresubjecttoreviewandexaminationbygovernmentauthorities.Variousexaminationsarenowinprogress.intheopinionofmanagement,anyfutureadjustmentswhichmayresultfromtheseexaminationsshouldnothaveamaterialeffectonthecompany’sconsolidatedfinancialstatements.

note16•employeeBenefitplanssuntrustsponsorsvariousincentiveplansforeligibleemployees.themanagementincentiveplanforkeyemployeesprovidesforannualcashawards,ifany,basedontheattainmentofthecompanyprofitplanandtheachievementofbusinessunit,aswellas,individualperformanceobjectives.theperformanceunitplan(“pup”)forkeyexecutivesprovidescashawards,ifany,basedonmulti-yearearningsperformanceinrelationtoearningsgoalsestablishedbythecompensationcommittee(“committee”)ofthecompany’sboardofdirectors.

thecompanyprovidesstock-basedawardsthroughthesuntrustbanks,inc.2004stockplan(“stockplan”)underwhichthecommitteehastheauthoritytograntstockoptions,restrictedstock,andperfor-mance-basedrestrictedstock(“performancestock”)tokeyemployeesofthecompany.underthe2004stockplan,atotalof14millionsharesofcommonstockisauthorizedandreservedforissuance,ofwhichnomorethan2.8millionsharesmaybeissuedasrestrictedstock.stockoptionsaregrantedatapricewhichisnolessthanthefairmarketvalueofashareofsuntrustcommonstockonthegrantdateandmaybeeithertax-quali-fiedincentivestockoptionsornon-qualifiedstockoptions.priorto2002,thecompanydidnotrecordexpenseasaresultofthegrantorexerciseofanyofthestockoptions.effectiveJanuary1,2002,thecompanyadoptedprospectivelythefairvaluerecognitionapproachandbeganexpensingthecostofstockoptions.

withrespecttocurrentlyoutstandingperformancestock,sharesmustbegranted,awardedandvestedbeforeparticipantstakefulltitle.

afterperformancestockisgrantedbythecommittee,specifiedportionsareawardedbasedonincreasesintheaveragepriceofsuntrustcommonstockabovetheinitialpricespecifiedbythecommittee.awardsaredis-tributedontheearliestof(i)fifteenyearsafterthedatesharesareawardedtoparticipants;(ii)theparticipantattainingage64;(iii)deathordisabilityofaparticipant;or(iv)achangeincontrolofthecompanyasdefinedinthestockplan.dividendsarepaidonawardedbutunvestedperformancestock,andparticipantsmayexercisevotingprivilegesonsuchshares.

thecompensationelementforperformancestock(whichisdeferredandshownasareductionofshareholders’equity)isequaltothefairmar-ketvalueofthesharesatthedateoftheawardandisamortizedtocom-pensationexpenseovertheperiodfromtheawarddatetoage64orthe15thanniversaryoftheawarddatewhichevercomesfirst.approximately40%ofperformancestockawardedbecamefullyvestedonfebruary10,2000andisnolongersubjecttotheforfeitureconditionsetforthintheoriginalagreements.thisearly-vestedperformancestockwasconvertedintoanequalnumberof“phantomstockunits”asofthatdate.paymentofphantomstockunitswillbemadetoparticipantsinsharesofsuntrustcommonstockupontheearliertooccurof(1)thedateonwhichtheparticipantwouldhavevestedinhisorherperformancestockor(2)thedateofachangeincontrol.dividendequivalentswillbepaidatthesamerateasthesharesofperformancestock;however,theseunitswillnotcarryvotingprivileges.

compensationexpenserelatedtotheincentiveplansforthethreeyearsendeddecember31wereasfollows:(dollarsinthousands) 2005 2004 2003401(k)plan $60,560 $49,046 $44,090managementincentiveplanandperformanceunitplan 57,289 55,027 29,849performanceandrestrictedstock 9,190 8,515 5,475



thefollowingtablepresentsinformationonstockoptionsandperformanceandrestrictedstock:

stockoptions performanceandrestrictedstock weighted weighted average deferred average(dollarsinthousandsexceptpersharedata) shares pricerange exerciseprice shares compensation grantpriceBalance,January1,2003 11,742,908 $13.96–$76.50 $57.56 2,687,492 $28,862 $—granted 3,818,050 54.28– 69.90 54.48 198,985 11,040 55.48exercised/vested (777,087) 6.96– 65.25 36.14 (22,930) — —cancelled/expired/forfeited (795,225) 21.03– 73.06 61.50 (100,382) (4,787) —acquisitionoflighthouse financialservices,inc. 175,417 6.96– 22.75 13.32 — — —amortizationofcompensation element — — — — (5,475) —Balance,December31,2003 14,164,063 6.96– 76.50 57.14 2,763,165 29,640 —granted 4,013,523 65.33– 73.19 73.07 271,844 19,062 70.13exercised/vested (2,046,298) 6.96– 73.06 45.89 (148,026) — —cancelled/expired/forfeited (529,229) 45.23– 73.19 64.79 (72,667) (3,676) —acquisitionofncf 5,830,146 12.85– 67.64 46.89 — — —amortizationofcompensation element — — — — (8,515) —Balance,December31,2004 21,432,205 6.96– 76.50 58.21 2,814,316 36,511granted 4,064,417 70.60– 74.25 73.12 79,353 5,685 71.91exercised/vested (3,046,871) 6.96– 73.19 45.86 (449,045) — —cancelled/expired/forfeited (659,296) 12.85– 73.40 66.75 (117,655) (6,784) —amortizationofcompensation element — — — — (9,190) —Balance,December31,2005 21,790,455 $14.18–$76.50 $62.46 2,326,969 $26,222exercisable,December31,2005 11,123,240 $57.61availableforadditionalgrant, December31,20051 10,919,2631includes2.8millionsharesavailabletobeissuedasrestrictedstock.

thefollowingtablepresentsinformationonstockoptionsbyrangesofexercisepriceatdecember31,2005:

optionsoutstanding optionsexercisable weighted weighted weighted number average averageremaining number averagerangeofexerciseprices outstanding exerciseprice contractuallife(years) exercisable exerciseprice$14.18to$49.61 2,011,282 $40.18 3.86 2,011,282 $40.18 49.75to64.57 9,617,546 56.36 5.97 6,439,996 57.34 64.73to76.50 10,161,627 72.63 7.26 2,671,962 71.37 21,790,455 $62.46 6.38 11,123,240 $57.61

effectiveJanuary1,2002,thecompanyadoptedthefairvaluerecognitionprovisionofsfasno.123andappliedsfasno.123prospectivelytoallawardsgrantedafterJanuary1,2002.theeffectonnetincomeandearn-

ingspershareifthefairvaluebasedmethodhadbeenappliedtoallout-standingawardsineachperiodisasfollows:


(dollarsinthousands,exceptpersharedata) 2005 2004 2003netincome,asreported $1,987,239 $1,572,901 $1,332,297stock-basedemployeecompensationexpenseincludedin reportednetincome,netofrelatedtaxeffects 16,134 10,962 5,285totalstock-basedemployeecompensationexpense determinedunderfairvaluebasedmethodforallawards, netofrelatedtaxeffects (16,138) (15,846) (14,474)netincome,proforma $1,987,235 $1,568,017 $1,323,108earningpershare: diluted–asreported $5.47 $5.19 $4.73 diluted–proforma 5.47 5.17 4.70 basic–asreported 5.53 5.25 4.79 basic–proforma 5.53 5.24 4.75

theweightedaveragefairvaluesofoptionsgrantedduring2005,2004,and2003were$8.10,$8.40,and$5.80pershare,respectively.thefairvalueofeachoptiongrantisestimatedonthedateofgrantusingtheblack-scholesoptionpricingmodelwiththefollowingassumptions:

2005 2004 2003expecteddividendyield 2.81% 2.54% 3.20%expectedstockpricevolatility 11.98 12.98 14.51risk-freeinterestrate(weightedaverage) 3.62 3.10 2.96expectedlifeofoptions 5years 5years 5years

suntrustmaintainsadefinedcontributionplanthatoffersadollarfordollarmatchonthefirst3%and$.50centsoneachdollarforthe4thand5thper-cents.thereisamaximummatchof4%ofeligiblewagesforcontributionsof5%ormoreinthesuntrustbanks,inc.401(k)plan.

suntrustmaintainsafunded,noncontributoryqualifiedretirementplancoveringallemployeesmeetingcertainservicerequirements.theplanprovidesbenefitsbasedonsalaryandyearsofservice.suntrustcontributed$30milliontothisplanin2004tomaintainawell-fundedpositionandmanagecoststax-efficiently.duetosuntrust’spracticeofcontributingthemaximumtaxdeductiblecontributioneachyear,theplanwasfullyfundedatthebeginningof2005,andnotaxdeductiblecontributionswereper-mitted.suntrustwillcontinuetoreviewthefundedstatusoftheplanandmakeadditionalcontributionsaspermittedbylaw.itisanticipatedthatnocontributionswillberequiredduring2006.

onoctober1,2004,suntrustacquiredncf.priortotheacquisition,ncfsponsoredafundedqualifiedretirementplan,anunfundednonquali-fiedretirementplanforsomeofitsparticipants,andcertainpostretirementhealthbenefitsforitsemployees.effectivedecember31,2004,participantsnolongerearnedfutureserviceinthencfretirementplan(qualifiedplan),andparticipants’benefitswerefrozenwiththeexceptionofadjustmentsforpayincreasesafter2004.allformerncfemployeeswhomettheser-vicerequirementsbegantoearnbenefitsinthesuntrustretirementplaneffectiveJanuary1,2005.thencfretirementplanwasfullyfundedatthebeginningofbothfiscalyears2004and2005;therefore,notaxdeductiblecontributionswerepermitted.itisanticipatedthatnocontributionswillberequiredduringfiscalyear2006.

suntrustalsomaintainsunfunded,noncontributorynon-qualifiedsupplementaldefinedbenefitpensionplansthatcoverkeyexecutivesofthecompany.theplansprovidedefinedbenefitsbasedonyearsofserviceandfinalaveragesalary.benefitsinthencfnon-qualifiedsupplementaldefinedbenefitpensionplanwerefrozeneffectivedecember31,2004.

suntrust’sobligationsforthesenon-qualifiedsupplementaldefinedbenefitpensionplansareshownseparatelyunderthe“supplementalretirementbenefits”sectionofthetables.

althoughnotundercontractualobligation,suntrustprovidescer-tainhealthcareandlifeinsurancebenefitstoretiredemployees(“otherpostretirementbenefits”inthetables).attheoptionofsuntrust,retireesmaycontinuecertainhealthandlifeinsurancebenefitsiftheymeetageandservicerequirementsforpostretirementbenefitswhileworkingforthecompany.thehealthcareplansarecontributorywithparticipantcontri-butionsadjustedannually;thelifeinsuranceplansarenoncontributory.aspartofabenefitstudyperformedin2002,suntrustrealignedthecostshar-ingofthepostretirementbenefitplanswithretireesandeliminatedpostretirementlifeinsurancebenefitsforemployeeswhoretireafterdecember31,2003.additionally,suntrustnolongersubsidizespost-65medi-calbenefitsforemployeeswhoretiredafterdecember31,2003.certainretireehealthbenefitsarefundedinaretireehealthtrust.inaddition,certainretireelifeinsurancebenefitsarefundedinaVoluntaryemployees’beneficiaryassociation(“Veba”).suntrustreservestherighttoamendorterminateanyofthebenefitsatanytime.

aspartofsuntrust’syearendassumptionsettingprocessin2005,suntrustauthorizedastudytoexaminerecentexperienceinitsplanpopu-lations.thescopeofthisstudyincludedanalysisoftheturnover,retirement,disability,medicalparticipation,andcompensationincreasesinthepastthreetofiveyears.ingeneral,theassumptionssuntrustusedasofyear-end2004wereconsistentwithrecentexperience.suntrustusedthestudytorefineitsturnoverandretirementassumptionstoreflectexpectationsforthefuture.suntrustalsoincreaseditscompensationincreaseassump-tionfrom4.0%asofyearend2004to4.5%asofyearend2005.inaddi-tion,suntrusthasupdateditsmortalitytablefrom1994groupannuitymortalitytoanrp2000table.



theaccumulatedbenefitobligationfortheretirementbenefitsattheendof2005and2004was$1.5billionand$1.4billion,respectively.forthesupplementalretirementbenefits,theaccumulatedbenefitobliga-

tionattheendof2005and2004was$106.8millionand$113.7million,respectively.

