SunTrust 2011 Annual Report Download - page 34
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Federal Reserve policies are beyond our control and difficult to predict; consequently, the impact of these changes on our activities
and results of operations is difficult to predict.
Depressed market values for our stock may require us to write down goodwill.
Numerous facts and circumstances are considered when evaluating the carrying value of our goodwill. One of those considerations
is the estimated fair value of each reporting unit. The fair value of a reporting unit is impacted by the reporting unit's expected
financial performance and susceptibility to adverse economic, regulatory, and legislative changes. The estimated fair values of
the individual reporting units are assessed for reasonableness by reviewing a variety of indicators, including our market
capitalization evaluated over a reasonable period of time. While this comparison provides some relative market information
regarding the estimated fair value of the reporting units, it is not determinative and needs to be evaluated in the context of the
current economic and political environment. However, significant and/or sustained declines in our market capitalization, especially
in relation to our book value, could be an indication of potential impairment of goodwill.
Clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding.
Checking and savings account balances and other forms of client deposits could decrease if clients perceive alternative investments,
such as the stock market, as providing superior expected returns. When clients move money out of bank deposits in favor of
alternative investments, we can lose a relatively inexpensive source of funds, increasing our funding costs.
Consumers may decide not to use banks to complete their financial transactions, which could affect net income.
Technology and other changes now allow parties to complete financial transactions without banks. For example, consumers can
pay bills and transfer funds directly without banks. This process could result in the loss of fee income, as well as the loss of client
deposits and the income generated from those deposits.
We have businesses other than banking which subject us to a variety of risks.
We are a diversified financial services company. This diversity subjects earnings to a broader variety of risks and uncertainties.
Hurricanes and other disasters may adversely affect loan portfolios and operations and increase the cost of doing business.
Large scale natural or man-made disasters may significantly affect loan portfolios by damaging properties pledged as collateral
and by impairing the ability of certain borrowers to repay their loans. The nature and level of disasters cannot be predicted and
may be exacerbated by global climate change. The ultimate impact of a disaster on future financial results is difficult to predict
and will be affected by a number of factors, including the extent of damage to the collateral, the extent to which damaged collateral
is not covered by insurance, the extent to which unemployment and other economic conditions caused by the disaster adversely
affect the ability of borrowers to repay their loans, and the cost of collection and foreclosure moratoriums, loan forbearances and
other accommodations granted to borrowers and other clients.
Negative public opinion could damage our reputation and adversely impact business and revenues.
As a financial institution, our earnings and capital are subject to risks associated with negative public opinion. The reputation of
the financial services industry in general has been damaged as a result of the financial crisis and other matters affecting the financial
services industry, including mortgage foreclosure issues. Negative public opinion regarding us could result from our actual or
alleged conduct in any number of activities, including lending practices, the failure of any product or service sold by us to meet
our clients' expectations or applicable regulatory requirements, corporate governance and acquisitions, or from actions taken by
government regulators and community organizations in response to those activities. Negative public opinion can adversely affect
our ability to keep and attract and/or retain clients and personnel and can expose us to litigation and regulatory action. Actual or
alleged conduct by one of our businesses can result in negative public opinion about our other businesses. Negative public opinion
could also affect our credit ratings, which are important to accessing unsecured wholesale borrowings. Significant changes in these
ratings could change the cost and availability of these sources of funding.
A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors and
other service providers, including as a result of cyber attacks, could disrupt our businesses, result in the disclosure or
misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.
We depend upon our ability to process, record, and monitor a large number of client transactions on a continuous basis. As client,
public, and regulatory expectations regarding operational and information security have increased, our operational systems and
infrastructure must continue to be safeguarded and monitored for potential failures, disruptions, and breakdowns. Our business,
financial, accounting, data processing systems, or other operating systems and facilities may stop operating properly or become
disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control. For example,
there could be sudden increases in client transaction volume; electrical or telecommunications outages; natural disasters such as
earthquakes, tornadoes, and hurricanes; disease pandemics; events arising from local or larger scale political or social matters,
including terrorist acts; and, as described below, cyber attacks. Although we have business continuity plans and other safeguards
in place, our business operations may be adversely affected by significant and widespread disruption to our physical infrastructure
or operating systems that support our businesses and clients.