SunTrust 2008 Annual Report Download - page 59

right, but not the obligation, to sell to the Counterparty, at prevailing market prices at the time of settlement, any of
the 30 million Coke common shares that are not delivered to the Counterparty in settlement of the variable forward
agreements. The Agreements effectively ensure that we will be able to sell our 30 million Coke common shares at
a price no less than approximately $38.67 per share, while permitting us to participate in future appreciation in the
value of the Coke common shares up to approximately $66.02 per share and approximately $65.72 per share, under
each of the respective Agreements.
During the terms of the Agreements, and until we sell the 30 million Coke common shares, we generally will
continue to receive dividends as declared and paid by Coke and will have the right to vote such shares. However,
the amounts payable to us under the Agreements will be adjusted if actual dividends are not equal to expected
amounts.
Contemporaneously with entering into the Agreements, the Counterparty invested in senior unsecured promissory
notes issued by SunTrust Bank and SunTrust Banks, Inc. (collectively, the “Notes”) in a private placement in an
aggregate principal amount equal to the Minimum Proceeds. The Notes carry stated maturities of approximately
ten years from the effective date and bear interest at one-month LIBOR plus a fixed spread. The Counterparty
pledged the Notes to us and we pledged the 30 million Coke common shares to the Counterparty, securing each
entity’s respective obligations under the Agreements. The pledged Coke common shares are held by an
independent third party custodian and the Counterparty is prohibited under the Agreements from selling, pledging,
assigning or otherwise using the pledged Coke common shares in its business.
We generally may not prepay the Notes. The interest rate on the Notes will be reset upon or after the settlement of
the Agreements, either through a remarketing process or based upon dealer quotations. In the event of an
unsuccessful remarketing of the Notes, we would be required to collateralize the Notes and the maturity of the
Notes may accelerate to the first anniversary of the settlement of the Agreements. However, we presently believe
that it is substantially certain that the Notes will be successfully remarketed.
The Agreements carry scheduled settlement terms of approximately seven years from the effective date. However,
we have the option to terminate the Agreements earlier with the approval of the Federal Reserve. The Agreements
may also terminate earlier upon certain events of default, extraordinary events regarding Coke and other typical
termination events. Upon such early termination, there could be exit costs or gains, such as certain breakage fees
including an interest rate make-whole amount, associated with both the Agreements and the Notes. Such costs or
gains may be material but cannot be determined at the present time due to the unlikely occurrence of such events
and the number of variables that are unknown. However, the payment of such costs, if any, will not result in us
receiving less than the Minimum Proceeds from the Agreements. We expect to sell all of the Coke common shares
upon settlement of the Agreements, either under the terms of the Agreements or in another market transaction. See
Note 17, “Derivative Financial Instruments”, to the Consolidated Financial Statements for additional discussion of
the transactions.
The Federal Reserve determined that we may include in Tier 1 Capital, as of the effective date of the Agreements,
an amount equal to the Minimum Proceeds minus the deferred tax liability associated with the ultimate sale of the
30 million Coke common shares. Accordingly, the Agreements resulted in an increase in Tier 1 Capital during the
third quarter of approximately $728 million or an estimated 43 basis points as of the transaction date.
DEPOSITS
Table 13 – Composition of Average Deposits
Year Ended December 31 Percent of Total
(Dollars in millions) 2008 2007 2006 2008 2007 2006
Noninterest-bearing $20,949.0 $21,677.2 $23,312.3 18.0 % 18.1 % 18.9 %
NOW accounts 21,080.7 20,042.8 17,214.4 18.2 16.7 13.9
Money market accounts 26,564.8 22,676.7 24,507.9 22.9 18.9 19.8
Savings 3,770.9 4,608.7 5,371.1 3.2 3.8 4.3
Consumer time 16,770.2 16,941.3 15,622.7 14.5 14.2 12.7
Other time 12,197.2 12,073.5 11,146.9 10.5 10.1 9.0
Total consumer and commercial deposits 101,332.8 98,020.2 97,175.3 87.3 81.8 78.6
Brokered deposits 10,493.2 16,091.9 17,425.7 9.0 13.4 14.1
Foreign deposits 4,250.3 5,764.5 9,064.5 3.7 4.8 7.3
Total deposits $116,076.3 $119,876.6 $123,665.5 100.0 % 100.0 % 100.0 %
Average consumer and commercial deposits increased during 2008 by $3.3 billion, or 3.4%, compared to 2007. The growth
was in NOW, money market, and other time deposits which, in aggregate, increased $5.0 billion, or 9.2%. The increase was
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