(dollarsinthousands) 1%increase 1%decreaseeffectonpostretirementbenefitobligation $8,875 ($7,903)

assumedhealthcarecosttrendrateshaveasignificanteffectontheamountsreportedforthepostretirementplans.asofdecember31,2005,suntrustassumedthatretireehealthcarecostswillincreaseataninitialrateof10.50%peryear.suntrustassumedahealthcarecosttrendthatrec-ognizesexpectedmedicalinflation,technologyadvancements,risingcost

ofprescriptiondrugs,regulatoryrequirementsandmedicarecostshifting.suntrustexpectsthisannualcostincreasetodecreaseovera5-yearperiodto5.25%peryear.duetochangingmedicalinflation,itisimportanttounderstandtheeffectofaone-percentpointchangeinassumedhealthcarecosttrendrates.theseamountsareshownbelow:

thechangeinbenefitobligationsfortheyearsendeddecember31wasasfollows: supplemental other retirementbenefits retirementbenefits postretirementbenefits(dollarsinthousands) 2005 2004 2005 2004 2005 2004benefitobligation,beginningofyear $1,570,728 $1,268,690 $127,969 $100,436 $182,291 $176,400servicecost 63,604 50,085 2,130 1,713 3,034 2,277interestcost 94,494 82,084 5,718 5,082 9,921 9,803planparticipants’contributions — — — — 15,400 14,122amendments — — 4,510 1,883 — —actuarialloss(gain) 93,889 77,448 11,080 10,333 9,390 (4,860)ncfacquisition — 149,297 — 11,713 3,079 14,056benefitspaid (95,433) (56,876) (28,709) (3,191) (31,916) (29,507)benefitobligation,endofyear $1,727,282 $1,570,728 $122,698 $127,969 $191,199 $182,291

supplemental other

(weightedaverageassumptionsusedto retirementbenefits retirementbenefits postretirementbenefitsdeterminebenefitobligations,endofyear) 2005 2004 2005 2004 2005 2004discountrate 5.68% 5.90% 5.56% 4.59% 5.45% 5.35%rateofcompensationincrease 4.50 4.00 4.50 4.00 n/a n/a

adiscountrateisusedtodeterminethepresentvalueoffutureben-efitobligations.thediscountrateforeachplanisdeterminedbymatchingtheexpectedcashflowsofeachplantoayieldcurvebasedonlongterm,highqualityfixedincomedebtinstrumentsavailableasofthemeasure-mentdate.astringofbenefitpaymentsprojectedtobepaidbytheplanforthenext100yearsisdevelopedbasedonmostrecentcensusdata,planprovisionsandassumptions.thebenefitpaymentsateachfuturematurityarediscountedbytheyear-appropriatespotinterestrates(whicharedevel-opedfromayieldcurveofapproximately500aaqualitybondswithsimilarmaturitiesasthebenefitpayments).themodelthensolvesfortheconstantdiscountratethatproducesthesamepresentvalueoftheprojectedbenefitpaymentsasgeneratedbydiscountingeachyear’spaymentsbythespotrate.thisassumptionisreviewedbythesuntrustbenefitplancommitteeandupdatedeveryyearforeachplan.

arateofcompensationgrowthisusedtodeterminefuturebenefitobligationsforthoseplanswhosebenefitsvarybypay.basedona2005studyofrecentsuntrustsalaryincreaseexperienceandprojectionsofrealinflation,wagegrowth,andmeritincreases,suntrusthasincreaseditscompensationincreaseassumptionfrom4.0%to4.5%fromyearend2004toyearend2005.

actuarialgainsandlossesarecreatedwhenactualexperiencedeviatesfromassumptions.themainsourcesofactuariallossesfor2005resultfromlowerdiscountrates,highersalaryincreaseassumptions,changesmadetorefineturnoverandretirementassumptions,andtheuseofamorecurrentmortalitytable.


indecember2003,themedicareprescriptiondrug,improvementandmodernizationactof2003(the“act”)wasenacted.theactestablishedaprescriptiondrugbenefitundermedicare,knownas“medicarepartd,”andafederalsubsidytosponsorsofretireehealthcarebenefitplansthatprovideaprescriptiondrugbenefitthatisatleastactuariallyequivalenttomedicarepartd.

inmay2004,thefasbissuedfspno.106-2,“accountinganddisclosurerequirementsrelatedtothemedicareprescriptiondrug,improvementandmodernizationact(“fsp106-2”).fsp106-2providesdefinitiveguidanceontherecognitionoftheeffectsoftheactandrelated

disclosurerequirementsforemployersthatsponsorprescriptiondrugben-efitplansforretirees.inthequarterbeginningJuly1,2004,thecompanyadoptedfsp106-2retroactivelytoJanuary1,2004.theexpectedsubsidyreducedtheaccumulatedpostretirementbenefitobligation(“apbo”)asofJanuary1,2004by$9.7million,andnetperiodiccostfor2004by$1.6million,ascomparedtotheamountcalculatedwithoutconsideringtheeffectsofthesubsidy.accordingly,adoptionoffsp106-2in2004reducedtheJanuary1,2005apboby$10.9million,andnetperiodiccostfor2005by$1.5million.

target percentageofplan allocation1 assetsatdecember312

assetcategory 2006 2005 2004equitysecurities 70–80% 79% 78%debtsecurities 20–25 19 18realestate — — 1cashequivalents 0–5% 2 3total 100% 100%1suntrustretirementplanonly.

2suntrustandncfretirementplans.

employercontributionsandbenefitspaidintheabovetableincludeonlythoseamountscontributeddirectlytopayparticipants’planben-efitsoraddedtoplanassetsin2005and2004,respectively.supplementalretirementplansarenotfundedthroughplanassets.

theassetallocationforthesuntrustandncfretirementplansattheendof2005and2004,andthetargetallocationfor2006,byassetcat-

egory,follow.thefairvalueofplanassets(inthousands)fortheseplansis$1,870,310and$1,878,771attheendof2005and2004,respectively.theexpectedlong-termrateofreturnontheseplanassetswas8.50%in2005and2004.

atdecember31,2005,therewasnosuntrustcommonstockheldinthesuntrustandncfretirementplans.atdecember31,2004,equitysecuri-tiesincludesuntrustcommonstockof$17.3million,or0.9%oftotalplanassets.

thesuntrustbenefitplancommittee,whichincludesseveralmem-bersofseniormanagement,establishesinvestmentpoliciesandstrate-giesandformallymonitorstheperformanceofthefundsonaquarterlybasis.thecompany’sinvestmentstrategywithrespecttopensionassetsistoinvesttheassetsinaccordancewiththeemployeeretirementincomesecurityactandfiduciarystandards.thelong-termprimaryobjectivesfortheretirementplanareto(1)provideforareasonableamountoflong-termgrowthofcapital,manageexposuretorisk;andprotecttheassetsfromero-sionofpurchasingpower,and(2)provideinvestmentresultsthatmeetor

exceedtheretirementplan’sactuariallyassumedlong-termrateofreturn.rebalancingoccursonaperiodicbasistomaintainthetargetallocation,butnormalmarketactivitymayresultindeviations.

theinvestmentstrategyfortheotherpostretirementbenefitplansismaintainedseparatelyfromthestrategyfortheretirementplan.thecompany’sinvestmentstrategyistocreateastreamofinvestmentreturnsufficienttoprovideforcurrentandfutureliabilitiesatareasonablelevelofrisk.theexpectedlong-termrateofreturnontheseassetswas8.5%in2005and2004.

theassetallocationfortheotherpostretirementbenefitplansattheendof2005and2004,andtargetallocationfor2006,byassetcategory,areasfollows:

thechangeinplanassetsfortheyearsendeddecember31wasasfollows: other retirementbenefits postretirementbenefits(dollarsinthousands) 2005 2004 2005 2004fairvalueofplanassets,beginningofyear $1,878,771 $1,551,232 $154,565 $148,229actualreturnonplanassets 86,972 188,790 (2,871) 7,283acquisition — 165,625 — —employercontributions — 30,000 26,132 14,438planparticipants’contributions — — 15,400 14,122benefitspaid (95,433) (56,876) (31,916) (29,507)fairvalueofplanassets,endofyear $1,870,310 $1,878,771 $161,310 $154,565



funDeDStatuSthefundedstatusoftheplans,reconciledtotheconsolidatedbalancesheets,isasfollows:

supplemental other retirementbenefits retirementbenefits postretirementbenefits(dollarsinthousands) 2005 2004 2005 2004 2005 2004fairvalueofplanassets $1,870,310 $1,878,771 $— $— $161,310 $154,565benefitobligations (1,727,282) (1,570,728) (122,698) (127,969) (191,199) (182,291)fundedstatus 143,028 308,043 (122,698) (127,969) (29,889) (27,726)amountsnotyetrecognized:unrecognizednetloss 589,261 448,447 41,062 47,170 85,355 71,000unrecognizedpriorservicecost 1,837 1,357 14,364 12,388 — —unrecognizednettransitionobligation — — — — 16,251 18,573netamountrecognized $734,126 $757,847 ($67,272) ($68,411) $71,717 $61,847

atdecember31,2005,thetotaloutstandingunrecognizednetlosstoberecognizedinfutureyearsforallretirementandpostretirementbenefitswas$715.7million.thekeysourcesofthecumulativenetlossesareattrib-utableto(1)sustaineddecreasesinthediscountrateforthepastseveralyears,(2)recentcompensationincreaseswhichhaveexceededexpectations

andresultedintheincreaseinthesalaryincreaseassumptionatdecember31,2005,and(3)investmentlossesin2000through2002havenotbeenfullyoffsetbyrecentinvestmentgains.asdiscussedpreviously,suntrustreviewsitsassumptionsannuallytoensuretheyrepresentbestestimatesforthefutureandwill,therefore,minimizefuturegainsandlosses.

supplemental other retirementbenefits retirementbenefits postretirementbenefits(dollarsinthousands) 2005 2004 2005 2004 2005 2004prepaidbenefitcost $734,126 $757,847 $— $— $71,717 $61,847accruedbenefitcost — — (67,272) (68,411) — —additionalminimumliability — — (39,466) (45,303) — —intangibleasset — — 14,364 12,388 — —accumulatedothercomprehensive income,beforetaxes — — 25,102 32,915 — —netamountrecognized $734,126 $757,847 ($67,272) ($68,411) $71,717 $61,847

pensionplanswithanaccumulatedbenefitobligation,inexcessofplanassetsatdecember31wereasfollows:

supplemental retirementbenefits(dollarsinthousands) 2005 2004projectedbenefitobligation $122,698 $127,969accumulatedbenefitobligation 106,791 113,714

target percentageofplan allocation assetsatdecember31assetcategory 2006 2005 2004equitysecurities 35–50% 49% 45%debtsecurities 50–65 31 42other 20 13total 100% 100%

acontributionof$25.5millionwasmadeondecember30,2005andinvestedinashort-termfund.equitysecuritiesdonotincludesuntrustcommonstockfortheotherpostretirementbenefitplans.


netperioDiccoStcomponentsofnetperiodicbenefitcostwereasfollows: supplemental other retirementbenefits retirementbenefits postretirementbenefits(dollarsinthousands) 2005 2004 2003 2005 2004 2003 2005 2004 2003servicecost $63,604 $50,085 $43,071 $2,130 $1,713 $1,520 $3,034 $2,277 $2,515interestcost 94,494 82,084 74,574 5,718 5,082 4,991 9,921 9,803 10,823expectedreturnonplanassets (156,426) (134,625) (111,656) — — — (8,880) (8,606) (8,489)amortizationofpriorservicecost (480) (480) (443) 2,533 1,992 1,941 — — —recognizednetactuarialloss 37,129 37,910 57,307 6,229 4,751 4,358 6,833 5,554 6,840amortizationofinitialtransition obligation — — — — — 44 2,322 2,322 2,322other (14,600) — — 10,998 — — 3,032 — —netperiodicbenefitcost $23,721 $34,974 $62,853 $27,608 $13,538 $12,854 $16,262 $11,350 $14,011weighted-averageassumptions usedtodeterminenetcostdiscountrate 5.90% 6.25% 6.75% 4.53%1 4.91% 6.75% 5.35% 6.25% 6.75%expectedreturnonplanassets 8.50 8.50 8.75 n/a n/a n/a 6.00 6.00 6.25rateofcompensationincrease 4.00 3.50 3.50 4.00 3.50 3.50 n/a n/a n/a1theweightedaverageshownfor2005istheweightedaveragediscountrateofallnonqualifiedplansasofthebeginningofthefiscalyear.interimremeasurementswererequiredduring2005duetosettlements(i.e.,largelumpsumpaymentsoccurring).thediscountrateasofeachremeasurementdatewasselectedbasedontheeconomicenvironmentasofthatdate.

expecteDcaShflowSinformationabouttheexpectedcashflowsforthepensionandotherpostretirementbenefitplansfollows:

supplemental otherpostretirement Valuetocompany retirement retirement benefits(excluding ofexpected(dollarsinthousands) benefits1 benefits2 medicaresubsidy)3 medicaresubsidyemployercontributions2006(expected)toplantrusts $50,000 $— $15,002 ($965)2006(expected)toplanparticipants — 8,075 — —expectedBenefitpayments2006 78,144 8,075 16,985 (965)2007 83,191 9,624 17,567 (999)2008 88,871 15,877 17,930 (1,022)2009 95,141 13,217 18,344 (1,026)2010 102,254 15,014 18,609 (1,015)2011–2015 639,303 48,100 90,518 (4,646)1atthistime,suntrustanticipatescontributionstotheretirementplanmaybepermitted(butnotrequired)during2006basedonthefundedstatusoftheplanandcontributionlimitationsundertheemployeeretirementincomesecurityactof1974(erisa).suntrustexpectstomakeacontributionupto$50millionnottoexceedirssection404limits.

