SunTrust 2006 Annual Report Download - page 118
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SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
Deferred income tax liabilities and assets result from temporary differences between assets and
liabilities measured for financial reporting purposes and for income tax return purposes. These assets
and liabilities are measured using the enacted tax rates and laws that are currently in effect. The
significant components of the net deferred tax liability at December 31 were as follows:
(Dollars in thousands) 2006 2005
Deferred tax assets
Allowance for loan losses $386,796 $379,098
Accrued expenses 96,203 130,539
Other 136,321 136,091
Gross deferred tax assets $619,320 $645,728
Deferred tax liabilities
Net unrealized gains in accumulated other comprehensive income $521,568 $532,466
Leasing 823,763 791,429
Employee benefits 185,737 181,244
Mortgage 311,774 233,214
Securities 89,910 58,418
Intangible assets 41,753 39,497
Fixed assets 44,334 39,595
Loans 97,971 95,487
Undistributed dividends 95,382 43,842
Other 80,381 61,572
Gross deferred tax liabilities $2,292,573 $2,076,764
Net deferred tax liability $1,673,253 $1,431,036
SunTrust and its subsidiaries file consolidated income tax returns where permissible or required. Each
subsidiary generally remits current taxes to or receives current refunds from the Parent Company based
on what would be required had the subsidiary filed an income tax return as a separate entity. Deferred
tax assets resulting from state net operating loss carryforwards consist of $38.7 million (net of a
valuation allowance of $6.1 million) for 2006 and $28.3 million (net of valuation allowance of $2.8
million) for 2005. The state net operating losses expire, if not utilized, in varying amounts from 2007 to
2023.
The Company’s federal and state income tax returns are subject to review and examination by
government authorities. Various examinations are now in progress. In the opinion of management, any
future adjustments which may result from these examinations should not have a material effect on the
Company’s Consolidated Financial Statements.
Note 16 - Employee Benefit Plans
SunTrust sponsors various incentive plans for eligible employees. The Management Incentive Plan for
key employees provides for potential annual cash awards based on the attainment of the Company’s
earnings and/or the achievement of business unit and individual performance objectives. The
Performance Unit Plan (“PUP”) for key executives provides potential cash awards based on multi-year
earnings performance in relation to earnings goals established by the Compensation Committee
105