SunTrust 2007 Annual Report Download - page 105

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SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
On January 2, 2008, SunTrust completed the sale of its 24.9% minority interest in Lighthouse Investment Partners to HFA
Holdings Ltd., an Australian fund manager. SunTrust received $155.0 million in cash consideration, which exceeded the
carrying value of its investment. This minority interest was created on March 30, 2007 when SunTrust merged its wholly-
owned subsidiary, Lighthouse Partners into Lighthouse Investment Partners. The Company will continue to earn a revenue
share related to clients it refers to the funds.
Note 3 – Funds Sold and Securities Purchased Under Agreements to Resell
Funds sold and securities purchased under agreements to resell at December 31 were as follows:
(Dollars in thousands) 2007 2006
Federal funds $400,300 $209,225
Resell agreements 947,029 840,821
Total funds sold and securities purchased under agreements to resell $1,347,329 $1,050,046
Securities purchased under agreements to resell are collateralized by U.S. government or agency securities and are carried at
the amounts at which securities will be subsequently resold. The Company takes possession of all securities under
agreements to resell and performs the appropriate margin evaluation on the acquisition date based on market volatility, as
necessary. The Company requires collateral between 100% and 105% of the underlying securities. The total market value of
the collateral held was $999.0 million and $849.9 million at December 31, 2007 and 2006, of which $527.8 million and
$561.8 million was repledged, respectively.
Note 4 – Trading Assets and Liabilities
The fair values of the components of trading account assets and liabilities at December 31 were as follows:
(Dollars in thousands) 2007 2006
Trading Assets
U.S. government and agency securities $4,133,490 $838,301
Corporate and other debt securities 2,821,737 409,029
Equity securities 242,680 2,254
Mortgage-backed securities 938,930 140,531
Derivative contracts 1,977,401 1,064,263
Municipal securities 171,203 293,311
Commercial paper 2,368 29,940
Other securities and loans 230,570 -
Total trading assets $10,518,379 $2,777,629
Trading Liabilities
U.S. government and agency securities $404,501 $382,819
Corporate and other debt securities 126,437 -
Equity securities 68 77
Mortgage-backed securities 61,672 -
Derivative contracts 1,567,707 1,251,201
Total trading liabilities $2,160,385 $1,634,097
The Company purchased certain trading securities, classified primarily within corporate and other debt securities, during the
latter half of 2007 from (i) an institutional private placement fund managed by Trusco Capital Management, Inc. (“Trusco”),
a subsidiary of the Company, (ii) Three Pillars Funding, LLC, a multi-seller commercial paper conduit sponsored by the
Company and (iii) certain money market funds managed by Trusco. The acquired securities were predominantly AAA or
AA-rated at the time they were originally purchased by these entities. In the fourth quarter of 2007, while certain securities
were not downgraded, these securities experienced an increase in the loss severity of the underlying collateral, which
included Alt-A and subprime mortgages, resulting in a decline in market value of these securities. Total valuation losses
recorded with respect to these instruments during 2007 were $527.7 million.
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