2theexpectedbenefitpaymentsforthesupplementalretirementplanwillbepaiddirectlyfromsuntrustcorporateassets.

3the2006expectedcontributionfortheotherpostretirementbenefitsplansrepresenttheexpectedbenefitpaymentsunderthemedicalplansonly.notethatexpectedbenefitsunderotherpostretirementbenefitsplansareshownnetofparticipantcontributions.

basedonaten-yearcapitalmarketprojectionofthetargetassetalloca-tionsetforthintheinvestmentpolicyforthesuntrustandncfretirementplans,thepre-taxexpectedrateofreturnonplanassetswas8.50%in2005and2004.suntrustwillleavethereturnonassetassumptionat8.50%for2006fortheretirementplans.suntrustwilllowerthereturnonassetassumptionto7.50%for2006fortheotherpostretirementbenefitplans.

inaddition,suntrustsetspensionassetvaluesequaltotheirmarketvalue,incontrasttotheuseofasmoothedassetvaluethatincorporatesgainsandlossesoveraperiodofyears.utilizationofmarketvalueofassetsprovidesamorerealisticeconomicmeasureoftheplan’sfundedstatusandcost.

assumeddiscountratesandexpectedreturnsonplanassetsaffecttheamountsofnetperiodicpensioncostreported.a25basispointdecrease

inthediscountrateorexpectedlong-termreturnonplanassetswouldincreasetheretirementbenefitsnetperiodicbenefitcostapproximately$13millionand$5million,respectively.

assumedhealthcarecosttrendrateshaveasignificanteffectontheamountsreportedforthehealthcareplan.aone-percentage-pointchangeintheassumedhealthcarecosttrendrateswouldhavehadthefollowingeffectinfiscal2005:

(dollarsinthousands) 1%increase 1%decreaseeffectontotalofserviceand interestcost $501 ($446)



note17•Derivativesandoff-BalanceSheetarrangementsinthenormalcourseofbusiness,thecompanyutilizesvariousfinancialinstrumentstomeettheneedsofclientsandtomanagethecompany’sexposuretointerestrateandothermarketrisks.thesefinancialinstru-ments,whichconsistofderivativescontractsandcredit-relatedarrange-ments,involve,tovaryingdegrees,elementsofcreditandmarketriskinexcessoftheamountrecordedontheconsolidatedbalancesheetsinaccor-dancewithgenerallyacceptedaccountingprinciples.

creditriskrepresentsthepotentiallossthatmayoccurbecauseapartytoatransactionfailstoperformaccordingtothetermsofthecon-tract.marketriskisthepossibilitythatachangeinmarketpricesmaycausethevalueofafinancialinstrumenttodecreaseorbecomemorecostlytosettle.thecontract/notionalamountsoffinancialinstruments,whicharenotincludedintheconsolidatedbalancesheets,donotnecessarilyrepre-sentcreditormarketrisk.however,theycanbeusedtomeasuretheextentofinvolvementinvarioustypesoffinancialinstruments.

thecompanymanagesthecreditriskofitsderivativesandunfundedcommitmentsbylimitingthetotalamountofarrangementsoutstandingbyindividualcounterparty,bymonitoringthesizeandmaturitystructureoftheportfolio,byobtainingcollateralbasedonmanagement’screditassess-mentofthecounterparty,andbyapplyinguniformcreditstandardsmain-tainedforallactivitieswithcreditrisk.collateralheldvariesbutmayincludemarketablesecurities,accountsreceivable,inventory,property,plantandequipment,andincome-producingcommercialproperties.collateralmaycovertheentireexpectedexposurefortransactionsormaybecalledforwhencreditexposureexceedsdefinedthresholdsofcreditrisk.inaddition,thecompanyentersintomasternettingagreementswhichincorporatetherightofsetofftoprovideforthenetsettlementofcoveredcontractswiththesamecounterpartyintheeventofdefaultorotherterminationoftheagreement.

DerivativeSthecompanyentersintovariousderivativecontractsbothinadealercapacity,tofacilitateclienttransactions,andalsoasariskmanagementtool.wherecontractshavebeencreatedforclients,thecompanyentersintotransactionswithdealerstooffsetitsriskexposure.derivativesarealsousedasariskmanagementtooltohedgethecompany’sexposuretochangesininterestratesorotherdefinedmarketrisks.

interestrateswapsarecontractsinwhichaseriesofinterestratecashflows,basedonaspecificnotionalamountandafixedandfloatinginterestrate,areexchangedoveraprescribedperiod.capsandfloorsarecontractsthattransfer,modify,orreduceinterestrateriskinexchangeforthepay-mentofapremiumwhenthecontractisissued.thetruemeasureofcreditexposureisthereplacementcostofcontractsthathavebecomefavorabletothecompany.

futuresandforwardsarecontractsforthedelayeddeliveryofsecuri-tiesormoneymarketinstrumentsinwhichtheselleragreestodeliveronaspecifiedfuturedate,aspecifiedinstrument,ataspecifiedpriceoryield.thecreditriskinherentinfuturesistheriskthattheexchangepartymaydefault.futurescontractssettleincashdaily;thus,thereisminimalcreditrisktothecompany.thecreditriskinherentinforwardsarisesfromthepotentialinabilityofcounterpartiestomeetthetermsoftheircontracts.bothfuturesandforwardsarealsosubjecttotheriskofmovementsininter-estratesorthevalueoftheunderlyingsecuritiesorinstruments.

derivativeinstrumentsexposethecompanytocreditandmarketrisk.ifthecounterpartyfailstoperform,thecreditriskisequaltothefairvaluegainofthederivative.whenthefairvalueofaderivativecontractispositive,thisindicatesthecounterpartyowesthecompany,andthere-fore,createsarepaymentriskforthecompany.whenthefairvalueofaderivativecontractisnegative,thecompanyowesthecounterpartyandhasnorepaymentrisk.thecompanyminimizesthecreditorrepaymentriskinderivativeinstrumentsbyenteringintotransactionswithhighqual-itycounterpartiesthatarereviewedperiodicallybythecompany’screditcommittee.thecompanyalsomaintainsapolicyofrequiringthatallderivativecontractsbegovernedbyaninternationalswapsandderivativesassociationsmasteragreement;dependingonthenatureofthederivativetransactions,bilateralcollateralagreementsmayberequiredaswell.whenthecompanyhasmorethanoneoutstandingderivativetransactionwithasinglecounterparty,andthereexistsalegallyenforceablemasternettingagreementwiththecounterparty,themarktomarketexposureisthenetofthepositiveandnegativeexposureswiththesamecounterparty.whenthereisanetnegativeexposure,thecompanyconsidersitsexposuretothecounterpartytobezero.thenetmarktomarketpositionwithaparticularcounterpartyrepresentsareasonablemeasureofcreditriskwhenthereisalegallyenforceablemasternettingagreement,includingalegalrightofsetoffofreceivableandpayablederivativecontractsbetweenthecompanyandacounterparty.

marketriskistheadverseeffectthatachangeininterestrates,cur-rencyorimpliedvolatilityrateshasonthevalueofafinancialinstrument.thecompanymanagesthemarketriskassociatedwithinterestrate,credit,andequityderivativesandforeignexchangecontractsbyestablishingandmonitoringlimitsonthetypesanddegreeofriskthatmaybeunder-taken.thecompanycontinuallymeasuresthisriskbyusingavalue-at-riskmethodology.

fairvalueheDgeSthecompanyentersintointerestrateswapstoconvertfixedrateassetsandliabilitiestofloatingrates.fortheyearsendeddecember31,2005and2004,thecompanyrecognizedadditionalincomeinthenetinterestincomeof$89.2millionand$197.7million,respectively,relatedtocashpaymentsfromnetsettlementsandincomeaccruedfrominterestrateswapsaccountedforasfairvaluehedges.thishedgingstrategyresultedinzeroineffectivenessfortheyearsendeddecember31,2005and2004.

thecompanymaintainsariskmanagementprogramtomanageinterestrateriskandpricingriskassociatedwithitsmortgagelendingactiv-ities.theriskmanagementprogramincludestheuseofforwardcontractsthatarerecordedinthefinancialstatementsatfairvalueandareusedtooffsetchangesinvalueofthemortgageinventoryduetochangesinmarketinterestrates.aportionoftheforwardcontractshavebeendocumentedasfairvaluehedgesofspecificpoolsofloansthatmeetthesimilarassetstestasdescribedinsfasno.133,andthequalifyingpoolsofhedgedloansarerecordedinthefinancialstatementsattheirfairvalue.thepoolsofloansarematchedwithacertainportionoftheforwardcontractssothattheexpectedchangesinmarketvaluewillinverselyoffsetwithinarangeof80%to125%.thishedgingstrategyresultedinineffectivenessthatreducedearningsby$40.4millionand$50.0millionfortheyearsendeddecember31,2005and2004,respectively.theimpactofthehedgeineffectivenessis


substantiallyoffsetbyhigherlevelsofnetinterestincomefromholdingfirstmortgageloans.

caShflowheDgeSthecompanyusesvariousinterestrateswapstoconvertfloatingrateassetsandliabilitiestofixedrates.specifictypesoffundingandprincipalamountshedgedweredeterminedbasedonprevailingmarketconditionsandthecurrentshapeoftheyieldcurve.thetermsandnotionalamountsoftheswapsaredeterminedbasedonmanagement’sassessmentoffutureinterestrates,aswellasotherfactors.

fortheyearsendeddecember31,2005and2004,thecompanyrecognizedinterestincomeof$15.2andinterestexpenseof$46.2mil-lion,respectively,relatedtointerestrateswapsaccountedforascashflowhedges.thishedgingstrategyresultedinineffectivenessthatreducedearn-ingsby$2.4millionfortheyearendeddecember31,2005andresultedinzeroineffectivenessfortheyearendeddecember31,2004.

gainsandlossesonderivativecontractsthatarereclassifiedfromaccumulatedothercomprehensiveincometocurrentperiodearningsareincludedinnetinterestincome.asofdecember31,2005,$16.8million,netoftaxes,ofthedeferrednetlossesonderivativeinstrumentsthatarerecordedinaccumulatedothercomprehensiveincomeareexpectedtobereclassifiedtointerestexpenseinthenexttwelvemonthsasderivativesmatureoraspaymentsaremade.

