SunTrust 2007 Annual Report Download - page 117

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
Note 14 – Capital
The Company is subject to various regulatory capital requirements which involve quantitative measures of the Company’s
assets.
2007 2006
(Dollars in millions) Amount Ratio Amount Ratio
SunTrust Banks, Inc.
Tier 1 capital $11,425 6.93% $12,525 7.72%
Total capital 16,994 10.30 18,025 11.11
Tier 1 leverage 6.90 7.23
SunTrust Bank
Tier 1 capital 12,338 7.60 12,832 7.97
Total capital 16,944 10.44 17,454 10.85
Tier 1 leverage 7.56 7.35
Substantially all of the Company’s retained earnings are undistributed earnings of the Bank, which are restricted by various
regulations administered by federal and state bank regulatory authorities. Retained earnings of the Bank available for
payment of cash dividends to the Bank Parent Company under these regulations totaled approximately $0.6 billion and $1.8
billion at December 31, 2007 and 2006, respectively. The Company also has amounts of cash reserves required by the
Federal Reserve. As of December 31, 2007 and 2006, these reserve requirements totaled $882.0 million and $901.2 million,
respectively.
Preferred Stock
On September 12, 2006, the Company issued depositary shares representing ownership interests in 5,000 shares of Perpetual
Preferred Stock, Series A, no par value and $100,000 liquidation preference per share (the “Series A Preferred Stock”). The
Series A Preferred Stock has no stated maturity and will not be subject to any sinking fund or other obligation of the
Company. Dividends on the Series A Preferred Stock, if declared, will accrue and be payable quarterly at a rate per annum
equal to the greater of three-month LIBOR plus 0.53 percent, or 4.00 percent. Dividends on the shares were initially
cumulative. However, dividends on the shares became non-cumulative immediately upon the effective date of an amendment
to the Company’s articles of incorporation to eliminate the requirement that the Company’s preferred stock dividend be
cumulative. The amendment became effective upon filing with the Secretary of State of the State of Georgia on April 17,
2007.
Shares of the Series A Preferred Stock have priority over the Company’s common stock with regard to the payment of
dividends. As such, the Company may not pay dividends on or repurchase, redeem, or otherwise acquire for consideration
shares of its common stock unless dividends for the Series A Preferred Stock have been declared for that period, and
sufficient funds have been set aside to make payment.
On or after September 15, 2011, the Series A Preferred Stock will be redeemable at the Company’s option at a redemption
price equal to $100,000 per share, plus any declared and unpaid dividends. Except in certain limited circumstances, the
Series A Preferred Stock does not have any voting rights.
During the years ended December 31, 2007 and 2006, the Board declared and paid cash dividends on perpetual preferred
stock totaling $30.3 million and $7.7 million, respectively.
Accelerated Share Repurchase Agreement
On May 31, 2007, SunTrust entered into an accelerated share repurchase (“ASR”) agreement with a global investment bank
to purchase $800 million (gross of settlement costs) of SunTrust’s common stock. On June 7, 2007, the global investment
bank delivered to SunTrust 8,022,254 shares of SunTrust common stock, in exchange for the aforementioned consideration.
During the third quarter of 2007, SunTrust completed this ASR when the Company received, without additional payment, an
additional 1,462,091 shares.
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