SunTrust 2008 Annual Report Download - page 26

• governmental and regulatory legislation or actions
• issuances of shares of common stock or other securities in the future;
• changes in dividends;
• the addition or departure of key personnel;
• cyclical fluctuations;
• changes in financial estimates or recommendations by securities analysts regarding us or shares of our common
stock;
• announcements by us or our competitors of new services or technology, acquisitions, or joint ventures; and
• activity by short sellers and changing government restrictions on such activity.
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 us in
reports we file or submit under the Exchange Act is accurately 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 a 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 us to certain market risks.
We maintain an available for sale securities portfolio and trading assets which include various types of instruments and
maturities. In addition, we 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 Statement of Financial Accounting Standards (“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, market liquidity,
and our market-based credit spreads, as well as to the risk of default by specific borrowers. We manage 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 securities and trading positions 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. Additionally, accounting regulations may require us to record a charge prior to the actual realization of
a loss when market valuations of such securities are impaired and such impairment is considered to be other than temporary.
We may enter into transactions with off-balance sheet affiliates or our 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.
Depending on the nature and magnitude of any transaction we enter into with off-balance sheet entities, accounting rules may
require us to consolidate the financial results of these entities with our financial results.
We are subject to market risk associated with our asset management and commercial paper conduit businesses.
During 2007 and 2008, we recorded market valuation losses related to securities that we purchased from certain money
market funds managed by our subsidiary RidgeWorth as well as Three Pillars Funding, LLC (“Three Pillars”), a multi-seller
commercial paper conduit sponsored by us. At the time of purchase, these securities were predominantly AAA or AA-rated,
residential MBS, structured investment vehicle (“SIVs”) securities, and corporate and consumer collateralized debt
obligations. We cannot provide assurance that we will not sustain additional losses in the future related to these securities or
14