traDingactivitieSthecompanyentersintovariousderivativecontractsonbehalfofitscli-entsandforitsowntradingaccount.thesetradingpositionsprimarilyincludeinterestrateswaps,equityderivatives,creditdefaultswaps,futures,options,andforeigncurrencycontracts.thecompanymaintainspositions

ininterestrateswapsforitsowntradingaccountaspartofitsoverallinter-estrateriskmanagementstrategy.foreignexchangederivativecontractsareusedtomanagethecompany’sforeigncurrencyexchangeriskandtoprovidederivativeproductstoclients.thecompanydoesnothaveanyhedgesofforeigncurrencyexposurewithintheguidelinesofsfasno.133.thecompanybuysandsellscreditprotectiontoclientsanddealersusingcreditdefaultswaps.thesederivativeinstrumentsallowthecompanytopayorreceiveastreamofpaymentsinreturnforreceivingorprovidingpro-tectionintheeventofdefault.thesederivativesareaccountedforastrad-ingassetsandliabilitiesandanygainorlossinmarketvalueisrecordedintradingincome.

creDit-relateDarrangeMentSinmeetingthefinancingneedsofitsclients,thecompanyissuescommit-mentstoextendcredit,standbyandotherlettersofcredit,andguarantees.foradditionalinformationregardingguarantees,whichincludesstandbyandotherlettersofcreditseenote18,guarantees.thecompanyalsoprovidessecuritieslendingservices.fortheseinstruments,thecontrac-tualamountofthefinancialinstrumentrepresentsthemaximumpoten-tialcreditriskifthecounterpartydoesnotperformaccordingtothetermsofthecontract.alargemajorityofthesecontractsexpirewithoutbeingdrawnupon.asaresult,totalcontractualamountsdonotrepresentactualfuturecreditexposureorliquidityrequirements.

commitmentstoextendcreditareagreementstolendtoaclientwhohascompliedwithpredeterminedcontractualconditions.commitmentsgenerallyhavefixedexpirationdatesandaresubjectedtothecompany’screditpolicystandards.asofdecember31,2005and2004,thecompanyhadoutstandingcommitmentstoextendcredittoitsclientstotaling$89.6billionand$73.2billion,respectively.

atDecember31,2005 atdecember31,2004 contractor contractor notionalamount notionalamount for creditrisk for creditrisk(dollarsinmillions) enduser clients amount enduser clients amountDerivativescontractsinterestratecontracts swaps $19,476 $49,296 $596 $17,459 $42,507 $478 futuresandforwards 16,843 3,750 — 8,649 1,512 — caps/floors 210 17,369 — 60 10,866 — totalinterestratecontracts $36,529 $70,415 $596 $26,168 $54,885 $478foreignexchangeratecontracts 186 5,249 99 — 6,020 78interestratelockcommitments 3,112 — — 3,793 — —commodityandothercontracts 1,567 7 292 1,549 468 179 totalderivativescontracts $41,394 $75,671 $987 $31,510 $61,373 $735credit-relatedarrangementscommitmentstoextendcredit $89,576 $89,576 $73,183 $73,183standbylettersofcreditand similararrangements 13,510 13,510 11,125 11,125 totalcredit-relatedarrangements $103,086 $103,086 $84,308 $84,308totalcreditriskamount $104,073 $85,043



when-iSSueDSecuritieSthecompanyentersintotransactionsinvolving“when-issuedsecurities.”when-issuedsecuritiesarecommitmentstopurchaseorsellsecuritiesauthorizedforissuancebutnotyetactuallyissued.accordingly,theyarenotrecordedontheconsolidatedbalancesheetsuntilissued.risksarisefromthepossibleinabilityofcounterpartiestomeetthetermsoftheircontractsandfrommovementsinsecuritiesvaluesandinterestrates.asofdecember31,2005and2004,thecompanydidnothaveanycommit-mentstopurchaseorsellwhen-issuedsecurities.

variaBleintereStentitieSanDoff-BalanceSheetarrangeMentSsuntrustassistsinprovidingliquiditytoselectcorporateclientsbydirect-ingthemtoamulti-sellercommercialpaperconduit,threepillarsfundingllc(“threepillars”).threepillarsprovidesfinancingfordirectpurchasesoffinancialassetsoriginatedandservicedbysuntrust’scorporateclients.threepillarsfinancesthisactivitybyissuinga-1/p-1ratedcommercialpaper.theresultisafavorablefundingarrangementfortheseclients.

threepillarshasissuedasubordinatednotetoathirdparty.theholderofthisnoteabsorbsthemajorityofthreepillars’expectedlosses.thesubordinatednoteinvestor,therefore,isthreepillars’primarybene-ficiary,andthusthecompanyisnotrequiredtoconsolidatethreepillars.asofdecember31,2005and2004,threepillarshadassetsnotincludedonthecompany’sconsolidatedbalancesheetsofapproximately$4.7bil-lionand$3.4billion,respectively,consistingofprimarilysecuredloansandmarketableasset-backedsecurities.

activitiesrelatedtothethreepillarsrelationshipgeneratednetfeerevenueforthecompanyofapproximately$25.2million,$24.2million,and$21.3millionfortheyearsendeddecember31,2005,2004,and2003,respectively.theseactivitiesinclude:clientreferralsandinvestmentrecom-mendationstothreepillars;theissuingofaletterofcredit,whichprovidespartialcreditprotectiontothecommercialpaperholders;andprovidingamajorityofthetemporaryliquidityarrangementsthatwouldprovidefund-ingtothreepillarsintheeventitcannolongerissuecommercialpaperorincertainothercircumstances.

asofdecember31,2005,off-balancesheetliquiditycommitmentsandothercreditenhancementsmadebythecompanytothreepillars,thesumofwhichrepresentsthecompany’smaximumexposuretopotentialloss,totaled$7.2billionand$707.1million,respectively,comparedto

$5.9billionand$548.7million,respectively,asofdecember31,2004.thecompanymanagesthecreditriskassociatedwiththesecommitmentsbysubjectingthemtothecompany’snormalcreditapprovalandmonitoringprocesses.

atdecember31,2005,thecompanyhadcontractualrelationshipswithasecuritizationvehiclethatisconsideredaVie.thecompanyistheprimarybeneficiaryoftheVieandtherefore,isrequiredtoconsolidateitsassetsandliabilities.asofdecember31,2005,theassetsofthisentity,whichserveascollateralfortheentity’sobligations,totaled$317.0mil-lionandarereflectedininterest-bearingdepositsinotherbanksontheconsolidatedbalancesheets.creditorsoftheViehavenorecoursetothegeneralcreditofthecompany.asofdecember31,2005,thecompany’smaximumexposuretopotentiallossforthisViewas$38.1million.

aspartofitscommunityreinvestmentinitiatives,thecompanyinvestsinmulti-familyaffordablehousingpropertiesthroughoutitsfoot-printasalimitedand/orgeneralpartner.thecompanyreceivesaffordablehousingfederalandstatetaxcreditsfortheselimitedpartnerinvest-ments.assetsinpartnershipswheresuntrustisonlyalimitedpartnerofapproximately$803.0millionand$884.2millionwerenotincludedintheconsolidatedbalancesheetsatdecember31,2005and2004,respec-tively.thecompany’smaximumexposuretolossfortheseinvestmentsatdecember31,2005totaled$166.0millionascomparedto$198.1millionatdecember31,2004,consistingofthelimitedpartnershipinvestmentsplusunfundedcommitments.

suntrustisthemanaginggeneralpartnerofanumberofnon-reg-isteredinvestmentlimitedpartnershipswhichhavebeenestablishedtoprovidealternativeinvestmentstrategiesforitsclients.inreviewingthepartnershipsforconsolidation,suntrustdeterminedthatthesewerevotinginterestentitiesandaccordinglyconsideredtheconsolidationguidancecon-tainedinemergingissuestaskforce(“eitf”)issueno.04-5,“determiningwhetherageneralpartner,orthegeneralpartnersasagroup,controlsalimitedpartnershiporsimilarentitywhenthelimitedpartnershavecertainrights.”underthetermsofsuntrust’snon-registeredinvestmentlimitedpartnerships,thelimitedpartnershipshavecertainrights,suchasthosespecificallyindicatedineitfissueno.04-5(includingtherighttoremovethegeneralpartner,or“kick-outrights”).assuch,suntrust,asthegeneralpartner,isprecludedfromconsolidatingthelimitedpartnerships.


note18•guaranteesthecompanyhasundertakencertainguaranteeobligationsintheordinarycourseofbusiness.infollowingtheprovisionsoffin45,thecompanymustconsiderguaranteesthathaveanyofthefollowingfourcharacteristics:(i)contractsthatcontingentlyrequiretheguarantortomakepaymentstoaguaranteedpartybasedonchangesinanunderlyingfactorthatisrelatedtoanasset,aliability,oranequitysecurityoftheguaranteedparty;(ii)contractsthatcontingentlyrequiretheguarantortomakepaymentstoaguaranteedpartybasedonanotherentity’sfailuretoperformunderanobligatingagreement;(iii)indemnificationagreementsthatcontingentlyrequiretheindemnifyingpartytomakepaymentstoanindemnifiedpartybasedonchangesinanunderlyingfactorthatisrelatedtoanasset,aliabil-ity,oranequitysecurityoftheindemnifiedparty;and(iv)indirectguaran-teesoftheindebtednessofothers.theissuanceofaguaranteeimposesanobligationforthecompanytostandreadytoperform,andshouldcertaintriggeringeventsoccur,italsoimposesanobligationtomakefuturepay-ments.paymentsmaybeintheformofcash,financialinstruments,otherassets,sharesofstock,orprovisionsofthecompany’sservices.thefol-lowingisadiscussionoftheguaranteesthatthecompanyhasissuedasofdecember31,2005and2004,whichhavecharacteristicsasspecifiedbyfin45.

letterSofcreDitlettersofcreditareconditionalcommitmentsissuedbythecompanygen-erallytoguaranteetheperformanceofaclienttoathirdpartyinborrow-ingarrangements,suchascommercialpaper,bondfinancingandsimilartransactions.thecreditriskinvolvedinissuinglettersofcreditisessentiallythesameasthatinvolvedinextendingloanfacilitiestoclientsandmaybereducedbysellingparticipationstothirdparties.thecompanyissueslet-tersofcreditthatareclassifiedaseitherfinancialstandby,performancestandby,orcommerciallettersofcredit.commerciallettersofcreditarespecificallyexcludedfromthedisclosureandrecognitionrequirementsoffin45.

asofdecember31,2005anddecember31,2004,themaximumpotentialamountofthecompany’sobligationwas$13.3billionand$11.0billion,respectively,forfinancialandperformancestandbylettersofcredit.thecompanyhasrecorded$113.8millionand$99.4millioninotherlia-bilitiesforunearnedfeesrelatedtotheselettersofcreditasofdecember31,2005anddecember31,2004,respectively.thecompany’soutstand-inglettersofcreditgenerallyhaveatermoflessthanoneyear.ifaletterofcreditisdrawnupon,thecompanymayseekrecoursethroughtheclient’sunderlyinglineofcredit.iftheclient’slineofcreditisalsoindefault,thecompanymaytakepossessionofthecollateralsecuringthelineofcredit.

contingentconSiDerationthecompanyhascontingentpaymentobligationsrelatedtocertainbusi-nesscombinationtransactions.paymentsarecalculatedusingcertainpost-acquisitionperformancecriteria.thepotentialliabilityassociatedwiththesearrangementswasapproximately$163.0millionand$205.0millionasofdecember31,2005anddecember31,2004,respectively.ascontingentconsiderationinabusinesscombinationisnotsubjecttotherecognitionandmeasurementprovisionsoffin45,thecompanycurrentlyhasnoamountsrecordedfortheseguaranteesasofdecember31,2005.ifrequired,thesecontingentpaymentswouldbepayablewithinthenextfouryears.

otherinthenormalcourseofbusiness,thecompanyentersintoindemnifica-tionagreementsandprovidesstandardrepresentationsandwarrantiesinconnectionwithnumeroustransactions.thesetransactionsincludethosearisingfromunderwritingagreements,mergerandacquisitionagreements,loansales,contractualcommitments,andvariousotherbusinesstransac-tionsorarrangements.theextentofthecompany’sobligationsundertheseindemnificationagreementsdependsupontheoccurrenceoffutureevents;therefore,thecompany’spotentialfutureliabilityunderthesearrange-mentsisnotdeterminable.

