SunTrust 2011 Annual Report Download - page 200
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Please find page 200 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)
184
Non-recurring Fair Value Measurements
The following tables present the change in carrying value of those assets measured at fair value on a non-recurring basis for which
impairment was recognized. The table does not reflect the change in fair value attributable to any related economic hedges the
Company may have used to mitigate the interest rate risk associated with LHFS and MSRs. The Company’s economic hedging
activities for LHFS are deployed at the portfolio level.
(Dollars in millions)
LHFS
LHFI
OREO
Affordable Housing
Other Assets
(Dollars in millions)
LHFS
LHFI
OREO
Affordable Housing
Other Assets
Net
Carrying
Value
$212
72
479
324
45
Net
Carrying
Value
$333
85
596
357
130
Fair Value Measurement at
December 31, 2011,
Using
Quoted Prices in
Active Markets
for Identical
Assets/
Liabilities
(Level 1)
$—
—
—
—
—
Fair Value Measurement at
December 31, 2010,
Using
Quoted Prices in
Active Markets
for Identical
Assets/
Liabilities
(Level 1)
$—
—
—
—
—
Significant
Other
Observable
Inputs
(Level 2)
$108
—
372
—
24
Significant
Other
Observable
Inputs
(Level 2)
$142
—
553
—
90
Significant
Unobservable
Inputs
(Level 3)
$104
72
107
324
21
Significant
Unobservable
Inputs
(Level 3)
$191
85
43
357
40
Valuation
Allowance
$—
(7)
(127)
—
(20)
Valuation
Allowance
$—
(15)
(116)
—
(20)
The following is a discussion of the valuation techniques and inputs used in developing fair value measurements for assets classified
as level 2 or 3 that are measured at fair value on a non-recurring basis, based on the class as determined by the nature and risks
of the instrument.
Loans Held for Sale
Level 2 LHFS consist primarily of conforming, residential mortgage loans and corporate loans that are accounted for at LOCOM.
Level 3 LHFS consist of non-agency residential mortgage LHFS for which there is little or no secondary market activity and leases
held for sale. These loans are valued consistent with the methodology discussed in the Recurring Fair Value Measurement section
of this footnote. Leases held for sale are valued using internal estimates which incorporate market data when available. Due to
the lack of current market data for comparable leases, these assets are considered level 3.
During the year ended December 31, 2011, the Company transferred $47 million in NPLs, net of a $10 million incremental charge-
off, that were previously designated as LHFI to LHFS in conjunction with the Company’s election to actively market these loans
for sale. These loans were predominantly reported at amortized cost prior to transferring to LHFS; however, a portion of the NPLs
was carried at fair value. Of these transferred loans, $34 million were sold at approximately their carrying value during the year
ended December 31, 2011; the remaining $13 million were returned to LHFI as they were no longer deemed marketable for sale.
The Company executed a similar transfer of $160 million in NPLs during the year ended December 31, 2010; these loans were
subsequently sold at prices approximating fair value.