SunTrust 2012 Annual Report Download - page 90

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Reporting," to the Consolidated Financial Statements in this Form 10-K for a further discussion of our reportable segments
and changes that occurred during 2012.
We review the goodwill of each reporting unit for impairment on an annual basis as of September 30th, or more often, if
events or circumstances indicate that it is more likely than not that the fair value of the reporting unit is below the carrying
value of its equity. The goodwill impairment analysis estimates the fair value of equity using discounted cash flow analyses
which require assumptions, as well as guideline company and guideline transaction information, where available. The inputs
and assumptions specific to each reporting unit are incorporated in the valuations, including projections of future cash flows,
discount rates, the fair value of tangible assets and intangible assets and liabilities, and applicable valuation multiples based
on the guideline information. We assess the reasonableness of the estimated fair value of the reporting units by giving
consideration to our market capitalization over a reasonable period of time; however, supplemental information is applied
based on observable multiples from guideline transactions, adjusted to reflect our specific factors, as well as current market
conditions. Based on our annual impairment analysis of goodwill as of September 30, 2012, we determined for the following
reporting units that the fair value is in excess of the respective reporting unit's carrying value by the following percentages:
Consumer Banking and Private Wealth Management 21%
Wholesale Banking 31%
RidgeWorth Capital Management 147%
The fair value of the GenSpring reporting unit, however, was less than its carrying value as of September 30, 2012. As a result,
we performed the second step of the goodwill impairment evaluation and recorded an impairment loss of $7 million, which
was the entire amount of goodwill recorded for the GenSpring reporting unit prior to the impairment evaluation.
We monitored events and circumstances during the fourth quarter of 2012 for all reporting units, of which no events gave rise
to an additional impairment test.
Valuation Techniques
In determining the fair value of our reporting units, we use discounted cash flow analyses, which require assumptions about
short and long-term net cash flow, growth rates for each reporting unit, as well as discount rates. Additionally, we consider
guideline company and guideline transaction information, where available, to aid in the valuation of certain reporting units.
Growth Assumptions
Multi-year financial forecasts are developed for each reporting unit by considering several key business drivers such as new
business initiatives, client service and retention standards, market share changes, anticipated loan and deposit growth, forward
interest rates, historical performance, and industry and economic trends, among other considerations. The long-term growth
rate used in determining the terminal value of each reporting unit was estimated at 4% as of September 30, 2012 and 2011
based on management's assessment of the minimum expected terminal growth rate of each reporting unit, as well as broader
economic considerations such as gross domestic product and inflation.
Discount Rate Assumptions
Discount rates are estimated based on the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk
premium, beta, and unsystematic risk and size premium adjustments specific to a particular reporting unit. The discount rates
are also calibrated based on the assessment of the risks related to the projected cash flows of each reporting unit. In the annual
analysis as of September 30, 2012, the discount rates ranged from 12% to 20%. In the annual analysis as of September 30,
2011, the discount rates ranged from 13% to 17%.
Estimated Fair Value and Sensitivities
The estimated fair value of each reporting unit is derived from the valuation techniques described above. The estimated fair
value of each reporting unit is analyzed in relation to numerous market and historical factors, including current economic and
market conditions, company-specific growth opportunities, and guideline company and guideline transaction information.
Economic and market conditions can vary significantly which may cause increased volatility in a company's stock price,
resulting in a temporary decline in market capitalization. In those circumstances, current market capitalization may not be an
accurate indication of a market participant's estimate of entity-specific value measured over a reasonable period of time. As