SunTrust 2011 Annual Report Download - page 39
Download and view the complete annual report
Please find page 39 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.23
Certain of our financial instruments, including trading assets and liabilities, securities AFS, certain loans, MSRs, private equity
investments, structured notes and certain repurchase and resale agreements, among other items, require a determination of their
fair value in order to prepare our financial statements. Where quoted market prices are not available, we may make fair value
determinations based on internally developed models or other means which ultimately rely to some degree on management
judgment. Some of these and other assets and liabilities may have no direct observable price levels, making their valuation
particularly subjective, being based on significant estimation and judgment. In addition, sudden illiquidity in markets or declines
in prices of certain loans and securities may make it more difficult to value certain balance sheet items, which may lead to the
possibility that such valuations will be subject to further change or adjustment and could lead to declines in our earnings.
Management has identified certain accounting policies as being critical because they require management's judgment to ascertain
the valuations of assets, liabilities, commitments, and contingencies. A variety of factors could affect the ultimate value that is
obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability, or recognizing or
reducing a liability. We have established detailed policies and control procedures that are intended to ensure these critical accounting
estimates and judgments are well controlled and applied consistently. In addition, the policies and procedures are intended to
ensure that the process for changing methodologies occurs in an appropriate manner. Because of the uncertainty surrounding our
judgments and the estimates pertaining to these matters, we cannot guarantee that we will not be required to adjust accounting
policies or restate prior period financial statements. See “Critical Accounting Policies” in the MD&A and Note 1, “Significant
Accounting Policies,” to the Consolidated Financial Statements.
Changes in our accounting policies or in accounting standards could materially affect how we report our financial results
and condition.
From time to time, the FASB and SEC change the financial accounting and reporting standards that govern the preparation of our
financial statements. In addition, accounting standard setters and those who interpret the accounting standards (such as the FASB,
SEC, banking regulators and our outside auditors) may change or even reverse their previous interpretations or positions on how
these standards should be applied. Changes in financial accounting and reporting standards and changes in current interpretations
may be beyond our control, can be hard to predict and could materially affect how we report our financial results and condition.
In some cases, we could be required to apply a new or revised standard retroactively, resulting in us restating prior period financial
statements.
Our stock price can be volatile.
Our stock price can fluctuate widely in response to a variety of factors including:
• variations in our quarterly results;
• changes in market valuations of companies in the financial services industry;
• governmental and regulatory legislation or actions;
• issuances of shares of common stock or other securities in the future;
• changes in dividends;
• the addition or departure of key personnel;
• cyclical fluctuations;
• changes in financial estimates or recommendations by securities analysts regarding us or shares of our common stock;
• announcements by us or our competitors of new services or technology, acquisitions, or joint ventures; and
• activity by short sellers and changing government restrictions on such activity.
General market fluctuations, industry factors, and general economic and political conditions and events, such as terrorist attacks,
economic slowdowns or recessions, interest rate changes, credit loss trends, or currency fluctuations, also could cause our stock
price to decrease regardless of operating results.
Our framework for managing risks may not be effective in mitigating risk and loss to us.
Our risk management framework seeks to mitigate risk and loss to us. We have established processes and procedures intended to
identify, measure, monitor, report and analyze the types of risk to which we are subject, including liquidity risk, credit risk, market
risk, interest rate risk, operational risk, legal and compliance risk, and reputational risk, among others. However, as with any risk
management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the
future, risks that we have not appropriately anticipated or identified. For example, the recent financial and credit crisis and resulting
regulatory reform highlighted both the importance and some of the limitations of managing unanticipated risks. If our risk
management framework proves ineffective, we could suffer unexpected losses and could be materially adversely affected.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports
we file or submit under the Exchange Act is accurately accumulated and communicated to management, and recorded, processed,
summarized, and reported within the time periods specified in the SEC's rules and forms. We believe that any disclosure controls