2 while net interest income decreased 17

This increase was driven primarily by higher credit-relatedexpenses including operating losses due to fraud, other real estate, andcollections, as well as continued investment in the branch distributionnetwork.Twelve Months Ended December 31, 2008 vs. 2007Retail and Commercial Banking net income for the twelve months ended December31, 2008 was $306.6 million, a decrease of $483.9 million, or 61.2, comparedto the same period in 2007.This decrease was primarily the result of higherprovision for loan losses due to home equity line, consumer, indirect, andcommercial loan net charge-offs, lower net interest income related to depositspreads and higher credit-related noninterest expense, partially offset bystrong growth in service charges on deposits.Net interest income decreased $217.9 million, or 7.7, driven by a continuedshift in deposit mix and decreased spreads, as deposit competition and theinterest rate environment encouraged customers to migrate into higher yieldinginterest-bearing deposits. Average deposit balances increased $0.8 billion, or1.0, while deposit spreads decreased 26 basis points resulting in a $207.6million decrease in net interest income.Low cost demand deposit and savingsaccount average balances decreased a combined $1.6 billion, or 8.1, primarilydue to decreases in commercial demand and savings.Higher cost products suchas NOW and money market increased a combined $2.3 billion, or 6.7.Netinterest income from loans decreased $14.3 million, or 1.4, as average loanbalances declined $0.1 billion, or 0.1.Growth in commercial loans, equitylines, credit card, student loans, and loans acquired in conjunction with theGB&T transaction was offset by an approximately $1.8 billion decline inaverage loan balances related to the migration of middle market clients fromRetail and Commercial to Wholesale Banking.Provision for loan losses increased $593.1 million over the same period in2007.The provision increase was most pronounced in home equity linesreflecting deterioration in the residential real estate market, whileprovision for loan losses on consumer, indirect, and commercial loans,primarily to commercial clients with annual revenues of less then $5 million,also increased.Total noninterest income increased $102.6 million, or 8.2, over the sameperiod in 2007.This increase was driven primarily by a $66.5 million, or9.1, increase in service charges on both consumer and business depositaccounts, primarily due to growth in the number of accounts, higher NSF rates,and an increase in occurrences of NSF fees. Interchange fees increased $24.5million, or 12.1, and ATM revenue increased $9.9 million, or 8.3.Total noninterest expense increased $60.2 million, or 2.4, from the sameperiod in 2007. The continuing positive impact of expense savings initiativesand lower amortization of intangibles was offset by higher credit-relatedexpenses including operating losses due to fraud, other real estate, andcollections, as well as continued investments in the branch distributionnetwork.Wholesale BankingThree Months Ended December 31, 2008 vs. The growth in net interest income due to volume was partially offset byoverall portfolio spread compression caused by a shift in mix away from higherspread residential construction loans to lower spread commercial loans, aswell as higher real estate-related nonaccrual loans.Trading assets netinterest income increased $16.8 million, or 102.0, primarily driven byimproved spreads and higher volumes in the fixed income sales and tradingbusiness.Total average deposits were up $1.9 billion, or 25.5, primarily inhigher cost deposits.

