SunTrust 2004 Annual Report Download - page 87

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
SUNTRUST 2004 ANNUAL REPORT 85
Note 12 / MORTGAGE SERVICING RIGHTS
The following is an analysis of capitalized mortgage servicing rights included in intangible assets in the Consolidated Balance Sheets:
(Dollars in thousands) 2004 2003 2002
Balance at beginning of year $ 449,293 $ 383,918 $ 351,200
Amortization1(168,127) (324,221) (244,625)
Servicing rights originated 196,118 384,198 277,343
Lighthouse acquisition —5,398 —
NCF acquisition 5,108 ——
Balance at end of year $ 482,392 $ 449,293 $ 383,918
1Included $77.4 million, $158.9 million,and $97.2 million for the years ended December 31, 2004, 2003, and 2002, respectively, on loans that have been paid-in-full and loans that have been foreclosed.
No valuation allowances were required at December 31, 2004, 2003, and 2002 for the Company’s mortgage servicing rights.The Company
retained the servicing rights for all its securitized single-family mortgages. Key economic assumptions used to measure total mortgage serv-
icing rights at December 31, 2004 and 2003 were as follows:
2004 2003
Payment rate 14.9% annual 15.6% annual
Weighted-average life 6.2 years 6.2 years
Discount rate 9.5% 9.7%
Weighted-average coupon 5.9% 6.0%
At December 31, 2004 and 2003, key economic assumptions and the sensitivity of the current fair value on retained servicing rights to imme-
diate 10% and 20% adverse changes in those assumptions follow:
(Dollars in millions) 2004 2003
Fair value of retained servicing rights $631.5 $560.6
Weighted-average life (in years) 6.2 6.2
Prepayment rate (annual rate) 14.9% 15.6%
Decline in fair value of 10% adverse change $ 35.5 $ 31.4
Decline in fair value of 20% adverse change 67.8 59.9
Residual cash flows discount rate (annual rate) 9.5% 9.7%
Decline in fair value of 10% adverse change $ 19.1 $ 17.2
Decline in fair value of 20% adverse change 37.1 33.4
At December 31, 2004, $255 million of unused borrowings under
unsecured lines of credit from non-affiliated banks were available to
the Parent Company to support outstanding commercial paper and
provide for general liquidity needs.The average balances of short-
term borrowings for the year ended December 31, 2004, 2003, and
2002 were $1.7 billion, $2.2 billion, and $0.9 billion, respectively,
while the maximum amounts outstanding at any month-end during
the years ended December 31, 2004, 2003, and 2002 were $4.0 bil-
lion, $4.2 billion, and $1.6 billion, respectively.
Note 11 / OTHER SHORT-TERM BORROWINGS
Other short-term borrowings at December 31 include:
2004 2003
(Dollars in thousands) Balance Rates Balance Rates
Commercial paper $— —%$3,216,678 1.06% – 1.14%
Federal funds purchased maturing in over one day 810,000 2.13 31,500 0.88 – 0.97
Master notes 534,220 0.87 311,490 0.45
U.S.Treasury demand notes 477,929 2.00 498,979 0.73
Other 240,400 various 2,499 various
Total other short-term borrowings $2,062,549 $4,061,146
These sensitivities are hypothetical and should be used with cau-
tion. As the figures indicate, changes in fair value based on a 10%
variation in assumptions generally cannot be extrapolated because
the relationship of the change in assumption to the change in
fair value may not be linear.Also, the effect of a variation in a partic-
ular assumption on the fair value of the retained servicing right is