SunTrust 2006 Annual Report Download - page 90

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SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements
Note 1 - Accounting Policies
General
SunTrust, one of the nation’s largest commercial banking organizations, is a financial services holding
company with its headquarters in Atlanta, Georgia. SunTrust’s principal banking subsidiary, SunTrust
Bank, offers a full line of financial services for consumers and businesses through its branches located
primarily in Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia, and the
District of Columbia. Within its geographic footprint, the Company operates under five business
segments. These business segments are: Retail, Commercial, Corporate and Investment Banking,
Wealth and Investment Management, and Mortgage. In addition to traditional deposit, credit, and trust
and investment services offered by SunTrust Bank, other SunTrust subsidiaries provide mortgage
banking, credit-related insurance, asset management, securities brokerage and capital market services.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company, its majority-owned
subsidiaries, and variable interest entities (“VIEs”) where the Company is the primary beneficiary. All
significant intercompany accounts and transactions have been eliminated. Results of operations of
companies purchased are included from the date of acquisition. Results of operations associated with
companies or net assets sold are included through the date of disposition. Assets and liabilities of
purchased companies are stated at estimated fair values at the date of acquisition. Investments in
companies which are not VIEs, or where SunTrust is not the primary beneficiary in a VIE, that the
Company owns a voting interest of 20% to 50%, and for which it may have significant influence over
operating and financing decisions, are accounted for using the equity method of accounting. These
investments are included in other assets, and the Company’s proportionate share of income or loss is
included in other noninterest income in the Consolidated Statements of Income.
The preparation of financial statements in conformity with accounting principles generally accepted in
the United States (“US GAAP”) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could vary from these estimates. Certain reclassifications have been made to prior period
amounts to conform to the current period presentation.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks, interest-bearing bank balances, federal
funds sold and securities purchased under agreements to resell. Generally, cash and cash equivalents
have maturities of three months or less, and accordingly, the carrying amount of these instruments is
deemed to be a reasonable estimate of fair value.
Securities and Trading Activities
Securities are classified at trade date as trading or available for sale securities. Securities available for
sale are used as part of the overall asset and liability management process to optimize income and
market performance over an entire interest rate cycle. Interest income and dividends on securities are
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