Higher Revenues and Lower Credit Costs Drive Earnings Per Share of $0.17 and Net Income of $84 Million

SunTrust Banks, Inc. (NYSE: STI) announced today that stronger revenue performance and a continued decline in credit-related costs resulted in net income available to common shareholders of $84 million, or $0.17 per average common diluted share, in the third quarter of 2010. The Company reported a net loss of $377 million, or $0.76 per average common share, in the third quarter of 2009 and a net loss of $56 million, or $0.11 per average common share, in the second quarter of 2010.

"The revenue generation of our core business and continued strength of the balance sheet affirms our confidence that our client-centric strategies are gaining traction and driving better results," said James M. Wells III, chairman and chief executive officer of SunTrust Banks, Inc. "While decreasing credit costs are certainly welcomed, we are even more encouraged by the improvement in our operating results that are being driven by several of our lines of business." Mr. Wells also noted an improvement in net interest income, a result of increased earning assets and continued favorable deposit trends.

Third Quarter 2010 Consolidated Highlights

Net income available to common shareholders of $0.17 per share compared to net losses of $0.11 per share in the prior quarter and $0.76 per share in the third quarter of 2009.

Net income for the quarter before preferred dividends was $153 million, up from $12 million in the second quarter.

Total revenues increased compared to the second quarter driven by mortgage and capital markets-related revenues and higher net interest income. The results were generated despite $81 million in mark-to-market valuation losses, net of hedges, related to the Company's public debt and index-linked certificates of deposit carried at fair value.

Net interest margin increased 8 basis points to 3.41% and net interest income rose 8% on a sequential quarter basis due to a continued decline in funding costs, further improvement in deposit mix and earning asset growth.

Noninterest expenses were relatively flat on a sequential quarter basis with lower debt extinguishment costs offset primarily by higher revenue-related personnel costs and legal-related expenses.

Asset quality continued to improve in the third quarter. Nonperforming assets, nonaccrual loans and net charge-offs all declined compared to the prior quarter and the third quarter of 2009.

Provision expense declined due to lower net charge-offs and the impact of improved credit trends on the allowance for loan losses. The allowance for loan losses declined $70 million and total loans increased 2% resulting in an allowance to loan ratio of 2.69%.

Average loans grew slightly during the current quarter primarily in consumer loans and government guaranteed residential mortgage loans. Consumer loan growth included the purchase of a high-quality consumer auto loan portfolio.

Average deposits increased as growth in lower-cost deposits was partially offset by a decline in higher-cost time deposits.

Capital ratios remained strong with an estimated Tier 1 common equity ratio of 8.00% and Tier 1 capital ratio of 13.60%.

Revenue

For the third quarter of 2010, total revenue rose 7% on a sequential quarter basis and increased 19% over the third quarter of 2009. Revenue growth was driven by higher net interest income and growth in fee-based income, particularly mortgage and capital markets-related revenues. Mark-to-market valuation losses, net of hedges, on the Company's public debt and index-linked certificates of deposits carried at fair value were $81 million in the third quarter compared to gains of $86 million in the second quarter of 2010 and losses of $145 million in the third quarter of 2009. The current quarter included net gains of $69 million from the sale of securities, compared to gains of $57 million and $47million in the prior quarter and third quarter of 2009, respectively.

For the nine months, total revenue was $6.4 billion, essentially flat compared to the same period in 2009. Higher net interest income, gains on the Company's debt carried at fair value compared to losses in 2009, and gains on the sale of securities in 2010 were offset by lower mortgage production income and service charges in 2010. Additionally, the Company recognized a $112million gain from the sale of Visa shares in the second quarter of 2009.

Net Interest Income

Net interest income was $1.3 billion in the third quarter of 2010, an increase of 8% from the third quarter of 2009 and 5% on a sequential quarter basis. Higher average securities available for sale and total loans contributed to a 1% increase in average earning assets on a sequential quarter basis. Compared to a year ago, average earning assets declined $2.3 billion, or 2%, primarily attributable to declines in loans and loans held for sale, partially offset by an increase in average securities available for sale.

Net interest margin for the third quarter was 3.41%, up 31 basis points from the same quarter last year and eight basis points compared to the prior quarter, primarily driven by lower funding costs. Growth in lower-cost deposits, coupled with significant reductions in higher-cost time deposits and long-term debt contributed to a 49 basis point year-over-year decline in the cost of average interest-bearing liabilities.

For the nine months, net interest income was $3.7 billion, an increase of 9% from the prior year, while net interest margin increased 38 basis points to 3.35%. The same factors in the quarterly year-over-year comparisons contributed to the nine month increase in net interest income and margin.

