SunTrust 2007 Annual Report Download - page 23

materially impact how we record and report our financial condition and results of operations. In some cases, we could be
required to apply a new or revised standard retroactively, resulting in us restating prior period financial statements.
Our stock price can be volatile.
Our stock price can fluctuate widely in response to a variety of factors including:
• variations in our quarterly operating results;
• changes in market valuations of companies in the financial services industry;
• fluctuations in stock market prices and volumes;
• issuances of shares of common stock or other securities in the future;
• the addition or departure of key personnel;
• seasonal fluctuations;
• changes in financial estimates or recommendations by securities analysts regarding SunTrust or shares of our common
stock; and
• announcements by us or our competitors of new services or technology, acquisitions, or joint ventures.
General market fluctuations, industry factors, and general economic and political conditions and events, such as terrorist
attacks, economic slowdowns or recessions, interest rate changes, credit loss trends, or currency fluctuations, also could
cause our stock price to decrease regardless of operating results.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by
SunTrust in reports we file or submit under the Exchange Act is accumulated and communicated to management, and
recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. We believe
that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision-making can be faulty, that alternative reasoned
judgments can be drawn, or that breakdowns can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of
the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may
occur and not be detected.
Our financial instruments carried at fair value expose the Company to certain market risks.
We maintain an available for sale securities portfolio and trading assets which include various types of instruments and
maturities. Compared to December 31, 2006, in 2007, we increased the size of trading assets in conjunction with the
Company’s adoption of the Statement of Financial Accounting Standards (“SFAS”) No. 157 and SFAS No. 159. In addition,
the Company elected to record selected fixed-rate debt, mortgage loans, securitization warehouses and other trading assets at
fair value. The changes in fair value of the financial instruments elected to be carried at fair value pursuant to the provisions
of SFAS No. 159 are recognized in earnings. The financial instruments carried at fair value are exposed to market risks
related to changes in interest rates and the Company’s market-based credit spreads, as well as to the risk of default by
specific borrowers. The Company manages the market risks associated with these instruments through active hedging
arrangements or broader asset/liability management strategies. Changes in the market values of these financial instruments
could have a material adverse impact on our financial condition or results of operations. We may classify additional financial
assets or financial liabilities at fair value in the future.
Our revenues derived from our investment securities may be volatile and subject to a variety of risks.
We generally maintain investment portfolios in the fixed income, currency, commodity and equity markets. Unrealized gains
and losses associated with our investment portfolio and mark to market gains and losses associated with our trading portfolio
are affected by many factors, including our credit position, interest rate volatility, volatility in capital markets and other
economic factors. Our return on such investments and trading have in the past experienced, and will likely in the future
experience, volatility and such volatility may materially adversely affect our financial condition and results of operations.
We may enter into transactions with off-balance sheet entities affiliated with SunTrust or its subsidiaries.
We engage in a variety of transactions with off-balance sheet entities with which we are affiliated. While we have no
obligation, contractual or otherwise, to do so, under certain limited circumstances, these transactions may involve providing
some form of financial support to these entities. Any such actions may cause us to recognize current or future gains or losses.
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