thirdpartyinvestorsholdseriesbpreferredstockinstbrealestateholdings(atlanta),inc.(“stbreh”),asubsidiaryofsuntrust.thecontractbetweenstbrehandthethirdpartyinvestorscontainsanautomaticexchangeclausewhich,undercertaincircumstances,requirestheseriesbpreferredsharestobeautomaticallyexchangedforguaranteedpreferredbeneficialinterestindebenturesofthecompany.theguaranteedpreferredbeneficialinterestindebenturesareguaranteedtohavealiquidationvalueequaltothesumoftheissueprice,$350.0million,andanapproximateyieldof8.5%perannumsubjecttoreductionforanycashorpropertydividendspaidtodate.asofdecember31,2005anddecember31,2004,$492.9millionand$451.0millionwasaccruedinotherliabilitiesfortheprincipalandinterest,respectively.thisexchangeagreementremainsineffectaslongasanysharesofseriesbpreferredstockareownedbythethirdpartyinvestors,nottoexceed30yearsfromthefebruary25,2002dateofissu-anceoftheseriesbpreferredstock.

suntrustinvestmentservices,inc.(“stis”)andsuntrustcapitalmarkets,inc.(“stcm”),broker-dealeraffiliatesofsuntrust,useacommonthirdpartyclearingbrokertoclearandexecutetheirclients’securitiestrans-actionsandtoholdclients’accounts.undertheirrespectiveagreements,stisandstcmagreetoindemnifytheclearingbrokerforlossesthatresult



note19•concentrationsofcreditriskcreditriskrepresentsthemaximumaccountinglossthatwouldberecog-nizedatthereportingdateifborrowersfailedtoperformascontractedandanycollateralorsecurityprovedtobeofnovalue.concentrationsofcreditrisk(whetheron-oroff-balancesheet)arisingfromfinancialinstrumentscanexistinrelationtoindividualborrowersorgroupsofborrowers,certaintypesofcollateral,certaintypesofindustries,certainloanproducts,orcer-tainregionsofthecountry.creditriskassociatedwiththeseconcentrationscouldarisewhenasignificantamountofloans,relatedbysimilarcharacter-istics,aresimultaneouslyimpactedbychangesineconomicorothercon-ditionsthatcausetheirprobabilityofrepaymenttobeadverselyaffected.thecompanydoesnothaveasignificantconcentrationtoanyindividualclientexceptfortheu.s.governmentanditsagencies.themajorconcen-trationsofcreditriskforthecompanyarisebycollateraltypeinrelationtoloansandcreditcommitments.theonlysignificantconcentrationthatexistsisinloanssecuredbyresidentialrealestate.atdecember31,2005,

thecompanyhad$43.5billioninresidentialrealestateloans,represent-ing38.0%oftotalloans,andanadditional$15.7billionincommitmentstoextendcreditonsuchloans.thecompanyoriginatesandretainscertainresidentialmortgageloanproductsthatincludefeaturessuchasinterestonlyloans,highloantovalueloansandlowinitialinterestrateloans,whichcomprisedapproximately30%ofloanssecuredbyresidentialrealestate.theriskineachloantypeismitigatedandcontrolledbymanagingthetim-ingofpaymentshock,privatemortgageinsuranceandunderwritingguide-lines.ageographicconcentrationarisesbecausethecompanyoperatesprimarilyinthesoutheasternandmid-atlanticregionsoftheunitedstates.

suntrustengagesinlimitedinternationalbankingactivities.thecompany’stotalcross-borderoutstandingswere$412.8millionasofdecember31,2005.

fromaclient’sfailuretofulfilltheircontractualobligations.astheclear-ingbroker’srightstochargestisandstcmhavenomaximumamount,thecompanybelievesthatthemaximumpotentialobligationcannotbeestimated.however,tomitigateexposure,theaffiliatemayseekrecoursethroughcashorsecuritiesheldinthedefaultingclients’accounts.fortheyearendeddecember31,2005,suntrustexperiencedminimalnetlossesasaresultoftheindemnity.theclearingagreementsforstisandstcmexpireinmay2010.

thecompanyhasguaranteesassociatedwithcreditdefaultswaps,anagreementinwhichthebuyerofprotectionpaysapremiumtothesellerofthecreditdefaultswapforprotectionagainstaneventofdefault.eventsconstitutingdefaultundersuchagreementsthatwouldresultinthecompanymakingaguaranteedpaymenttoacounterpartymayinclude:(i)defaultofthereferencedasset;(ii)bankruptcyoftheclient;or(iii)restruc-

turingorreorganizationbytheclient.thenotionalamountoutstandingasofdecember31,2005anddecember31,2004was$664.2millionand$757.0million,respectively.asofdecember31,2005,thenotionalamountsexpireasfollows:$123.0millionin2006,$35.0millionin2007,$160.0millionin2008,$123.9millionin2009,$189.0millionin2010,and$33.3millionin2015.intheeventofdefaultunderthecontract,thecompanywouldmakeacashpaymenttotheholderofcreditprotectionandwouldtakedeliveryofthereferencedassetfromwhichthecompanymayrecoveraportionofthecreditloss.inaddition,therearecertainpurchasedcreditdefaultswapcontractsthatmitigateaportionofthecompany’sexposureonwrittencontracts.suchcontractsarenotincludedinthisdisclosuresincetheyrepresentbenefitsto,ratherthanobligationsof,thecompany.


thefollowingmethodsandassumptionswereusedbythecompanyinesti-matingthefairvalueoffinancialinstruments:• short-termfinancialinstrumentsarevaluedattheircarryingamounts

reportedintheconsolidatedbalancesheets,whicharereasonableesti-matesoffairvalueduetotherelativelyshortperiodtomaturityoftheinstruments.thisapproachappliestocashandcashequivalents,short-terminvestments,andcertainotherassetsandliabilities.

• tradingassetsandliabilitiesarepredominantlyvaluedatquotedmarketprices.ifquotedmarketpricesarenotavailable,fairvaluesarebasedonquotedmarketpricesofcomparableinstruments.fairvaluesforderiva-tivesarebasedonquotedmarketprices,currentsettlementvalues,pric-ingmodelsorotherformulas.

• securitiesavailableforsalearepredominantlyvaluedatquotedmarketprices.

• loansheldforsalearevaluedbasedonobservablecurrentmarketprices.• loansarevaluedonthebasisofestimatedfuturereceiptsofprincipaland

interest,discountedatratescurrentlybeingofferedforloanswithsimilar

termsandcreditquality.loanprepaymentsareusedtoadjustfuturecashflowsbasedonhistoricalpatterns.thecarryingamountofaccruedinter-estapproximatesitsfairvalue.

• mortgageservicingrightsarevaluedusingassumptionsthataresup-portedbymarketandeconomicdatacollectedfromvarioussources.

• depositliabilitieswithnodefinedmaturitysuchasdemanddeposits,now/moneymarketaccounts,andsavingsaccountshaveafairvalueequaltotheamountpayableondemandatthereportingdate,i.e.,theircarryingamounts.fairvaluesforcertificatesofdepositareestimatedusingadiscountedcashflowcalculationthatappliescurrentinterestratestoascheduleofaggregatedexpectedmaturities.theintangiblevalueoflong-termrelationshipswithdepositorsisnottakenintoaccountinestimatingfairvalues.

• fairvaluesforforeigndeposits,short-termborrowingsandlong-termdebtarebasedonquotedmarketpricesforsimilarinstrumentsoresti-matedusingdiscountedcashflowanalysisandthecompany’scurrentincrementalborrowingratesforsimilartypesofinstruments.

note20•fairvaluesoffinancialinstrumentsthefollowingtablepresentsthecarryingamountsandfairvaluesofthecompany’sfinancialinstrumentsatdecember31,2005and2004:

2005 2004 carrying fair carrying fair(dollarsinthousands) amount value amount Valuefinancialassets: cashandshort-terminvestments $6,305,606 $6,305,606 $5,488,939 $5,488,939 tradingassets 2,811,225 2,811,225 2,183,645 2,183,645 securitiesavailableforsale 26,525,821 26,525,821 28,941,080 28,941,080 loansheldforsale 13,695,613 13,729,065 6,580,223 6,579,482 loans 113,526,767 112,341,489 100,376,148 100,312,937 mortgageservicingrights 657,604 996,299 482,392 631,518financialliabilities: consumerandcommercialdeposits 97,572,382 97,460,001 92,109,695 92,132,281 brokereddeposits 15,644,932 15,589,723 6,100,911 6,101,412 foreigndeposits 8,835,864 8,835,573 5,150,645 5,150,645 short-termborrowings 12,312,157 12,311,568 11,405,380 11,405,380 long-termdebt 20,779,249 20,932,308 22,127,166 22,837,503 tradingliabilities 1,529,325 1,529,325 1,098,563 1,098,563



note21•contingenciesonJanuary11,2005,thesecissuedaformalorderofinvestigationandthesecstaffissuedsubpoenasseekingdocumentsrelatedtothecompany’sallowanceforloanandleaselossesandrelatedmatters.thecompanyiscooperating,andintendstocooperatewiththesecregard-ingthismatter.inaddition,thecompanyanditssubsidiariesarepartiestonumerousclaimsandlawsuitsarisinginthecourseoftheirnormalbusi-nessactivities,someofwhichinvolveclaimsforsubstantialamounts.thecompany’sexperiencehasshownthatthedamagesallegedbyplaintiffsorclaimantsaregrosslyoverstated,oftenunsubstantiatedby

legaltheory,andbearnorelationtotheultimateawardthatacourtmightgrant.inaddition,validlegaldefenses,suchasstatutesoflimitations,fre-quentlyresultinjudicialfindingsofnoliabilitybythecompany.becauseofthesefactors,wecannotprovideameaningfulestimateoftherangeofreasonablypossibleoutcomesofclaimsintheaggregateorbyindividualclaim.however,itistheopinionofmanagementthatliabilitiesarisingfromtheseclaimsinexcessoftheamountscurrentlyaccrued,ifany,willnothaveamaterialimpacttothecompany’sfinancialconditionorresultsofoperations.

note22•BusinessSegmentreportingthecompanyusesalineofbusinessmanagementstructuretomeasurebusinessactivities.thecompanyhasfiveprimaryfunctionallinesofbusi-ness:retail,commercial,corporateandinvestmentbanking,wealthandinvestmentmanagement,andmortgage.

theretaillineofbusinessincludesloans,deposits,andotherfee-basedservicesforconsumersandbusinessclientswithlessthan$5millioninsales(upto$10millioninsalesinlargermetropolitanmarkets).clientsareservicedthroughanextensivenetworkoftraditionalandin-storebranches,atms,theinternetandthetelephone.

thecommerciallineofbusinessprovidesenterpriseswithafullarrayoffinancialproductsandservicesincludingtraditionalcommerciallending,treasurymanagement,financialriskmanagement,andcorporatebankcard.thislineofbusinessprimarilyservesbusinessclientsbetween$5millionand$250millioninannualrevenuesandclientsspecializingincommercialrealestateactivities.

corporateandinvestmentbankingiscomprisedofthefollowingbusi-nesses:corporatebanking,investmentbanking,capitalmarketsbusinesses,commercialleasing,andmerchantbanking.thecorporatebankingstrat-egyisfocusedoncompanieswithrevenuesinexcessof$250millionandisorganizedalongindustryspecialtyandgeographiclines.

wealthandinvestmentmanagementprovidesafullarrayofwealthmanagementproductsandprofessionalservicestobothindividualandinstitutionalclients.wealthandinvestmentmanagement’sprimaryseg-mentsincludeprivatewealthmanagement(brokerageandindividualwealthmanagement)andinstitutionalinvestmentmanagementandadministration.

themortgagelineofbusinessoffersresidentialmortgageproductsnationallythroughitsretail,brokerandcorrespondentchannels.theseproductsareeithersoldinthesecondarymarketprimarilywithservicingrightsretainedorheldaswholeloansinthecompany’sresidentialloan

portfolio.thelineofbusinessservicesloansforitsownresidentialmortgageportfolioaswellasforothers.additionally,thelineofbusinessgeneratesrevenuethroughitstaxservicesubsidiary(Valutreerealestateservices,llc)anditscaptivereinsurancesubsidiary(cherokeeinsurancecompany).

inaddition,thecompanyreportscorporate/otherwhichincludestheinvestmentsecuritiesportfolio,long-termdebt,capital,short-termliquidityandfundingactivities,balancesheetriskmanagementincludingderivativehedgingactivities,officepremisesassets,provisionforincometax,andcertainsupportactivitiesnotcurrentlyallocatedtotheaforemen-tionedlinesofbusiness.anyinternalmanagementreportingtransactionsnotalreadyeliminatedintheresultsofthefunctionallinesofbusinessarereflectedinreconcilingitems.

