SunTrust 2014 Annual Report Download - page 30

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Item 1A. RISK FACTORS
The risks described in this Form 10-K are not the only risks we
face. Additional risks that are not presently known or that we
presently deem to be immaterial also could have a material
adverse effect on our financial condition, results of operations,
business, and prospects.
As one of the largest lenders in the Southeast and Mid-
Atlantic U.S. and a provider of financial products and
services to consumers and businesses across the U.S., our
financial results have been, and may continue to be,
materially affected by general economic conditions. A
deterioration of economic conditions or of the financial
markets may materially adversely affect our lending and
other businesses and our financial results and condition.
We generate revenue from the interest and fees we charge
on the loans and other products and services we provide, and a
substantial amount of our revenue and earnings come from the
net interest income and fee income that we earn from our
consumer, wholesale, and mortgage banking businesses. These
businesses have been, and may continue to be, materially
affected by the state of the U.S. economy, particularly
unemployment levels and home prices. Although the U.S.
economy has continued to gradually improve from severely
depressed levels during the last economic recession, economic
growth and improvement in the housing market have been
modest. In addition, financial uncertainty stemming from low
oil and commodity prices, a strong U.S. dollar, U.S. debt and
budget matters, geopolitical turmoil, deceleration of economic
activity in other large countries, as well as the uncertainty
surrounding financial regulatory reform, have impacted and
may continue to impact the continuing global economic
recovery. A prolonged period of slow growth in the U.S.
economy or any deterioration in general economic conditions
and/or the financial markets resulting from the above matters,
or any other events or factors that may disrupt or dampen the
global economic recovery, could materially adversely affect our
financial results and condition.
If unemployment levels increase or if home prices decrease
we would expect to incur higher than normal charge-offs and
provision expense from increases in our allowance for credit
losses. These conditions may adversely affect not only consumer
loan performance but also C&I and CRE loans, especially for
those businesses that rely on the health of industries or properties
that may experience deteriorating economic conditions. The
ability of these borrowers to repay their loans may be reduced,
causing us to incur significantly higher credit losses. In addition,
current economic conditions have made it more challenging for
us to increase our consumer and commercial loan portfolios by
making loans to creditworthy borrowers at attractive yields. If
economic conditions do not continue to improve or if the
economy worsens and unemployment rises, then a decrease in
consumer and business confidence and spending are likely,
which may reduce demand for our credit products, which would
adversely affect our interest and fee income and our earnings.
A deterioration in business and economic conditions that
erodes consumer and investor confidence levels, and/or
increased volatility of financial markets, also could adversely
affect financial results for our fee-based businesses, including
our wealth management, investment advisory, trading, and
investment banking businesses. We earn fee income from
managing assets for others and providing brokerage and other
investment advisory and wealth management services. Because
investment management fees are often based on the value of
assets under management, a decrease in the market prices of
those assets could reduce our fee income. Changes in stock
market prices could affect the trading activity of investors,
reducing commissions and other fees we earn from our
brokerage business. Poor economic conditions and volatile or
unstable financial markets also can adversely affect our trading
and debt and equity underwriting and advisory businesses.
Legislation and regulation, including the Dodd-Frank Act,
as well as future legislation and/or regulation, could require
us to change certain of our business practices, reduce our
revenue, impose additional costs on us, or otherwise
adversely affect our business operations and/or competitive
position.
We are actively regulated by federal and state agencies.
Changes to statutes, regulations, or regulatory policies,
including interpretation or implementation of statutes,
regulations, or policies, could affect us adversely, including
limiting the types of financial services and products we may
offer and/or increasing the ability of nonbanks to offer
competing financial services and products. Also, if we do not
comply with laws, regulations, or policies, we could be subject
to regulatory sanctions and damage to our reputation.
Regulation of the financial services industry has increased
significantly. The regulation is focused on the protection of
depositors, FDIC funds, consumers, and the banking system as
a whole, rather than our shareholders, and may be adverse to the
interests of our shareholders. We are subject to significant
regulation under state and federal laws in the U.S., including
new legislation and rule-making promulgated under the Dodd-
Frank Act. Increased supervision, reporting, and significant new
and proposed legislation and regulatory requirements in the U.S.
and in other jurisdictions outside of the U.S. where we conduct
business may affect the manner in which we do business and
the products and services that we provide, and may affect or
restrict our ability to compete in our current businesses or our
ability to enter into or acquire new businesses, reduce or limit
our revenue in businesses or impose additional fees, assessments
or taxes on us, and adversely affect our business operations or
have other negative consequences.
A significant number of the provisions of the Dodd-Frank
Act still require extensive rulemaking and interpretation by
regulatory authorities. In several cases, authorities have
extended implementation periods and delayed effective dates.
Accordingly, in many respects the ultimate impact of the Dodd-
Frank Act and its effects on the U.S. financial system and
SunTrust will not be known for an extended period of time.
Nevertheless, the Dodd-Frank Act, including current and future
rules implementing its provisions and the interpretation of those
rules, could result in a loss of revenue, require us to change
certain of our business practices, limit our ability to pursue
certain business opportunities, increase our capital and liquidity
requirements and impose additional assessments and costs on