SunTrust 2005 Annual Report Download - page 63

SUNTRUST  ANNUAL REPORT 61
We may not be able to hire or retain additional qualified personnel
and recruiting and compensation costs may increase as a result of turn-
over, both of which may increase costs and reduce profitability and may
adversely impact our ability to implement the business strategy.
Our success depends upon the ability to attract and retain highly
motivated, well-qualified personnel. We face significant competition in
the recruitment of qualified employees. Our ability to execute the busi-
ness strategy and provide high quality service may suffer if we are unable to
recruit or retain a sufficient number of qualified employees or if the costs of
employee compensation or benefits increase substantially.
Our accounting policies and methods are key to how we report
financial condition and results of operations. They may require manage-
ment to make estimates about matters that are uncertain.
Accounting policies and methods are fundamental to how we record
and report the financial condition and results of operations. Management
must exercise judgment in selecting and applying many of these accounting
policies and methods so they comply with US GAAP.
Management has identified certain accounting policies as being criti-
cal because they require management’s judgment to ascertain the valua-
tions of assets, liabilities, commitments and contingencies. A variety of
factors could affect the ultimate value that is obtained either when earning
income, recognizing an expense, recovering an asset, or reducing a liabil-
ity. We have established detailed policies and control procedures that are
intended to ensure these critical accounting estimates are well controlled
and applied consistently. In addition, the policies and procedures are
intended to ensure that the process for changing methodologies occurs
in an appropriate manner. Because of the uncertainty of estimates about
these matters, we cannot guarantee that we will not be required to adjust
accounting policies or restate prior period financial statements.
See the “Critical Accounting Policies” section beginning on page 
and Note , Accounting Policies, to the Consolidated Financial Statements
in this report for more information.
Our stock price can be volatile.
Our stock price can fluctuate widely in response to a variety of factors
including:
• variations in our quarterly operating results;
• changes in market valuations of companies in the financial services
industry;
• fluctuations in stock market prices and volumes;
• issuances of shares of common stock or other securities in the future;
• the addition or departure of key personnel;
• seasonal fluctuations;
• changes in financial estimates or recommendations by securities analysts
regarding SunTrust or shares of our common stock; and
• announcements by us or our competitors of new services or technology,
acquisitions, or joint ventures.
General market fluctuations, industry factors, and general economic
and political conditions and events, such as terrorist attacks, economic
slowdowns or recessions, interest rate changes, credit loss trends, or cur-
rency fluctuations, also could cause our stock price to decrease regardless
of operating results.
Our disclosure controls and procedures may not prevent or detect
all errors or acts of fraud.
Our disclosure controls and procedures are designed to reasonably
assure that information required to be disclosed by SunTrust in reports we
file or submit under the Exchange Act is accumulated and communicated to
management, and recorded, processed, summarized, and reported within
the time periods specified in the SEC’s rules and forms. We believe that any
disclosure controls and procedures or internal controls and procedures, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people or by an
unauthorized override of the controls. Accordingly, because of the inherent
limitations in our control system, misstatements due to error or fraud may
occur and not be detected.
LEGAL PROCEEDINGS
On January , , the SEC issued a formal order of investigation and the
SEC Staff issued subpoenas seeking documents and testimony related to
the Company’s allowance for loan losses and related matters. The Company
is cooperating, and intends to cooperate with the SEC regarding this mat-
ter. In addition, the Company and its subsidiaries are parties to numerous
claims and lawsuits arising in the course of their normal business activities,
some of which involve claims for substantial amounts. Although the ulti-
mate outcome of these suits cannot be ascertained at this time, it is the
opinion of management that none of these matters, when resolved, will
have a material effect on the Company’s consolidated results of operations
or financial position.
PROPERTIES
The Company’s headquarters are located in Atlanta, Georgia. As of
December , , SunTrust Bank owned  of its , full-service
banking offices and leased the remaining banking offices. (See Note ,
Premises and Equipment, to the Consolidated Financial Statements).