SunTrust 2011 Annual Report Download - page 40
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and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision making can be faulty, that alternative reasoned judgments
can be drawn, or that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly,
because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.
Our financial instruments carried at fair value expose us to certain market risks.
We maintain at fair value a securities AFS portfolio and trading assets and liabilities which include various types of instruments
and maturities. In addition, we elected to record selected fixed-rate debt, mortgage loans, securitization warehouses, MSRs and
other financial instruments at fair value. The changes in fair value of the financial instruments carried at fair value are recognized
in earnings. The financial instruments carried at fair value are exposed to market risks related to changes in interest rates, market
liquidity, and our market-based credit spreads, as well as to the risk of default by specific borrowers. We manage the market risks
associated with these instruments through active hedging arrangements or broader ALM strategies. Changes in the market values
of these financial instruments could have a material adverse impact on our financial condition or results of operations. We may
classify additional financial assets or financial liabilities at fair value in the future.
Our revenues derived from our investment securities may be volatile and subject to a variety of risks.
We generally maintain investment securities and trading positions in the fixed income, currency, commodity, and equity markets.
Unrealized gains and losses associated with our investment portfolio and mark to market gains and losses associated with our
trading portfolio are affected by many factors, including interest rate volatility, volatility in capital markets, and other economic
factors. Our return on such investments and trading have in the past experienced, and will likely in the future experience, volatility
and such volatility may materially adversely affect our financial condition and results of operations. Additionally, accounting
regulations may require us to record a charge prior to the actual realization of a loss when market valuations of such securities are
impaired and such impairment is considered to be other than temporary.
We may enter into transactions with off-balance sheet affiliates or our subsidiaries.
We engage in a variety of transactions with off-balance sheet entities with which we are affiliated. While we have no obligation,
contractual or otherwise, to do so, under certain limited circumstances, these transactions may involve providing some form of
financial support to these entities. Any such actions may cause us to recognize current or future gains or losses. Depending on the
nature and magnitude of any transaction we enter into with off-balance sheet entities, accounting rules may require us to consolidate
the financial results of these entities with our financial results.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 2. PROPERTIES
The Company’s headquarters is located in Atlanta, Georgia. As of December 31, 2011, the Bank owned 615 of its 1,659 full-
service banking offices and leased the remaining banking offices. (See Note 8, “Premises and Equipment,” to the Consolidated
Financial Statements in this Form 10-K for further discussion of its properties.)
Item 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to numerous claims and lawsuits arising in the normal course of its business activities,
some of which involve claims for substantial amounts. Although the ultimate outcome of these suits cannot be ascertained at this
time, it is the opinion of management that none of these matters, when resolved, will have a material effect on the Company’s
consolidated results of operations, cash flows, or financial condition. For additional information, see Note 20, “Contingencies,”
to the Consolidated Financial Statements in this Form 10-K, which is incorporated into this Item 3 by reference.
Item 4. MINE SAFETY DISCLOSURES
None.