The net interest income on deposits declined $3.3million, or 9.3, as the additional volume was more than offset by lowercredit for funds on demand deposits.Provision for loan losses was $111.9 million, an increase of $98.8 millionfrom the same period in 2007.The increase was primarily due to higherresidential builder-related charge-offs and higher charge-offs from largecorporate and middle market clients.Total noninterest income was $132.7 million, an increase of $118.4 millioncompared to the fourth quarter of 2007.Lower market valuation trading lossesprimarily related to structured products, as well as higher revenues fromcredit-related fees, fixed income sales and trading, and direct finance, werein part offset by lower revenues in derivatives, structured leasing, merchantbanking, and Affordable Housing.Total noninterest expense was $214.4 million, a decrease of $32.1 million, or13.0.The migration of middle market clients from Retail and Commercial toWholesale Banking accounted for an approximately $5.0 million increase inexpense.The remainder of Wholesale Banking decreased $37.1 million, or15.3.The decrease was primarily driven by lower Affordable Housing expense,as SunTrust recorded $15.7 million of write-downs in the fourth quarter 2008as compared to $57.7 million of related charges in the fourth quarter of 2007. Certain structural expenses also decreased partially offset by higherincentive-based compensation and higher other real estate expense.Twelve Months Ended December 31, 2008 vs. 2007Wholesale Banking's net income for the twelve months ended December 31, 2008was $217.3 million, an increase of $21.2 million, or 10.8, compared to thesame period in 2007.Lower market valuation trading losses in structuredproducts and Affordable Housing related noninterest expenses were partiallyoffset by an increase in provision expense, lower merchant banking gains, andhigher incentive-based compensation.Net interest income was $564.7 million for the twelve months ended December31, 2008, relatively unchanged from prior year.Average loan balancesincreased $4.8 billion, or 16.2, while the corresponding net interest incomedeclined $7.1 million, or 1.6.The migration of middle market clients fromRetail and Commercial to Wholesale Banking accounted for approximately $1.8billion of the loan balances and $25.8 million of the loan-related netinterest income increase.The remainder of Wholesale Banking increased $3.0billion, or 10.4, driven by increased corporate banking loans and leasefinancing which was partially offset by reductions in the residential builderportfolio.The corresponding net interest income declined $32.9 million, or7.3, due to a shift in mix away from higher spread residential constructionloans to lower spread commercial loans, as well as an increase in residentialconstruction nonaccrual loans.Total average deposits increased $3.5 billion,or 63.2, primarily in higher cost interest-bearing deposits.Deposit-relatednet interest income decreased $8.9 million, or 6.6, driven by the lowercredit for funds on demand deposits partially offset by the increased volumesin higher cost deposit products.Provision for loan losses was $167.4 million, an increase of $120.5 millionover the prior year, resulting from higher residential builder relatedcharge-offs as well as increased charge-offs on middle market clientspartially offset by lower charge-offs in corporate banking.Noninterest income increased $168.2 million, or 35.0, primarily due to lowermarket valuation trading losses in structured products.In addition,increases in direct finance, loan syndications, credit-related fees, and fixedincome sales and trading were partially offset by a reduction in merchantbanking gains and lower revenues in structured leasing, derivatives, andAffordable Housing.Noninterest expense increased $6.4 million, or 0.8, primarily due to thetransfer of the middle market business from Retail and Commercial to WholesaleBanking which accounted for approximately $24.9 million of the increase. 2007Mortgage had a net loss of $285.6 million for the fourth quarter of 2008,compared to a net loss of $30.4 million in fourth quarter 2007, a decrease of$255.2 million, principally due to higher credit-related costs.Net interest income declined $34.3 million, or 26.6.Average loans were down$0.8 billion, or 2.4, while net interest income was down $30.9 million, or34.6.Nonaccrual loans accounted for $13.5 million of the net interestincome decline as average nonaccruals increased $1.2 billion.Accruing loansdeclined $1.9 billion, or 6.2, while net interest income decreased $17.4million, or 18.2.The decline in net interest income was influenced bycompressed spreads due to a change in product mix as declines inconstruction-perm and Alt-A balances were replaced with lower yielding primefirst lien mortgages.Provision for loan losses increased $94.0 million to $140.2 million due tohigher residential mortgage and residential construction net charge-offs.Total noninterest income declined $33.7 million, or 33.5.The decline wasprincipally