SunTrust 2006 Annual Report Download - page 24

Significant legal actions could subject us to substantial uninsured liabilities.
We are from time to time subject to claims related to our operations. These claims and legal actions,
including supervisory actions by our regulators, could involve large monetary claims and significant
defense costs. Substantial legal liability or significant regulatory action against us could have material
adverse financial effects or cause significant reputational harm to us, which in turn could seriously harm
our business prospects. We may be exposed to substantial uninsured liabilities, which could adversely
affect our results of operations and financial condition.
Company Risks
We have in the past and may in the future pursue acquisitions, which could affect costs and from
which we may not be able to realize anticipated benefits.
We have historically pursued an acquisition strategy, and intend to continue to seek additional
acquisition opportunities. We may not be able to successfully identify suitable candidates, negotiate
appropriate acquisition terms, complete proposed acquisitions, successfully integrate acquired
businesses into the existing operations, or expand into new markets. Once integrated, acquired
operations may not achieve levels of revenues, profitability, or productivity comparable with those
achieved by our existing operations, or otherwise perform as expected.
Acquisitions involve numerous risks, including difficulties in the integration of the operations,
technologies, services and products of the acquired companies, and the diversion of management’s
attention from other business concerns. We may not properly ascertain all such risks prior to an
acquisition or prior to such a risk impacting us while integrating an acquired company. As a result,
difficulties encountered with acquisitions could have a material adverse effect on the business, financial
condition, and results of operations.
Furthermore, we must generally receive federal regulatory approval before we can acquire a bank or
bank holding company. In determining whether to approve a proposed bank acquisition, federal bank
regulators will consider, among other factors, the effect of the acquisition on competition, financial
condition, future prospects, including current and projected capital levels, the competence, experience,
and integrity of management, compliance with laws and regulations, the convenience and needs of the
communities to be served, including the acquiring institution’s record of compliance under the
Community Reinvestment Act, and the effectiveness of the acquiring institution in combating money
laundering activities. In addition, we cannot be certain when or if, or on what terms and conditions, any
required regulatory approvals will be granted. Consequently, we might be required to sell portions of the
acquired institution as a condition to receiving regulatory approval or we may not obtain regulatory
approval for a proposed acquisition on acceptable terms or at all, in which case we would not be able to
complete the acquisition despite the time and expenses invested in pursuing it.
We depend on the expertise of key personnel. If these individuals leave or change their roles
without effective replacements, operations may suffer.
The success of our business to date has been, and the continuing success will be, dependent to a large
degree on the continued services of executive officers, especially our President and Chief Executive
Officer, James M. Wells, III, and other key personnel who have extensive experience in the industry.
We do not carry key person life insurance on any of the executive officers or other key personnel. If we
lose the services of any of these integral personnel and fail to manage a smooth transition to new
personnel, the business could be impacted.
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