thecompanycontinuestoaugmentitsinternalmanagementreport-ingsystem.currently,thelinesofbusinessreceivematchmaturityfundstransferpricingtocreatenetinterestincome,occupancyexpense(inclusiveofthecosttocarrytheassets),afullytaxable-equivalent(“fte”)gross-upontaxexemptloans,andvarioussupportcostssuchasoperationalsupportunits,humanresourcesandcorporatefinance.

futureenhancementstolineofbusinesssegmentprofitabilityreport-ingareexpectedtoinclude:theattributionofeconomiccapital,expectedlossinlieuofnetchargeoffs,effectivetaxrates,andtheallocationofcer-tainproduct-relatedexpensesincurredwithinproductionsupportareas,andoverheadcosts.theimplementationoftheseenhancementstotheinternalmanagementreportingsystemisexpectedtomateriallyaffectthenetincomedisclosedforeachsegmentwithnoimpactonconsolidatedamounts.wheneversignificantchangestomanagementreportingmeth-odologiestakeplace,theimpactofthesechangesisquantifiedandpriorperiodinformationisreclassifiedwhereverpracticable.thecompanywillreflectthesereclassifiedchangesinthecurrentperiod,andwillprovideupdatedhistoricalyear-to-date,quarterly,andannualschedules.


thetablesbelowdiscloseselectedfinancialinformationforsuntrust’sreportablesegmentsforthetwelvemonthsendeddecember31,2005,2004,and2003. twelveMonthsendedDecember31,2005 corporateand wealthand investment investment corporate/ reconciling(dollarsinthousands) retail commercial Banking Mortgage Management other items consolidatedaveragetotalassets $36,871,515 $32,757,977 $21,259,489 $33,212,973 $8,622,087 $32,847,007 $2,517,723 $168,088,771averagetotalliabilities 63,923,687 12,389,193 6,630,579 1,695,955 9,405,961 53,343,097 4,174,017 151,562,489averagetotalequity — — — — — 16,526,282 — 16,526,282netinterestincome $2,193,559 $850,562 $259,116 $554,544 $345,573 $12,807 $362,805 $4,578,966fullytaxable-equivalent adjustment(fte) 83 38,201 22,005 — 64 15,138 1 75,492netinterestincome(fte)1 2,193,642 888,763 281,121 554,544 345,637 27,945 362,806 4,654,458provisionforloanlosses2 138,296 24,488 14,808 4,818 9,754 6,619 (21,897) 176,886netinterestincomeafter provisionforloanlosses 2,055,346 864,275 266,313 549,726 335,883 21,326 384,703 4,477,572noninterestincome 1,042,656 366,265 641,924 239,315 944,295 (24,504) (54,907) 3,155,044noninterestexpense 1,447,050 428,895 332,079 482,892 794,796 1,259,931 (54,914) 4,690,729totalcontributionbeforetaxes 1,650,952 801,645 576,158 306,149 485,382 (1,263,109) 384,710 2,941,887provisionforincometaxes3 — — — — — — 954,648 954,648netincome $1,650,952 $801,645 $576,158 $306,149 $485,382 ($1,263,109) ($569,938) $1,987,239

twelvemonthsendeddecember31,2004 corporateand wealthand investment investment corporate/ reconciling(dollarsinthousands) retail commercial banking mortgage management other items consolidatedaveragetotalassets $27,305,891 $24,938,401 $18,668,902 $23,920,215 $6,672,486 $30,648,517 $1,599,881 $133,754,293averagetotalliabilities 52,082,344 10,510,819 6,677,267 1,434,252 7,813,305 41,215,284 2,551,540 122,284,811averagetotalequity — — — — — 11,469,482 — 11,469,482netinterestincome $1,796,862 $654,925 $240,855 $489,354 $243,882 ($1,539) $260,816 $3,685,155fullytaxable-equivalent adjustment(fte) 75 31,500 16,264 — 48 10,510 1 58,398netinterestincome(fte)1 1,796,937 686,425 257,119 489,354 243,930 8,971 260,817 3,743,553provisionforloanlosses2 142,049 24,438 16,407 3,614 3,780 2,797 (57,548) 135,537netinterestincomeafter provisionforloanlosses 1,654,888 661,987 240,712 485,740 240,150 6,174 318,365 3,608,016noninterestincome 847,142 320,502 633,687 116,363 821,382 (87,434) (47,196) 2,604,446noninterestexpense 1,172,361 352,549 334,908 338,358 681,829 1,064,911 (47,878) 3,897,038totalcontributionbeforetaxes 1,329,669 629,940 539,491 263,745 379,703 (1,146,171) 319,047 2,315,424provisionforincometaxes3 — — — — — — 742,523 742,523netincome $1,329,669 $629,940 $539,491 $263,745 $379,703 ($1,146,171) ($423,476) $1,572,9011netinterestincomeisfullytaxable-equivalentandispresentedonamatchedmaturityfundstransferpricebasisforthelinesofbusiness.


3includesregularincometaxprovisionandtaxable-equivalentincomeadjustmentreversal.



twelvemonthsendeddecember31,2003 corporateand wealthand investment investment corporate/ reconciling(dollarsinthousands) retail commercial banking mortgage management other items consolidatedaveragetotalassets $22,573,638 $21,655,638 $21,759,593 $22,251,251 $5,319,223 $30,958,656 ($2,192,638)$122,325,361averagetotalliabilities 48,157,411 8,380,187 8,192,272 1,588,761 6,175,396 37,983,434 2,764,875 113,242,335averagetotalequity — — — — — 9,083,026 — 9,083,026netinterestincome $1,636,992 $578,921 $279,407 $573,547 $191,948 ($44,208) $103,696 $3,320,303fullytaxable-equivalent adjustment(fte) 76 26,280 13,369 — 43 5,246 — 45,014netinterestincome(fte)1 1,637,068 605,201 292,776 573,547 191,991 (38,962) 103,696 3,365,317provisionforloanlosses2 170,025 19,414 114,965 2,479 2,167 2,023 2,477 313,550netinterestincomeafter provisionforloanlosses 1,467,043 585,787 177,811 571,068 189,824 (40,985) 101,219 3,051,767noninterestincome 748,454 279,218 554,573 5,700 685,354 64,384 (34,682) 2,303,001noninterestexpense 1,017,876 273,034 312,576 300,000 547,284 984,852 (35,006) 3,400,616totalcontributionbeforetaxes 1,197,621 591,971 419,808 276,768 327,894 (961,453) 101,543 1,954,152provisionforincometaxes3 — — — — — — 621,855 621,855netincome $1,197,621 $591,971 $419,808 $276,768 $327,894 ($961,453) ($520,312) $1,332,2971netinterestincomeisfullytaxable-equivalentandispresentedonamatchedmaturityfundstransferpricebasisforthelinesofbusiness.


3includesregularincometaxprovisionandtaxable-equivalentincomeadjustmentreversal.


note23•comprehensiveincomethecompany’scomprehensiveincome,whichincludescertaintrans-actionsandothereconomiceventsthatbypassthe incomestate-ment,consistsofnetincome,changesinunrealizedgainsandlossesonsecuritiesavailableforsale,changesinderivativesaccountedfor

ascashflowhedges,andchangesintheadditionalminimumliabilityrelatedtothecarryingvalueofthesupplementalretirementbenefits.

comprehensiveincomefortheyearsendeddecember31,2005,2004,and2003isasfollows:

(dollarsinthousands) 2005 2004 2003unrealized(loss)gainonavailableforsalesecurities,net, recognizedinothercomprehensiveincome: beforeincometax ($438,132) ($604,347) $177,314 incometax (105,949) (209,004) 62,060 netofincometax (332,183) (395,343) 115,254amountsreportedinnetincome: (loss)gainonsaleofsecurities (7,155) (41,691) 123,876 netamortization (36,028) (62,034) (172,434) reclassificationadjustment (43,183) (103,725) (48,558) incometax 16,410 36,304 16,995 reclassificationadjustment,netoftax (26,773) (67,421) (31,563) unrealized(loss)gainonavailableforsalesecurities arisingduringperiod,netoftax (358,956) (462,764) 83,691 reclassificationadjustment,netoftax 26,773 67,421 31,563 netunrealized(loss)gainonavailableforsalesecurities recognizedinothercomprehensiveincome (332,183) (395,343) 115,254unrealized(loss)gainonderivativefinancialinstruments,net, recognizedinothercomprehensiveincome: beforeincometax (17,329) 16,402 45,366 incometax 6,585 (5,741) (15,878) netofincometax (10,744) 10,661 29,488changerelatedtosupplementalretirementbenefits 4,068 (2,460) 9,881totalunrealized(loss)gainrecognizedinothercomprehensiveincome (338,859) (387,142) 154,623netincome 1,987,239 1,572,901 1,332,297totalcomprehensiveincome $1,648,380 $1,185,759 $1,486,920

thecomponentsofaccumulatedothercomprehensiveincomeatdecember31wereasfollows:

(dollarsinthousands) 2005 2004 2003unrealizedgainonavailableforsalesecurities $971,817 $1,304,000 $1,699,344unrealizedlossonderivativefinancialinstruments (17,339) (6,595) (17,257)supplementalretirementbenefits (16,387) (20,455) (17,995)totalaccumulatedothercomprehensiveincome $938,091 $1,276,950 $1,664,092



note24•othernoninterestexpenseothernoninterestexpenseintheconsolidatedstatementsofincomeincludes: yearendeddecember31(dollarsinthousands) 2005 2004 2003consultingandlegal $112,625 $81,035 $57,421otherstaffexpense 90,074 66,005 60,353postageanddelivery 85,399 69,810 69,036creditandcollectionservices 84,895 66,694 70,316communications 79,245 67,190 61,261operatingsupplies 53,175 46,802 39,837fdicpremiums 23,083 19,503 17,958otherrealestateincome (1,196) (1,799) (1,999)otherexpense 381,406 339,828 254,712 totalothernoninterestexpense $908,706 $755,068 $628,895

note25•SuntrustBanks,inc.(parentcompanyonly)financialinformationStatementsofincome—parentcompanyonly yearendeddecember31

(dollarsinthousands) 2005 2004 2003incomefromsubsidiaries: dividends–substantiallyallfromsuntrustbank $1,860,103 $1,464,648 $1,472,487 interestonloans 26,143 9,615 3,870otherincome 65,314 30,103 33,475 totalincome 1,951,560 1,504,366 1,509,832expenseinterestonshort-termborrowings 13,889 4,663 3,840interestonlong-termdebt 215,453 143,688 132,954employeecompensationandbenefits 18,506 16,223 41,163servicefeestosubsidiaries 16,250 7,645 6,934otherexpense 65,533 54,291 61,621 totalexpense 329,631 226,510 246,512incomebeforeincometaxesandequityinundistributedincomeofsubsidiaries 1,621,929 1,277,856 1,263,320incometaxbenefit 56,903 33,512 53,751incomebeforeequityinundistributedincomeofsubsidiaries 1,678,832 1,311,368 1,317,071equityinundistributedincomeofsubsidiaries 308,407 261,533 15,226 netincome $1,987,239 $1,572,901 $1,332,297


BalanceSheets—parentcompanyonly december31(dollarsinthousands) 2005 2004assetscashinsubsidiarybanks $5,167 ($2,244)interest-bearingdepositsinbanks 1,166,090 705,614tradingassets 17,701 55,198securitiesavailableforsale 383,613 486,421loanstosubsidiaries 913,666 864,162investmentincapitalstockofsubsidiariesstatedonthebasisofthe company’sequityinsubsidiaries’capitalaccounts: bankingsubsidiaries 18,906,644 17,796,319 nonbankingsubsidiaries 1,049,630 1,334,149premisesandequipment 14,908 15,027goodwillandotherintangibleassets 116,656 129,987otherassets 534,704 794,194 totalassets $23,108,779 $22,178,827liabilitiesandShareholders’equityshort-termborrowingsfrom: subsidiaries $45,998 $54,126 non-affiliatedcompanies 441,112 534,220long-termdebt 4,427,740 4,489,656tradingliabilities 28,589 12,739otherliabilities 1,277,945 1,101,187 totalliabilities 6,221,384 6,191,928preferredstock,noparvalue;50,000,000sharesauthorized;noneissued — —commonstock,$1.00parvalue 370,578 370,578additionalpaidincapital 6,761,684 6,749,219retainedearnings 9,310,978 8,118,710treasurystock,atcost,andother (493,936) (528,558)accumulatedothercomprehensiveincome 938,091 1,276,950 totalshareholders’equity 16,887,395 15,986,899 totalliabilitiesandshareholders’equity $23,108,779 $22,178,827commonsharesoutstanding 361,984,193 360,840,710commonsharesauthorized 750,000,000 750,000,000treasurysharesofcommonstock 8,594,205 9,737,688



