SunTrust 2011 Annual Report Download - page 97
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As mentioned above, the Bank and Parent Company maintain programs to access the debt capital markets. The Parent Company
maintains an SEC shelf registration statement from which it may issue senior or subordinated notes and various capital securities
such as common or preferred stock. Our Board has authorized the issuance of up to $5 billion of such securities, of which
approximately $2.2 billion of issuance capacity remains available. The most recent issuance from this shelf occurred on October
27, 2011, when we issued $750 million of 3.50% senior Parent Company notes due January 20, 2017. The Bank also maintains a
Global Bank Note program under which it may issue senior or subordinated debt with various terms. As of December 31, 2011,
the Bank had $33.8 billion of remaining board authority to issue notes under the program. Our issuance capacity under these
programs refers to authorization granted by our Board and does not refer to a commitment to purchase by any investor. Debt and
equity securities issued under these programs are designed to appeal primarily to domestic and international institutional investors.
Institutional investor demand for these securities is dependent upon numerous factors, including but not limited to our credit ratings
and investor perception of financial market conditions and the health of the banking sector.
Parent Company Liquidity. Our primary measure of Parent Company liquidity is the length of time the Parent Company can meet
its existing and certain forecasted obligations using its present balance of cash and liquid securities without the support of dividends
from the Bank or new debt issuance. In accordance with risk limits established by ALCO and the Board, we manage the Parent
Company’s liquidity by structuring its maturity schedule to minimize the amount of debt maturing within a short period of time.
During the year ended December 31, 2011, we had no Parent Company debt that matured, and approximately $1 billion of Parent
Company debt is scheduled to mature in 2012. Also during 2011, we repurchased $395 million of Parent Company junior
subordinated notes that were due in 2036. A majority of the Parent Company’s liabilities are long-term in nature, coming from the
proceeds of our capital securities and long-term senior and subordinated notes.
The primary uses of Parent Company liquidity include debt service, dividends on capital instruments, the periodic purchase of
investment securities, and loans to our subsidiaries. We fund corporate dividends primarily with dividends from our banking
subsidiary. We are subject to both state and federal banking regulations that limit our ability to pay common stock dividends in
certain circumstances.
Recent Developments. Numerous legislative and regulatory proposals currently outstanding may have an effect on our liquidity
if they become effective, the potential impact of which cannot be presently quantified. However, we believe that we will be well
positioned to comply with new standards as they become effective as a result of our strong core banking franchise and liquidity
management practices. See discussion of certain current legislative and regulatory proposals within the “Executive Overview”
section of this MD&A.
On December 20, 2011, the Federal Reserve published proposed measures to strengthen regulation and supervision of large bank
holding companies and systemically important nonbank financial firms, pursuant to sections 165 and 166 of the Dodd-Frank Act.
These proposed regulations include a number of requirements related to liquidity that would be instituted in phases. The first phase
encompasses largely qualitative liquidity risk management practices, including internal liquidity stress testing. The second phase
would include certain quantitative liquidity requirements related to the proposed Basel III liquidity standards. We believe that the
Company is well positioned to demonstrate compliance with these new requirements and standards if and when they are adopted.
Other Liquidity Considerations. As presented in Table 36, we had an aggregate potential obligation of $62.0 billion to our clients
in unused lines of credit at December 31, 2011. Commitments to extend credit are arrangements to lend to clients who have
complied with predetermined contractual obligations. We also had $5.2 billion in letters of credit as of December 31, 2011, most
of which are standby letters of credit, which require that we provide funding if certain future events occur. Approximately $3.1
billion of these letters as of December 31, 2011 supported variable rate demand obligations.
As of December 31, 2011, our liability for UTBs was $133 million. The liability for interest related to these UTBs was $21 million
as of December 31, 2011. The UTBs represent the difference between tax positions taken or expected to be taken in our tax returns
and the benefits recognized and measured in accordance with the relevant accounting guidance for income taxes. The UTBs are
based on various tax positions in several jurisdictions, and if taxes related to these positions are ultimately paid, the payments
would be made from our normal operating cash flows, likely over multiple years.