Noninterest Income

Total noninterest income was $1.0 billion for the third quarter of 2010, a $95 million, or 10%, sequential quarter increase primarily driven by higher mortgage and capital markets-related income, partially offset by lower service charges. Due to improvement in the Company's credit spreads during the quarter, the Company recorded market valuation losses, net of hedges, on its public debt and index-linked certificates of deposit carried at fair value of $81 million compared to a gain of $86 million in the prior quarter. Compared to the third quarter of 2009, noninterest income increased $272 million, or 35%, due to higher mortgage and capital markets-related income, partially offset by lower service charges. In addition, the third quarter of 2009 included $145 million in mark-to-market net losses on the Company's public debt and index-linked certificates of deposit carried at fair value. In the current quarter, gains from the sale of securities associated with repositioning the investment portfolio were $69 million compared to $57 million in the prior quarter and $47 million in the third quarter of 2009.

Mortgage production income increased significantly due to lower interest rates, increasing $150 million over the prior quarter and $105 million over the third quarter of 2009, as application volumes increased over 25% and margins expanded compared to the second quarter of 2010. Estimated mortgage repurchase losses recognized during the current quarter were $95 million, compared to $148 million in the prior quarter and $136 million in the third quarter of 2009. As of September 30, 2010, mortgage repurchase reserves totaled $270 million, up $14million during the quarter.

Mortgage servicing income for the quarter was $132 million, which was $44 million higher than the prior quarter due to improved hedge performance. Net hedge performance in the current quarter was $74 million compared to $35 million in the prior quarter. Mortgage servicing income for the third quarter of 2009 was $60 million. As of September 30, 2010, the Company serviced $176.6 billion in mortgage loans, down slightly compared to the prior year.

Trading account profits and commissions decreased $130 million on a sequential quarter basis in the third quarter of 2010 primarily due to the mark-to-market valuation losses, net of hedges, on the Company's public debt and index-linked certificates of deposits carried at fair value. The Company has historically recorded certain index-linked certificates of deposits at fair value. The outstanding balance of these deposits since September 30, 2009 has remained stable at approximately $1.2billion. The mark-to-market valuation gains and losses related to these instruments in prior periods has been relatively insignificant; however, during the current quarter, improvement in the Company's credit spreads combined with the significant decline in interest rates resulted in a $59 million mark-to-market loss. Excluding these debt-related mark-to-market losses, trading income increased due to higher fixed income and derivatives trading income. Compared to the third quarter of 2009, trading account profits and commissions increased $65 million, primarily due to the $64 million reduction in mark-to-market valuation losses on the Company's public debt and index-linked certificates of deposit carried at fair value. Increased mergers and acquisition advisory fees and bond underwriting activities drove a 66% increase in investment banking income on a sequential quarter basis and a 28% increase over the third quarter of 2009.

Noninterest income in the current quarter from consumer and commercial fee-based services was generally higher compared to the prior quarter and third quarter of 2009 with the exception of service charges on deposits. During the current quarter, service charges on deposits were impacted by the recently enacted regulations requiring clients to elect whether to opt in to certain account transaction services. Service charges declined $24 million, or 11%, on a sequential quarter basis, and $35 million, or 16%, compared to the third quarter of 2009.

For the nine months, total noninterest income was $2.7 billion, down 9% compared to the same period of 2009. The decline was largely due to lower mortgage production income from increased mortgage repurchase losses and lower loan production in 2010, lower service charges in 2010, and the gain on the sale of Visa shares of $112 million recorded in 2009, partially offset by higher gains on the sale of securities and reduced mark-to-market value losses on the Company's debt instruments carried at fair value in 2010.

Noninterest Expense

Total noninterest expense in the current quarter was $1.5 billion, up $70 million, or 5%, from the third quarter of 2009. Increases in employee compensation-related expenses, FDIC insurance premiums, outside processing and software expense, and debt extinguishment costs drove the year-over-year increase in noninterest expense, which was partially offset by lower credit-related costs. Personnel-related expenses increased primarily due to higher salary and contract labor expense. Full-time equivalent employees increased by 584 compared to September 30, 2009, with the majority of the increase occurring in retail branches and client support areas. Higher incentive compensation related to improved business performance, including higher mortgage loan production, also contributed to the increase in personnel-related expenses. Credit-related expenses were $180 million in the current quarter, down $34 million, or 16%, primarily due to the $29 million of expense related to the reserve for unfunded commitments recorded in the third quarter of 2009; beginning in the fourth quarter of 2009, this expense was included in provision for credit losses. FDIC insurance premiums increased due to higher deposit balances and assessment rates that became effective in the fourth quarter of 2009. Outside processing and software expense increased $10 million, or 7%, due to higher transaction volume and increased investment in software. Debt extinguishment costs of $12 million were related to the repayment of $1.0 billion of long-term debt during the third quarter of 2010.

