SunTrust 2012 Annual Report Download - page 153

Notes to Consolidated Financial Statements (Continued)
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exposure to loss, although such exposure to loss has been mitigated via the TRS contracts with the third parties. The
Company has not provided any support to the VIEs that it was not contractually obligated to for the years ended
December 31, 2012 and 2011. For additional information on the Company’s TRS with these VIEs, see Note 16,
“Derivative Financial Instruments.”
Community Development Investments
As part of its community reinvestment initiatives, the Company invests almost exclusively within its footprint in
multi-family affordable housing developments and other community development entities as a limited and/or general
partner and/or a debt provider. The Company receives tax credits for various investments. The Company has
determined that the related partnerships are VIEs. For partnerships where the Company operates strictly as the general
partner, the Company consolidates these partnerships on its Consolidated Balance Sheets. As the general partner, the
Company typically guarantees the tax credits due to the limited partner and is responsible for funding construction
and operating deficits. As of December 31, 2012 and 2011, total assets, which consist primarily of fixed assets and
cash attributable to the consolidated partnerships, were $3 million and $5 million, respectively, and total liabilities,
excluding intercompany liabilities, were $1 million. Security deposits from the tenants are recorded as liabilities on
the Company’s Consolidated Balance Sheets. The Company maintains separate cash accounts to fund these liabilities
and these assets are considered restricted. The tenant liabilities and corresponding restricted cash assets were not
material as of December 31, 2012 and 2011. While the obligations of the general partner are generally non-recourse
to the Company, as the general partner, the Company may from time to time step in when needed to fund deficits.
During the years ended December 31, 2012 and 2011, the Company did not provide any significant amount of funding
as the general partner or to cover any deficits the partnerships may have generated.
For other partnerships, the Company acts only in a limited partnership capacity. The Company has determined that
it is not the primary beneficiary of these partnerships and accounts for its limited partner interests in accordance with
the accounting guidance for investments in affordable housing projects. The general partner or an affiliate of the
general partner provides guarantees to the limited partner, which protects the Company from losses attributable to
operating deficits, construction deficits, and tax credit allocation deficits. Partnership assets of $1.2 billion in these
partnerships were not included in the Consolidated Balance Sheets at December 31, 2012 and 2011.The limited
partner interests had carrying values of $186 million and $194 million at December 31, 2012 and 2011, respectively,
and are recorded in other assets in the Company’s Consolidated Balance Sheets. The Company’s maximum exposure
to loss for these limited partner investments totaled $505 million and $472 million at December 31, 2012 and 2011,
respectively. The Company’s maximum exposure to loss would be borne by the loss of the limited partnership equity
investments along with $236 million and $249 million of loans, interest-rate swaps, or letters of credit issued by the
Company to the limited partnerships at December 31, 2012 and 2011, respectively. The difference between the
maximum exposure to loss and the investment and loan balances is primarily attributable to the unfunded equity
commitments. Unfunded equity commitments are amounts that the Company has committed to the partnerships upon
the partnerships meeting certain conditions. When these conditions are met, the Company will invest these additional
amounts in the partnerships.
Additionally, the Company invests in funds whose purpose is to invest in affordable housing developments as the
limited partner investor. The Company owns minority and noncontrolling interests in these funds. As of December 31,
2012 and 2011, the Company's investment in these funds totaled $63 million and $68 million, respectively, and the
Company's maximum exposure to loss on its equity investments, which is comprised of its investments in the funds
plus any additional unfunded equity commitments, was $110 million and $108 million, respectively.
When the Company owns both the limited partner and general partner interests or acts as the indemnifying party, the
Company consolidates the partnerships. As of December 31, 2012 and 2011, total assets, which consist primarily of
fixed assets and cash, attributable to the consolidated non-VIE partnerships were $239 million and $360 million,
respectively, and total liabilities, excluding intercompany liabilities, primarily representing third party borrowings,
were $100 million and $107 million, respectively.
During 2012, the Company announced its intention to sell certain consolidated affordable housing properties. In
connection with this action, the Company recorded valuation losses related to the planned sale of these properties in
the amount of $96 million in noninterest expense for the year ended December 31, 2012. Of the total valuation loss,
$3 million relates to properties held in the partnerships where the Company operates strictly as the general partner,
and the remaining $93 million relates to properties held in the partnerships where the Company owns both the limited
partner and general partner interests or acts as the indemnifying party. One of these consolidated affordable housing
properties was sold as of December 31, 2012 at an immaterial gain. For the remaining $0.1 billion of properties,
marketing efforts continue as scheduled. See Note 18, “Fair Value Election and Measurement,” for further discussion
on the impact of impairment charges on affordable housing partnership investments.