SunTrust 2009 Annual Report Download - page 133

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
participants. The individual fair values were then used to record the Series C and Series D Preferred Stock and associated
warrants on a relative fair value basis, with the warrants being recorded in Additional Paid in Capital as permanent equity
and the Series C and Series D Preferred Stock being recorded at a discount of approximately $132 million. Accretion of the
discount associated with the Series C and Series D Preferred Stock is recognized as an increase to preferred stock dividends
in determining net income/(loss) available to common shareholders. The discount is being amortized over a five-year period
from each respective issuance date using the effective yield method and totaled $23.1 million and $3.7 million during 2009
and 2008, respectively.
The Company is subject to certain restrictions on its ability to increase the dividend on common shares as a result of
participating in the CPP. Prior to November 14, 2011, unless the Company has redeemed the Series C and Series D Preferred
Stock or the U.S. Treasury has transferred the Series C and Series D Preferred Stock to a third party, the consent of the U.S.
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 U.S. Treasury has transferred the Series D
Preferred Stock to a third party, the consent of the U.S. 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 CPP, then the anti-dilution warrants issued in connection with the Company’s
participation in the CPP 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 were filed as exhibits to the 2008 10-K.
During the years ended December 31, 2009 and 2008, the SunTrust Board of Directors paid cash dividends on perpetual
preferred stock totaling $246.1million and $37.3 million, respectively.
Accelerated Share Repurchase Agreement
On May 31, 2007, SunTrust entered into an 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/(Loss) were as follows:
(Dollars in thousands) Years ended December 31,
Current income tax expense (benefit) 2009 2008 2007
Federal ($6,496) $140,484 $697,628
State 2,687 13,480 65,644
Total ($3,809) $153,964 $763,272
Deferred income tax expense (benefit)
Federal ($798,507) ($93,895) ($110,760)
State (96,467) (127,340) (36,998)
Total ($894,974) ($221,235) ($147,758)
Total income tax expense (benefit) ($898,783) ($67,271) $615,514
The Company’s income from international operations 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 OCI
related to certain retirement plans were recorded in OCI and had no effect on income tax expense (see Note 23,
“Accumulated Other Comprehensive Income,” to the Consolidated Financial Statements).
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