due to lower origination income and higher loan repurchasereserves, partially offset by securities gains in excess of mortgage servicingrights impairment.Mortgage production income declined $55.7 million, withloan repurchase reserves increasing $32.5 million, while income related tolower loan production drove the remainder of the decrease.Loan production of$7.2 billion was down $5.7 billion, or 44.2, compared to the fourth quarterof 2007.Mortgage servicing income was down $393.5 million, driven by $370.0million of impairment of mortgage servicing rights that were carried atamortized cost.Also, mortgage servicing income in the fourth quarter of 2007included $19.2 million of gains from the sale of servicing rights, as comparedto no sales in the fourth quarter of 2008.The mortgage servicing rightsimpairment expense was offset by $410.7 million of gains from the sale ofavailable for sale securities that were acquired in conjunction with theCompany's risk management strategies associated with economically hedging thevalue of mortgage servicing rights.Total loans serviced at December 31, 2008were $162.0 billion, an increase of $12.2 billion, or 8.1.Total noninterest expense was up $254.6 million, or 106.7, principally due tohigher credit-related costs.Operating losses increased $165.1 million drivenby fraud losses and reserves primarily related to borrower misrepresentationand insurance claim denials.Reserves for mortgage reinsurance lossesincreased $99.9 million and other real estate and collection services costsincreased $25.1 million.Staff and commissions expense were down $23.8million, or 22.5, primarily due to lower loan production.Twelve Months Ended December 31, 2008 vs. 2007Mortgage reported a net loss for the twelve months ended December 31, 2008 of$561.8 million, compared to $5.4 million in net income in 2007, a decrease of$567.2 million, principally due to higher credit-related costs.Net interest income declined $67.0 million, or 12.8.Average loans increased$0.5 billion, or 1.7, while the resulting net interest income declined $78.7million.Nonaccrual loans accounted for $46.0 million of the net interestincome decline as average nonaccrual loans increased $1.1 billion.Accruingloans declined $0.5 billion, or 1.8, while net interest income decreased$32.7 million, or 8.5.The decline in net interest income was influenced bya change in product mix as declines in construction-perm and Alt-A balanceswere replaced with lower yielding prime first lien mortgages.Averagemortgage loans held for sale declined $5.5 billion; however, due to wideningspreads, net interest income increased $25.4 million.Average investmentsecurities were up $0.8 billion while net interest income increased $21.5million primarily due to improved spreads.Total deposits increased $0.1billion, or 4.8, although net interest income on deposits and otherliabilities decreased $17.7 million primarily due to lower short-term interestrates.Provision for loan losses increased $410.1 million to $491.3 million due tohigher residential mortgage and residential construction net charge-offs.Total noninterest income increased $70.2 million, or 19.2, due to reduced netvaluation losses, increased production fee income, and securities gains inexcess of mortgage servicing rights impairment, partially offset by higherrepurchase reserves and lower gains from the sale of mortgage servicingrights.Total production income increased $83.2 million, or 85.5, driven byreduced valuation losses associated with secondary market loans and therecognition of loan origination fees resulting from the Company's election torecord certain mortgage loans at fair value beginning in May 2007.Theincrease in loan production income was partially offset by increased reservesfor the repurchase of loans. 2007Wealth and Investment Management's net income for the fourth quarter of 2008was $34.0 million, an increase of $129.6 million compared to the fourthquarter of 2007.The increase in net income was primarily due to a $250.5million market valuation loss recorded in the fourth quarter of 2007 relatedto securities purchased from the Company's RidgeWorth subsidiary.Net interest income decreased $3.0 million, or 3.5, primarily due to loweraverage deposits.Average deposits were down $0.8 billion, or 7.8, while netinterest income on deposits declined $1.6 million, or 2.9, due to the loweraverage balance, as well as a lower credit for funds on demand deposits. SunTrust's total assets under advisement wereapproximately $192.0 billion, which includes $113.1 billion in assets undermanagement, $45.7 billion in non-managed trust assets, $31.2 billion in retailbrokerage assets, and $2.0 billion in non-managed corporate trust assets.Total noninterest expense decreased $43.2 million, or 17.3, driven by lowerstaff and lower structural expense resulting from the sale of LighthousePartners and First Mercantile Trust.Employee compensation declined $17.3million, or 14.4, resulting from reduced headcount and lower incentivepayments.Twelve Months Ended December 31, 2008 vs.

