SunTrust 2014 Annual Report Download - page 116

Notes to Consolidated Financial Statements, continued
93
NOTE 3 - FEDERAL FUNDS SOLD AND SECURITIES FINANCING ACTIVITIES
Fed funds sold and securities borrowed or purchased under
agreements to resell were as follows:
(Dollars in millions) December 31,
2014 December 31,
2013
Fed funds sold $38 $75
Securities borrowed or purchased 290 184
Resell agreements 832 724
Total fed funds sold and securities
borrowed or purchased under
agreements to resell $1,160 $983
Securities purchased under agreements to resell are primarily
collateralized by U.S. government or agency securities and are
carried at the amounts at which securities will be subsequently
resold. Securities borrowed are primarily collateralized by
corporate securities. The Company takes possession of all
securities purchased under agreements to resell and securities
borrowed and performs a margin evaluation on the acquisition
date based on market volatility, as necessary. It is the Company's
policy to obtain possession of collateral with a fair value between
95% to 110% of the principal amount loaned under resell and
securities borrowing agreements. At December 31, 2014 and
2013, the total market value of collateral held was $1.1 billion
and $913 million, of which $222 million and $234 million was
repledged, respectively.
Securities sold under agreements to repurchase are
accounted for as secured borrowings. The following table
presents the Company’s related activity, by collateral type and
remaining contractual maturity, at December 31, 2014.
Remaining Contractual
Maturity of the Agreements
(Dollars in millions)
Overnight
and
Continuous
Up to
30
days Total
U.S. Treasury securities $376 $— $376
Federal agency securities 231 — 231
MBS - agency 1,059 45 1,104
CP 238 — 238
Corporate and other debt securities 327 — 327
Total securities sold under agreements
to repurchase $2,231 $45 $2,276
For these securities sold under agreements to repurchase,
the Company would be obligated to provide additional collateral
in the event of a significant decline in fair value of the collateral
pledged. This risk is managed by monitoring the liquidity and
credit quality of the collateral, as well as the maturity profile of
the transactions.
Netting of Securities - Repurchase and Resell Agreements
The Company has various financial assets and financial
liabilities that are subject to enforceable master netting
agreements or similar agreements. The Company's derivatives
that are subject to enforceable master netting agreements or
similar agreements are discussed in Note 17, "Derivative
Financial Instruments." Securities borrowed or purchased under
agreements to resell and securities sold under agreements to
repurchase are governed by a MRA. Under the terms of the MRA,
all transactions between the Company and the counterparty
constitute a single business relationship such that in the event of
default, the nondefaulting party is entitled to set off claims and
apply property held by that party in respect of any transaction
against obligations owed. Any payments, deliveries, or other
transfers may be applied against each other and netted. These
amounts are limited to the contract asset/liability balance, and
accordingly, do not include excess collateral received/pledged.