SunTrust 2008 Annual Report Download - page 137

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
The Company is subject to certain restrictions on its ability to increase the dividend as a result of participating in the Capital
Purchase Program. Prior to November 14, 2011, unless the Company has redeemed the Series C and Series D Preferred Stock
or the Treasury has transferred the Series C and Series D Preferred Stock to a third party, the consent of Treasury will be
required for the Company to declare or pay any dividend or make any distribution on its common stock (other than regular
quarterly cash dividends of not more than $0.77 per share of common stock) or redeem, purchase or acquire any shares of its
common stock or other equity or capital securities, other than in connection with benefit plans consistent with past practice
and certain other circumstances specified in the Purchase Agreement. Prior to December 31, 2011, unless the Company has
redeemed the Series D Preferred Stock or the Treasury has transferred the Series D Preferred Stock to a third party, the
consent of the Treasury will be required for the Company to declare or pay any dividend or make any distribution on its
common stock (other than regular quarterly cash dividends of not more than $0.77 per share of common stock) or redeem,
purchase or acquire any shares of its common stock or other equity or capital securities, other than in connection with benefit
plans consistent with past practice and certain other circumstances specified in the Purchase Agreement. In addition, if the
Company increases its dividend above $0.54 per share per quarter prior to the tenth anniversary of its participation in the
Capital Purchase Program, then the anti-dilution warrants issued in connection with the Company’s participation in the
Capital Purchase Program will require the exercise price and number of shares to be issued upon exercise to be
proportionately adjusted. The amount of such adjustment is determined by a formula and depends in part on the extent to
which the Company raises its dividend. The formulas are contained in the warrant agreements which are filed as exhibits to
this report.
During the years ended December 31, 2008 and 2007, the SunTrust Board of Directors declared and paid cash dividends on
perpetual preferred stock totaling $48.8 million and $30.3 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.
Note 15 - Income Taxes
The components of income tax expense (benefit) included in the Consolidated Statements of Income were as follows:
(Dollars in thousands) Years ended December 31,
Current income tax expense (benefit) 2008 2007 2006
Federal $140,484 $697,628 $753,523
State 13,480 65,644 7,481
Total $153,964 $763,272 $761,004
Deferred income tax expense (benefit)
Federal ($93,895) ($110,760) $105,906
State (127,340) (36,998) 2,060
Total ($221,235) ($147,758) $107,966
Total income tax expense (benefit) ($67,271) $615,514 $868,970
The Company’s income from international operations, before provision for income taxes, was not significant. Additionally,
the tax effects of unrealized gains and losses on securities available for sale, unrealized gains and losses on certain derivative
financial instruments, and other comprehensive income related to certain retirement plans were recorded in other
comprehensive income and had no effect on income tax expense (see Note 23, “Accumulated Other Comprehensive
Income,” to the Consolidated Financial Statements).
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