On a sequential quarter basis, debt extinguishment costs declined $51 million. Personnel expenses increased $26 million, or 4%. Full-time equivalent employees increased 349 with the majority attributable to increased mortgage production. Incentive compensation also increased related to higher revenue. The increase in other noninterest expense was primarily due to legal-related expenses. Credit-related expenses remained stable as increases in operating losses were offset by reductions in other real estate expenses.

For the nine months, total noninterest expense was $4.4 billion, a decrease of $747 million, or 15%, compared to the same period in 2009. The decline was primarily due to the $751 million non-cash goodwill impairment charge recorded in the first quarter of 2009. FDIC insurance premiums declined $45 million, primarily due to the special assessment paid in the second quarter of 2009. Credit-related expenses remained elevated but declined $43 million compared to a year ago, as mortgage reinsurance costs declined $80 million, partially offset by a $28 million increase in other real estate expenses. Marketing and customer development costs increased 18% on increased promotional and advertising spending, while outside processing expense increased 8% for the same reasons cited in the year-over-year quarterly comparison. Debt extinguishment costs increased $51 million.

Income Taxes

For the third quarter of 2010, the Company recognized a provision for income taxes of $14 million, compared to a benefit of $336 million for the third quarter of 2009. The effective tax rate for the current quarter was 8.25%.

U.S. Treasury Preferred Dividends

For the third quarter and year-to-date periods of 2010 and 2009, the Company recorded $67 million and $200 million, respectively, in preferred dividends related to the $4.85 billion in preferred securities issued to the U.S. Treasury under the Capital Purchase Program. The 5.5% effective yield reflects the 5.0% dividend rate and the amortization of the discount recorded on the preferred stock at issuance.

Balance Sheet

As of September 30, 2010, SunTrust had total assets of $174.7 billion and shareholders' equity of $23.4 billion, representing 13.42% of total assets. Book value per common share was $37.01 as of September 30, 2010.

Loans

Average loans for the third quarter of 2010 were $113.3 billion, down $6.5 billion, or 5%, compared to the third quarter of 2009. The decline was concentrated in the construction, residential real estate, commercial and commercial real estate loan categories. The Company continues to reduce its exposure to residential real estate, most notably real estate construction loans, which, on average, declined 39% from the third quarter of 2009. On a sequential quarter basis, average loans increased slightly as declines in commercial real estate and home equity lines were offset by growth in consumer loans and government guaranteed residential mortgage loans. Consumer loan growth included the purchase of a high-quality $741 million consumer auto loan portfolio. The Company also consolidated a $467 million student loan portfolio at the end of the third quarter of 2010. As of September 30, 2010, total loans outstanding were $115.1 billion compared to $112.9 billion as of June 30, 2010, up 2%. During the current quarter, loan originations totaled $19.7 billion, including renewals and loan commitments, which is 12% greater than the prior quarter.

Deposits

Average consumer and commercial deposits for the third quarter of 2010 totaled $117.2 billion, up 2% from the third quarter of 2009. As clients continued to migrate to more liquid products, average demand deposits and money market accounts increased $2.0 billion, or 8%, and $7.3 billion, or 23%, respectively, while consumer time deposits and other time deposits declined $6.5 billion, or 22%. Average total brokered and foreign deposits declined $2.5 billion, or 47%, from the third quarter of 2009, as the Company's deposit growth initiatives replaced these wholesale funding sources with client deposits. On a sequential quarter basis, average consumer and commercial deposits increased 1%, with the majority of the increase in lower-cost deposits.

Capital and Liquidity

The Company's capital ratios remained strong at September 30, 2010, with estimated Tier 1 common equity, Tier 1 capital, and tangible equity to tangible asset ratios of 8.00%, 13.60%, and 10.19%, respectively. The increase in the Tier 1 common equity and Tier 1 capital ratios was due to earnings in the quarter as risk weighted assets increased marginally due to growth in high-quality loans and investment securities. The Company's regulatory capital position remains strong relative to current regulatory requirements and the guidelines recently published by the Basel Committee and endorsed by U.S. regulatory agencies. The Company also has substantial available liquidity, as the inflows of client deposits have largely been retained in cash or invested in high-quality government-backed securities.

