SunTrust 2012 Annual Report Download - page 41

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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 in this Form 10-K.
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. For the above and other reasons, the market price of our securities
may not accurately reflect the value of our securities, and you should consider this before relying on the market prices of our
securities when making an investment decision.
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 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, 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