SunTrust 2006 Annual Report Download - page 42

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The Company’s charge-off policy meets or exceeds regulatory minimums. Losses on unsecured
consumer loans are recognized at 90-days past-due compared to the regulatory loss criteria of 120 days.
Secured consumer loans, including residential real estate, are typically charged-off between 120 and 180
days, depending on the collateral type, in compliance with FFIEC guidelines. Commercial loans and real
estate loans are typically placed on non-accrual when principal or interest is past-due for 90 days or
more unless the loan is both secured by collateral having realizable value sufficient to discharge the debt
in-full and the loan is in the legal process of collection. Accordingly, secured loans may be charged-
down to the estimated value of the collateral with previously accrued unpaid interest reversed.
Subsequent charge-offs may be required as a result of changes in the market value of collateral or other
repayment prospects.
The ratio of the allowance for loan and lease losses to total nonperforming loans decreased to 196.4% as
of December 31, 2006 from 346.9% as of December 31, 2005. The decline in this ratio was due to a
$235.5 million increase in nonperforming loans driven primarily by a $183.4 million increase in
residential mortgage nonperforming loans. The increase in residential mortgage nonperforming loans
was driven mainly by maturation of this portfolio, predominantly in well-collateralized or insured
conforming and alternative mortgage products that have an average loan-to-value below 80%.
In addition to reserves held in the ALLL, the Company had $2.5 million and $3.6 million in other
liabilities as of December 31, 2006 and 2005, respectively that represents a reserve against certain
unfunded commitments, including letters of credit.
29