Asset Quality

Asset quality trends continued to improve during the quarter with net charge-offs, nonperforming loans, and nonperforming assets all declining compared to the prior quarter. Early stage delinquencies remained relatively stable, declining 2 basis points to 1.24%. The allowance for loan losses declined $70 million to $3.1 billion as of September 30, 2010. The allowance for loan losses was 2.69% of total loans, down 12 basis points from June 30, 2010 due to the decline in the allowance for loan losses combined with higher period-end loan balances. As of September 30, 2010, approximately 7% of the Company's loan portfolio was substantially guaranteed by the federal government and its agencies. The allowance to nonperforming loans was 71.07% as of September 30, 2010, up 343 basis points from June 30, 2010. The reserve for unfunded commitments was $55 million at quarter end, down $5million from June 30, 2010, due to improved credit quality related to certain commercial and large corporate clients.

The provision for credit losses was $615 million, a decline of $47 million on a sequential quarter basis and a decline of $519 million from the third quarter of 2009. Net charge-offs in the current quarter were $690 million, down $316 million from the same quarter last year and down $32 million on a sequential quarter basis. Compared to the third quarter of 2009, net charge-offs in all loan categories declined with the exception of a small increase in commercial real estate-related loans. On a sequential quarter basis, net charge-offs related to construction and commercial loans declined but were partially offset by increases in the commercial real estate and residential mortgage portfolios. Net charge-offs to average annualized loans declined to 2.42% in the current quarter, down 91 basis points from the same period in 2009 and down 15 basis points on a sequential quarter basis. Year-to-date, net charge-offs were $2.2 billion, down $184 million, or 8%, from the same period in 2009, while the provision for credit losses was down $952 million, or 31%.

Nonaccrual loans declined, continuing a trend that began in the third quarter of 2009, and totaled $4.4 billion, or 3.80% of total loans, as of September 30, 2010. This compares to $5.4 billion, or 4.67%, of total loans as of September 30, 2009. The decrease was driven primarily by residential mortgages and construction loans; however, all nonaccrual loan categories have declined except for commercial real estate, which increased $182 million compared to a year ago. Nonaccrual loans declined $326 million, or 7%, on a sequential quarter basis with all loan categories stable or down. The overall decline in nonaccrual loans was due to repayments, net charge-offs, transfers to other real estate owned, and reduced inflows into nonaccrual. Despite the migrations of nonperforming loans into other real estate owned, OREO declined $55 million during the quarter to $645 million as of September 30, 2010.

Efforts to assist clients that are experiencing financial difficulties have continued during the third quarter resulting in loan modifications. Accruing restructured loans totaled $2.5 billion as of September 30, 2010, an increase of $247 million over the prior quarter end. The increase primarily related to residential mortgages, with commercial real estate related restructured loans increasing $17 million. Nonaccruing restructured loans remained relatively stable at $988 million.

LINE OF BUSINESS FINANCIAL PERFORMANCE

Line of Business Results

The Company has included line of business financial tables as part of this release on its website at www.suntrust.com in the Investor Relations section located under "About SunTrust." During the second quarter of 2010 the Company adjusted its lines of business used to measure business activities to align with certain organizational changes implemented during the quarter. The Company's business segments are: Retail Banking, Diversified Commercial Banking, Corporate and Investment Banking, Mortgage, Wealth and Investment Management, and Commercial Real Estate. All revenue in the line of business tables is reported on a fully taxable-equivalent basis. For the lines of business, results include net interest income, which is computed using matched-maturity funds transfer pricing. Further, provision for loan losses is represented by net charge-offs. SunTrust also reports results for Corporate Other and Treasury, which includes the Treasury department as well as the residual expense associated with operational and support expense allocations. This segment also includes differences created between internal management accounting practices and generally accepted accounting principles, certain matched-maturity funds transfer pricing credits and charges, differences in provision for loan losses compared to net charge-offs, as well as equity and its related impact. A detailed discussion of the line of business results will be included in the Company's forthcoming quarterly report on Form 10-Q.

Corresponding Financial Tables and Information

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

Conference Call

SunTrust management will host a conference call on October 21, 2010, at 8:00 a.m. (Eastern Time) to discuss the earnings results and business trends. Individuals may call in beginning at 7:45 a.m. (Eastern Time) by dialing 1-888-972-7805 (Passcode: 3Q10). Individuals calling from outside the United States should dial 1-517-308-9091 (Passcode: 3Q10). A replay of the call will be available approximately one hour after the call ends on October 21, 2010, and will remain available until November 4, 2010, by dialing 1-800-879-7389 (domestic) or 1-402-220-5339 (international).

Alternatively, individuals may listen to the live webcast of the presentation by visiting the SunTrust investor relations website at www.suntrust.com/investorrelations. Beginning the afternoon of October 21, 2010, listeners may access an archived version of the webcast in the "Webcasts and Presentations" subsection found on the investor relations webpage. This webcast will be archived and available for one year. A link to the Investor Relations page is also found in the footer of the SunTrust home page.

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