SunTrust 2008 Annual Report Download - page 23

Industry Risks
Regulation by federal and state agencies could adversely affect the business, revenue, and profit margins.
We are heavily regulated by federal and state agencies. This regulation is to protect depositors, the federal deposit insurance
fund and the banking system as a whole. Congress and state legislatures and federal and state regulatory agencies continually
review banking laws, regulations, and policies for possible changes. Changes to statutes, regulations, or regulatory policies,
including interpretation or implementation of statutes, regulations, or policies, could affect us adversely, including limiting
the types of financial services and products we may offer and/or increasing the ability of nonbanks to offer competing
financial services and products. Also, if we do not comply with laws, regulations, or policies, we could receive regulatory
sanctions and damage to our reputation.
Competition in the financial services industry is intense and could result in losing business or reducing margins.
We operate in a highly competitive industry that could become even more competitive as a result of legislative, regulatory
and technological changes, and continued consolidation. We face aggressive competition from other domestic and foreign
lending institutions and from numerous other providers of financial services. The ability of non-banking financial institutions
to provide services previously limited to commercial banks has intensified competition. Because non-banking financial
institutions are not subject to the same regulatory restrictions as banks and bank holding companies, they can often operate
with greater flexibility and lower cost structures. Securities firms and insurance companies that elect to become financial
holding companies may acquire banks and other financial institutions. This may significantly change the competitive
environment in which we conduct business. Some of our competitors have greater financial resources and/or face fewer
regulatory constraints. As a result of these various sources of competition, we could lose business to competitors or be forced
to price products and services on less advantageous terms to retain or attract clients, either of which would adversely affect
our profitability.
Future legislation could harm our competitive position.
Federal, state, and local legislatures increasingly have been considering proposals to substantially change the financial
institution regulatory system and to expand or contract the powers of banking institutions and bank holding companies.
Various legislative bodies have also recently been considering altering the existing framework governing creditors’ rights,
including legislation that would result in or allow loan modifications of various sorts. Such legislation may change banking
statutes and the operating environment in substantial and unpredictable ways. If enacted, such legislation could increase or
decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks,
savings associations, credit unions, and other financial institutions. We cannot predict whether new legislation will be
enacted and, if enacted, the effect that it, or any regulations, would have on our activities, financial condition, or results of
operations.
Maintaining or increasing market share depends on market acceptance and regulatory approval of new products and
services.
Our success depends, in part, on the ability to adapt products and services to evolving industry standards. There is increasing
pressure to provide products and services at lower prices. This can reduce net interest income and noninterest income from
fee-based products and services. In addition, the widespread adoption of new technologies could require us to make
substantial capital expenditures to modify or adapt existing products and services or develop new products and services. We
may not be successful in introducing new products and services in response to industry trends or development in technology,
or those new products may not achieve market acceptance. As a result, we could lose business, be forced to price products
and services on less advantageous terms to retain or attract clients, or be subject to cost increases.
We may not pay dividends on your common stock.
Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds
legally available for such payments. Although we have historically declared cash dividends on our common stock, we are not
required to do so and may reduce or eliminate our common stock dividend in the future. This could adversely affect the
market price of our common stock. Also, our ability to increase our dividend or to make other distributions is restricted due
to our participation in the Capital Purchase Program, which limits (without the consent of the Treasury) our ability to
increase our dividend or to repurchase our common stock for so long as any securities issued under such program remain
outstanding.
Our ability to receive dividends from our subsidiaries accounts for most of our revenue and could affect our liquidity
and ability to pay dividends.
We are a separate and distinct legal entity from our subsidiaries, including SunTrust Bank. We receive substantially all of our
revenue from dividends from our subsidiaries. These dividends are the principal source of funds to pay dividends on our
common stock and interest and principal on our debt. Various federal and/or state laws and regulations limit the amount of
dividends that our bank and certain of our nonbank subsidiaries may pay us. Also, our right to participate in a distribution of
assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.
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