SunTrust 2004 Annual Report Download - page 67

MANAGEMENT’S DISCUSSION continued
SUNTRUST 2004 ANNUAL REPORT 65
nal control over financial reporting as of December 31, 2004 based
on the criteria in the Internal Control—Integrated Framework.
Management’s assessment of the effectiveness of the Company’s
Internal Control over Financial Reporting as of December 31, 2004
has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report (which
expressed an unqualified opinion on management’s assessment and
an adverse opinion on the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2004) which
appears on pages 67 through 68.
CHANGES IN INTERNAL CONTROL OVER
FINANCIAL REPORTING
Management of the Company has evaluated, with the participation
of the Company’s Chief Executive Officer and Chief Financial
Officer, changes in the Company’s internal controls over financial
reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the
Exchange Act) during the fourth quarter of 2004. In connection with
such evaluation, the Company has determined that there have been
changes in internal control over financial reporting during the
fourth quarter that have materially affected or are reasonably likely
to materially affect, the Company’s internal control over financial
reporting.As discussed in Management’s Report on Internal Control
Over Financial Reporting, in the fourth quarter of 2004, the
Company identified a material weakness in internal controls over
financial reporting relating to the Company’s process of establish-
ing the ALLL that existed during 2004.
As of the end of the period covered by this report, the Company has
not fully remediated the material weakness in the Company’s inter-
nal control over financial reporting relating to the ALLL. However,
the Company has taken the following remedial actions:
• The Company terminated three members of its credit administra-
tion division, including its Chief Credit Officer.
• The Controller was reassigned to a position in the Company with
responsibilities that involve areas other than accounting or finan-
cial reporting.
• The Company’s ALLL Committee was reconstituted with certain
members of senior management.
• The ALLL policies and procedures have been, and are continuing to
be, documented and significantly augmented.
• The Company has established additional remediation plans to
address internal control deficiencies associated with the ALLL
framework, including additional documentation, training and
supervision, periodic testing and periodic updates to the Audit
Committee. Internal controls surrounding the validation and
testing of systems and models relating to the ALLL process have
been strengthened.
• Management has taken steps, and intends to take additional
steps, to ensure that the Company’s conservative credit culture
does not interfere with the application of GAAP in the ALLL calcu-
lation process.
Other than the changes identified above, there have been no
changes to the Company’s internal control over financial reporting
that occurred since the beginning of the Company’s fourth quarter
of 2004 that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
CEO AND CFO CERTIFICATIONS
The Company’s Chief Executive Officer and Chief Financial Officer
have filed with the Securities and Exchange Commission the certifi-
cations required by Section 302 of the Sarbanes-Oxley Act of 2002
as Exhibits 31.1 and 31.2 to the Company’s 2004 Form 10-K. In
addition, on April 28, 2004 the Company’s CEO certified to the New
York Stock Exchange that he was not aware of any violation by the
Company of the NYSE corporate governance listing standards as in
effect on April 28, 2004.The foregoing certification was unqualified.
OTHER INFORMATION
On December 31, 2004 the Company amended the NCF Supple-
mental Executive Retirement Plan (the “NCF SERP”) to freeze the
NCF SERP as to new participants and to freeze the NCF SERP as to
benefit accruals for participants in the NCF SERP, each effective as
of the close of business on December 31, 2004. In addition, on
December 31, 2004 the Company amended the NCF Equity
Investment Plan (the “NCF EIP”) to freeze the NCF EIP as to new par-
ticipants and to provide that the NCF EIP will not accept any new
deferrals from existing participants nor credit matching contribu-
tions to participants’ accounts in accordance with the terms of the
NCF EIP, each effective as of the close of business on December 31,
2004. Although the Company filed a Current Report on Form 8-K
with respect to the foregoing on February 11, 2005, the filing was
not timely.
On December 8, 2004 the Compensation Committee of the
Company’s Board of Directors designated certain key employees as
new participants in the Company’s Supplemental Executive
Retirement Plan (the “SERP”), which would require an amendment
to the SERP (the “Third Amendment”). Although the Third
Amendment has not been formally agreed upon and executed, the
Company has added the additional participants. In addition, on
January 6, 2005, the Compensation Committee approved Thomas
M. Garrott, III as a Tier 2 participant in the SunTrust SERP. The
Company did not file a Current Report on Form 8-K with respect to
the addition of the new participants.