Statementsofcashflow—parentcompanyonly yearendeddecember31(dollarsinthousands) 2005 2004 2003cashflowsfromoperatingactivities: netincome $1,987,239 $1,572,901 $1,332,297 adjustmentstoreconcilenetincometonetcash providedbyoperatingactivities: equityinundistributedincomeofsubsidiaries (308,407) (261,533) (69,780) depreciation,amortizationandaccretion 5,573 5,381 5,304 stockoptioncompensation 26,375 17,443 8,722 deferredincometaxprovision 16,753 14,789 8,037 amortizationofcompensationelementofperformance andrestrictedstock 9,190 8,515 5,475 securitieslosses(gains) 2,979 2,599 (7,117) net(increase)decreaseinotherassets (54,220) 137,486 86,767 netincrease(decrease)inotherliabilities 173,054 (110,144) 511,741 netcashprovidedbyoperatingactivities 1,858,536 1,387,437 1,881,446cashflowsfrominvestingactivities: proceedsfrommaturitiesandsalesofsecuritiesavailableforsale 299,968 256,710 177,712 purchasesofsecuritiesavailableforsale (200,187) (138,155) (345,066) netchangeinloanstosubsidiaries (49,504) (486,506) 489,526 capitalexpenditures (1,290) (32) (193) netcashusedforacquisitions — (1,519,152) (55,528) capitalcontributions(to)fromsubsidiaries (530,355) 42,202 (651,285) other,net 56,683 11,116 6,726 netcash(usedin)investingactivities (424,685) (1,833,817) (378,108)cashflowsfromfinancingactivities: net(decrease)increaseinshort-termborrowings (101,236) (46,962) 18,671 proceedsfromtheissuanceoflong-termdebt — 1,000,000 123,376 repaymentoflong-termdebt (9,062) (208,761) (137,805) proceedsfromtheexerciseofstockoptions 135,701 96,457 27,945 acquisitionoftreasurystock (196,396) (14,064) (182,152) dividendspaid (794,971) (603,309) (505,396) netcash(usedin)providedbyfinancingactivities (965,964) 223,361 (655,361)netincrease(decrease)incashandcashequivalents 467,887 (223,019) 847,977cashandcashequivalentsatbeginningofyear 703,370 926,389 78,412cashandcashequivalentsatendofyear $1,171,257 $703,370 $926,389SupplementalDisclosureincometaxesreceivedfromsubsidiaries $644,350 $604,729 $528,187incometaxespaidbyparentcompany (558,409) (544,037) (339,629)netincometaxesreceivedbyparentcompany $85,941 $60,692 $188,558interestpaid $234,537 $136,311 $138,298netnon-cashcontributionofassetsandliabilitiestosubsidiaries (325,631) (4,319,794) (32,689)non-cashimpactofacquisitionofnationalcommercefinancial — 5,517,551 —non-cashdividendfromsubsidiaries — — 54,554


parti pageitem1 business 1–62,insidebackcoveritem1a riskfactors 58–61item1b notapplicableitem2 properties 61item3 legalproceedings 61item4 notapplicable

partiiitem5 marketfortheregistrant’scommonequity,

relatedstockholdermattersandissuer purchasesofequitysecurities 18,44,55, insidefrontcover, insidebackcover

item6 selectedfinancialdata 18item7 management’sdiscussionandanalysisof

financialconditionandresultsofoperations 1–62item7a quantitativeandqualitativedisclosures

aboutmarketrisk 35–41item8 financialstatementsand

supplementarydata 44–45,50–56,63–105item9 notapplicableitem9a controlsandprocedures 62item9b otherinformation 62

partiii pageitem10 directorsandexecutiveofficersof

theregistrant proxystatementitem11 executivecompensation proxystatementitem12 securityownershipofcertainbeneficial

ownersandmanagementandrelated stockholdermatters proxystatement

item13 certainrelationshipsandrelated transactions proxystatement

item14 principalaccountantfeesandservices proxystatement

partivitem15 exhibitsandfinancialstatementschedules 107

certainstatisticaldatarequiredbythesecuritiesandexchangecommissionareincludedonpages18–56.

securitiesandexchangecommissionwashington,dc20549annualreportpursuanttosection13or15(d)ofthe securitiesexchangeactof1934forthefiscalyearendeddecember31,2005commissionfilenumber1-8918

suntrustbanks,inc.incorporatedinthestateofgeorgiairsemployeridentificationnumber58-1575035address:303peachtreestreet,ne,atlanta,ga30308telephone:404-588-7711

securitiesregisteredpursuanttosection12(b)oftheact:commonstock–$1.00parvalue,whichisregisteredonthenewyorkstockexchange.indicatebycheckmarkwhethertheregistrantisanacceleratedfiler(asdefinedinrule12b-2oftheact.)[X]indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinrule405ofthesecuritiesact.[X]indicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttosection13orsection15(d)oftheexchangeact.[ ]suntrust(1)hasfiledallreportsrequiredtobefiledbysection13or15(d)ofthesecuritiesexchangeactof1934duringthepreceding12months

(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.indicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoitem405ofregulations-Kisnotcontainedherein,andwillnotbecontained,tothe

bestofregistrant’sknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinpartiiiofthisform10-Koranyamendmenttothisform10-K.[X]

indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinrule12b-2oftheexchangeact.[ ]asofJanuary31,2006,suntrusthad362,555,710sharesofcommonstockoutstanding.theaggregatemarketvalueofsuntrustcommonstockheld

bynon-affiliatesonJune30,2005wasapproximately$26billion.

DocuMentSincorporateDBYreferencepartiiiinformationisincorporatedhereinbyreference,pursuanttoinstructiongofform10-K,fromsuntrust’sproxy-statementforits2006annualshareholders’meeting,whichwillbefiledwiththecommissionbymarch8,2006(the“proxystatement”).certainpartiandpartiiinformationrequiredbyform10-Kisincorporatedbyreferencefromthesuntrustannualreporttoshareholdersasindicatedbelow.exceptforpartsofthesuntrustannualreporttoshareholdersexpresslyincorporatedhereinbyreference,theannualreportisnottobedeemedfiledwiththesecuritiesandexchangecommission.

2005form10-K


iteM15•exhibitsandfinancialStatementSchedules

financialstatementfiled.seeindextoconsolidatedfinancialstatementsonpage63oftheannualreport.thecompany’sprincipalbankingsubsidiaryisownedbysuntrustbankholdingcompany,afloridacorporation.adirectoryofthecompany’sprincipal

bankingunitsandkeysubsidiariesareonpages108through110ofthisannualreportandform10-K.thecompany’sarticlesofincorporation,bylaws,cer-taininstrumentsdefiningtherightsofsecuritiesholders,includingdesignationsofthetermsofoutstandingindentures,constituentinstrumentsrelatingtovariousemployeebenefitplans,andcertainotherdocumentsarefiledasexhibitstothisreportorincorporatedbyreferencehereinpursuanttothesecuritiesexchangeactof1934.shareholdersmayobtainthelistofsuchexhibitsandcopiesofsuchdocumentsuponrequesttocorporatesecretary,suntrustbanks,inc.,mailcode643,p.o.box4418,atlanta,georgia,30302.a-copyingfeewillbechargedfortheexhibits.

conSentofinDepenDentaccountantSweherebyconsenttotheincorporationbyreferenceintheregistrationstatementsonforms-8(nos.33-28250,33-58723,333-50719,333-86306,333-69331,333-91519,333-91521,333-43348,333-106638,333-114625,333-118963,333-127402,333-132035)andforms-3(nos.333-61583,333-86330,333-118382)ofsuntrustbanks,inc.ofourreportdatedfebruary28,2006relatingtothefinancialstatements,management’sassessmentoftheeffectivenessofinternalcontroloverfinancialreportingandtheeffectivenessofinternalcontroloverfinancialreportingwhichappearsintheannualreporttoshareholders,whichisincorporatedinthisannualreportonform10-K.

pricewaterhousecoopersllpatlanta,gafebruary28,2006

SignatureSpursuanttotherequirementsofsection13or15(d)ofthesecuritiesexchangeactof1934,theregistranthasdulycausedthisreporttobesignedonitsbehalfonfebruary28,2006bytheundersigned,thereuntodulyauthorized.

suntrustbanks,inc. l.philliphumann(registrant) chairmanoftheboardofdirectors andchiefexecutiveofficer

pursuanttotherequirementsofthesecuritiesexchangeactof1934,thisreporthasbeensignedonfebruary28,2006bythefollowingpersonsonbehalfoftheregistrantandinthecapacitiesindicated.

l.philliphumann thomase.pantherchairmanoftheboardofdirectors seniorVicepresidentandchiefexecutiveofficer andcontroller

marka.chancycorporateexecutiveVicepresidentandchieffinancialofficer

alldirectorsoftheregistrantlistedonpage112.

partiV


geographicarea location keYexecutive

carolinasgroup Durham richardl.furrmecklenburgregion charlotte carle.wicker,Jr. • suntrustbank,charlotte charlotte carle.wicker,Jr. • suntrustbank,asheville asheville Johnd.Kimberlysouthcarolinaregion greenville charlesa.perry,Jr. • suntrustbank,greenville greenville charlesa.perry,Jr. • suntrustbank,hiltonhead hiltonheadisland phillipe.wrighttriadregion greensboro rockyw.Johnson • suntrustbank,greensboro greensboro michaelp.earey • suntrustbank,n.w.triad lenoir Jamese.sponenbergtriangleregion raleigh robertw.Jones • suntrustbank,raleigh raleigh robertw.Jones • suntrustbank,durham durham deanr.hamric • suntrustbank,newhanover wilmington spenceh.broadhurst

centralgroup atlanta e.Jennerwood,iiiatlantaregion atlanta garypeacock,Jr. • suntrustbank,atlanta atlanta garypeacock,Jr. • suntrustbank,gainesville gainesville lanad.nix • suntrustbank,athens athens peterhodgson,Jr.chattanoogaregion chattanooga michaelr.butler • suntrustbank,chattanooga chattanooga michaelr.butler • suntrustbank,northwestgeorgia rome,ga. michaelr.butler • suntrustbank,tennesseeValley florence,ala. w.davidJoneseasttennesseeregion Knoxville larryd.mauldin • suntrustbank,easttennessee Knoxville larryd.mauldin • suntrustbank,northeasttennessee Johnsoncity r.odiemajorgeorgiaregion savannah williamb.haile • suntrustbank,augusta augusta williamr.thompson • suntrustbank,middlegeorgia macon mardier.herndon,Jr. • suntrustbank,savannah savannah geraldl.rainey • suntrustbank,southeastgeorgia brunswick Jacke.hartman • suntrustbank,westgeorgia columbus franks.etheridge,iii • suntrustbank,southgeorgia albany d.michaelmarzmemphisregion memphis davidt.popwell • suntrustbank,memphis memphis davidt.popwellnashvilleregion nashville roberte.mcneilly,iii • suntrustbank,nashville nashville roberte.mcneilly,iii

floridagroup orlando thomasg.kuntzcentralfloridaregion orlando rayl.sandhagen • suntrustbank,centralflorida orlando rayl.sandhagen • suntrustbank,mid-florida lakeland charlesw.mcpherson • suntrustbank,eastcentralflorida daytonabeach williamh.davison • suntrustbank,brevardcounty melbourne donnam.demers • suntrustbank,lakecounty leesburg bradleyl.white

banKs


geographicarea location keYexecutive

floridagroup,continuednorthfloridaregion Jacksonville Johnr.schmitt • suntrustbank,northflorida Jacksonville Johnr.schmitt • suntrustbank,northcentralflorida ocala williamh.evans • suntrustbank,northwestflorida tallahassee davidb.ramsay • suntrustbank,tallahassee tallahassee Kennethstafford • suntrustbank,pensacola pensacola henrye.gonzales,Jr. • suntrustbank,gainesville gainesville dickd.mahaffey,Jr. • suntrustbank,panamacity panamacity Jane.shadburnsouthfloridaregion ft.lauderdale Jamesw.rasmussen • suntrustbank,southflorida ft.lauderdale Jamesw.rasmussen • suntrustbank,miami miami nicholasg.bustlesouthwestfloridaregion sarasota margaretl.callihan • suntrustbank,gulfcoast sarasota margaretl.callihan • suntrustbank,charlottecounty portcharlotte stevenJ.Vito • suntrustbank,leecounty fortmyers heidicolgate-tamblyn • suntrustbank,naples naples danielg.waetjentamparegion tampa danielw.mahurin • suntrustbank,tampa tampa fredo.dobbins • suntrustbank,naturecoast brooksville Jamesh.Kimbrough • suntrustbank,northpinellascounty clearwater Kentc.moegerle • suntrustbank,southpinellascounty st.petersburg roya.binger