2007Wealth and Investment Management's net income for the twelve months endedDecember 31, 2008 was $186.9 million, an increase of $98.6 million compared tosame period in 2007.The following transactions represented $141.7 million ofthe year-over-year increase:$39.4 million decrease due to the after-tax impact of the marketvaluation loss on Lehman bonds purchased from the Company'sRidgeWorth subsidiary in the third quarter of 2008.$18.4 million increase due to the after-tax gain on the sale of FirstMercantile Trust in the second quarter of 2008.$27.9 million decrease due to the after-tax impairment charge on aclient-based intangible asset in the second quarter of 2008.$55.4 million increase due to the after-tax gain on sale of a minorityinterest in Lighthouse Investment Partners in the first quarter of2008.$155.3 million increase due to the after-tax impact of the marketvaluation losses in the fourth quarter of 2007 on securities purchasedfrom the Company's RidgeWorth subsidiary.$20.1 million decrease due to the after-tax gain resulting from thesaleupon merger of Lighthouse Partners into Lighthouse Investment Partnersin the first quarter of 2007.Net interest income decreased $20.3 million, or 5.8, primarily due to adecline in deposit-related net interest income.Average deposits were down$0.2 billion, or 2.2, while net interest income on deposits declined $14.4million, or 6.5, due to the decreased average balance, as well as a lowercredit for funds on demand deposits.Average loans increased $0.1 billion, or1.8, while net interest income declined $5.0 million driven by growth incommercial loans in the professional specialty lending units at compressedspreads.Provision for loan losses increased $18.4 million driven by higher home equitylines, personal credit lines, and consumer mortgage net charge-offs.Total noninterest income increased $138.6 million, or 17.1, compared to thetwelve months ended December 31, 2007 driven by a decrease in market valuationlosses.Additionally, gains on the sale of non-strategic businesses wereoffset by the corresponding loss of revenue and lower market valuations onmanaged equity assets.Trading gains and losses increased $168.4 millionprimarily due to a $250.5 million market valuation loss in 2007 related tosecurities purchased from the Company's RidgeWorth subsidiary as compared to a$63.5 million market valuation loss in 2008 related to Lehman bonds purchasedfrom the Company's RidgeWorth subsidiary.A $29.6 million gain on sale ofFirst Mercantile Trust in 2008 and $24.1 million of incremental noninterestincome from the sale of the Company's Lighthouse Partners investment alsoincreased income. Retail investment income increased $6.8 million, or 2.5,due to higher annuity sales and higher recurring managed account fees.Trustincome decreased $91.1 million, or 13.4, primarily due to the aforementionedsales of Lighthouse Partners and First Mercantile Trust, which resulted in a$49.1 million decline in trust income as well as lower market valuations onmanaged equity assets.Total noninterest expense decreased $52.8 million, or 5.2, despite a $45.0million impairment charge on a client based intangible in the second quarterof 2008.Noninterest expense before intangible amortization declined $91.0million, or 9.2, driven by lower staff, discretionary, and indirect expenses,as well as lower structural expense resulting from the sales of LighthousePartners and First Mercantile Trust.Corporate Other and TreasuryThree Months Ended December 31, 2008 vs. 2007Corporate Other and Treasury's net loss for the fourth quarter of 2008 was$126.8 million, compared to net income of $6.4 million in the fourth quarterof 2007, a decrease of $133.2 million, primarily due to a $221.3 millionincrease in provision for loan losses.Net interest income increased $49.3 million, or 31.9, over the same period in2007 mainly due to increased gains on interest rate swaps employed as part ofan overall interest rate risk management strategy. Total average assetsdecreased $3.6 billion, or 16.8, mainly due to the reduction in the size ofthe investment portfolio in 2007 as part of the Company's overall balancesheet management strategy.Total average deposits decreased $3.7 billion, or22.7, mainly due to a decrease in brokered deposits, as the Company reducedits reliance on wholesale funding sources.Provision for loan losses, which predominantly represents the differencebetween consolidated provision for loan losses and net charge-offs for thelines of business was $410.4 million, compared to $189.1 million in 2007, anincrease of $221.3 million.Total noninterest income declined $114.9 million compared to the same periodin 2007.The decline is primarily related to $118.8 million gain on thesale/leaseback of real estate properties in 2007.Total noninterest expense declined $90.3 million.The decrease was mainly duea $14.3 million expense reversal related to Visa litigation, resulting fromthe recognition of the funding by Visa of the litigation escrow account,compared to a $76.9 million accrual in the same period in 2007.Twelve Months Ended December 31, 2008 vs.