SunTrust 2011 Annual Report Download - page 154
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Please find page 154 of the 2011 SunTrust annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Notes to Consolidated Financial Statements (Continued)
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At December 31, 2011 and 2010, the Company had $1.7 billion and $972 million, respectively, in senior financing
outstanding to VIEs, which were classified within trading assets on the Consolidated Balance Sheets and carried at fair
value. These VIEs had entered into TRS contracts with the Company with outstanding notional amounts of $1.6 billion
and $969 million at December 31, 2011 and 2010, respectively, and the Company had entered into mirror TRS contracts
with its third parties with the same outstanding notional amounts. At December 31, 2011, the fair values of these TRS
assets and liabilities were $20 million and $17 million, respectively, and at December 31, 2010, the fair values of these
TRS assets and liabilities were $34 million and $32 million, respectively, reflecting the pass-through nature of these
structures. The notional amounts of the TRS contracts with the VIEs represent the Company’s maximum exposure to
loss, although such exposure to loss has been mitigated via the TRS contracts with the third parties. The Company has
not provided any support to the VIE that it was not contractually obligated to for the years ended December 31, 2011 and
2010. For additional information on the Company’s TRS with these VIEs, see Note 17, “Derivative Financial Instruments.”
Community Development Investments
As part of its community reinvestment initiatives, the Company invests almost exclusively within its footprint in multi-
family affordable housing developments and other community development entities as a limited and/or general partner
and/or a debt provider. The Company receives tax credits for various investments. The Company has determined that the
related partnerships are VIEs. During the years ended December 31, 2011 and 2010, the Company did not provide any
financial or other support to its consolidated or unconsolidated investments that it was not previously contractually
required to provide.
For partnerships where the Company operates strictly as the general partner, the Company consolidates these partnerships
on its Consolidated Balance Sheets. As the general partner, the Company typically guarantees the tax credits due to the
limited partner and is responsible for funding construction and operating deficits. As of December 31, 2011 and 2010,
total assets, which consist primarily of fixed assets and cash attributable to the consolidated partnerships, were $5 million
and $8 million, respectively, and total liabilities, excluding intercompany liabilities, were $1 million. Security deposits
from the tenants are recorded as liabilities on the Company’s Consolidated Balance Sheets. The Company maintains
separate cash accounts to fund these liabilities and these assets are considered restricted. The tenant liabilities and
corresponding restricted cash assets were not material as of December 31, 2011 and 2010. While the obligations of the
general partner are generally non-recourse to the Company, as the general partner, the Company may from time to time
step in when needed to fund deficits. During the years ended December 31, 2011 and 2010, the Company did not provide
any significant amount of funding as the general partner or to cover any deficits the partnerships may have generated.
For other partnerships, the Company acts only in a limited partnership capacity. The Company has determined that it is
not the primary beneficiary of these partnerships and accounts for its limited partner interests in accordance with the
accounting guidance for investments in affordable housing projects. The general partner or an affiliate of the general
partner provides guarantees to the limited partner, which protects the Company from losses attributable to operating
deficits, construction deficits and tax credit allocation deficits. Partnership assets of $1.2 billion and $1.1 billion in these
partnerships were not included in the Consolidated Balance Sheets at December 31, 2011 and 2010, respectively. These
limited partner interests had carrying values of $194 million and $202 million at December 31, 2011 and 2010, respectively,
and are recorded in other assets on the Company’s Consolidated Balance Sheets. The Company’s maximum exposure to
loss for these limited partner investments totaled $472 million and $458 million at December 31, 2011 and 2010,
respectively. The Company’s maximum exposure to loss would be borne by the loss of the limited partnership equity
investments along with $249 million and $222 million of loans, interest-rate swaps or letters of credit issued by the
Company to the limited partnerships at December 31, 2011 and 2010, respectively. The difference between the maximum
exposure to loss and the investment and loan balances is primarily attributable to the unfunded equity commitments.
Unfunded equity commitments are amounts that the Company has committed to the partnerships upon the partnerships
meeting certain conditions. When these conditions are met, the Company will invest these additional amounts in the
partnerships.
Additionally, the Company invests in funds whose purpose is to invest in affordable housing developments as the limited
partner investor. The Company owns minority and noncontrolling interests in these funds. As of December 31, 2011 and
2010, the Company's investment in these funds totaled $68 million and $62 million, respectively, and the Company's
maximum exposure to loss on its equity investments, which is comprised of its investments in the funds plus any additional
unfunded equity commitments, was $108 million and $80 million, respectively.
When the Company owns both the limited partner and general partner interests or acts as the indemnifying party, the
Company consolidates the partnerships. As of December 31, 2011 and 2010, total assets, which consist primarily of fixed
assets and cash, attributable to the consolidated, non-VIE partnerships were $360 million and $394 million, respectively,
and total liabilities, excluding intercompany liabilities, primarily representing third party borrowings, were $107 million