Mid-atlanticgroup richmond c.t.hillcentralVirginiaregion richmond a.dalecannady • suntrustbank,centralVirginia richmond a.dalecannady • suntrustbank,tri-cities petersburg,hopewell,colonialheights ernesth.yerlygreaterwashingtonregion washington,d.c. peterf.nostrand J.scottwilfong • suntrustbank,greaterwashington washington,d.c. peterf.nostrand J.scottwilfonghamptonroadsregion norfolk williamK.butlerii • suntrustbank,hamptonroads norfolk williamK.butlerii • suntrustbank,newportnews newportnews Jeromef.clark • suntrustbank,williamsburg williamsburg bernardh.ngomarylandregion baltimore donaldp.hutchinson • suntrustbank,maryland baltimore donaldp.hutchinson • suntrustbank,southerneasternshore(md.&Va.) onancock thurmanc.renner,Jr.westernVirginiaregion roanoke robertc.lawson,Jr. • suntrustbank,roanoke roanoke robertc.lawson,Jr. • suntrustbank,charleston,w.Va. charleston,w.Va. davidl.sayre • suntrustbank,charlottesville charlottesville stevenc.Krohn • suntrustbank,harrisonburg harrisonburg marthad.shifflett • suntrustbank,lynchburg lynchburg stuartc.fauber • suntrustbank,martinsville martinsville Jamesr.austin • suntrustbank,newriverValley radford edwardb.lawhorn • suntrustbank,staunton staunton gregoryc.godsey

banKs continued


chiefexecutive

assetManagementadvisors,l.l.c. Mariaelenalagomasinoprovidescomprehensivefamilyofficeservices.

premiumassignmentcorporation peterkugelmannprovidesinsurancepremiumfinancingprimarilytobusinesses.

SuntrustcapitalMarkets,inc. r.charlesShufeldtsuntrust’sinvestmentbankingsubsidiarywhichdoesbusinessassuntrustrobinsonhumphrey.suntrustcapitalmarketsoffersdebtandequitycapitalraising,advisoryservicesandinvestmentcapabilitiestocommercial,corporateandinstitutionalclients.

SuntrustcommunityDevelopmentcorporation williamh.pridgenmanagesthecompany’sinvestmentsinaffordablehousing.

SuntrustDelawaretrustcompany robertM.Moseralimitedpurposetrustcompanyprovidingspecializedinvestment-relatedservicesforhigh-net-worthclients.

Suntrustinsurancecompany Davidv.Sweigartre-insurescreditlifeaswellasaccidentandhealthinsurancepolicies.

SuntrustinvestmentServices,inc. Johnt.rhettiiiprovidesfull-servicebrokerageandinvestmentadvisoryservicestoretailinvestors.includesalexanderKey,adivisionspecializingintheinvestmentneedsofwealthyindividualsandcorporateclients.

Suntrustleasingcorporation Daniele.Mckewprovidesfinancingforessential-useequipmentforbusinessesandmunicipalitiesnationwide.

SuntrustMortgage,inc. Sterlingedmunds,Jr.oneofthenation’slargestbank-ownedmortgagecompanies.originates,purchases,sellsandservicesmortgageloans.

truscocapitalManagement,inc. Davidh.eidsonansecregisteredinvestmentadvisorthatmanagesassetsforinstitutionalclients.includesthesticlassicfunds,suntrust’smutualfundfamily.

Keysubsidiaries


l.philliphumannChairman and Chief Executive Officer37yearsofservice.

JamesM.wellsiiiPresident and Chief Operating Officer38yearsofservice.

williamr.reed,Jr.Vice Chairmangeographicbankingandsalesadministration36yearsofservice.

gayo.abbottCorporate Executive Vice Presidentcommerciallineofbusiness23yearsofservice.

MimiBreedenCorporate Executive Vice Presidentdirectorofhumanresources26yearsofservice.

Marka.chancyCorporate Executive Vice Presidentchieffinancialofficer17yearsofservice.

roberth.coordsCorporate Executive Vice Presidentchiefriskofficer33yearsofservice.

Davidf.DierkerCorporate Executive Vice Presidentchiefadministrativeofficer9yearsofservice.

DonaldS.DowningCorporate Executive Vice Presidentmergerintegrationand managementgovernance38yearsofservice.

Sterlingedmunds,Jr.President and Chief Executive Officersuntrustmortgage,inc.19yearsofservice.

raymondD.fortinCorporate Executive Vice Presidentgeneralcounsel17yearsofservice.

thomase.freemanCorporate Executive Vice PresidentchiefcreditofficerJoinedsuntrustfebruary2006.

richardl.furrChairman, President and Chief Executive Officercarolinasbankinggroup35yearsofservice.

c.t.hillChairman, President and Chief Executive Officermid-atlanticbankinggroup36yearsofservice.

craigJ.kellyCorporate Executive Vice Presidentchiefmarketingexecutive9yearsofservice.

c.eugenekirbyCorporate Executive Vice Presidentretailbankinglineofbusiness21yearsofservice.

thomasg.kuntzChairman, President and Chief Executive Officerfloridabankinggroup28yearsofservice.

DennisM.pattersonCorporate Executive Vice Presidentcorporatesalesadministration37yearsofservice.

williamh.rogers,Jr.Corporate Executive Vice Presidentwealthandinvestmentmanagement, mortgageandcommerciallinesofbusiness26yearsofservice.

r.charlesShufeldtCorporate Executive Vice Presidentcorporateandinvestmentbanking lineofbusiness22yearsofservice.

timothye.SullivanCorporate Executive Vice Presidentchiefinformationofficer3yearsofservice.

e.Jennerwood,iiiChairman, President and Chief Executive Officercentralbankinggroup31yearsofservice.

managementcommittee


l.philliphumann1

Chairman of the Board and Chief Executive Officer

robertM.Beall,ii5

Chairman of the Board and Chief Executive Officerbeall’s,inc.bradenton,florida

J.hyattBrown1

Chairman of the Board and Chief Executive Officerbrown&brown,inc.daytonabeach,florida

alstonD.correll3,4

Chairman of the Boardgeorgia-pacificcorporationatlanta,georgia

Jeffreyc.crowe2

Chairman of the Boardlandstarsystem,inc.Jacksonville,florida

thomasc.farnsworth,Jr.5

Chairmanfarnsworthinvestmentco.memphis,tennessee

patriciac.frist5

Partnerinfristcapitalpartners,President, frisco,inc.andPresident, patriciac.fristandthomasf.frist,Jr.foundationnashville,tennessee

Blakep.garrett,Jr.5

Partnergarrett&garrettco.fountaininn,southcarolina

thomasM.garrott1

Former Chairman of the Boardnationalcommercefinancialcorporationmemphis,tennessee

Davidh.hughes3,4

Chairman of the Boardhughessupply,inc.orlando,florida

e.nevilleisdell1

Chairman of the Board and Chief Executive Officerthecoca-colacompanyatlanta,georgia

M.Douglasivester2,4

Retired Chairman of the Board and Chief Executive Officerthecoca-colacompanyatlanta,georgia

J.hickslanier2

Chairman of the Board and Chief Executive Officeroxfordindustries,inc.atlanta,georgia

g.gilmerMinor,iii3,4

Chairman of the Boardowens&minor,inc.richmond,Virginia

larryl.prince3

Chairman of the Executive Committeegenuinepartscompanyatlanta,georgia

frankS.royal,M.D.2

Presidentfranks.royal,m.d.,p.c.richmond,Virginia

karenhastiewilliams2,4

Retired Partnercrowell&moring,l.l.p.washington,d.c.

Dr.phailwynn,Jr.4,5

Presidentdurhamtechnicalcommunitycollegedurham,northcarolina

coMMitteeSoftheBoarD

1Executive Committeel.philliphumann,chair

2Audit Committeem.douglasivester,chairauditcommitteefinancialexpert

3Compensation Committeelarryl.prince,chair

4Governance and Nominating Committeedavidh.hughes,chair

5Risk Committeethomasc.farnsworth,Jr.,chair

boardofdirectors

SHAREHOLDER INFORMATION

SunTrust Banks, Inc.

CORPORATE HEADQUARTERS

SunTrust Banks, Inc. 303 Peachtree Street, NE Atlanta, GA 30308 404.588.7711

CORPORATE MAILING ADDRESS

SunTrust Banks, Inc. P.O. Box 4418 Center 645 Atlanta, GA 30302-4418

NOTICE OF ANNUAL MEETING

The Annual Meeting of Shareholders will be held on Tuesday, April 18, 2006 at 9:30 a.m. in Suite 105 on the first floor ofSunTrust Plaza Garden Offices, 303 Peachtree Center Avenue,Atlanta, Georgia.

STOCK TRADING

SunTrust Banks, Inc. common stock is traded on the New YorkStock Exchange under the symbol “STI.”

QUARTERLY COMMON STOCK PRICES AND DIVIDENDS

The quarterly high, low and close prices of SunTrust’s commonstock for each quarter of 2005 and 2004 and the dividends paidper share are shown below.

Quarter Market Price Dividends Ended High Low Close Paid

2005 December 31 $75.46 $65.32 $72.76 $0.55September 30 75.77 68.85 69.45 0.55June 30 75.00 69.60 72.24 0.55March 31 74.18 69.00 72.07 0.552004 December 31 $74.38 $67.03 $73.88 $0.50September 30 70.69 63.50 70.41 0.50June 30 71.10 61.27 64.99 0.50March 31 76.65 68.04 69.71 0.50

DEBT RATINGS

Ratings as of December 31, 2005.

Moody’s Standard Investors & Poor’s Fitch DBRS

Corporate Ratings Long Term Debt Ratings

Senior Debt Aa3 A+ A+ A(high)Subordinated Debt A1 A A A

Short Term Commercial Paper P-1 A-1 F1 R-1

(middle)

Bank Ratings Long Term Debt Ratings

Senior Debt Aa2 AA- A+ AA(low)Subordinated Debt Aa3 A+ A A(high)

Short Term P-1 A-1+ F1+ R-1(middle)

NUMBER OF SHAREHOLDERS

As of December 31, 2005, 39,992 Registered Shareholders (Shareholders of Record) Approximately 80,000 Street Name Shareholders Approximately 38,000 Employee Shareholders There could be overlapping shareholders among the three shareholder groups.

SHAREHOLDER SERVICES

Shareholders who wish to change the name, address or ownershipof stock, to report lost certificates, or to consolidate accountsshould contact the Transfer Agent:

Stock Transfer Department SunTrust Bank P.O. Box 4625Atlanta, GA 30302-4625800.568.3476

FINANCIAL INFORMATION

To obtain information on SunTrust, contact: Greg KetronDirector of Investor Relations404.827.6714

For information online, visit suntrust.com: • 2005 Annual Report

(including select information translated in Spanish)• Quarterly earnings releases • Press releases

WEB SITE ACCESS TO UNITED STATES SECURITIES AND

EXCHANGE COMMISSION FILINGS

All reports filed electronically by SunTrust Banks, Inc. with theUnited States Securities and Exchange Commission, including theannual report on Form 10-K, quarterly reports on Form 10-Q, and current event reports on Form 8-K, and amendments tothose reports filed or furnished pursuant to Section 13(a) or 15(d)of the Exchange Act are accessible as soon as reasonably practi-cable at no cost in the Investor Relations section of the corporate Web site at suntrust.com.

Des

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CONTENTS: 10 SUNTRUST AT A GLANCE 13 SHAREHOLDER LETTER 19 MANAGEMENT’S DISCUSSION 63 FINANCIALSTATEMENTS

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what we see€¦ · suntrust banks, inc. 2005 annual report what we see... suntrust banks, inc....

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