SunTrust 2006 Annual Report Download - page 110

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SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
without changing any other assumption. In reality, changes in one factor may result in changes in
another, which might magnify or counteract the sensitivities.
The following is the activity of mortgage servicing rights included in intangible assets in the
Consolidated Balance Sheets as of December 31.
(Dollars in thousands) 2006 2005 2004
Balance at beginning of year $657,604 $482,392 $449,293
Amortization 1(195,627) (166,482) (168,127)
Servicing rights originated 503,801 341,694 196,118
NCF acquisition -- 5,108
Sale/securitization of mortgage servicing rights (155,269) --
Balance at end of year $810,509 $657,604 $482,392
1Included $72.3 million, $89.6 million, and $77.4 million for the years ended December 31, 2006, 2005, and 2004, respectively, on loans that have been
paid-in-full and loans that have been foreclosed.
No valuation allowances were required at December 31, 2006, 2005, and 2004 for the Company’s
mortgage servicing rights. As of December 31, 2006 and 2005, the total unpaid principal balance of
mortgage loans serviced was $130.0 billion and $105.6 billion, respectively. Included in these amounts
were $91.5 billion and $68.9 billion as of December 31, 2006 and 2005, respectively, of loans serviced
for third parties.
Other Securitizations
The Company sells and securitizes student loans, commercial loans, including commercial mortgage
loans, as well as debt securities. Retained interests in securitized assets, including debt securities, are
recorded as securities available for sale or trading assets at their allocated carrying amounts based on the
relative fair value at time of securitization. Retained interests are subsequently carried at fair value,
which, for subordinated and other residual interests for which there is no quoted market price, is
generally estimated based on the present value of expected cash flows, calculated using management’s
best estimates of key assumptions, including credit losses, loan repayment speeds and discount rates
commensurate with the risks involved. Gains or losses upon securitization as well as servicing fees and
collateral management fees are recorded in noninterest income.
In 2006, the Company recognized net gains and fees related to the securitization of commercial and
student loans and debt securities of $47.9 million. Certain cash flows from the securitizations are as
follows for the twelve months ending December 31, 2006.
(Dollars in millions) Student Loans
Commercial
Loans
Debt
Securities
Proceeds from securitizations in 2006 $750.1 $1,546.3 $472.6
Collateral manager fees received - 2.2 -
Servicing fees received 0.7 - -
Other cash flows received on retained
interest - 0.9 -
97