SunTrust 2006 Annual Report Download - page 20

Factors that might cause our future financial performance to vary from that described in our forward-
looking statements include risks discussed in the MD&A and in other periodic reports filed with the
SEC. In addition, the following discussion sets forth certain risks and uncertainties that we believe could
cause actual future results to differ materially from expected results. However, other factors besides
those listed below or discussed in our reports to the SEC also could adversely affect our results, and the
reader should not consider this list of factors to be a complete set of all potential risks or uncertainties.
Business Risks
As a financial services company, adverse changes in general business or economic conditions could
have a material adverse effect on our financial condition and results of operations.
A sustained weakness or weakening in business and economic conditions generally or specifically in the
principal markets in which we do business could have one or more of the following adverse impacts on
business:
•A decrease in the demand for loans and other products and services offered by us;
•A decrease in the value of our loans held for sale;
•An increase or decrease in the usage of unfunded commitments;
•An increase in the number of clients and counterparties who become delinquent, file for protection
under bankruptcy laws or default on their loans or other obligations to us. An increase in the number
of delinquencies, bankruptcies or defaults could result in a higher level of nonperforming assets, net
charge-offs, provision for loan losses, and valuation adjustments on loans held for sale.
Changes in market interest rates or capital markets could adversely affect our revenue and
expense, the value of assets and obligations, costs of capital or liquidity.
Given our business mix, and the fact that most of the assets and liabilities are financial in nature, we tend
to be particularly sensitive to market interest rate movement and the performance of the financial markets.
In addition to the impact on the general economy, changes in interest rates or in valuations in the debt or
equity markets could directly impact us in one or more of the following ways:
•The value of certain on-balance sheet and off-balance sheet financial instruments or the value of equity
investments that we hold, in particular, holdings in common stock of The Coca-Cola Company, which as
of December 31, 2006 were valued at approximately $2.3 billion;
•The yield on earning assets and rates paid on interest bearing liabilities may change in
disproportionate ways;
•The value of assets for which we provide processing services; or
•To the extent we access capital markets to raise funds to support the business, such changes could
affect the cost of such funds or the ability to raise such funds.
The fiscal and monetary policies of the federal government and its agencies could have a material
adverse effect on our earnings.
The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the
United States. Its policies determine in large part the cost of funds for lending and investing and the
return earned on those loans and investments, both of which affect the net interest margin. They also can
materially decrease the value of financial instruments we hold, such as debt securities and Mortgage
Servicing Rights (“MSRs”). Its policies also can adversely affect borrowers, potentially increasing the
risk that they may fail to repay their loans. Changes in Federal Reserve Board policies are beyond our
control and difficult to predict; consequently, the impact of these changes on our activities and results of
operations is difficult to predict.
A decline in the market for residential or commercial real estate could harm our revenues and
profitability.
A significant percentage of our assets are secured by residential or commercial real estate mortgages.
Our financial results may be adversely affected by changes in real estate values. Decreases in real estate
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